                                    United States Court of Appeals,

                                              Fifth Circuit.

                                             No. 91–1857.

                             Phillip DAVENPORT, Jr., Plaintiff–Appellee,

                                                    v.

         ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Defendant–Appellant.

                                              Dec. 9, 1992.

Appeal from the United States District Court for the Southern District of Mississippi.

Before VAN GRAAFEILAND**, KING and EMILIO. GARZA, Circuit Judges.

          VAN GRAAFEILAND, Senior Circuit Judge:

          St. Paul Fire and Marine Insurance Company ("St. Paul") appeals from a judgment in favor

of Phillip Davenport, Jr. in the amount of $20,125,000. For the reasons that follow, we reverse the

judgment and remand to the district court with instructions to dismiss the complaint.

                                              THE FACTS

          On June 25, 1984, Judith Yearwood was undergoing relatively low-risk surgery at Methodist

Hospital in Hattiesburg, Mississippi. Dr. William Pace was the surgeon and appellee Davenport was

the nurse anesthetist. During the operation, something went tragically awry, and Mrs. Yearwood was

taken from the operating room in a coma from which she never recovered. Four days later, a hospital

nurse negligently dislodged Mrs. Yearwood's nasotracheal tube, and Mrs. Yearwood died the next

day. St. Paul insured the Hospital under a policy that also covered its employees, Davenport and the

negligent nurse, but did not cover Dr. Pace.

          Dr. Pace blamed Davenport for the operating room mishap, contending that Davenport

improperly supplied oxygen and failed to keep Dr. Pace informed of Mrs. Yearwood's deteriorating

condition. Davenport contended on the other hand that Dr. Pace negligently cut Mrs. Yearwood's

fallopian tube thus allowing CO2 to enter her blood stream and bring on a cardiac arrest. Davenport

also contended t hat some improper changes were made in the operative record to cover up what

   *
       Senior Circuit Judge of the Second Circuit, sitting by designation.
actually had occurred.1 After Mrs. Yearwood's death, a co-administrator of her estate sued

Davenport and the Hospital. St. Paul undertook their defense and assured both of them that they had

full and adequate coverage, a fact that Davenport never has disputed. Despite his lack of personal

exposure, however, Davenport expressed dissatisfaction with the attorney ret ained by St. Paul to

defend him and the Hospital. He contended that the attorney was not focusing sufficiently on the

conduct of the negligent nurse as the cause of Mrs. Yearwood's death. He also disagreed with the

attorney's tactic of not making pretrial disclosure of information the attorney had received concerning

alleged changes in the hospital record, the attorney preferring to save the information for use in his

cross-examination of Dr. Pace. Davenport and his personally retained attorney demanded the right

to have the attorney defend him at St. Paul's expense.

       St. Paul's policy, however, contained the following pertinent provisions:

       We'll defend any suit brought against you or any other protected person for covered claims,
       even if the suit is groundless or fraudulent. We have the right to investigate, negotiate and
       settle any suit or claim if we believe that is proper. We'll pay all costs of defending the suit,
       including interest on that part of any judgment that doesn't exceed the limit of coverage. But
       we won't defend a suit or pay a claim after the limit has been used up in paying judgments or
       settlements.

       We'll also pay all reasonable costs that you or any protected person incur at our request while
       helping us investigate or defend a claim or suit.

       If an accident or incident occurs that may involve this policy, you or any other protected
       person involved must ... [n]ot assume any financial obligation or pay out any money without
       our consent.

In order to pacify Davenport and secure his cooperation, St. Paul hired a second lawyer to represent

him. However, it refused to retain and pay the lawyer whom Davenport wanted.

       The case proceeded to trial with the bulk of the defense being handled by the two attorneys

retained by St. Paul, and Davenport's personally retained attorney playing only a minor role. The jury

returned a verdict of $150,000 against the Hospital but exonerated Davenport from liability. Instead

of rejoicing in his exoneration, Davenport brought this suit on November 12, 1986 to recover his

self-incurred expenses in preparing his defense and hiring his lawyer, plus $6 million for emotional


   1
    A more complete discussion of the surgical contretemps can be found in Shutze v. Pace, 557
So.2d 776 (Miss.1990).
distress and punitive damages based on St. Paul's alleged breach of contract, bad faith, etc., in

refusing to hire the lawyer selected by Davenport.

        In May of 1987, Davenport was discharged by the Hospital because of actions that were

"disruptive to the organization", "outbursts" with other employees and nurses, and

"employee/employer incompatibility." Witnesses from the Hospital and St. Paul testified that St. Paul

had nothing to do with the discharge, and there was no evidence to the contrary.

        Following Davenport's firing, he applied three times to St. Paul for personal insurance

coverage and was rejected on each occasion. St. Paul's stated reason for these rejections was that

its relations with Davenport were very adversarial and had deteriorated to such an extent that the

handling of any future claims would be very difficult.2 Davenport then broadened the claims made

in his pending action, assert ing that St. Paul was the only carrier in Mississippi writing individual

coverage for nurse anesthetists and that St. Paul's refusal to provide him with coverage handicapped

him in securing employment and was a malicious interference in his business. The evidence submitted

in support of Davenport's alleged difficulties in securing insurance and employment is far from

convincing. However, because the evidence is not dispositive of the issues before us, we see no need

to discuss it.

        The $20,125,000 judgment that Davenport secured is made up of the following elements:

        Failure to afford Davenport a defense         $     25,000

        Intentional interference with Davenport's business relations 100,000

        Infliction of emotional distress        5,000,000

        Punitive damages       15,000,000

        For convenience of discussion, we address St. Paul's obligation to defend and its obligation

to insure separately.

                                THE OBLIGATION TO DEFEND


   2
    Davenport concedes in his appellate brief that St. Paul "declined coverage only because of
Davenport's actions in the medical malpractice suit and his subsequent suit against St. Paul as a
result of the Yearwood litigation" and "because he was unhappy and any future claims handling
might be difficult." Brief at 46.
        The above-quoted provisions in St. Paul's policy are "customary provisions." See American

Home Assur. Co. v. Hermann's Warehouse Corp., 117 N.J. 1, 3–4, 563 A.2d 444 (1989). As stated

in 44 Am.Jur.2d Insurance § 1393 at 326:

               Clauses are usually found in policies of liability insurance giving the insurer the right
        to make such investigation, negotiation, and settlement of any claim or suit as it deems
        expedient. Such policies usually also contain a clause which prohibits the insured from
        voluntarily assuming any liability, settling any claims, incurring any expense, or interfering in
        any legal proceedings or negotiations for settlement, unless with the consent of the insurer.
        The purpose of such provision is to prevent collusion as well as to invest the insurer with the
        complete control and direction of the defense or compromise of suits or claims, and there is
        no doubt as to the validity of such provisions.

        It is a general rule of law, in Mississippi as elsewhere, that where an insurance contract is

plain and unambiguous, it cannot be rewritten by the court. See Interstate Life & Accident Co. v.

Matthews, 222 Miss. 821, 827, 77 So.2d 297 (1955). In accordance with our standard procedures,

see Ross v. Western Fidelity Ins. Co., 872 F.2d 665, 668 (5th Cir.1989), we have reviewed de novo

the above-quoted clauses from the St. Paul policy. We hold, as numerous other courts have done in

construing similar clauses, that they are unambiguous and give the insurer the right to assume control

of the defense of an action against the insured to the exclusion of the latter. American Casualty Co.

v. Timmons, 352 F.2d 563, 568–69 (6th Cir.1965); American Home Assur. Co. v. Hermann's

Warehouse Corp., supra, 117 N.J. at 5–6, 563 A.2d 444; Marginian v. Allstate Ins. Co., 18 Ohio

St.3d 345, 347, 481 N.E.2d 600 (1985); Louisiana Farm Supply Co. v. Federal Mut. Ins. Co., 409

S.W.2d 239, 240–41 (Mo.Ct.App.1966); Snyder v. National Union Indemn. Co., 65 F.2d 844, 845,

847 (10th Cir.1933), cert. denied, 291 U.S. 665, 54 S.Ct. 440, 78 L.Ed. 1056 (1934); 7C J.

Appleman, Insurance Law and Practice § 4681 (Berdal rev. 1979).

        As aptly put by one court, "[t]he obligation to defend the insured is not to be regarded simply

as a duty owed to the holder of the policy but also as an essential right which the insurance company

reserves to itself in order to protect itself against unwarranted liability claims." Podolsky v. Devinney,

281 F.Supp. 488, 499 (S.D.N.Y.1968). This court has said more succinctly that an insurer has "both

the right and the duty to defend suits against its insureds." State of Mississippi v. Richardson, 817

F.2d 1203, 1207 (5th Cir.1987). The district court's statement that the pertinent provisions in St.

Paul's policy were ambiguous and "can easily be interpreted to include coverage for an attorney
selected by the insured," is manifestly erroneous.

        The insurer's right to control the defense is at its strongest where, as here, the potential

liability is solely that of the insurer. Adequate coverage for the potential liability being conceded,

control by the carrier is virtually absolute, since the insured has no exposure whatever. St. Paul's

retained attorney explained this very carefully to Davenport's personal attorney in a letter, from which

we quote the following informative excerpts:

               However, as I expressed to you, in my opinion there is absolutely no conflict in the
       defense of the interests Methodist Hospital and Dick Davenport. In the first instance, there
       are no issues as to the existence of coverage and/or the adequacy of the amount of coverage.
       Accordingly, Dick Davenport can suffer absolutely no monetary loss by the payment of
       Judgment regardless of the outcome of the litigation. Secondly, the fortunes of the lawsuit
       as to both Defendants are inextricably bound to the fortunes and/or misfortunes of Dick
       Davenport's defense. In other words, unless we are successful in totally exonerating Dick
       Davenport, the lawsuit will be lost. Because of the doctrine of respondeat superior unless
       we're successful in cogently demonstrating to the jury that Dick Davenport did nothing wrong
       in the performance of the anesthesia services on June 25, 1984, the Methodist Hospital, the
       Co–Defendant, will be responsible in damages. Consequently, the Methodist Hospital has
       absolutely no interest to be served by attempting to point the finger at Dick Davenport's
       conduct on June 25. Rather, their exclusive interest lies in his exoneration.

               ....

               ... Seemingly, Mr. Westbrook [one of Davenport's personal attorneys] is of the
       opinion and has communicated to Mr. Davenport that, by pointing the finger to the second
       incident some benefit could somehow inure to Mr. Davenport's defense. As I discussed with
       you, that is simply not the case from a theoretical point of view, much less from a practical
       one. Assuming arguendo that the second incident contributed to Ms. Yearwood's ultimate
       demise, unless it could be proved and the jury believed that Ms. Yearwood would have fully
       recovered from the coma caused by the brain damage she suffered during the surgery on June
       25, in which Mr. Davenport was performing the anesthesia services, Mr. Davenport would
       not at all be insulated by the second incident. There is no reasonably possible scenario, in my
       opinion, whereby this second incident could be construed as a superseding intervening cause
       thereby insulating participants in the surgery of June 25, 1984 from the consequences of their
       negligence, if any.

               Rather, the second incident can only serve as a "red herring" for Plaintiff's counsel in
       an attempt to "bait and switch" i.e. talk about the unrefutable negligence occurring in the
       second incident in an attempt to bootstrap all the damages suffered from the June 25 surgery
       by the Plaintiff to that incident. From a medical point of view, the second incident made
       absolutely no contribution to the ultimate death of Judy Yearwood. Subsequent to the
       surgery on June 25, Judith Yearwood's EEG demonstrated a "burst suppression pattern"; in
       my opinion you will not find a competent neurologist who will render an opinion that there
       is even a reasonable possibility that a person will have any significant improvement with an
       EEG demo nstrating that type of pattern. Without any real question, from a clinical
       standpoint, Judith Yearwood was dead on June 25.

       The issue of control sometimes arises in cases where the insurer settles within the policy limits
a case that the insured, for some reason dehors the contract, does not want settled. The consensus

of the courts that have considered t his question is that, absent a policy rider to the contrary, such

settlement is the exclusive prerogative of the carrier. See, e.g., Jayakar v. North Detroit General

Hosp., 182 Mich.App. 108, 111–12, 451 N.W.2d 518 (1989); Feliberty v. Damon, 72 N.Y.2d 112,

116, 531 N.Y.S.2d 778, 527 N.E.2d 261 (1988); Mitchum v. Hudgens, 533 So.2d 194, 196–97

(Ala.1988); Commercial Union Assur. Companies v. Safeway Stores, Inc., 26 Cal.3d 912, 919, 164

Cal.Rptr. 709, 610 P.2d 1038 (1980); Savard v. Selby, 19 Ariz.App. 514, 517–18, 508 P.2d 773

(1973).

          Where coverage is full and complete, the same right that an insurer exercises in its settlement

negotiations are exercisable by it in its choice of counsel. "Because the company is footing the bill

for the defense, and will be obligated to pay any judgment rendered (if it does not settle the case), it

is clearly entitled to select the attorney and conduct the defense." Hartford Accident & Indemn. Co.

v. Foster, 528 So.2d 255, 269 (Miss.1988). "Such duty to defend, under the standard and commonly

used liability policies, gives the insurer the exclusive right to select defense counsel, as long as the

damages demanded are within the limits and if coverage has been accepted by the insurer." P.

Magarick, Excess Liability, Duties and Responsibilities of the Insurer, 1982 § 3.06 at 52. "If the

insurance policy pro vides complete coverage ..., no conflict of interest can exist, since the insurer

alone would ultimately be responsible for the entire judgment." A. Windt, Insurance Claims and

Disputes § 4.21 n. 176 (2d ed.1988).

          Even where, as here, a carrier insures codefendants, if their coverage is sufficient to relieve

each defendant of any possible personal liability and there are no cross-claims between the two

insureds that require separate representation, it is difficult to conceive of any conflict of interest that

would require separate legal representation. In any event, no such conflict exists in the instant case,

and the district court erred in permitting the jury to find otherwise.

           Assuming for the sake of argument only that Davenport was entitled to separate

representation, St. Paul had the clear contractual right to select the attorney who would represent

him. Davenport concedes that the lawyer selected by St. Paul represented him effectively and, of
course, successfully. Under the circumstances, Davenport's contention that he has a cause of action

against St. Paul because he was not given the right to tell the company which lawyer to hire, is

completely without merit. See, e.g., New York State Urban Dev. Corp. v. VSL Corp., 738 F.2d 61,

65–66 (2d Cir.1984); Suffolk County Patrolmen's Benevolent Ass'n v. County of Suffolk, 595

F.Supp. 1471, 1480–82 (E.D.N.Y.1984), aff'd, 751 F.2d 550 (2d Cir.1985); Goldberg v. American

Home Assur. Co., 80 A.D.2d 409, 411–12, 439 N.Y.S.2d 2 (N.Y.1981); Yeomans v. Allstate Ins.

Co., 130 N.J.Super. 48, 53–54, 324 A.2d 906 (1974); Hoffman v. Allstate Ins. Co., 21 Misc.2d 583,

584–86, 188 N.Y.S.2d 408 (N.Y.Sup.Ct.1959).

         In County of Suffolk, supra, the district court noted that, even in criminal cases where the

Constitution guarantees a defendant the right to counsel, the defendant is not guaranteed an absolute

right to counsel of his choice. Id. at 1482 n. 13. Where, as here, an insured's contract specifically

deprives him of that right and he has suffered no monetary loss, he has no cause to complain about

the carrier's exercise of the right he ceded to it.

         We hold that St. Paul fully complied with its contractual duty to defend Davenport and had

the clear contractual right to conduct that defense in the manner that it did. St. Paul and its

shareholders should not now be penalized simply because Davenport did not approve of his attorney's

litigation strategies.

                                  THE OBLIGATION TO INSURE

         A plaintiff who suggests the formation of a business relationship with a defendant, during

litigation in which he is accusing the defendant of egregious wrongdoing, possesses more than a

minimum degree of chutzpah, particularly where, as here, the accusations are completely without

merit. St. Paul would have been foolish indeed to risk further problems with Davenport by taking

him on as a personal insured, a relationship that did not theretofore exist. Clearly, there was no legal

requirement that it do so.

         Absent a statutory or constitutional mandate to the contrary, the general rule, in Mississippi

as elsewhere, is that everyone has the right to decide with whom he will do business. "The law of tort

is well established that an individual can refuse to enter into a contract or to maintain a business
relationship terminable at will for any reason sufficient to himself." Fulton v. Hecht, 580 F.2d 1243,

1250 (5th Cir.1978), cert. denied, 440 U.S. 981, 99 S.Ct. 1789, 60 L.Ed.2d 241 (1979). "Absolute

rights, including ... the right to enter or refuse to enter into contractual relations, may be exercised

without liability for interference without reference to one's motive as to any injury directly resulting

therefrom." 45 Am.Jur.2d Interference § 23. " "[T]he right to refrain from contracting is an absolute

right, which every man can exercise justly or unjustly, for a good purpose or for a bad purpose,

maliciously, in the popular sense of the term, or benevolently.' " Rothermel v. International Paper

Co., 163 N.J.Super. 235, 244, 394 A.2d 860 (App.Div.1978), cert. denied, 79 N.J. 487, 401 A.2d

242 (1979) (quoting Alfred W. Booth & Bro. v. Burgess, 72 N.J.Eq. 181, 190, 65 A. 226 (Ch.1906)).

"[I]t is immaterial by what motive one is prompted in the exercise of a clear legal right...." Lancaster

v. Hamburger, 70 Ohio St. 156, 164, 71 N.E. 289 (1904). "It is true that a person has the right to

refuse to have business relations with any person whomsoever, whether his refusal is the result of

caprice or malice, without laying himself liable to action therefor...." Standard Fruit & Steamship

Co. v. Putnam, 290 So.2d 612, 615 (Miss.1974) (quoting Wesley v. Native Lumber Co., 97 Miss.

814, 820, 53 So. 346 (1910)).

        The foregoing legal principle applies generally in the field of insurance law. See Appleman,

supra, § 7121; 1 Couch, Cyclopedia of Insurance Law § 7.9 (2d ed.1984); 43 Am.Jur.2d Insurance

§ 204. It applies specifically to insurance companies, such as St. Paul, who operate in Mississippi.

"In Mississippi, an insurer is under no duty to insure every applicant and is in fact free to state the

terms upon which insurance may be obtained." Gladney v. Paul Revere Life Ins. Co., 895 F.2d 238,

241 (5th Cir.1990); Interstate Life & Accident Ins. Co. v. Flanagan, 284 So.2d 33, 36 (Miss.1973);

Savage v. Prudential Life Ins. Co., 154 Miss. 89, 121 So. 487, 489 (1929).

        The district court clearly erred in instructing the jury, in reliance on Miss.Code Ann. §

83–5–33, that St. Paul had a general duty to refrain from unfair practices and it was for the jury to

determine whether St. Paul engaged in unfair practice in refusing to provide Davenport with

coverage. Section 83–5–33 is not applicable to the facts of the instant case. Moreover, it does not

provide for a private right of recovery. See Watson v. First Commonwealth Life Ins. Co., 686
F.Supp. 153, 155 (S.D.Miss.1988). In sum, we hold as a matter of law that St. Paul was within its

rights in refusing to issue a personal liability policy to Davenport as a named insured, and the jury

should not have been permitted to find otherwise.

       Because Davenport failed to establish any cause of action against St. Paul, he has no right to

recover punitive damages. See Vidrine v. Enger, 752 F.2d 107, 110 (5th Cir.1984).

       We reverse the judgment of the district court and remand to the district court with instructions

to dismiss the complaint.

       REVERSED.
