Isom v. Valley Forge Insurance Company et al

Filing 118

ORDER granting 82 Motion for Summary Judgment. Plaintiff's claims against Insurers will be dismissed with prejudice. Granting 85 Motion to Strike Ratliff ; granting 87 Motion to Strike Caniglia ; granting 89 Motion for Summary Judgment. Plaintiff's claim against Gathings will be dismissed with prejudice. Denying 91 Motion for Partial Summary Judgment. Signed by District Judge Keith Starrett on 12-13-16 (dtj)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
EASTERN DIVISION
JONATHAN M. ISOM
V.

PLAINTIFF
CIVIL ACTION NO. 2:16-CV-109-KS-MTP

VALLEY FORGE INSURANCE COMPANY,
TRANSPORTATION INSURANCE COMPANY,
CNA FINANCIAL CORPORATION, and
GATHING INSURANCE SERVICES, LLC

DEFENDANTS

MEMORANDUM OPINION AND ORDER
This matter is before the Court on the Motion to Strike Rebekah Ratliff (“Motion to Strike
Ratliff”) [85], Motion to Strike Dennis Caniglia (“Motion to Strike Caniglia”) [87], and Motion for
Summary Judgment [82] filed by Defendants Valley Forge Insurance Company (“Valley Forge”)
and Transportation Insurance Company (“Transportation”) (collectively “Insurers”), the Motion for
Summary Judgment [89] filed by Defendant Gathings Insurance Services, LLC (“Gathings”,)1 and
the Motion for Partial Summary Judgment [91] filed by Plaintiff Jonathan M. Isom (“Plaintiff”).
After considering the submissions of the parties, the record, and the applicable law, the Court finds
the following:
1.

the Motion to Strike Ratliff [85] is well taken and should be granted;

2.

the Motion to Strike Caniglia [87] is well taken and should be granted;

3.

Insurers’ Motion for Summery Judgment [82] is well taken and should be granted;

4.

Gathings’ Motion for Summary Judgment [89] is well taken and should be granted;
and

1

Incorrectly labeled “Gathering Insurance Services, LLC” by Plaintiff.

5.

Plaintiff’s Motion for Partial Summary Judgment [91] is not well taken and should
be denied.
I. BACKGROUND

On January 4, 2016, Plaintiff filed this action in the Circuit Court of the First Judicial District
of Hinds County, Mississippi. On February 3, 2016, Insurers removed the action to this Court
before Gathings was served with process. Gathing was served on April 15, 2016. On July 18, 2016,
CNA Financial Corporation was dismissed from the case for failure to serve process.
This action centers around a lawsuit filed in this court on December 23, 2013, styled Isom
v. Premier Orthopedic & Sports Medicine, et al., Civil Action No. 2:13-CV-278-KS-MTP (the
“Underlying Suit”). In the Underlying Suit, Plaintiff brought racial discrimination claims against
Premier Orthopedic & Sports Medicine (“Premier”) and Dr. Thomas B. Baylis (“Baylis”), the CEO
of Premier. In the Underlying Complaint [82-1], Plaintiff claimed that Premier and Baylis
discriminated against him based on race in violation of Title VII through Baylis’ refusal to work
with him when they were both on staff at Wesley Medical Center (“Wesley”). Premier and Baylis
made a claim to Insurers, with whom they had insurance policies providing Employment Practices
Liability Coverage and the Businessowners Liability Coverage. These policies were procured by
Premier and Baylis through Gathings. Insurers ultimately found that they were not obligated to
defend or indemnify under these policies, as the claims brought by Plaintiff were not covered under
the policy language.
In September 2015, a Judgment by Consent [1-4] was entered in the Underlying Suit in the
amount of $4,000,000, and parties entered into a Covenant Not to Execute and/or Enroll Judgment
and Assignment [1-3], through which Plaintiff agreed not to execute the judgment against Premier

2

or Baylis, and Premier and Baylis assigned all of their claims against Insurers in connection to the
Underlying Suit to Plaintiff.
II. MOTIONS TO STRIKE [85][87]
In their Motion to Strike Ratliff [85] and their Motion to Strike Caniglia [87], Insurers argue
that the opinions of Rebekah Ratliff (“Ratliff”) and Dennis Caniglia (“Caniglia”) are inadmissible
legal conclusions because they impermissibly analyze coverage under the policies and opine as to
whether Insurers acted in bad faith.
Although Federal Rule of Evidence 704(a) does permit expert opinion testimony to embrace
an ultimate issue, it “does not allow a witness to give legal conclusions.” United States v. Izydore,
167 F.3d 213, 218 (5th Cir. 1999) (citing Owen v. Kerr-McGee Corp., 698 F.2d 236, 240 (5th Cir.
1983)). The Fifth Circuit has held that the interpretation of policy coverage and the determination
of whether an insurer acted in bad faith are questions of law that the court must decide. See
Broussard v. State Farm Fire Cas. Co., 523 F.3d 618, 628 (5th Cir. 2008) (quoting U.S. Fid. &
Guar. Co. v. Wigginton, 964 F.2d 487, 492 (5th Cir. 1992) (holding that whether an insurer acted
in bad faith “is an issue of law for the court”); Amica Mut. Ins. Co. v. Moak, 55 F.3d 1093, 1096 n.5
(5th Cir. 1995) (stating that, because interpretation of contract is a question of law, any reliance on
expert testimony opining on coverage under an insurance policy was misplaced). The only relevant
opinions2 given by Ratliff is that Insurers “improperly disclaimed coverage and acted in bad faith.”
(Ratliff Report [85-1] at p. 14.) The only opinion given by Caniglia is that “there are at least two
areas where coverage exist” under the policies. (Caniglia Report [87-1] at p. 5.) Because these

2

She also gives an opinion as to the bad faith of CNA Financial Corporation, who has been
dismissed from this case for failure to serve process.
3

opinions address issues which are questions of law, they are legal conclusions and must be excluded.
Therefore, the Motion to Strike Ratliff [85] and the Motion to Strike Caniglia [87] will be granted.
III. MOTIONS FOR SUMMARY JUDGMENT [82][89][91]
A.

Standard of Review

Federal Rule of Civil Procedure 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). “Where the burden of production at trial
ultimately rests on the nonmovant, the movant must merely demonstrate an absence of evidentiary
support in the record for the nonmovant’s case.” Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808,
812 (5th Cir. 2010) (citation and internal quotation marks omitted). The nonmovant must then
“come forward with specific facts showing that there is a genuine issue for trial.” Id. “An issue is
material if its resolution could affect the outcome of the action.” Sierra Club, Inc. v. Sandy Creek
Energy Assocs., L.P., 627 F.3d 134, 138 (5th Cir. 2010) (quoting Daniels v. City of Arlington, Tex.,
246 F.3d 500, 502 (5th Cir. 2001)). “An issue is ‘genuine’ if the evidence is sufficient for a
reasonable [fact-finder] to return a verdict for the nonmoving party.” Cuadra, 626 F.3d at 812
(citation omitted).
The Court is not permitted to make credibility determinations or weigh the evidence. Deville
v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009) (citing Turner v. Baylor Richardson Med. Ctr., 476
F.3d 337, 343 (5th Cir. 2007)). When deciding whether a genuine fact issue exists, “the court must
view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving
party.” Sierra Club, 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
4

(5th Cir. 2002) (citation omitted). Summary judgment is mandatory “against a party who fails to
make a showing sufficient to establish the existence of an element essential to that party’s case, and
on which that party will bear the burden of proof at trial.” Brown v. Offshore Specialty Fabricators,
Inc., 663 F.3d 759, 766 (5th Cir. 2011) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106
S. Ct. 2548, 91 L. Ed. 2d 265 (1986)).
B.

Insurers’ Motion for Summary Judgment [82]

Plaintiff brings a claim of breach of contract against Insurers for breaching their duty to
defend and indemnify under the policies and a claim of breach implied covenant of good faith and
fair dealing based on this breach. Insurers contend that they are entitled to summary judgment as
to these claims. They argue there was no breach of contract because the claims in the underlying
suit were not covered by any policy issued by them, and that, because there was no breach of
contract, there can be no breach of implied covenant of good faith and fair dealing.
Insurers issued two types of coverage to Premier relevant to this suit,3 the Employment
Practices Liability Coverage and the Businessowners Liability Coverage.4 Plaintiff argues that
Insurers had a duty to defend and indemnify Premier and Baylis under both of these coverages.
1.

Employment Practices Liability Coverage

The Employment Practices Liability Coverage covered employment claims brought “by or
on behalf of a natural person who is an ‘employee’ or applicant for employment.” (Valley Forge
Policy [82-2] at p. 126; Transportation Policy [82-3] at p. 127.) An employee is defined by both

3

Valley Forge initially issued them for the policy period of December 5, 2011, through
December 5, 2012, and Transportation renewed them for the policy period of December 5, 2012,
through December 5, 2013.
4

The umbrella coverage referenced by Plaintiff was issued by Continental Casualty
Company, who is not a defendant in this case. (See Continental Umbrella Policy [82-8].)
5

policies to be “all of the [insured’s] past, present or future full-time or part-time employees,
including seasonal and temporary employees and employees leased or loaned to you” but
specifically excludes independent contractors. (Valley Forge Policy [82-2] at p. 126; Transportation
Policy [82-3] at p. 127.)
In the Underlying Complaint [82-1], Plaintiff never alleges that he was an employee of
Premier or Baylis and never alleges that he was leased or loaned to them as an employee. Rather,
he states that he is a “contract employee” of Wesley and was “assigned” by Wesley to provide
anesthesiology services for procedures done at Wesley by Baylis, who was also on staff there. (See
Underlying Complaint [82-1] at p. 3.) Nothing in the Underlying Complaint [82-1] suggests that
Premier or Baylis employed Plaintiff or that Wesley formally loaned him to them. From the face
of the Underlying Complaint [82-1], it appears that Plaintiff and Baylis were both staff physicians
at Wesley and were merely assigned to work together. Furthermore, after Insurers investigated the
claim under the Employment Practices Liability Coverage and determined there was no coverage,
Premier and Baylis verified that Plaintiff was never an employee.5 (See Claim Excerpts [106-6] at
p. 59.) Additionally, Plaintiff himself has admitted in the course of the current litigation that he is
not nor has he ever been an employee of Premier or Baylis. (See Admissions to Gathing [82-5] at
p. 3; Admissions to Insurers [82-4] at p. 3.)
Because it is indisputable that Plaintiff was never employed by Premier or Baylis, Insurers
properly denied Premier and Baylis’ claim under the Employment Practices Liability Coverage.

2.

5

Businessowners Liability Coverage

Prior to their investigation, Insurers had been under the impression that Plaintiff was an
employee of Premier and Baylis.
6

Plaintiff argues that coverage existed under the Businessowners Liability Coverage because
it covered claims of slander and false light invasion of privacy, both of which he contends were
brought by the factual allegations in the Underlying Complaint [82-1] even though they were not
specifically pleaded.6 This contention is based on one sentence of the Underlying Complaint [82-1],
which alleges that Baylis “on one occasion made a flagrantly derogatory comment to DR. ISOM
which was witnessed by several members of the surgical staff.” The Court is unsure how the
Insurers were meant to connect this sentence with slander or false light invasion of privacy, neither
of which were specifically pleaded, when there are no allegations in the Underlying Complaint [821] that the comment was a false statement, that it would be “highly offensive to a reasonable
person,” or that it satisfied any other element of either of the claims. See Bros. v. Winstead, 129
So.3d 906, 928 (Miss. 2014) (outlining the elements of slander); Cook v. Mardi Gras Casino Corp.,
697 So.2d 378, 382 (Miss. 1997) (defining false light invasion of privacy). In fact, Insurers
investigated this comment before denying coverage and found that it involved Baylis calling
Plaintiff “a piece of s***.” (Claim Excerpts [106-7] at p. 10.) This type of comment does not
amount to slander or false light invasion of privacy because it does not “convey any factual
assertion, but is rather ‘the sort of loose, figurative or hyperbolic which would negate the
impression’ that a factual statement was being made.”7 Farah v. Esquire Magazine, 736 F.3d 528,
540 (D.C. Cir. 2013) (quoting Milkovich v. Lorain Journal Co., 497 U.S. 1, 21, 110 S. Ct. 2695, 111

6

Under Mississippi law, the duty to defend extends to those instances where the insurer is
“presented with extrinsic facts, of which the insurer has knowledge or could obtain knowledge
by means of a reasonable investigation, that trigger coverage under the policy” Nationwide Mut.
Ins. Co. v. Lake Caroline, Inc., 515 F.3d 14, 418 (5th Cir. 2008) (citations omitted).
7

The Court need not decide whether these claims were properly excluded from coverage as
“intentional acts” because these claims were not brought in the Underlying Suit.
7

L.Ed.2d 1 (1990)). The only claims brought in the Underlying Complaint [82-1], even accounting
for all claims not explicitly stated and which could be inferred from the factual allegations, were
employment discrimination claims.

Therefore, coverage was properly denied under the

Businessowners Liability Coverage of the policies.
Because no coverage for the claims in the Underlying Complaint [82-1] existed under either
the Employment Practices Liability Coverage or the Businessowners Liability Coverage, Insurers
did not breach the terms of the policies by not defending or indemnifying Premier or Baylis.
Insurers’ Motion for Summary Judgment [82] must therefore be granted as to Plaintiff’s breach of
contract claim, and it will be dismissed with prejudice.
Furthermore, because the only other claim against Insurers, the breach of implied good faith
and fair dealing, is premised on a breach of contract, the Motion for Summary Judgment [82] will
be granted as to it as well, and it will also be dismissed with prejudice. See Daniels v. Parker &
Assocs., Inc., 99 So.3d 797, 801 (Miss. Ct. App. 2012) (“[T]o have a breach of the duty of implied
good faith and fair dealing there must first be an existing contract and then a breach of that
contract.”).
C.

Gathings’ Motion for Summary Judgment [89]

In the event that the Court finds that the policies do not cover the claims in the Underlying
Suit, which it does, Plaintiff brings a claim of negligence against Gathings for failure to procure
coverage.8 Under Mississippi law, if a reading of the insurance policy would make it clear that a
denied claim was not covered, and if the plaintiff had fair notice of the policy terms, an insurance

8

It is disputed as to whether Premier and Baylis’ assignment actually covered claims against
Gathings. However, since the negligent procurement claim necessarily fails as a matter of law
regardless, the Court need not address this issue.
8

agent is not liable for a negligent failure to procure claim. See Mladineo v. Schmidt, 52 So.3d 1154,
1164 (Miss. 2010). This is true even if the insurance agent did breach his duty to procure the
requested coverage. Id. Furthermore, the Mississippi Supreme Court has held that the policy itself
constitutes notice of its included terms and that silent acceptance of an insurance policy binds the
insured to the clear policy terms. Id. (quoting Rosenstock v. Miss. Home Ins. Co., 35 So. 309, 311
(1903)).
Here, the only claims brought in the Underlying Complaint [82-1] were employment
discrimination claims brought by a non-employee, and the policies clearly do not cover any type of
employment claims brought by non-employees. (See Valley Forge Policy [82-2] at p. 126;
Transportation Policy [82-3] at p. 127.) Therefore, because the language is clear that the
Employment Practices Liability Coverage only covers claims brought by employees as defined
therein and because the policies constituted notice of these terms, Gathings cannot be liable for a
negligent procurement claim.
Plaintiff attempts to argue that the rule from Mladineo does not apply, quoting language from
that case stating that, while plaintiffs were “barred from arguing that they did not know what was
in the policy,” the court did not say that they were “barred from arguing that [the insurance agent’s]
alleged negligence caused them to underestimate the coverage they would need.” 52 So.3d at 1163.
However, Plaintiff has presented no evidence that Gathings caused Premier and Baylis to
underestimate the coverage they needed. In fact, Baylis stated in his affidavit that he requested and
understood that he was getting full coverage for his business and made no statement concerning any
underestimation of needed coverage. (See Baylis Affidavit [91-8].) A reading of the policies would
have shown that employment claims brought by non-employees were not covered. As such, Baylis
is barred from arguing he did not know of this limitation to the coverage.
9

Therefore, as Premier and Baylis had notice that employment claims by non-employees were
not covered by the policies, Gathings’ Motion for Summary Judgment [89] must be granted, and
the claim against it dismissed with prejudice.

D.

Plaintiff’s Motion for Partial Summary Judgment [91]

Plaintiff’s Motion for Partial Summary Judgment [91] asks the Court to grant him summary
judgment on the issue of Insurers’ duty to defend under the applicable policies. As the Court has
already determined that the claims of the Underlying Suit were not covered by Insurers’ policies and
that there was consequently no duty to defend, see supra III.B, this motion will be denied.
IV. CONCLUSION
IT IS THEREFORE ORDERED AND ADJUDGED that the Motion to Strike Ratliff [85]
is granted.
IT IS FURTHER ORDERED AND ADJUDGED that the Motion to Strike Caniglia [87] is
granted.
IT IS FURTHER ORDERED AND ADJUDGED that Insurers’ Motion for Summary
Judgment [82] is granted. Plaintiff’s claims against Insurers will be dismissed with prejudice.
IT IS FURTHER ORDERED AND ADJUDGED that Gathings’ Motion for Summary
Judgment [89] is granted. Plaintiff’s claim against Gathings will be dismissed with prejudice.
IT IS FURTHER ORDERED AND ADJUDGED that Plaintiff’s Motion for Partial Summary
Judgment [91] is denied.
SO ORDERED AND ADJUDGED this the

10

13th day of December, 2016.

s/Keith Starrett
KEITH STARRETT
UNITED STATES DISTRICT JUDGE

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