JACKSON — Almost a decade ago, Dr. Edsel Stewart, 73, of McComb thought he bought some life insurance to protect his children from estate taxes.
Specifically, Stewart thought he bought a $1 million life insurance policy from Prudential Life Insurance for a premium of $105,000 per year. Stewart thought he had given agent James Bateman of JMB Financial Group a check for an initial premium of $20,000 and his completed set of insurance documents on Aug. 31, 1999.
On one of those documents, Stewart wrote: “I believe this contract meets my insurance needs and financial objectives.”
But on Sept. 1, 1999, Dr. Stewart suffered a massive stroke. He lingered in a coma for about seven weeks and then died.
The Stewart family tried to collect on the policy, but Prudential balked — claiming that the $20,000 payment to Bateman was not a premium payment but a fee for estate planning. The company further argued that the policy had not been finalized.
Finally, the company argued that the policy Bateman gave Stewart was not the actual policy, but a counter offer.
Litigation ensued.
In 2006, a Hinds County jury found in favor of the Stewart estate and awarded them $36.4 million in actual and punitive damages.
But Prudential appealed the decision to the Mississippi Supreme Court. On Sept. 27, 2007, the state’s highest court rejected the jury’s decision and overturned the Stewart case.
“The evidence is insufficient to show a meeting of the minds as to whether an offer was made and accepted and what the terms of the insurance coverage were. Thus a contract was never formed,” former Justice Chuck Easley wrote in a 6-2 majority opinion.
The court denied the Stewart family’s motion for a rehearing in December 2007. That decision left the Stewart family liable for about $492,000 of Prudential’s court costs.
The insurance industry saw the case as a test of whether insurers can place conditions on their underwriting and claims issuance policies. Moreover, the company steadfastly argued that the three basic tests of a contract — offer, acceptance and consideration — were never met in the Stewart case.
But the Stewart family’s attorney, Alex Alston Jr. — who lost millions in potential attorney fees when the case was overturned — used the Stewart case as a springboard to launch a stunning attack on the state Supreme Court.
Prior to the 2008 judicial elections, Alston claimed that over “the past 4-1/2 years, according to my research, an astonishing 88 percent of all jury verdicts in favor of the wronged victims have been reversed by the state Supreme Court” and that over the same period “a plaintiff’s success rate in reversing a jury verdict for the defendant is an astonishing zero.”
But Harvard-educated Jackson attorney Brett Harvey quickly countered Alston’s criticism with some statistics of his own. He cited the 2007 edition of Luther Munford’s Mississippi Appellate Practice, which “indicates that plaintiffs do pretty well when defendants appeal summary judgment, prevailing in 72 percent of cases.”
The political battle over whether pro-business interests or the state’s trial lawyers will hold sway in judicial elections and the rhetorical debate continues. But the Stewart case clearly marked a watershed in public perception about tort reform and its impact in the judicial system.
Three of the nine justices who decided the case are no longer on the bench. Chief Justice Jim Smith, Justice Oliver Diaz and Easley were defeated in re-election bids. The “new” Supreme Court now has a motion in the Stewart case before them. Both sides of Mississippi’s “tort reform” debate are watching the fate of that motion.
