By William Moore
Daily Journal
JACKSON – The state’s highest court ruled that an insurance agent and insurance company were right to deny coverage to Lee County farmer Mitchell Scruggs.
“We find that Scruggs’ actions were intentional and illegal and therefore uninsurable under Mississippi law,” Mississippi Supreme Court Associate Justice Ann Lamar wrote in the decision handed down Thursday.
Seven other justices concurred with the decision that affirmed the lower court ruling.
Monsanto Company sued Scruggs and his farming business in federal court in fall 2000, saying Scruggs had intentionally saved soybean and cotton seeds that had been genetically engineered to be resistant to the herbicide Roundup.
Scruggs argued that it was a long accepted practice of farmers to save seeds from one crop to use the following year. He also noted that he never signed an infringement agreement with Monsanto, like the company required with most users of the special seeds. Monsanto countered that all of its advertising stated the seeds were for one season and farmers needed to sign a licensing agreement.
When sued, Scruggs asked insurance agent Greg Bost and Nowell Insurance to cover the costs of his defense in the Monsanto case. They refused, saying his general liability insurance did not cover patent infringement.
After a lengthy trial, the jury ruled Scruggs had infringed on Monsanto’s patents and awarded the company $8.9 million in compensatory damages in 2004.
Scruggs then sued Bost and Nowell, demanding they cover the legal fees and court costs. Lee County Circuit Court issued a summary judgment against Scruggs. He then appealed it to the Supreme Court, arguing in part that Bost and Nowell failed to advise him that he needed to purchase patent infringement insurance.
william.moore@journalinc.com