Mitchell Scruggs v. Greg Bost

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2013-CA-00374-SCT
MITCHELL SCRUGGS, EDDIE SCRUGGS,
SCRUGGS FARM & SUPPLIES, LLC f/k/a AND
a/k/a SCRUGGS FARM SUPPLY, INC. AND
SCRUGGS FARM JOINT VENTURE
v.
GREG BOST AND NOWELL INSURANCE
AGENCY
DATE OF JUDGMENT: 02/06/2013
TRIAL JUDGE: HON. JAMES S. POUNDS
TRIAL COURT ATTORNEYS: JAMES L. ROBERTSON
WILLIAM M. BEASLEY, SR.
WILLIAM M. BEASLEY, JR.
COURT FROM WHICH APPEALED: LEE COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: JAMES L. ROBERTSON
WILLIAM J. DUKES
JIM WAIDE
RACHEL PIERCE WAIDE
ATTORNEYS FOR APPELLEES: FRED L. BANKS, JR.
WILLIAM M. BEASLEY, SR.
WILLIAM M. BEASLEY, JR.
NATURE OF THE CASE: CIVIL - CONTRACT
DISPOSITION: AFFIRMED - 10/23/2014
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE RANDOLPH, P.J., LAMAR AND KITCHENS, JJ.
LAMAR, JUSTICE, FOR THE COURT:
¶1. When Monsanto Company sued Mitchell Scruggs and his various agricultural entities
for patent infringement in federal court, Scruggs made a demand on his commercial general
liability insurer, Farmland Mutual Insurance Company. Farmland denied coverage based on
Scruggs’s alleged intentional conduct. Scruggs then sued Farmland, Greg Bost (the
insurance agent), and Nowell Insurance Agency in state court. The circuit court ultimately
granted summary judgment for Bost and Nowell. Scruggs appeals to this Court, arguing,
among other things, that Bost and Nowell negligently failed to advise him that he needed to
purchase patent infringement insurance. Because we find that Scruggs’s conduct was
uninsurable as a matter of law, we affirm.
FACTS AND PROCEDURAL HISTORY
1. The Underlying Federal Action
¶2. Monsanto Company develops, manufactures, licenses, and sells agricultural
chemicals, agricultural biotechnology and other agricultural products. Monsanto Company
v. Scruggs, 249 F. Supp. 2d 746, 749 (N.D. Miss. 2001). After much research, Monsanto
developed genetically modified seeds that had several favorable traits, such as resistance to
herbicides and certain insects/pests. Id. Monsanto markets their genetically modified
soybean and cotton seeds under the Roundup Ready® and Bollgard® brands, respectively.1
The seeds are protected by several U.S. patents, which were issued before Scruggs’s alleged
illegal actions took place. Id. Monsanto began marketing the Roundup Ready® seed in time
for the 1996 planting season and the Bollgard® seed during the 1998 planting season. Id.
at 750.
1
The Roundup Ready® soybean seeds allow a farmer to apply Roundup® and other
herbicides to their entire field without damaging the crop, even after the plants have emerged
from the soil. The Bollgard® cotton seeds are resistant to numerous insects and pests that
normally prey on cotton crops. Monsanto, 249 F. Supp. 2d at 749.
2
¶3. Monsanto structured its marketing strategy for its genetically modified seeds carefully.
Id. Seed companies and farmers who wished to use Monsanto’s patented seeds were
required to enter into a licensing agreement with Monsanto, which limited use of its seeds
to one growing season. Id. In other words, farmers could not resell or supply the seeds to
any other person, and they could not save any seed to replant the next year. These
restrictions were publicized in trade journals and through public meetings with farmers, and
they also appeared on the product label. Id.
¶4. Monsanto obtained information that Scruggs might have planted saved Roundup
Ready® and Bollgard® seeds during the 2000 growing season. Id. After conducting an
investigation, Monsanto determined that Scruggs had indeed replanted its seeds, and it filed
suit against him in the United States District Court for the Northern District of Mississippi
on September 7, 2000. Monsanto alleged that Scruggs “knowingly, intentionally and
willfully planted unlicensed,2 saved Roundup Ready® seed without authorization from
Monsanto and used such seed in violation of Monsanto’s patent rights.” 3 Scruggs denied
Monsanto’s allegations and brought numerous counterclaims against it. After extensive
2
Scruggs testified in his deposition that he did not sign a licensing agreement when
he purchased the seeds because “nobody ever asked [him] to,” but he also testified that he
was aware of the conditions under which Monsanto licensed its seed technology to farmers.
3
Monsanto amended its Complaint several times during the litigation. By its Third
Amended Complaint, it was alleging that Scruggs had also wrongfully sold its seeds to third
parties.
3
litigation 4 and trial,5 the jury found that Scruggs had willfully infringed Monsanto’s patents
and awarded it $8.9 million in compensatory damages.6
2. The State Action Against Farmland
¶5. Beginning in the 1990s, Scruggs did business with insurance agent Greg Bost, and
Bost procured insurance coverage for Scruggs’s cotton gin and cotton ginning business. At
some point in 1999, Scruggs decided to have Bost (who was by then employed by Nowell
Insurance Agency) provide insurance coverage for all of his farming activities.7 Bost,
several other Nowell Agency personnel and Farmland personnel visited Scruggs’s facilities,
4
See Monsanto v. Scruggs, 249 F. Supp. 2d 746 (N.D. Miss. 2001) (granting
Monsanto’s request for preliminary injunction); 342 F. Supp. 2d 584 (N.D. Miss. 2004)
(granting summary judgment for Monsanto on several counts of its complaint); 342 F. Supp.
2d 568 (N.D. Miss. 2004) (granting summary judgment for Monsanto on several counts of
Scruggs’s counterclaim); 342 F. Supp. 2d 602 (N.D. Miss. 2004) (granting summary
judgment for Monsanto on what appears to be remainder of counts in Scruggs’s
counterclaim); 459 F.3d 1328 (Fed. Cir. 2006) (affirming all rulings by the District Court for
the Northern District of Mississippi); 890 F. Supp. 2d 729 (N.D. Miss. 2012) (resolving
various post-trial motions).
5
From our review of the various district court opinions, it appears that Monsanto was
granted summary judgment on all of its patent infringement claims against Scruggs, and that
the trial proceeded on damages only (and possibly the common-law claims). See Monsanto
v. Scruggs, 342 F. Supp. 2d 584 (N.D. Miss. 2004).
6
Specifically, the jury found that: (1) Scruggs acted willfully; (2) Scruggs owed
Monsanto $2.6 million in damages for his unauthorized planting of its patented soybean and
cotton seeds; (3) Scruggs made “brown bag” sales of Monsanto’s patented soybean seed; and
(4) Scruggs owed Monsanto $6.3 million in damages for his unauthorized sale of its patented
soybean seeds.
7
Scruggs stated that Bost approached him and solicited all of his insurance business,
while Bost stated that Scruggs was the one who initially requested additional coverage.
4
observed his operations and conducted extensive interviews with him and his employees to
determine potential liability and possible coverage options.
¶6. Bost presented several coverage options to Scruggs via a written insurance proposal,
and Scruggs purchased some options and declined others. Scruggs alleges that he told Bost
that he wanted to be protected “in the event that anybody sued us over almost anything.”
Scruggs alleges that Bost assured him that he would be protected from all potential liabilities,
except for any that might arise out of the quality of seed that Scruggs sold to third parties.
¶7. Scruggs purchased a general liability policy and an umbrella policy, and the policies
first went into effect on April 1, 1999. Scruggs subsequently renewed his coverage in 2000.
Scruggs testified in his deposition in the state action that he did not mention patent
infringement to Bost or ask him about patent-infringement coverage prior to the issuance of
the policy in 1999, nor did he mention it before the renewal in 2000.
¶8. Sometime in early 2000, Scruggs noticed that some unidentified individuals had
bought the lot across from him and had installed surveillance cameras to record his farming
activities. Scruggs later learned that they were Monsanto employees after the Sheriff’s
Department arrested some of them for stalking. Scruggs believed that Monsanto was
investigating him because it “didn’t want [him] replanting seed that had their technology in
it,” and because it was unhappy with him planting Roundup Ready® seed. Scruggs was
aware that Monsanto did not want farmers replanting its patented seed, because he had read
ads to that effect in various farm publications.
¶9. As mentioned above, Monsanto filed suit against Scruggs on September 7, 2000.
Scruggs gave notice of the suit to Bost and Nowell and demanded that Farmland defend him.
5
Farmland denied coverage just before Christmas, and Scruggs (along with his various
agricultural entities and partners) then filed suit against Bost, Nowell, and Farmland in the
Lee County Circuit Court on March 30, 2001.8
¶10. In his Complaint, Scruggs alleged that Farmland’s denial of coverage was “outrageous
and malicious,” because Bost and Nowell had promised him that the policy would cover the
patent-infringement claims. Scruggs sought a declaratory judgment that Defendants were
required to both defend and indemnify him. Scruggs also sought actual and punitive
damages and attorneys’ fees.
¶11. Scruggs and Farmland engaged in discovery and ultimately filed cross-motions for
summary judgment in February and March 2002, respectively. After a hearing, the circuit
judge entered an opinion and order granting partial summary judgment for Scruggs. The
circuit judge found that Farmland owed Scruggs coverage under the property-damage,
personal-injury and advertising-injury sections of the policy. He further found that the
intentional-act exclusion did not apply to Scruggs’s conduct, because, while Scruggs may
have intentionally saved and replanted Monsanto’s seeds, he did not intentionally infringe
Monsanto’s patents, because he had a “reasonable belief” that he could lawfully replant the
seeds.
¶12. Finally, the judge found that Farmland had a duty to defend Scruggs going forward
in the federal action. The circuit judge issued a preliminary injunction in Scruggs’s favor and
8
Interestingly, Scruggs testified in his deposition that he renewed his policy with
Farmland for a second time in April 2001, even after Monsanto had sued him and after
Farmland had denied coverage. He also testified that he renewed his coverage despite Bost
reminding him that Farmland had determined that no patent-infringement coverage existed.
Bost testified to this conversation as well.
6
ordered Farmland to immediately pay all of the attorneys’ fees that Scruggs had accrued prior
to the summary judgment hearing, and to pay all of Scruggs’s attorneys’ fees accrued after
that date, within thirty days of receiving an invoice. Farmland filed a motion to vacate the
circuit judge’s opinion and order, which the judge denied.
¶13. Farmland appealed, and this Court reversed and rendered in a unanimous opinion
written by Justice Graves.9 Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d 714 (Miss.
2004). This Court began its analysis by stating:
Despite the technological complexity of the underlying facts, we only need to
address one basic legal issue to resolve this matter: does the Scrugges’
insurance policy cover the torts complained of in Monsanto’s lawsuit? After
a review of our jurisprudence and the language of the policy, we answer that
question in the negative.
Id. at 717. This Court then closely examined the bodily-injury, property-damage and
advertising-injury sections of the policy and determined that, based on the allegations in
Monsanto’s complaint, no coverage existed under any of those provisions. Id. at 718-21.
This Court also held that Scruggs’s actions were intentional and, as such, uninsurable:
“Furthermore, as a matter of public policy, people and businesses cannot purchase insurance
coverage for illegal activities.” Id. at 720 (citing Delta Pride Catfish, Inc. v. Home Ins. Co.,
697 So. 2d 400, 405 (Miss. 1997)).
¶14. This Court ultimately concluded that there were “three reasons why coverage must
be denied; first, the plain face of Monsanto’s complaint does not trigger the policy’s coverage
and duty to defend; secondly, the torts complained of were intentional; and last, public policy
9
Justice Diaz not participating.
7
compels us to refuse coverage for intentional and illegal actions.” Id. at 720. This Court
reversed the circuit court’s entry of partial summary judgment for Scruggs, reversed the
preliminary injunction requiring Farmland to pay Scruggs’s legal fees, and entered summary
judgement on Farmland’s behalf. Id. at 721.
3. The State Action Against Bost and Nowell
¶15. As mentioned above, Scruggs filed one Complaint against Farmland, Bost, and
Nowell in March 2001, but the case has proceeded in a bifurcated manner. Farmland and
Scruggs litigated the action initially, as the pressing issue was Farmland’s duty to defend.
Scruggs focused on his claims against Farmland until this Court reversed and rendered in
Farmland’s favor. After the federal jury awarded Monsanto $8.9 million in compensatory
damages in September 2010, Scruggs pursued his claims against Bost and Nowell, which had
remained virtually dormant since 2001.
¶16. Following this Court’s decision in Farmland, Scruggs amended his Complaint against
Bost and Nowell twice. In his Third Amended Complaint, Scruggs alleged that he was
entitled to a declaratory judgment that they had failed in their professional duties as insurance
salesmen; that they had failed to use that degree of care that a reasonably prudent insurance
agent would exercise; that they had negligently misrepresented to Scruggs that the policy
would cover him for anything except the quality of seed sold to third parties and that it
provided the broadest possible agricultural liability coverage available at that time; and that
they were contractually bound to Scruggs and had breached that contract.
¶17. Bost and Nowell filed a motion for summary judgment on February 28, 2011. They
argued that Scruggs could not possibly maintain his claims, as his conduct would never have
8
been insurable. So, they argued, because any policy that would have covered Scruggs in
spite of his intentional actions would have violated public policy, they could not possibly
have been liable for any sort of negligence or negligent misrepresentation.
¶18. Scruggs responded and argued, among other things, that Bost and Nowell could be
liable for professional negligence given their history with Scruggs, and that the jury verdict
against Scruggs was for the strict liability tort of patent infringement only. After a hearing,
the circuit judge granted Bost’s and Nowell’s motion for summary judgment. The circuit
judge found that:
According to the Mississippi Supreme Court, public policy does not allow
parties to purchase insurance coverage for intentional and illegal actions
[citing Farmland]. Here, there is no dispute that the actions Plaintiffs took
were intentional. Indeed as the Mississippi Supreme Court pointed out, “it
took a preliminary injunction by a federal court to stop the Scruggses from
using or selling the seeds.” [citing Farmland]. Plaintiffs have never denied
they acted intentionally; they simply assert their intentional acts were not
unlawful. Because it has long been undisputed that Plaintiffs acted
intentionally and that public policy does not allow individuals to insure against
intentional actions, this Court finds, in accordance with Farmland, that
Mississippi law prohibits insurance coverage for the conduct that resulted in
Monsanto’s claims. Accordingly, Defendants cannot be liable, contractually
or otherwise, for not obtaining and/or failing to offer such insurance to the
Plaintiffs.
¶19. As for Scruggs’s allegations regarding Bost’s and Nowell’s failure to advise, the
circuit judge found that no duty arose, “because neither Defendants nor Plaintif even
mentioned patent infringement coverage.” Finally, the circuit judge found that Bost and
Nowell could not be held liable for not realizing the potential for the patent-infringement suit,
because “the Mississippi Supreme court has held that request for ‘full coverage’ does not
require an insurance agent to provide coverage for all conceivable risks or perils.” The
9
circuit judge dismissed all of Scruggs’s claims with prejudice, and he now appeals to this
Court.
¶20. Scruggs posits six issues on appeal:
(1) Whether the Circuit Court erred when it granted summary judgment for the
professional insurance agent defendants, when there were genuine issues of
material fact[] regarding the insured’s claims of professional negligence,
negligent misrepresentation and failure to warn;
(2) Whether the Circuit Court erred in holding that public policy, to the extent
that it prohibits insurance coverage for intentional and illegal acts, would have
prevented Scruggs from acquiring any liability insurance coverage for the
strict liability tort of patent infringement;
(3) Whether the insurance agents have professional liability when they procure
and sell to the insured a liability insurance policy the terms of which cannot be
taken at face value, given the established rules regarding the construction and
application of the terms of a liability insurance policy;
(4) Whether the Circuit Court erred in holding that a professional insurance
agent who undertakes to advise a potential insured about his coverage needs
can escape liability with regard to a particular category of coverage by entirely
failing to mention it;
(5) Whether insurance agents have professional liability when they advise and
induce an insured to purchase a policy with the representation that such policy
will cover all of the insured’s liability coverage needs, if that policy in fact
fails to provide coverage for a significant category of the insured’s liability
risks; and
(6) Whether an insurance agent with a ten year professional relationship with
an insured, who solicits all of the insured’s insurance business, and who joins
insurance specialists in an on-site investigation of the insured’s commercial
and business activities, has a duty to bring the information thus gleaned to bear
in proposing comprehensive coverage to the insured.
We find that Scruggs’s arguments really boil down to one issue. So, despite the rather
tedious and lengthy litigation in this case to date, the question before this Court is simple:
10
Did the circuit judge properly grant summary judgment in favor of Bost and Nowell? We
find that he did.
STANDARD OF REVIEW
¶21. The standard of review in a summary judgment case is well known. Mississippi Rule
of Civil Procedure 56(c) allows summary judgment where there is no genuine issue of
material fact and the moving party is entitled to judgment as a matter of law. Conrad v.
Holder, 825 So. 2d 16, 18 (Miss. 2002). This Court will review a granted motion for
summary judgment de novo. Id. When conducting a de novo review, this Court must view
the evidence in the light most favorable to Scruggs, but if the evidence shows that Bost and
Nowell are entitled to judgment as a matter of law, summary judgment should be entered in
their favor. Id.
ANALYSIS
¶22. After careful consideration, we find that Scruggs’s actions were both intentional and
illegal,10 and therefore uninsurable as a matter of law. As a result, Bost and Nowell simply
cannot be liable for any form of negligence.11 In other words, it would not matter what
negligent misrepresentations or omissions Bost and Nowell might have committed if
Scruggs’s actions are uninsurable as a matter of law.
10
Black’s Law Dictionary defines “illegal” as “forbidden by law; unlawful.” See
Black’s Law Dictionary 815 (9th ed. 2009). Patent infringement is clearly prohibited by
federal law. See 35 U.S.C. § 271. We are not convinced by Scruggs’s argument that,
because one can be held strictly liable for patent infringement (i.e., because intent is not an
element), that somehow saves the act from being “unlawful.”
11
Scruggs does not make any sort of intentional misrepresentation and/or fraud claims
against Bost and Nowell.
11
¶23. “In general, it is against public policy for an insurance contract to provide coverage
for the intentional or willful misconduct of an insured.” Couch On Insurance § 101:22 (3d
ed. 2010). This Court had acknowledged that principle prior to its decision in Farmland in
Delta Pride Catfish, Inc. v. Home Insurance Company, 697 So. 2d 400 (Miss. 1997):
“Delta Pride cannot purchase insurance coverage for its intentional, illegal activities.
‘[People should not be allowed to insure themselves against acts prohibited by law.’” Id. at
405 (citing Graham Resources, Inc. v. Lexington Ins. Co., 625 So. 2d 716 (La. App. Ct.
1993)).
¶24. And in Farmland, this Court affirmed that principle unequivocally:
Furthermore, as a matter of public policy, people and businesses cannot
purchase insurance coverage for illegal activities. For we do not allow
corporations or persons to “insure themselves against acts prohibited by law.”
...
There are therefore three reasons why coverage must be denied; first, the plain
face of Monsanto’s complaint does not trigger the policy’s coverage and duty
to defend; secondly, the torts complained of were intentional; and last, public
policy compels us to refuse coverage for intentional and illegal actions.
Farmland, 886 So. 2d at 720-21 (citations omitted).
¶25. The evidence of Scruggs’s intentional conduct is ample throughout this record and the
federal court action. First, Scruggs himself admitted several times in his deposition that he
acted intentionally:
Q: I understand, but it wasn’t no [sic] accident in 1990 – in – in 2000, at
planting time, at their [sic] April, May, June beans, it wasn’t by accident that
Roundup Ready® technology beans went in the grain drills that ended up
being planted on your property was it?
A. No, sir.
Q: That was deliberate actions on your part, deliberately made, a conscious,
informed decision to plant Roundup Ready® soybeans?
...
12
A: Well, yeah, I – I planted the seed.
Q: You made a conscious, informed decision to plant the seed before actually
instructing your laborer to go plant it, correct?
A. Yes, sir.
Q: And I presume the same would apply as far as your cotton crop that same
year to the extent that whatever portion of it involved the Roundup Ready®
technology?
A: Yes, sir.
...
Q: Do you agree with this statement? [referring to the federal court opinion
granting Monsanto an injunction] Mr. Scruggs unqualifiedly testified that he
has never executed a license for the use of Monsanto’s gene technology; he
further – he further admits he was aware of the conditions under which
Monsanto licensed its technology to seed companies and farmers.
...
A: Yeah. I – I’ve never executed a license.
...
A: No, sir, I’ve never signed one.
Q: What about the next phrase? You were aware of the conditions under
which Monsanto licenses technology to seed companies and farmers.
A: Yes, sir, I was aware of that.
Second, District Judge Pepper found that Scruggs had acted intentionally:
In addition to the scientific evidence presented, Mitchell Scruggs admitted
during his testimony that much of his soybean and cotton crops were
Roundup® “resistant;” he further admitted to the use of Roundup® herbicide
on his crops.
...
There is evidence that defendants have unlicensed Roundup Ready® seed in
large quantities. Despite Mr. Scruggs’[s] protestations to the contrary, the
plaintiff presented considerable evidence that the defendants have engaged in
the sale of reconditioned seeds containing Monsanto’s patented gene
technology.
...
Monsanto is not obligated to afford defendants the opportunity to sell its
products. To force it to do so under the present circumstances would be to
reward the defendants for their willful infringement of the plaintiff’s patented
seed technology.
Monsanto Co. v. Scruggs, 249 F. Supp. 2d 746, 751, 760 (N.D. Miss. 2001).
13
¶26. Third, as mentioned above, the federal jury found that Scruggs had acted “wilfully.” 12
And finally, and perhaps most important for our discussion here, this Court previously found
that Scruggs had acted intentionally:
From the face of Monsanto’s complaint, only intentional torts are
alleged. In addition, the Scruggses’ pattern of conduct has been one of
intentional acts. Indeed, it took a preliminary injunction by a federal court to
stop the Struggles from using or selling the seeds. See Monsanto Co. v.
Scruggses, 249 F. Supp. 2d 746 (N.D. Miss.2001). The Scruggses never
disputed that the conduct was intentional, only that the effects were
unintended; in fact, they dispute there was any harm at all. They offer that
Monsanto’s claim of patent infringement and damage to trade reputation is
“utter nonsense, [since] the farmers saving Roundup Ready soybeans and
replanting them in future years is no more harmful to Monsanto’s slogans,
brand names and trade reputation th [an] the used car salesman damages Ford
Motor Co. by selling used Fords.”
That analogy does not fit the facts at hand. There is nothing illegal
about selling used cars, but the cars must not be stolen. The seeds at issue are
like a stolen Ford, for at the hearing for the preliminary injunction in federal
court “Scruggs also admitted that [he and the other defendants] never entered
into a commercial license for authorized use of the plaintiffs’ patented
biotechnology.” Scruggs, 249 F. Supp. 2d at 751. In the federal court the
Scruggses also contended in part that the Monsanto patents were invalid, that
there was patent misuse, and that there were antitrust violations. Id. at 752-54.
The district court dismissed these claims as “a charade.” Id. at 754.
The Scruggses may not like the consequences of their intentional
actions and may dispute the law that protects Monsanto against their actions,
but that does not mean their liability insurer must be made a party to such an
action. The reasonable and unambiguous insurance contract between the
Scruggses and Farmland excludes all intentional acts. Therefore, there is no
coverage under the “Bodily Injury and Property Damage Liability” section of
the policy.
Farmland, 886 So. 2d at 719-20 (emphasis added).
12
We note that this finding subsequently was set aside by Judge Mills in Monsanto
Co. v. Scruggs, 890 F. Supp. 2d 729 (N.D. Miss. 2012), in which he concluded that
Scruggs’s actions did not rise to the level of “objective recklessness” necessary for
imposition of treble damages. We discuss Judge Mills’s opinion further below.
14
¶27. There is one federal court opinion written by District Judge Michael Mills where he
finds that Scruggs did not act willfully. Monsanto Co. v. Scruggs, 890 F. Supp. 2d 729
(N.D. Miss. 2012). As expected, Scruggs relies heavily on this opinion. While it is true that
Judge Mills did ultimately set aside the jury’s finding of willfulness in the federal action, a
close reading of the opinion reveals that he did so only in light of the heightened federal
standard under which treble damages can be imposed:
[This court finds a certain degree of reprehensibility to Scruggs’[s] actions in
this case. At the same time, the court also finds, with regard to each of these
factors, mitigating factors which counsel against an award of treble damages.
Accordingly, even if the court were to limit its analysis solely to the Read
factors, it would still conclude (albeit more narrowly) that treble damages
should not be awarded in this case.
...
[The court finds that the unique legal and historical context in which this case
arose, in particular the prior lack of legal clarity regarding the patentability of
trait-bearing seeds, supports a conclusion that Scruggs did not “act[ ] despite
an objectively high likelihood that [his] actions constituted infringement of a
valid patent.” This court has already discussed at length above its reasons for
reaching this conclusion, and this issue is clearly one which a court is in a
better position to understand than a jury. Accordingly, while this court is
reluctant to overturn the jury’s findings of fact regarding a trial which it did
not witness, it concludes, in light of Bard, that the question of willfulness is
partially one of law. The court further concludes that Scruggs did not act with
objective recklessness in this case to support a finding of willfulness, since, at
the time of the infringement in the case, the law in this context had not been
definitively resolved.
Monsanto, 890 F. Supp. 2d at 740, 742 (citing Read Corp. v. Portec, 970 F .2d 816 (Fed.
Cir. 2012), abrogation recognized by Bard Peripheral Vascular, Inc. v. W.L. Gore and
Assocs., 670 F .3d 1171 (Fed. Cir. 2012)). In other words, Judge Mills’s opinion is not proof
of Scruggs’s lack of willfulness; rather it is only a finding that Scruggs’s conduct did not rise
to the level of “objective recklessness” required for treble damages to be imposed.
15
¶28. In sum, we find that Scruggs’s actions were intentional and illegal and therefore
uninsurable under Mississippi law. So Bost and Nowell cannot be held liable under any
negligence theory, as Scruggs’ actions simply were not insurable. In other words, even if
Bost and Nowell did have some duty to recognize Scruggs’s need for patent-infringement
insurance and failed to inform him that he needed it, they cannot be liable for that omission,
as insurance coverage for Scruggs’s intentional actions simply cannot exist in Mississippi as
a matter of law. Thus, the circuit court’s grant of summary judgment in Bost and Nowell’s
favor was correct, and we affirm.
CONCLUSION
¶29. Mississippi caselaw is clear that one’s intentional, illegal actions cannot be insured
as a matter of law. We find that Scruggs’s actions were intentional and therefore
uninsurable. Because his actions are uninsurable as a matter of law, we find that Bost and
Nowell cannot be liable for any alleged negligent misrepresentations or omissions, and we
affirm the judgment of the Lee County Circuit Court.
¶30. AFFIRMED.
WALLER, C.J., DICKINSON AND RANDOLPH, P.JJ., KITCHENS, PIERCE,
KING AND COLEMAN, JJ., CONCUR. CHANDLER, J., NOT PARTICIPATING.
16