Certain Underwriters at Lloyd's Subscribing to Policy No. TCN034699 et al v. Bell et al
Filing
36
ORDER granting 25 Motion for Summary Judgment. Signed by Honorable David C. Bramlette, III on 12/30/14 (dtj)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
CERTAIN UNDERWRITERS AT LLOYD’S SUBSCRIBING
TO POLICY NO. TCN034699 and
TAPCO UNDERWRITERS, INC.
VS.
PLAINTIFFS
CIVIL ACTION NO: 5:13-cv-113-DCB-MTP
EMMA BELL and JOHN BELL
DEFENDANTS
ORDER GRANTING SUMMARY JUDGMENT
This
cause
is
before
the
Court
on
Plaintiff’s,
Certain
Underwriters at Lloyd’s Subscribing to Policy No. TCN034699 and
TAPCO Underwriters, Inc., Motion for Summary Judgment [docket entry
no. 25]. Having reviewed the motion and responses, applicable
statutory and case law, and being otherwise fully informed in the
premises, the Court finds as follows:
I. Factual and Procedural Background
In August of 2011, Defendants Emma Bell and her husband John
Bell
(collectively
“the
insureds”)
insured
property
through
Southgroup Insurance and Financial Services, LLC, (“Southgroup”),
acting as agent for Plaintiffs Certain Underwriters at Lloyd’s
Subscribing
to
Policy
No.
TCN034699
(“Lloyd’s”)
and
TAPCO
Underwriters, Inc., (“TAPCO”) (collectively “the underwriters”).
Although both Bells are defendants in this action, only Emma Bell’s
name appears on the policy. In May of 2012, the insureds filed a
1
claim on this policy. An 8,900 square foot wood framed barn had
collapsed.
After
the
insureds
filed
the
claim,
an
insurance
adjuster came to inspect the property and determined that there
were two unattached buildings: (1) a 900 square foot steel framed
building and (2) the 8,900 square foot wood barn. Although the
steel
framed
building
is
not
the
subject
of
a
claim,
the
underwriters argue that the policy covers only the steel framed
building. On October 4, 2012, the insureds’ claim was denied.
On April 16, 2013, the insureds filed suit in the Circuit
Court of Claiborne County, Mississippi, alleging bad faith denial
by
Lloyd’s,
TAPCO,
and
Southgroup.
On
July
29,
2013,
the
underwriters initiated this declaratory judgment action, asserting
diversity jurisdiction.1 On August 1, 2014, the underwriters moved
for summary judgment arguing that no coverage existed, and even if
it did, the insureds voided coverage by refusing to submit to an
under oath examination. During the briefing for this motion, the
state court rendered a decision in favor of the underwriters on
theories similar to those advanced in this Court. The Court ordered
the insureds to respond to arguments concerning preclusion made by
the underwriters, and they did so.
II. Analysis
1
Lloyd’s and TAPCO are foreign corporations, whereas
Southgroup is a Mississippi corporation.
2
A. Summary Judgment Standard
Summary judgment is appropriate “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).
“A fact is ‘material’ if its resolution in favor of one party might
affect the outcome of the lawsuit under governing law. An issue is
‘genuine’ if the evidence is sufficient for a reasonable jury to
return a verdict for the non-moving party.” Ginsberg 1985 Real
Estate P’ship v. Cadle Co., 39 F.3d 528, 531 (5th Cir. 1994)
(citations
omitted).
The
moving
party
bears
the
initial
responsibility of apprising the district court of the basis for its
motion and the parts of the record which indicate the absence of a
genuine issue of material fact. Celotex Corp. V. Catrett, 477 U.S.
317, 323 (1986).
“Once the moving party presents the district court with a
properly supported summary judgment motion, the burden shifts to
the
non-moving
party
to
show
that
summary
judgment
is
inappropriate.” Morris v. Covan World Wide Moving, Inc., 144 F.3d
377, 380 (5th Cir. 1998). “The evidence of the non-movant is to be
believed, and all justifiable inferences are to be drawn in his
favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986).
But the nonmovant must meet his burden with more than metaphysical
doubt, conclusory allegations, unsubstantiated assertions, or a
mere scintilla of evidence. Little v. Liquid Air Corp., 37 F.3d
3
1069, 1075 (5th Cir. 1994). A party asserting a fact is “genuinely
disputed must support the assertion by: (A) citing to particular
parts of materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations,
stipulations . . . admissions, interrogatory answers, or other
materials . . . .” Fed. R. Civ. P. 56(c)(1)(A).
Summary judgment must be rendered when the nonmovant “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.” Celotex, 477 U.S. at 322.
B. Preclusion
“The Full Faith and Credit Act, 28 U.S.C. Section 1738,
requires federal courts to give the same preclusive effect to state
court judgments that those judgments would receive in the courts of
the state from which the judgments emerged.” Capital City Ins. Co.
v. Hurst, 632 F.3d 898, 903 (5th Cir. 2011) (citation omitted).
Federal courts look to state law to determine whether a state court
judgment should be given preclusive effect. Duffy & McGovern
Accommodation Servs. v. QCI Marine Offshore, Inc., 448 F.3d 825,
828 (5th Cir. 2006) (“[W]e ask whether, under state law, the state
order is preclusive.”). The underwriters argue that their favorable
state court judgment should collaterally estop the insureds from
pursuing their case here.
Under Mississippi law, collateral estoppel precludes parties
4
“from relitigating a specific issue [1] actually litigated, [2]
determined by, and [3] essential to the judgment in a former
action. . . .” Norman v. Bucklew, 684 So. 2d 1246, 1254 (Miss.
1996), overruled on other grounds Jones v. Fluor Daniel Servs.
Corp., 32 So. 3d 417, 422 (Miss. 2010). The operation of collateral
estoppel requires a valid and final judgment. The Mississippi
Supreme Court has held that “a judgment is ‘final’ for res judicata
and collateral estoppel purposes even though pending on appeal.”
Smith v. Malouf, 597 So. 2d 1299, 1301 (Miss. 1992). However, “a
judgment from which an appeal has been taken loses its collateral
estoppel
or
res
judicata
effect
upon
being
reversed
by
the
appellate court.” Id., at 1302.
The state court entered an order granting the underwriters’
motion for summary judgment on August 28, 2014. Reply Ex. 1, ECF
No. 30-1. The state court entered a final judgment in favor of the
underwriters on September 2, 2014. Notice Supplemental Authority
Ex. A, ECF No. 32-1. On September 11, 2014, the state court entered
an order clarifying its prior order granting summary judgment.
Response Ex. A (“Clarifying Order”), ECF No. 35-1. The state court
found as follows:
In August 2011, Plaintiff Emma Bell applied for a
policy of property insurance through [Southgroup]. The
application requested insurance for a 900 square foot
steel building. Plaintiff Emma Bell signed the
application attesting that the statements contained
therein were true and accurate. However, Plaintiff Emma
Bell admitted that she never read the application before
signing it. Southgroup procured the insurance from
5
[TAPCO] and TAPCO issued Plaintiff Emma Bell the policy
on August 24, 2011. In May 2012, Plaintiff Emma Bell made
a claim on the policy when a wooden structure on the
Plaintiffs’ property collapsed. The wooden structure sat
adjacent but separate from the insured steel building.
[The underwriters] commissioned an investigation by a
claims adjustor and a forensic engineer. Ultimately, it
was concluded that the wooden structure was not covered
under the subject policy[,] and the claim was denied.
The Court finds that the subject policy of property
insurance did not afford coverage of the separate, larger
building on Plaintiffs’ property and, accordingly, finds
summary judgment is proper as to all Plaintiffs’ claims.
The Court finds that Plaintiff Emma Bell had an
obligation to read the contract before signing it. The
Court finds that the policy clearly covered only the
smaller, steel building on the property. As a result, the
Court finds that it was unreasonable for Plaintiffs to
have relied upon any representations contrary to the
contents of the policy. Therefore, the Court finds that
summary judgment is proper as to all Plaintiffs[’] claims
and as to [all defendants].
Clarifying Order p. 1-2. The only argument the insureds make to
prevent application of collateral estoppel is that they have
appealed the state court judgment. Response ¶ 4, ECF No. 35.
Because this argument has already been rejected by the Mississippi
Supreme Court as discussed above, the Court adopts the state court
findings above and further finds that no genuine issue of material
fact exists and that the underwriters are entitled to judgment as
a matter of law. Therefore, the motion for summary judgment will be
granted.
The
Court
finds
that
awarding
inappropriate in this case.
6
fees
and
costs
would
be
IV. Order
IT IS HEREBY ORDERED that the plaintiffs’ Motion for Summary
Judgment is GRANTED.
A final judgment in accordance with Federal Rule of Civil
Procedure 58 will follow.
SO ORDERED this the
30th
day of December, 2014
s/ David Bramlette
UNITED STATES DISTRICT JUDGE
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