Farani et al v. File et al

Filing 247

ORDER granting 217 Plaintiff's Post Judgment Motion for Summary Judgment regarding Insurance Coverage. Signed by District Judge Henry T. Wingate on 3/23/2022 (CGC)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION
TAVITA FARANI, TYLER BUNTING and
MICHAEL LOCKE

PLAINTIFFS

VS.

CIVIL ACTION NO. 3:16-CV-227

LESLIE FILE

DEFENDANT

EVANSTON INSURANCE COMPANY

JUDGMENT DEBTOR

POST-JUDGMENT ORDER ON PLAINTIFF’S MOTION FOR SUMMARY
JUDGMENT REGARDING INSURANCE COVERAGE
Plaintiff Tavita Farani brings this Motion for Summary Judgment [doc. no. 217], asking
this court to find, as a matter of law, that Defendant Leslie File was covered by the Evanston
Insurance Company (“ EIC”) umbrella policy procured by her employer, Prime Time HealthCare
LLC (hereafter “Prime Time”). Plaintiff Tyler Bunting joined in the motion [doc. no. 220].
This lawsuit stems from a vehicular wreck that occurred in the State of North Dakota on
July 23, 2014. The car driven by Leslie File (hereafter “File”) struck a van carrying nine
passengers. All of the van’s occupants claimed injuries arising out of the accident, including the
three plaintiffs in the case sub judice (Tavita Farani, Tyler Bunting and Michael Locke). After a
jury trial lasting six days, the jury found in favor of the three Plaintiffs in this case and against
File, the driver, in the following amounts: $877,780.00 for Tavita Farani; $617,707.61 for Tyler
Bunting; and $583,519.00 for Michael Locke. The total verdict was $2,079,006.61.
File, a resident of Mississippi, was a traveling nurse employed with Prime Time. She
was on assignment in the State of Montana at the time of the wreck. File was driving an
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automobile rented for her use by Prime Time, and was returning to the State of Montana after
visiting friends. The jury found File liable, but did not find against her employer, Prime Time.
The jury concluded that File was not acting within the course and scope of her employment at
the time of the wreck, a finding which negated respondeat superior 1 for Prime Time.
Plaintiff Farani lists the following as Undisputed Material Facts:
1. Leslie File was in a car accident with Plaintiffs on [July] 2 23, 2014 (“the
Accident”).
2. File was an employee of Primetime [sic] Healthcare (“Primetime”) on [July] 23,
2014.
3. File was found liable for the Accident and Judgement was entered against her for
more than $2,000,000.
4. Primetime [sic] was not liable for the Accident because the jury found File was
not in the course and scope of her employment for Primetime [sic] when the
Accident occurred.
5. At the time of the Accident, Primetime [sic] had an automobile liability insurance
policy with Travelers (“the Travelers Policy”).
6. Although the jury found that File was not in the course and scope of her
employment for Primetime [sic], File still “qualifies individually as an ‘insured’
under the terms of the [Travelers] Policy” with respect to the Accident.
7. Accordingly, Travelers has paid out the limits of its insurance.
8. At the time of the Accident, Primetime [sic] also had a $2,000,000 umbrella
liability policy with EIC (“the EIC Policy”).
9. The EIC Policy states that the following qualify as an “insured”: “Any other
person or organization who is insured under the ‘controlling underlying
insurance.’”
10. The EIC Policy states that “Controlling underlying insurance” includes “any
other insurance available to the insured[.]”
11. The EIC Policy further states: “We will pay on behalf of the insured for that
portion of the ‘ultimate net loss’ in excess of the ‘underlying limit’ because of
‘bodily injury’ or ‘property damage’ to which this insurance applies but only up to
the Limits of Insurance stated in the Declarations.”
12. The term “ultimate net loss” is defined as “the total amount of ‘damages’ for
which the insured is legally liable in payment of ‘bodily injury’[.]”

Respondeat superior is the proposition that an employer, or master, should be held vicariously liable for
the torts of its employee, or servant committed within the scope of employment See e.g., Doe v.
Medeiros, 168 F. Supp. 3d 347, 351 (D. Mass. 2016).
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Plaintiff inadvertently states June 23, 2014 as the date of the accident under number 1 and 2. The
accident date, however, was July 23, 2014. See Complaint [doc. no. 1 ¶9] and Incident Report, North
Dakota Highway Patrol [doc. no. 217-2 pp.1-4].
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13. EIC denied coverage for File and never filed a declaratory judgement action
against her.
14. File still owes more than $1,000,000 after the Travelers Policy is exhausted.
15. Ms. File filed for bankruptcy.
16. Plaintiffs have obtained relief from the automatic stay in File’s bankruptcy.
Plaintiffs’ Memorandum Brief [doc. no. 218 pp. 2-4]
In his joinder to Plaintiff Farani’s Motion for Summary Judgment, Plaintiff Tyler Bunting
submitted two additional undisputed material facts in support of his motion as follows:
1. On February 13, 2019, Ms. File’s bankruptcy petition was granted and her personal
obligations, including the judgment in favor of Plaintiffs was discharged by the U.S.
Bankruptcy Court for the Southern District of Mississippi. See Order of Discharge
[doc. no. 220-1].
2. Plaintiff Bunting did not receive any payment from Ms. File’s Bankruptcy matter to
apply to his January 9, 2019 Proof of Claim, establishing amounts due and owing to
him under this Court’s Judgment. See Proof of Claim [doc. no. 220-2].
EIC has neither disputed the facts as listed above nor provided its own statement of
undisputed facts. These facts then, are taken as confessed and there is no genuine dispute of
material fact.
Travelers Casualty Insurance Company of America (“Travelers”), an automobile insurer
for Prime Time, acknowledged coverage for the wreck at issue here, and paid all of the persons
injured in the wreck, including the Plaintiffs in this lawsuit, up to the limits of its policy. Two
factors were evident that caused Travelers to acknowledge its obligation of coverage.
First, Travelers determined that Ms. File was an insured under its [Travelers’] policy. As
Plaintiffs stated in the second motion hearing on September 23, 2019, Ms. File was the “driver,
with permission,” of an automobile rented by Prime Time for her use. That brought her under
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the Travelers automobile policy. Plaintiffs contend this also makes her an insured under the
umbrella policy issued by Evanston Insurance Company (“EIC”) to Prime Time. Plaintiffs argue
that because File was an insured under “Travelers,” an underlying insurer to the EIC umbrella
policy, she met the definition contained in EIC’s policy of an “insured,” that is, “one covered by
an underlying policy.”
Secondly, Travelers acknowledged, and none of the parties disputes, that on the date of
this accident, July 23, 2014, the Travelers policy had already been purchased and was in effect.
The Travelers policy had been in effect since before the date of the accident. Again, Plaintiffs
contend this also makes her an insured under EIC’s umbrella policy, since, according to
Plaintiffs, the Travelers policy automatically became “underlying insurance” to the EIC policy
without any requirement that it be listed on the schedule of underlying insurers.
EIC, on the other hand, denies that File was covered by its umbrella policy for the
accident at issue here, despite being covered by the Travelers policy. According to EIC,
Travelers was not a scheduled underlying insurer to EIC’s umbrella policy on the date of the
accident. EIC cites to the exclusion in its policy that provides: “Coverage A of this policy does
not apply to: “Bodily Injury” or “property damage” arising out of the …use… of any ‘auto,’
except to the extent that coverage is provided by a policy listed in the Schedule of Underlying
Insurance… EIC Policy [doc. no. 217-7 p. 16 ¶12]. If Travelers was not listed in the Schedule of
Underlying Insurance at the time of the wreck, EIC says it has no coverage obligation for the
wreck.
EIC alleges that when Prime Time procured the Travelers automobile policy, that policy
was not immediately added to EIC’s schedule of underlying insurers. Although the Travelers
policy was purchased by Prime Time prior to the wreck at issue, EIC says Travelers was not

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added as a scheduled insurer until September 22, 2014 (two months after the accident). EIC’s
version of events is that when the brokers contacted EIC to add Travelers to the underlying
schedule, the Travelers policy had already been in effect several months and the wreck had
already occurred. 3
Nevertheless, according to EIC, the brokers 4 asked and EIC agreed to backdate the
effective date of the Travelers addition to the schedule, to March 27, 2014; thus, EIC intended
and agreed that Travelers was a scheduled insurer under the EIC umbrella policy as of March
27, 2014, by virtue of the backdating. See EIC Policy [doc. no. 217-7 pp. 34-35]. EIC provides
very little information in its Memorandum Brief as to why the Travelers policy, whenever it was
added to the schedule, would have been given an effective date of March 27, 2014; however the
EIC policy issued to Prime Time and attached as an Exhibit to EIC’s Memorandum brief shows
that the effective dates of the umbrella policy were from March 27, 2014 to March 27, 2015, see
Prime Time admitted, in its Answer filed in the Nebraska litigation, that “a commercial automobile
policy was not listed on the [EIC] policy’s “Schedule of underlying insurance in March 2014.”” Answer,
Counterclaim, and Jury Demand of Prime Time Healthcare, LLC [doc. no. 225-1 ¶ 13] (emphasis added).
Evanston Insurance Company v. Prime Time Healthcare LLC, Case No. 8:16-cv-159, 2018 WL 3369688,
*1 (D. Neb. July 10, 2018). Prime Time denies in its Answer, however, that the Travelers Policy was
added to the Evanston policy after the accident.” Id. at ¶¶ 33, 42.
3

This court takes judicial notice of this pleading from the United States District Court of Nebraska. See
Lake Eugenie Land & Dev., Inc. v. Halliburton Energy Servs. (In re Deepwater Horizon), 934 F.3d 434,
440 (5th Cir. 2019) (“We may take judicial notice of prior court proceedings as matters of public
record.”) (as cited in Siplast, Inc. v. Emps. Mut. Cas. Co., 23 F.4th 486, 493 fn.2 (5th Cir. 2022).
The brokers referred to are Prime Time’s Insurance agents, Omaha Agency Services, LLC d/b/a/
Rensing Insurance; and Jeffrey W. Brown, the licensed account manager for that agency who acted as
Prime Time’s main point of contact (collectively, “Rensing”). EIC alleges that Rensing made
misrepresentations or concealed information when they notified EIC that Prime Time had purchased a
commercial automobile policy through Travelers. Evanston Ins. Co. v. Prime Time Healthcare LLC, No.
8:16CV159, 2018 WL 3369688, at *1 (D. Neb. July 10, 2018). [doc. no. 225-2]. Rensing says it had no
duty to EIC because it had to communicate with EIC through Risk Placement Services, Inc. (“RPSI”) a
wholesale insurance broker that acts as an intermediary between insurance agents (such as Rensing) and
insurance providers (such as EIC). RPSI is the wholesale insurance broker that Rensing used to procure
coverage from EIC for Prime Time. Evanston Ins. Co. v. Prime Time Healthcare LLC, No. 8:16CV159,
2018 WL 3369688, at *2 (D. Neb. July 10, 2018). See [doc. no. 225-2].
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[doc no. 221-1 p. 1]; so, EIC might simply have added Travelers as of the effective date of their
umbrella policy, which was March 27, 2014.
Unfortunately, says EIC, the accident involving Defendant File and the Plaintiffs had
already occurred without EIC’s knowledge. EIC now contends that it was the
“misrepresentation” or omission by the brokers, that caused it to backdate the policy.
Nonetheless, EIC did backdate it. None of the parties alleges that either Prime Time or File had
any knowledge of, or responsibility for, the alleged omission or “misrepresentation.” Any delay
in notification and the resulting backdating were the result of a mistake or “misrepresentation”
on the part of the brokers, or a failure of EIC or its predecessor to do due diligence, or both.
Plaintiffs here question whether there was, in fact, any delay in listing the Travelers policy as an
underlying insurer on the umbrella policy as EIC contends; but Plaintiffs say it does not matter to
their position.
Plaintiffs assert it is immaterial when the Travelers policy was actually added to the
underlying schedule because, say Plaintiffs, the EIC policy defines underlying insurance, in two
places, to include “other insurance available to the insured:” The policy states the following:
‘Controlling underlying insurance’ means the coverage(s) afforded under
insurance policies designated in the Schedule of Underlying Insurance of this policy
as “controlling underlying insurance” and any renewals or replacements of such
policies. ‘Underlying insurance’ also includes any other insurance available to
the insured, except such insurance as may be purchased to apply specifically in
excess of this policy.
EIC Policy [doc. no. 217-7 p. 29 ¶ I] (emphasis added).
The policy provides in another section:
‘Underlying Insurance’ means the coverage(s) afforded under insurance
policies designated in the Schedule of Underlying Insurance of this policy and any
renewals or replacements of such policies. ‘Underlying insurance’ also includes
any other insurance available to the insured, except such insurance as may be
purchased to apply specifically in excess of this policy.
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EIC Policy [doc. no. 217-7 p. 32 ¶ EE].
Given that Prime Time was not at fault for the alleged failure to timely list Travelers as
an underlying insurer, neither Prime Time nor the intended beneficiaries under the EIC policy
should bear the consequence of this alleged failure. Additionally, Prime Time is entitled to the
benefit of its bargain in purchasing both the umbrella policy and an additional underlying
liability policy. “Contractual parties making mutual promises must be entitled to the benefit of
their bargain.” Minnesota Life Ins. Co. v. Columbia Cas. Co., 164 So. 3d 954, 968 (Miss. 2014)
(citing Noxubee County Sch. Dist. v. United Nat'l Ins. Co., 883 So.2d 1159, 1166 (Miss.2004).
Pursuant to the language of EIC’s own policy, Travelers was an underlying insurance
despite not being listed on the schedule, because it was “available to the insured” for the date of
the accident, and actually paid Plaintiffs’ claims up to the policy limits. Since Travelers was an
underlying insurer for the date of the accident, Ms. File was an insured under the EIC umbrella
policy. On that date, Travelers was a scheduled insurer (either because of back dating or in the
normal course).
Only later did a question arise as to whether Travelers should have been a scheduled
insurer because of EIC’s allegations of “misrepresentation” by the brokers. Either way, Ms. File
is an insured under EIC’s policy. Regardless of the status of Travelers on the date in question,
Ms. File was covered by Travelers and Travelers was an underlying insurer for the date of the
accident.
EIC also relies on a Stipulated Judgment from the United States District Court of
Nebraska in support of its position. Evanston Insurance Company v. Prime Time Healthcare
LLC, Case No. 8:16-cv-159, 2018 WL 3369688, *1 (D. Neb. July 10, 2018). EIC filed a
declaratory judgment action in Nebraska federal district court. At issue was whether the EIC
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umbrella policy covered Ms. File’s accident, given that the Travelers policy was only added to
the EIC umbrella policy after the accident had occurred. Allegedly, the brokers, having failed to
add Travelers to the EIC umbrella policy in timely fashion, failed to inform EIC that the wreck
had already occurred when they called to have Travelers added as an underlying insurer. The
parties do not contend that any “misrepresentation” was on the part of Prime Time.
The stipulated judgment in the Nebraska federal district court case entered July 10, 2018,
reformed the EIC policy and endorsement to exclude umbrella coverage for any occurrences
related to the Travelers Policy prior to September 22, 2014, the date EIC issued an endorsement
to Prime Time adding Travelers to the schedule of underlying insurance. If accepted by this
court, that would mean that no umbrella coverage was available for the Travelers policy at the
time of this accident, which occurred on or about July 23, 2014.
The Nebraska judgment does not meet the criteria for res judicata or issue preclusion to
apply. “Federal courts may look to the common law or to the policies supporting res judicata and
collateral estoppel in assessing the preclusive effect of decisions of other federal courts…”
Kremer v. Chem. Const. Corp., 456 U.S. 461, 482, 102 S. Ct. 1883, 1898, 72 L. Ed. 2d 262
(1982). In Mississippi, the doctrine of res judicata requires the presence of four identities: “(1)
identity of the subject matter of the action; (2) identity of the cause of action; (3) identity of the
parties to the cause of action; and (4) identity of the quality or character of a person against
whom the claim is made.” Harrison v. Chandler–Sampson Ins., Inc., 891 So.2d 224, 232
(Miss.2005). The absence of any one of the elements is fatal to a finding of res judicata. Hill v.
Carroll Cty., 17 So. 3d 1081, 1085 (Miss. 2009) (quoting Estate of Anderson v. Deposit Guar.
Nat'l Bank, 674 So.2d 1254, 1256 (Miss.1996).

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At least one of the identities was missing in the Nebraska litigation. The parties to the
Nebraska proceeding were only EIC and Prime Time. Neither File nor the Plaintiffs here were
made a part of that litigation. Strict identity of the parties is not necessary, however, for either
res judicata or collateral estoppel, if it can be shown that a nonparty stands in privity with the
party in the prior action. EMC Mortg. Corp. v. Carmichael, 17 So. 3d 1087, 1091 (Miss. 2009).
“Privity describes a relationship between one who is a party of record and a nonparty that
is sufficiently close[,] so a judgment for or against the party should bind or protect the nonparty.”
Doss v. Dixon, 131 So. 3d 1265, 1270 (Miss. Ct. App. 2014) (citing Little v. V & G Welding
Supply Inc., 704 So.2d 1336, 1341(Miss.1997)). Ordinarily, a party who is vicariously
responsible for the acts of another party is in privity with that party, such as an employeremployee relationship where liability is based on respondeat superior. In the instant case,
however, Prime Time is not being held liable for the actions of File, since the jury determined
that File was not acting in the course and scope of her employment at the time of the wreck.
Therefore, privity between Prime Time and File did not exist in the Nebraska litigation.
The interests of Prime Time and File actually were dissimilar. Prime Time was not
motivated to protect File’s interests in the Nebraska proceeding, since it was not being held
vicariously liable for her actions. On the contrary, Prime Time would have had more incentive
to exclude File (who is no longer a Prime Time employee) from coverage under its policies, in
order to maintain good relations with its insurer EIC, or to avoid possible premium increases.
Moreover, for res judicata to apply, the judgment must be a final judgment adjudicated on
the merits. Doss v. Dixon, 131 So. 3d 1265, 1269 (Miss. Ct. App. 2014) (citing EMC Mortgage
Corp. v. Carmichael, 17 So.3d 1087, 1090 (¶ 10) (Miss.2009)); Onebeacon America Ins. Co. v.
Barnett, 761 Fed. Appx. 396 (5th Cir. 2019). This, too, is missing in our scenario. The Nebraska

9

Judgment was a stipulated judgment. It was not the consequence of an adjudication on the
merits. It was agreed upon and stipulated to by the only two parties to that litigation, EIC and
Prime Time; and as earlier discussed, Prime Time no longer had any motivation to prove that the
wreck was covered by EIC.
A finding that this court is not deprived of jurisdiction over this issue due to res judicata
or issue preclusion, does not resolve the substantive dilemma, however. Plaintiffs are asking this
court to determine whether the Defendant, Leslie File, was an underlying insured under the EIC
policy, such that the policy covered the injuries to Plaintiffs in this case. EIC, of course, says she
was not.
In this court’s eye, key to this issue is that EIC backdated the date of inclusion for the
Travelers policy under EIC’s umbrella insurance policy. Even if, as EIC contends, EIC did not
become aware of the existence of the Travelers’ policy until September of 2014, the policy was
backdated or made effective as of March 27, 2014, a date before this accident occurred. EIC
agreed to backdate the underlying policy. Making the listing retroactive to the beginning of the
policy period means the accident here was covered, since it occurred during the period that the
parties showed by their backdating that they intended to be covered.
Some inquiries by EIC might have uncovered that the accident had already occurred.
EIC could have asked more questions of the brokers whom EIC says are to blame. EIC also
could have taken measures to protect itself, such as requiring Prime Time to attest that there had
been no losses during this period before agreeing to backdating the schedule listing. Ultimately,
EIC agreed to backdate the policy and did so. If it failed to take adequate precautions, EIC
should bear the brunt of the consequences, and not Prime Time or the intended beneficiaries of
its policies.

10

EIC also argues that the “known loss doctrine” is fatal to Plaintiffs’ claims. This doctrine
would apply to defeat coverage for an occurrence that took place or was in progress prior to the
purchase of insurance. See e.g., Sosebee v. Certain Underwriters at Lloyds London, 566 Fed.
Appx. 296, 297 (5th Cir. 2014); Essex Ins. Co. v. Redtail Products, Inc., 213 F.3d 636 (5th Cir.
2000). The accident at issue here may have occurred prior to notification to EIC of the existence
of the Travelers policy, and prior to the actual listing of Travelers on the EIC schedule of
underlying insurers (which EIC says occurred in September of 2014), but it did not occur prior to
the purchase of the Travelers policy by PrimeTime, File’s employer.
Plaintiffs here aver and EIC has not disputed, that the Travelers policy had been
purchased and was in effect on the day of the accident. The policy period was from July 22,
2014 to July 22, 2015. See Traveler’s Insurance Policy [doc. no. 217-6 p.3] Moreover,
Plaintiff’s undisputed material facts state at number 5, “[a]t the time of the Accident, Primetime
had an automobile liability insurance policy with Travelers (“the Travelers Policy”). [doc. no
218 p.3]. As earlier stated, EIC does not challenge Plaintiffs’ undisputed material facts, nor
provide its own undisputed material facts. This court, then, accepts as fact that the Travelers
policy was in effect on the date of this tragic accident. Therefore, the “no known loss” doctrine
is inapplicable.
Whatever the circumstances under which Travelers was not added timely to the umbrella
policy, (if, in fact, it was not), Prime Time apparently thought, when it rented a car for File’s use,
that it was insured under its larger policy for automobile accidents, as well as under its Travelers
policy. Prime Time went about conducting its business under the assumption that it had
sufficient insurance coverage for automobile accidents for itself and its employees. It continued

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to send its employees around the country to various assignments, in automobiles rented by Prime
Time for their use.
CONCLUSION
This court is persuaded that the EIC policy covered Leslie File for the accident in
question, and there being no disputed issues of material facts, Plaintiff’s Motion for Summary
Judgment [doc. no. 217] is granted.
SO ORDERED AND ADJUDGED, this the 23rd day of March, 2021.
s/ HENRY T. WINGATE
UNITED STATES DISTRICT JUDGE

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