Massachusetts Mut. Life Ins. Co. v. Woodall

304 F.Supp.2d 1364

MASSACHUSETTS MUTUAL LIFE INSURANCE COMPANY, Plaintiff, v. John T. WOODALL, Defendant.

No. 402 CV 120.

United States District Court, S.D. Georgia, Savannah Division.

August 21, 2003.

COPYRIGHT MATERIAL OMITTED

Arnold C. Young, Hunter, Maclean, Exley & Dunn, PC, Savannah, GA, William A. Clineburg, Jr., Matthew A. Boyd, King & Spalding, Atlanta, GA, for plaintiff.

Samuel Powel Inglesby, Jr., Inglesby, Falligant, Horne, Courington & Chisholm, PC, Savannah, GA, for defendant.

ORDER

EDENFIELD, District Judge.

I. INTRODUCTION

Plaintiff Massachusetts Mutual Life Insurance Company (MMLIC) brings this diversity-based, 28 U.S.C. § 2201 action to obtain a judgment declaring that its insured, defendant John Woodall, cannot recover on the disability insurance that MMLIC sold him.¹ Doc. # 1. In denying Woodall's earlier, F.R.Civ.P. 12(f) motion to strike as immaterial (etc.) references to prior litigation, the Court noted that neither party had litigated Woodall's personal jurisdiction and improper venue defenses. Doc. # 23 at 4.

Woodall now moves the Court under F.R.Civ.P. 56 (styled as a "Request for Ruling") to dismiss this case for lack of venue and personal jurisdiction. Doc. # 24 ("Request"); # 25 at 10-11 (brief citing to matters outside of the pleadings). He also moves for summary judgment on the merits. Doc. # 27 (motion); # 28 (brief); # 38 (reply). MMLIC cross-moves for partial summary judgment, doc. # 33; # 39 (reply); # 42 (reply), and opposes Woodall's venue/jurisdiction motion. Doc. # 37. The parties agree that the material facts are undisputed, doc. # 22 ¶ 8; # 35 at 1, 6; # 36 at 1-10, and that this is a first-impression case. Doc. # 35 at 2.

II. BACKGROUND

MMLIC sold (mostly in the 1980s) Woodall disability, life and business insurance policies. Doc. # 1 ¶¶ 7-9. The disability policy wording in question states that MMLIC would consider Woodall disabled "if because of sickness or injury you can't do the main duties of your occupation. You must be under a doctor's care." Doc. # 26 ¶ 9; # 36 ¶ 9. The policy expressly excludes coverage "caused or contributed to by: . war (declared or not) . normal pregnancy . or normal childbirth." Id.

Starting in 1995, Woodall became embroiled in, and ultimately became depressed over, what would become known as the "Shiggs" controversy:

Ms. Julia Mae Shiggs suffered brain damage and became comatose as the alleged result of medical malpractice. The [Chatham County, Georgia] probate court appointed Michael Mydell, Ms. Shiggs' common law husband, guardian of her person and property. In his representative capacity, Mydell retained the legal services of David Roberson for the purpose of filing in state court a malpractice action on behalf of his ward. Roberson, in turn, associated another attorney, John Woodall, to assist him in the case. During the course of trial, an oral settlement agreement was reached, and the defendants thereafter delivered significant sums to Roberson. Roberson deposited the money into his trust account. Prior to the approval of any written settlement agreement by the probate court, Roberson calculated attorney's fees as $2,400,000, and issued checks drawn on his trust account to himself and Woodall. Only then did Roberson and Woodall file petitions with the state court and probate court, seeking approval of the settlement.

Gnann v. Woodall, 270 Ga. 516, 516, 511 S.E.2d 188 (1999) (Woodall I); see also In re Woodall, 241 Ga.App. 196, 197-98, 526 S.E.2d 69 (1999) (Woodall II) (expanded factual recitation). The attorneys' failure to seek prior probate court approval of an obscene fee,² leaving Shiggs to die comatose and in poverty,³ ultimately led to orders of contempt for both and, for Roberson, incarceration:

After removing Mydell as Ms. Shiggs' guardian and replacing him with J. Hamrick Gnann, the probate court refused to approve the settlement agreement and, finding that the disbursement of the settlement proceeds was improper, ordered Roberson and Woodall to pay all monies received by them on behalf of Ms. Shiggs into the registry of the state court. Ms. Shiggs died, and Gnann was appointed administrator of her estate. When Roberson and Woodall refused to pay the funds into the registry as ordered, the probate court held them in contempt.

270 Ga. at 516, 511 S.E.2d 188; see also Woodall II, 241 Ga.App. at 203, 526 S.E.2d 69 ("The probate court ordered Woodall to return the monies he had received pursuant to the representation. Woodall failed to do so, and the probate court properly held him in contempt for violating its ... order"); see also www.savannahmorningnews.com/stories/101800/LOCrobersonout.shtml (site as of 8/19/03) (noting Roberson's incarceration under contempt and that his "cohort, attorney John T. Woodall, was also under [the probate court's] order to repay his fees, but fled to Texas where he remains out of the court's reach on a civil contempt of court"); doc. # 26 ¶ 10; # 36 ¶ 10 (Woodall moved from Georgia to Texas in 3/00); # 26, attached "Stipulation" exh. I. (5/16/01 MMLIC reservation of rights letter to Woodall acknowledging Woodall's request that MMLIC keep Woodall's Texas address secret).

Woodall's wrongdoing in the Shiggs case ultimately led to his (and Roberson's) disbarment. Doc. # 1 ¶ 24. See In re Woodall, 273 Ga. 412, 418, 541 S.E.2d 649 (2001) (Clear and convincing evidence supported finding that Woodall, who contracted to assist another attorney in a medical malpractice claim brought on behalf of comatose patient, engaged in professional misconduct, and thus disbarment was an appropriate sanction, where Woodall accepted $1,100,000 in attorney fees knowing that the settlement had not been approved by probate court; Woodall, based on his level of experience as trial attorney, should have known that there was a problem with the settlement and thus should have investigated further; he did not inquire as to when a settlement hearing would be held, and, despite knowing that the settlement process was flawed, he nevertheless ratified his co-counsel's misconduct in inflating the valuation of future medical services in the settlement to $1,425,000, despite an economist's estimate of $1,091,900 for the client's seven-year life span, which inflated settlement amount to $4,800,000 and thus "justified" $2,400,000 in attorney fees); see also In re Roberson, 273 Ga. 651, 655, 544 S.E.2d 715 (2001) (disbarring Roberson).

As the walls closed in on him, Woodall became depressed. The parties have stipulated

that, beginning in [2/97], [Woodall] became and has remained as of the date this suit was filed [5/29/02], unable to perform the main duties of his occupation and continually has been under a doctor's care by reason of depression and its related effects, which resulted principally and directly from his being subject to allegations of misconduct in the [Shiggs] case, which he disputed, and his initial anticipation of a reprimand from the State Bar of Georgia.

Doc. # 21 at 1 (footnote omitted; emphasis added). Both sides further acknowledge that

[t]he [Shiggs] allegations led to very negative publicity and comments concerning Mr. Woodall, a civil contempt order being directed against him, a civil lawsuit being brought against him by the estate of his former client on [5/22/97], State Bar disciplinary proceedings filed against him in [12/97], and his disbarment from the practice of law on [2/5/01].

Doc. # 21 at 1-2; id. at 1 n. 1 (The parties "make no stipulation one way or the other regarding [Woodall's] disability after ... [the date on which MMLIC filed this case, 5/29/02]").

MMLIC thus initially paid Woodall disability benefits, but after he was disbarred, issued him reservation of rights letters. Doc. # 1 ¶ 26; # 14 ¶ 26 (Woodall admits receiving them but disputes their effective date and scope); # 26 ¶ 8 (he agrees that after he "was disbarred, each subsequent disability payment was accompanied by [an MMLIC] reservation of rights letter....").

MMLIC brought this action on 5/29/02. Doc. # 1 at 1. It contends that "Woodall's alleged disability and disbarment is the direct and sole result of his prior intentional misconduct, all of which predated his claims of depression." Id. ¶ 30. In other words, "because his legal disability and inability to work arose from his own illegal and improper conduct, [MMLIC insists that Woodall] is not entitled to benefits under the Disability Income Policy because the provision of benefits under these circumstances would violate public policy." Id. ¶ 34.

MMLIC explains that, when it first started paying Woodall under its disability policy, Woodall had not yet been disbarred, so MMLIC "made such payments without knowledge of the facts that disqualify Woodall from being eligible for benefits under the policy." Doc. # 1 ¶ 35. It therefore seeks recoupment, and makes essentially the same showing for benefits it paid under its "Business Overhead Expense Policies," id. ¶¶ 37-42, as well as the premium-waiver it allowed on the subject life insurance policies. Id. ¶¶ 43-47.

III. ANALYSIS

A. Personal Jurisdiction/Venue

MMLIC persuasively argues that Woodall has waived his personal jurisdiction and venue defenses by litigating non-jurisdictional matters (e.g., his prior motion to strike, discovery conduct, merits-based stipulation and status report co-generation) months into this case, and only now litigating these defenses upon the Court's prompting. Doc. # 37 at 21-22.

Unlike subject matter jurisdiction, personal jurisdiction is a waivable defense,⁴ and some courts have deemed it waived through inaction. See Datskow v. Teledyne, Inc., Continental Prod. Div., 899 F.2d 1298, 1303 (2d Cir.1990) ("A delay in challenging personal jurisdiction by motion to dismiss has resulted in waiver, even where, as here, the defense was asserted in a timely answer"); Schwartz v. M/V GULF SUPPLIER, 116 F.Supp.2d 831, 835 (S.D.Tex.2000) (British company that contracted with seismic...