Watson v. Travelers Property Casualty Company of America
ORDER denying 18 Motion for Summary Judgment Signed by Chief District Judge Louis Guirola, Jr on 07/24/2014 (Guirola, Louis)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
CAUSE NO. 1:13CV257-LG-JMR
TRAVELERS PROPERTY CASUALTY
COMPANY OF AMERICA
MEMORANDUM OPINION AND ORDER DENYING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
BEFORE THE COURT is the Motion for Summary Judgment  filed by
Travelers Property Casualty Company of America. In its motion, Travelers seeks a
declaration validating a policy provision prohibiting coverage for uninsured
motorist claims that are also covered by workers’ compensation. The plaintiff,
Julian Watson, has filed a response in opposition to the Motion, and Travelers has
filed a reply. After reviewing the submissions of the parties, the record in this
matter, and the applicable law, the Court concludes that the policy provision at
issue is unenforceable under Mississippi law. Therefore, Travelers’ Motion for
Summary Judgment is denied.
On July 12, 2012, Watson was involved in an accident on Highway 49 that
was caused by a hit and run driver. The vehicle driven by Watson at the time of the
accident was insured by a Travelers policy that provides uninsured motorist
coverage. The Travelers policy was purchased by Watson’s employer, Gollott &
Sons Transfer and Storage, Inc. Since Watson was working at the time of the
accident, he has been receiving workers’ compensation benefits for the injuries he
suffered. Watson has filed the present lawsuit, seeking to recover uninsured
motorist coverage under the Travelers policy issued to Gollott. In its Motion for
Summary Judgment, Travelers relies on the following policy provision: “We will not
pay for any element of ‘loss’ if a person is entitled to receive payment for the same
element of ‘loss’ under any workers’ compensation, disability benefits or similar
law.” (Def.’s Mot., Ex. A at 38, ECF No. 18-1)
In Nationwide Mutual Insurance Co. v. Garriga, the Mississippi Supreme
Court addressed the issue of whether “[u]nder Mississippi law, an insurer can
contractually limit, credit or offset the amount of workers’ compensation benefits
received by its insured to the extent such uninsured motorist coverage exceeds the
statutory minimum required.” Nationwide Mut. Ins. Co. v. Garriga, 636 So. 2d 658,
661 (Miss. 1994). Garriga was a Gulfport Police Officer who was injured in an
automobile accident that was caused by an underinsured motorist. Id. at 660.
Garriga had purchased liability policies that provided uninsured motorist coverage
for each of his two personal vehicles in the amount of $25,000. Id. Garriga had
received workers’ compensation benefits for his injuries, because he was on duty at
the time of the accident. Id. Nationwide, Garriga’s uninsured motorist carrier,
attempted to invoke a policy provision that would reduce his coverage to the extent
he received workers’ compensation benefits. Id. at 661. Nationwide also argued
that Garriga would receive a windfall if the Court held that the clause was
unenforceable, because the parties agreed that Garriga suffered $50,000 in
damages, and he had already received that amount.1 Id.
The Garriga court characterized the question presented as one of statutory
interpretation, not policy interpretation. Id. at 664. The Court, after reviewing the
language of the uninsured motorist statute,2 held that “the minimum required
coverage which may not be offset by clauses such as that here involved is the
coverage that the insured chooses up to that amount equal to the liability amount
acquired.” Id. In other words, if an insured chooses uninsured motorist coverage
that is equal to or less than the amount of liability insurance purchased, the
uninsured motorist coverage cannot be offset as a matter of law. See id. The court
reasoned that the statute provides “an option given the insured to increase
coverage, over which the insurer has no control other than refusal to increase bodily
injury liability limits.” Id. (emphasis added).
In the present case, Travelers argues that the Garriga case is
distinguishable, because the plaintiff in Garriga was a Class I insured, while
Garriga received $25,000 in workers’ compensation coverage, and $10,000
from the carrier that insured the underinsured motorist. Nationwide had also
already paid $15,000 in underinsured motorist coverage to Garriga, but it argued
that it was not required to pay any additional amounts due to the workers’
compensation reduction clause in the policies Garriga purchased.
The uninsured motorist statute provides, in part, “[A]t the option of the
insured, the uninsured motorist limits may be increased to limits not to exceed
those provided in the policy of bodily injury liability insurance of the insured or
such lesser limits as the insured elects to carry over the minimum requirement set
forth by this section.” Miss. Code Ann. § 83-11-101(1).
Watson is a Class II insured. Travelers contends that the holding in Meyers v.
American States Insurance Co., 914 So. 2d 669 (Miss. 2005), supports its argument
for this distinction. In Meyers, the court explained that the following are included
in Class I: “the named insured, and residents of the same household, his spouse and
relatives of either, while in a motor vehicle or otherwise.” Id. at 674 (¶15). Class II
includes “any person who uses, with the consent, expressed or implied, of the named
insured, the motor vehicle to which the policy applies.” Id. “The coverage afforded
Class I insureds extends to all circumstances when a member of the first class is
injured by an uninsured motorist,” while a Class II individual “is only covered
because he or she is in the covered automobile.” Id. at 674 (¶16). An employee
driving his employer’s vehicle is a Class II insured with regard to his employer’s
policy. Id. at 676 (¶23). The Meyers court held that Class II insureds are only
entitled to the uninsured motorist coverage applicable to the vehicle in which they
are traveling at the time of the accident; they are not permitted to stack the
uninsured motorist coverage applicable to all of the vehicles insured under the
employer’s policy. Id. at 674 (¶¶15-16). Class I insureds, on the other hand, are
permitted to stack coverage. Id.
Although the Meyers decision did not address the enforceability of workers’
compensation offset provisions, Travelers argues that the Class I and II distinctions
discussed in the Meyers decision provide support for its argument that offset
provisions are enforceable as to Class II insureds like Watson but not as to Class I
insureds like Garriga.3 The Court finds no room in the Garriga decision for such a
distinction, given the Court’s clear and unequivocal holding – “The correct
interpretation of the statutory scheme as it developed and in its present form is that
carriers are commanded by statute to provide coverage up to the amount of liability
insurance purchased where the insured so desires and cannot reduce this amount
by exception of the type here involved.” Garriga, 636 So. 2d at 665.
Furthermore, it should be noted that the distinction between Class I and
Class II insureds is derived from the fact that Class I insureds are insured “while in
a motor vehicle or otherwise.” See Miss. Code Ann. § 83-11-103(b) (emphasis added).
Meanwhile, a Class II insured is only entitled to the coverage purchased on the
vehicle he was occupying at the time of the accident. Meyers, 914 So. 2d at 674
(¶¶15-16). For stacking, this distinction is important, because stacking permits an
insured to receive coverage that was purchased on vehicles that the insured was not
occupying at the time of the accident. In the present case, there is no justification
for distinguishing between Class I and Class II insureds. Watson is only seeking
the coverage provided on the vehicle he occupied, which is permissible under
Travelers also argues that the Garriga case is distinguishable from the
present case, because there was no danger of a double recovery for Garriga, while
there is such a danger here. Travelers’ argument is not persuasive. As previously
Garriga was a Class I insured, because he was the named insured on his
personal policies. His employer had not purchased uninsured motorist coverage.
explained, when the Supreme Court’s opinion was rendered, Garriga had already
received $50,000, and it was agreed that his damages totaled $50,000. The parties
were disputing whether Nationwide was obligated to pay more. Nationwide, like
Travelers, had argued that there was a danger that Garriga would receive a
windfall if the offset or reduction clause was held unenforceable. In response to this
argument, the court explained:
The reduction clause, however, is so broad, that even if Garriga had
$100,000 in damages his insurance liability would only pay the policy
limit minus workers’ compensation payments. Under the reduction
clause Nationwide will always reduce the $50,000 policy limit if
workers’ compensation has been paid, no matter the ultimate damages
suffered. In fact, if Garriga had received $50,000 in workers’
compensation, this clause would act to deny him any recovery, even
the $10,000 statutory minimum.
Garriga, 636 So. 2d at 661. The clause in the Travelers policy is likewise overly
broad. In fact, it appears that Travelers is arguing that it does not owe Watson any
uninsured motorist coverage, not even the $25,000 statutory minimum.4 As a
result, the Garriga decision is not distinguishable on this basis. The offset
provision in the Travelers policy is unenforceable, and the Motion for Summary
Judgment must be denied.
IT IS, THEREFORE, ORDERED AND ADJUDGED that the Motion for
Summary Judgment  filed by Travelers Property Casualty Company of America
At the time of the Garriga decision, the statutory minimum coverage was
$10,000, but now the minimum is $25,000. See Miss. Code Ann. § 83-11-101(1);
Miss. Code. Ann. § 63-15-43.
SO ORDERED AND ADJUDGED this the 24th day of July, 2014.
Louis Guirola, Jr.
LOUIS GUIROLA, JR.
CHIEF U.S. DISTRICT JUDGE
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