The Travelers Indemnity Company et al v. Forrest County et al

Filing 535

ORDER granting Zurich American Insurance Company and American Zurich Insurance Company's 406 Motion for Summary Judgment as to their commercial and general liability policies; and granting Zurich American Insurance Company's 408 Motion for Summary Judgment as to its excess policies. Signed by District Judge Keith Starrett on July 12, 2016 (dsl)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
THE TRAVELERS INDEMNITY
COMPANY, et al.
V.

PLAINTIFFS
CIVIL ACTION NO. 2:14-CV-22-KS-MTP

FORREST COUNTY, et al.

DEFENDANTS

MEMORANDUM OPINION AND ORDER
For the reasons below, the Court grants Zurich American Insurance Company
and American Zurich Insurance Company’s Motion for Summary Judgment [406] as
to their commercial and general liability policies and grants Zurich American
Insurance Company’s Motion for Summary Judgment [408] as to its excess policies.
I. BACKGROUND
This is a liability insurance coverage case arising from a civil rights lawsuit. The
Court previously discussed the case’s background. See Travelers v. Forrest County, No.
2:14-CV-22-KS-MTP, 2016 U.S. Dist. LEXIS 18288, at *6-*9 (S.D. Miss. Feb. 16, 2016);
Bivens v. Forrest County, No. 2:13-CV-8-KS-MTP, 2015 U.S. Dist. LEXIS 40602, at *3*10 (S.D. Miss. Mar. 30, 2015). On February 16, 2016, the Court granted [370] motions
for judgment on the pleadings filed by Zurich Specialties London Limited (“ZSLL”),
Gemini Insurance Company, and Steadfast Insurance Company. See Travelers, 2016
U.S. Dist. LEXIS 18288 at *31-*32. The Court ruled that the Bivens Plaintiffs1 had not
1

The Court will refer to the underlying plaintiffs – Defendants/CounterPlaintiffs Bivens, Ruffin, Dixon, Smith, and Strong – as the Bivens Plaintiffs. The
Court will refer to the underlying defendants – Defendants/Counter-Plaintiffs
Forrest County, City of Hattiesburg, Howell, Walters, Hopstein, Hart, Martin,

alleged any specific wrongful acts or omissions during the applicable policy periods,
and that ZSLL, Gemini, and Steadfast had no duty to defend or indemnify the Bivens
Defendants against the Bivens Plaintiffs’ claims.
The parties then filed numerous dispositive motions [258, 344, 346, 349, 351,
353, 354, 355, 359, 361, 363, 365], each addressing an insurer’s duty to defend and/or
indemnify the Bivens Defendants against the Bivens Plaintiffs’ claims. On April 20,
2016, the Bivens Plaintiffs filed a Third Amended Complaint. See Third Amended
Complaint, Bivens v. Forrest County, No. 2:13-CV-8-KS-MTP (S.D. Miss. Apr. 20,
2016), ECF No. 307. Anticipating that the parties would need to address the Bivens
Plaintiffs’ new allegations, the Court denied [401] all pending dispositive motions
without prejudice, and set a new motions deadline. Once again, the parties filed
numerous dispositive motions [402, 404, 406, 408, 410, 412, 414, 416, 418, 420, 422,
424, 426, 428, 430, 432, 434, 437].
The Bivens Plaintiffs and Defendants filed a Motion for Reconsideration [424]
of the Court’s order [370] granting the motions for judgment on the pleadings. On June
22, 2016, the Court granted [502] the motion for reconsideration in part and denied it
in part. See Travelers Ind. Co. v. Forrest County, No. 2:14-CV-22-KS-MTP, 2016 U.S.
Dist. LEXIS 81206 (S.D. Miss. June 22, 2016). Specifically, the Court granted the
motion with respect to its previous ruling that ZSLL had no duty to defend or

Brown, Taylor, Erwin, Moulds, James, and Clark – as the Bivens Defendants. The
Court may also refer to the Bivens Plaintiffs and Defendants collectively as the
Bivens Parties.
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indemnify the Bivens Defendants in the underlying case, but the Court denied the
motion in all other respects. Id. at *17. The Court held that the Bivens Plaintiffs had
alleged specific omissions and/or breaches of duty by the Bivens Defendants during the
ZSLL policy periods, id. at *14-*16, but that they had not alleged any specific wrongful
acts during the Gemini and Steadfast policy periods. Id. at *13. For these same
reasons, the Court granted [504] the Motions for Summary Judgment [410, 414] filed
by Steadfast and Gemini on June 23, 2016. See Travelers Ind. Co. v. Forrest County,
No. 2:14-CV-22-KS-MTP, 2016 U.S. Dist. LEXIS 81826 (S.D. Miss. June 23, 2016).
On June 29, 2016, the Court granted in part and denied in part [515] the Motion
for Summary Judgment [418] filed by The Travelers Indemnity Company, The
Travelers Indemnity Company of America, United States Fidelity & Guaranty
Company, and St. Paul Fire and Marine Insurance Company (collectively, “Travelers”),
and it granted the Bivens Parties’ Motion for Partial Summary Judgment [432] as to
Travelers. Travelers Ind. Co. v. Forrest County, No. 2:14-CV-22-KS-MTP, 2016 U.S.
Dist. LEXIS 84534 (S.D. Miss. June 29, 2016). Specifically, the Court held that
Travelers had no duty to defend or indemnify the Bivens Defendants under a variety
of general liability policies issued to Forrest County and the City of Hattiesburg, but
that it did have a duty to defend the Bivens Defendants under a law enforcement
liability policy issued to the Forrest County Board of Supervisors. Id. at *22.
On June 30, 2016, the Court granted in part and denied in part [516] Sirius
America Insurance Company’s Motion for Summary Judgment [402] and granted in
part and denied in part the Bivens Parties’ Motion for Partial Summary Judgment
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[422] as to Sirius America. Travelers Ind. Co. v. Forrest County, No. 2:14-CV-22-KSMTP, 2016 U.S. Dist. LEXIS 85399 (S.D. Miss. June 30, 2016). Specifically, the Court
held that Sirius America has a duty to defend the Bivens Defendants under a law
enforcement liability policy effective from November 13, 1984, to November 13, 1985,
but that it has no duty to defend or indemnify under a policy effective from October 7,
1984, to November 13, 1984. Id. at *11. The Court additionally held that Sirius
America has no duty to defend or indemnify any of the claims against the Bivens
Defendants Larry James, Jim Erwin, and Arlon Moulds. Id. at *14.
On July 1, 2016, the Court granted in part and denied in part Great American
E&S Insurance Company’s Motion for Summary Judgment [404] and denied the Bivens
Parties’ Motion for Partial Summary Judgment as to Great American. Travelers
Indem. Co. v. Forrest County, No. 2:14-CV-22-KS-MTP, 2016 U.S. Dist. LEXIS 86108
(S.D. Miss. July 1, 2016). Specifically, the Court found that Great American has no
duty to defend the Bivens Defendants in the underlying case, but the Court could not
determine whether it has a duty to indemnify under several law enforcement liability
policies issued to the Forrest County Sheriff’s Department from November 13, 1996,
to November 13, 2000. Id. at *19-*20. The Court now considers ZSLL’s Motion for
Summary Judgment [416].
On July 7, 2010, the Court granted in part and denied in part Zurich Specialties
London Limited’s Motion for Summary Judgment [416]. Travelers Indem. Co. v. Forrest
County, No. 2:14-CV-22, 2016 U.S. Dist. LEXIS 88095 (S.D. Miss. July 7, 2016).
Specifically, the Court granted the motion insofar as it found that ZSLL had no duty
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to defend or indemnify the Bivens Defendants against any claims asserted by the
Bivens Plaintiffs arising from wrongful actions or omissions committed by the following
individual Bivens Defendants: Gene Walters, Joe Hopstein, Henry Brown, Terry
Martin, Larry James, Jim Erwin, and Arlon Moulds. Id. at *20-*21. The Court also
granted the motion with respect to ZSLL’s duty to defend and/or indemnify the Bivens
Defendants under a ZSLL policy effective from November 13, 2001, to November 13,
2002. Id. at *10. The Court denied the motion in all other respects. Id. at *22.
On July 11, 2016, the Court granted in part and denied in part [530] the Motion
for Summary Judgment [420] filed by Scottsdale Insurance Company and denied the
Bivens Parties’ Motion for Partial Summary Judgment [428]. Specifically, the Court
found that Scottsdale has no duty to defend or indemnify the Bivens Defendants under
its public officials & employees liability policies, and that it has no duty to defend Arlon
Moulds and Ricky Rawls. However, the Court found that there exists a genuine dispute
of material fact as to the application of a notice provision in Scottsdale’s law
enforcement liability policy.
The Court now considers Zurich American Insurance Company (“Zurich
American”) and American Zurich Insurance Company’s (“American Zurich”) Motion for
Summary Judgment [406] as to their commercial and general liability policies and
Zurich American’s Motion for Summary Judgment [408] as to its excess policies.2
II. STANDARD OF REVIEW
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The Court may collectively refer to Zurich American and American Zurich as
“Zurich.”
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Rule 56 provides that “[t]he court shall grant summary judgment if the movant
shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” FED. R. CIV. P. 56(a); see also Sierra Club, Inc.
v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 138 (5th Cir. 2010). “An issue is
material if its resolution could affect the outcome of the action.” Sierra Club, Inc., 627
F.3d at 138. “An issue is ‘genuine’ if the evidence is sufficient for a reasonable jury to
return a verdict for the nonmoving party.” Cuadra v. Houston Indep. Sch. Dist., 626
F.3d 808, 812 (5th Cir. 2010).
The Court is not permitted to make credibility determinations or weigh the
evidence. Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009). When deciding
whether a genuine fact issue exists, “the court must view the facts and the inference
to be drawn therefrom in the light most favorable to the nonmoving party.” Sierra
Club, Inc., 627 F.3d at 138. However, “[c]onclusional allegations and denials,
speculation, improbable inferences, unsubstantiated assertions, and legalistic
argumentation do not adequately substitute for specific facts showing a genuine issue
for trial.” Oliver v. Scott, 276 F.3d 736, 744 (5th Cir. 2002).
III. MSJ AS TO CGL POLICIES [406]
Zurich American is the predecessor-in-interest of Valiant Insurance Company
(“Valiant”) and Northern Insurance Company of New York (“Northern”). Valiant issued
three commercial and general liability (“CGL”) policies to the Forrest County Board of
Supervisors: policy no. CMM 98658603, effective from February 18, 1999, to February

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18, 2000;3 policy no. CMM 98658603, effective from February 18, 2000, to February 18,
2001;4 and policy no. CMM 98658603, effective from February 18, 2001, to February
18, 2002.5 Northern issued CGL policy no. 98658603 to the Forrest County Board of
Supervisors, effective from February 18, 2002, to February 18, 2003.6 Finally,
American Zurich issued the following CGL policies to the Forrest County Board of
Supervisors: policy no. CPO 2826642-00, effective from February 18, 2003, to February
18, 2004;7 and policy no. CPO 2826642-01, effective from February 18, 2004, to
February 18, 2005.8 Zurich argues that none of these CGL policies require the insurer
to defend or indemnify the Bivens Defendants in the underlying case.
“Under Mississippi law, an insurer’s duties to defend and indemnify its insured
are distinct and separable duties requiring the use of different standards.” Estate of
Bradley v. Royal Surplus Lines Ins. Co., 647 F.3d 524, 529 (5th Cir. 2011). To
determine whether an insurance company has a duty to defend its policyholder against
3

Exhibit B to Motion for Summary Judgment as to CGL Policies, Travelers v.
Forrest County, No. 2:14-CV-22-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 406-2.
4

Exhibit C to Motion for Summary Judgment as to CGL Policies, Travelers v.
Forrest County, No. 2:14-CV-22-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 406-3.
5

Exhibit D to Motion for Summary Judgment as to CGL Policies, Travelers v.
Forrest County, No. 2:14-CV-22-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 406-4.
6

Exhibit E to Motion for Summary Judgment as to CGL Policies, Travelers v.
Forrest County, No. 2:14-CV-22-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 406-5.
7

Exhibit F to Motion for Summary Judgment as to CGL Policies, Travelers v.
Forrest County, No. 2:14-CV-22-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 406-6.
8

Exhibit G to Motion for Summary Judgment as to CGL Policies, Travelers v.
Forrest County, No. 2:14-CV-22-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 406-7.
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suit, the Court looks “at the facts alleged in the complaint, together with the policy.”
Auto. Ins. Co. of Hartford v. Lipscomb, 75 So. 3d 557, 559 (Miss. 2011). “[A]n insurer’s
duty to defend is triggered when the allegations of the complaint reasonably bring a
claim within the coverage of its policy.” Carl E. Woodward, LLC v. Acceptance Indem.
Ins. Co., 749 F.3d 395, 398 (5th Cir. 2014) (quoting Baker Donelson Bearman &
Caldwell, P.C. v. Muirhead, 920 So. 2d 440, 451 (Miss. 2006)) (punctuation omitted).
There is no duty to defend if “the alleged conduct falls outside the policy’s coverage,”
but if the insurer “becomes aware that the true facts, if established, present a claim
against the insured which potentially would be covered under the policy, the insurer
must provide a defense until it appears that the facts upon which liability is predicated
fall outside the policy’s coverage.” Lipscomb, 75 So. 3d at 559.
“Unlike the duty to defend, which can be determined at the beginning of the
lawsuit, an insurer’s duty to indemnify generally cannot be ascertained until the
completion of the litigation, when liability is established, if at all.” Bradley, 647 F.3d
at 531. “This is because, unlike the duty to defend, which turns on the pleadings and
the policy, the duty to indemnify turns on the actual facts giving rise to liability in the
underlying suit, and whether any damages caused by the insured and later proven at
trial are covered by the policy.” Id. Typically, though, “if there is no duty to defend,
there can be no duty to indemnify.” Evanston Ins. Co. v. Neshoba Cnty. Fair Ass’n, 442
F. Supp. 344, 346 n. 1 (S.D. Miss. 2006).
The Court’s ultimate goal in applying an insurance policy is to “render a fair
reading and interpretation of the policy by examining its express language and
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applying the ordinary and popular meaning to any undefined terms.” Corban v. United
Servs. Auto. Ass’n, 20 So. 3d 601, 609 (Miss. 2009). “In Mississippi, insurance policies
are contracts, and as such, they are to be enforced according to their provisions.” Id.
First, where an insurance policy is plain and unambiguous, a court must
construe that instrument, like other contracts, exactly as written. Second,
it reads the policy as a whole, thereby giving effect to all provisions.
Third, it must read an insurance policy more strongly against the party
drafting the policy and most favorably to the policy holder. Fourth, where
it deems the terms of an insurance policy ambiguous or doubtful, it must
interpret them most favorably to the insured and against the insurer.
Fifth, when an insurance policy is subject to two equally reasonable
interpretations, a court must adopt the one giving the greater indemnity
to the insured. Sixth, where it discerns no practical difficulty in making
the language of an insurance policy free from doubt, it must read any
doubtful provision against the insurer. Seventh, it must interpret terms
of insurance policies, particularly exclusion clauses, favorably to the
insured wherever reasonably possible. Finally, although ambiguities of
an insurance policy are construed against the insurer, a court must
refrain from altering or changing a policy where terms are unambiguous,
despite resulting hardship on the insured.
Nationwide Mut. Ins. Co. v. Lake Caroline, Inc., 515 F.3d 414, 419 (5th Cir. 2008); see
also Corban, 20 So. 3d at 609; Guidant Mut. Ins. Co. v. Indem. Ins. Co. of N. Am., 13
So. 3d 1270, 1281 (Miss. 2009); United States Fid. & Guar. Co. v. Martin, 998 So. 2d
956, 963 (Miss. 2008).
All of the CGL policies contain the following exclusion:
EXCLUSION – LAW ENFORCEMENT ACTIVITIES
***
This insurance does not apply to “bodily injury”, “property damage” or
“personal and advertising injury” arising out of any act or omission
resulting from law enforcement activities of your police department or
any of your other law enforcement agencies, including their agents or
“employees.”
9

Exhibit B [406-2], at 143; Exhibit C [406-3], at 160; Exhibit D [406-4], at 184; Exhibit
E [406-5], at 329; Exhibit F [406-6], at 122; Exhibit G [406-7], at 247.9
Zurich argues that the Bivens Plaintiffs’ alleged injuries arise from acts or
omissions committed during law enforcement activities, and, therefore, they are
excluded from coverage. In response, the Bivens Parties concede that, to the extent the
Court finds that the injuries alleged in the Third Amended Complaint were caused by
law enforcement activities, the CGL policies provide no coverage. In reply, Zurich
concedes that the Bivens Parties’ alleged injuries arise out of law enforcement
activities.
Therefore, the Court finds that the Bivens Plaintiffs’ alleged injuries arise from
law enforcement activities, and that the Zurich CGL policies’ law enforcement
exclusion applies. Zurich has no duty to defend or indemnify the Bivens Defendants
against the Bivens Plaintiffs’ claims under the CGL policies, and the Court grants
Zurich’s Motion for Summary Judgment [406].
IV. MSJ AS TO EXCESS POLICIES [408]
Zurich American issued the following excess policies to the Forrest County
Board of Supervisors: policy no. CC 2826495-00, effective from February 18, 2001, to
February 18, 2002;10 policy no. CC 2826495-01, effective from February 18, 2002, to

9

The language of the exclusion in Exhibits D [406-4] and E [406-5] varies
slightly from the other CGL policies, but the variance is irrelevant to the Court’s
analysis.
10

Exhibit B to Motion for Summary Judgment as to Excess Policies, Travelers
v. Forrest County, No. 2:14-CV-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 408-2.
10

February 18, 2003;11 policy no. CC 2826495-02, effective from February 18, 2003, to
February 18, 2004;12 and policy no. CC 2826495-03, effective from February 18, 2004,
to February 18, 2005.13 Each policy provides excess coverage over the Valiant,
Northern, or Zurich CGL policy for the corresponding policy period and provides: “Our
coverage applies excess of, but in the same manner and on the same basis as the
primary insurance shown on our Schedule A as applying to Coverage Part A-1. We
follow all the terms, conditions, definitions and exclusions of the primary insurance .
. . .” Exhibit B [408-2], at 14; Exhibit C [408-3], at 13; Exhibit D [408-4], at 14; Exhibit
E [408-5], at 13.
Therefore, because the Bivens Plaintiffs’ claims are excluded from coverage
under the primary CGL policies, as explained above, they are likewise excluded from
coverage under the excess policies. The Court grants Zurich American’s Motion for
Summary Judgment [408].
V. CONCLUSION
For these reasons, the Court grants the Motion for Summary Judgment [406]
filed by Zurich American Insurance Company and American Zurich Insurance
Company. Neither Zurich American nor American Zurich has a duty to defend and/or

11

Exhbit C to Motion for Summary Judgment as to Excess Policies, Travelers
v. Forrest County, No. 2:14-CV-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 408-3.
12

Exhibit D to Motion for Summary Judgment as to Excess Policies, Travelers
v. Forrest County, No. 2:14-CV-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 408-4.
13

Exhibit E to Motion for Summary Judgment as to Excess Policies, Travelers
v. Forrest County, No. 2:14-CV-KS-MTP (S.D. Miss. May 9, 2016), ECF No. 408-5.
11

indemnify the Bivens Defendants in the underlying suit under the following CGL
policies: Valiant Insurance Company policy no. CMM 98658603, effective from
February 18, 1999, to February 18, 2000; Valiant Insurance Company policy no. CMM
98658603, effective from February 18, 2000, to February 18, 2001; Valiant Insurance
Company policy no. CMM 98658603, effective from February 18, 2001, to February 18,
2002; Northern Insurance Company of New York policy no. 98658603, effective from
February 18, 2002, to February 18, 2003; American Zurich Insurance Company policy
no. CPO 2826642-00, effective from February 18, 2003, to February 18, 2004; and
American Zurich Insurance Company policy no. CPO 2826642-01, effective from
February 18, 2004, to February 18, 2005.
The Court also grants Zurich American Insurance Company’s Motion for
Summary Judgment [408] as to its excess policies. The following excess policies issued
to the Forrest County Board of Supervisors provide no coverage for the claims asserted
by the Bivens Plaintiffs in the underlying case: policy no. CC 2826495-00, effective from
February 18, 2001, to February 18, 2002; policy no. CC 2826495-01, effective from
February 18, 2002, to February 18, 2003; policy no. CC 2826495-02, effective from
February 18, 2003, to February 18, 2004; and policy no. CC 2826495-03, effective from
February 18, 2004, to February 18, 2005.
SO ORDERED AND ADJUDGED this 12th day of July, 2016.
s/Keith Starrett
UNITED STATES DISTRICT JUDGE

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