Mitchell Scruggs v. Greg Bost
149 So. 3d 493
Miss.2014Background
- Mitchell Scruggs was sued by Monsanto for replanting and selling patented Roundup Ready® and Bollgard® seeds; federal litigation resulted in findings of willful infringement and $8.9 million in damages (and earlier injunctions and summary judgments in Monsanto’s favor).
- Scruggs held a commercial general liability and umbrella policy procured through agent Greg Bost and Nowell Insurance Agency with Farmland Mutual as insurer; Scruggs sought defense and indemnity after Monsanto sued, and Farmland denied coverage.
- Scruggs sued Farmland, Bost, and Nowell in state court; this Court previously held in Farmland Mut. Ins. Co. v. Scruggs that Monsanto’s complaint did not trigger coverage and that intentional/illegal acts are uninsurable, reversing a trial-court ruling for Scruggs.
- After the federal damages verdict, Scruggs pursued malpractice/negotiation claims against Bost and Nowell, alleging they negligently failed to advise him to purchase patent-infringement insurance and misrepresented coverage scope.
- The circuit court granted summary judgment for Bost and Nowell, finding that (1) Scruggs’s conduct was intentional and uninsurable as a matter of law and (2) no duty arose to advise regarding patent-infringement coverage where it was neither requested nor discussed.
- The Mississippi Supreme Court affirmed: because intentional, illegal acts cannot be insured under Mississippi public policy, agents cannot be held liable for failing to procure coverage that would be illegal/unavailable.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether agents can be liable for negligent failure to advise/procure patent-infringement insurance | Scruggs: Bost/Nowell had long relationship and promised broad coverage; they should have advised and procured patent-infringement coverage | Bost/Nowell: Any such coverage would violate public policy because Scruggs’s acts were intentional/illegal and thus uninsurable | Held for defendants: no liability because intentional illegal acts are uninsurable as a matter of law |
| Whether public policy permits insurance for patent infringement (strict-liability tort) | Scruggs: patent infringement is strict liability, so intent shouldn’t bar insurability | Defendants: patent infringement here involved intentional, unlawful conduct; public policy bars insuring illegal, intentional acts | Held: public policy bars insurance for intentional/illegal acts; Scruggs’s conduct was intentional and uninsurable |
| Whether a duty arose to disclose or recommend specific coverage when insured requested "full coverage" | Scruggs: his request for broad protection imposed a duty to recommend all significant coverages | Defendants: "full coverage" does not obligate agents to insure against all conceivable risks, especially illegal ones; plaintiff never mentioned patent-infringement coverage | Held: no duty to procure illegal/unavailable coverage; no duty where patent coverage was not discussed |
| Whether factual disputes (e.g., conflicting federal rulings on willfulness) preclude summary judgment | Scruggs: later federal opinion questioned willfulness, creating factual dispute | Defendants: multiple findings and this Court’s prior ruling support intentionality; any federal opinion on treble-damages standard does not negate uninsurability | Held: summary judgment proper—record establishes intentional/illegal conduct such that coverage would be barred as matter of law |
Key Cases Cited
- Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d 714 (Miss. 2004) (Mississippi Supreme Court held Monsanto’s complaint did not trigger coverage and reaffirmed that intentional/illegal acts are uninsurable)
- Delta Pride Catfish, Inc. v. Home Ins. Co., 697 So. 2d 400 (Miss. 1997) (public policy bars insurance for intentional, illegal conduct)
- Monsanto Co. v. Scruggs, 249 F. Supp. 2d 746 (N.D. Miss. 2001) (district court findings of intentional conduct and preliminary injunction in underlying patent litigation)
- Monsanto Co. v. Scruggs, 890 F. Supp. 2d 729 (N.D. Miss. 2012) (later federal opinion addressing willfulness/treble-damages standard but not inconsistent with Mississippi’s uninsurability rule)