Oglesbee v. National Sec. Fire and Cas. Co., Civ. A. No. H90-0046(W).

• Decision Date: 29 January 1992
• Docket Number: Civ. A. No. H90-0046(W).
• Citation: 788 F. Supp. 909
• Parties: Ona Mae OGLESBEE, Plaintiff, v. NATIONAL SECURITY FIRE AND CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

788 F. Supp. 909

Ona Mae OGLESBEE, Plaintiff, v. NATIONAL SECURITY FIRE AND CASUALTY COMPANY, Defendant.

Civ. A. No. H90-0046(W).

United States District Court, S.D. Mississippi, Hattiesburg Division.

January 29, 1992.

Jimmy Brown, Starkville, Miss., for plaintiff.

David Ott, Hattiesburg, Miss., for defendant.

MEMORANDUM OPINION AND ORDER

WINGATE, District Judge.

Before this court is the motion of defendant National Security Fire and Casualty Company for summary judgment pursuant to Rule 56(c), Federal Rules of Civil Procedure.¹ The interrogatory here is whether National Security Fire and Casualty Company (hereinafter "National") may rescind its policy with its insured, the plaintiff, on the grounds: (1) that plaintiff misrepresented a material matter on the insurance application; and (2) that plaintiff accepted and negotiated National's check for refund of premiums, said check having been sent to plaintiff upon cancellation of the policy for misrepresentation, which says National, constitutes waiver and/or estoppel. Having studied the briefs of the parties and having heard oral arguments of counsel, the court is persuaded by the applicable law and undisputed facts to grant the defendant's motion for summary judgment.

The parties to this lawsuit are the plaintiff, Ona Mae Oglesbee, a Mississippi resident, and National Security Fire and Casualty Company. National is a foreign insurance company located in Elba, Alabama, certified as a non-admitted insurer, but authorized to do business in this state.

Originally filed on January 30, 1990, this case was removed to this court on February 27, 1990, pursuant to 28 U.S.C. § 1441² and 28 U.S.C. § 1332.³ When removed, this lawsuit featured a co-defendant, Anderson Insurance Company, that, as a Mississippi resident, was a non-diverse defendant; however, on April 11, 1990, this court approved an agreement between the plaintiff and defendant Anderson Insurance Company to dismiss the claim against Anderson with prejudice.

The factual portrait of this lawsuit is easy to sketch. On or about November 29, 1986, the plaintiff, Ona Mae Oglesbee, applied to National for insurance coverage on her building and land. Based upon the application and the information contained therein, National issued the policy of insurance for plaintiff's building and land, which included a liability provision of $25,000.00. The policy identified only Ona Mae Oglesbee as the insured.

The application for the insurance policy, which is the centerpiece of this lawsuit, asked plaintiff whether she had full unconditional ownership of the building and land to be insured and whether plaintiff owned title in fee simple to any land upon which the insured building was located. The quoted sections from the application are as follows:

1. If a building is to be insured, does applicant, subject to mortgage stated above, have full unconditional ownership to the building and to the land upon which it is located?

2. Application is hereby made for Fire and Extended Coverage insurance on the above property. I certify that there is no other insurance and that I own title in fee simple to any land upon which an insured building is located. I understand that other insurance is prohibited, and that no electrical burnout is offered on appliances unless a premium is indicated above.

Plaintiff answered yes to the first question and indicated an affirmative response to the second statement by signing the application which signified that she owned the insured property in fee simple.

On or about April 4, 1989, F. Lynwood Oglesbee suffered a tragic and fatal fall at the plaintiff's residence. The plaintiff is F. Lynwood's mother. No one quarrels with the assertion that this circumstance could trigger the liability provision of plaintiff's policy with National.

After being notified of the possible claim against its policy, National wrote and advised the plaintiff that National was cancelling the policy. National enclosed a refund of premiums check to plaintiff in the sum of $1,601.00. Plaintiff cashed the check. In its letter of cancellation, National claimed that plaintiff had misrepresented her ownership of the property in question. National said that according to its information plaintiff owned but a life estate in the property, and not in fee simple as she had represented on her policy application. National charged that on June 20, 1978, by warranty deed, plaintiff had deeded the insured property to Elti Mae Blue and F. Lynwood Oglesbee, reserving to herself only a life estate. National's letter to plaintiff concluded that on account of this discrepancy, National was cancelling the policy. As earlier mentioned, National also tendered to plaintiff a refund of previously paid premiums.

Aggrieved over National's actions, plaintiff resorted to court. Originally filed in state court, plaintiff's lawsuit later was removed to this federal forum. Seeking compensatory damages in the amount of $25,000, plaintiff claims that she is entitled to a money judgment from the defendant insurer for extreme mental anguish suffered by her as a result of National's wrongful cancellation of the policy which has stripped her of coverage while she is exposed to a possible liability lawsuit from the heirs of her son. Plaintiff also seeks punitive damages in the sum of $5,000,000.00, claiming that defendant's act of cancelling the policy was in bad faith since defendant had no arguable reason for so doing.

While the bedrock of plaintiff's claim for compensatory damages is that she has suffered extreme mental anguish apprehending a lawsuit by her son's heirs while she is bereft of coverage, the facts show that to date no lawsuit premised on the death of her son's unfortunate death has been filed against her. Nor, to date, has any claim been made against the insurance company by any of the heirs of F. Lynwood Oglesbee.⁴

National's response to plaintiff's lawsuit is the instant motion for summary judgment. The motion was filed initially in April, 1990, but pursuant to Rule 56(f),⁵ Federal Rules of Civil Procedure, the court held the motion in abeyance in order to allow plaintiff adequate time to complete discovery.

In its motion for summary judgment, National argues that it is entitled to this relief on either of two principal grounds: (1) that plaintiff misrepresented a material matter on the insurance application; and (2) that plaintiff accepted and negotiated National's check for refund of premiums, said check having been sent to plaintiff upon cancellation of the policy for misrepresentation, which says National, constitutes waiver and/or estoppel. Each argument will be considered separately.

Before proceeding to the respective arguments, the court first needs to set out the ground rules for its analysis. These ground rules are found in Rule 56(c) and its interpretative cases. Rule 56(c) provides as follows:

... The summary judgment motion shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law....

Case law has fleshed out this skeletal rubric and provided to us the following illustrative guideposts. When adequate time for discovery has been had and the motion for summary judgment is made against the party who fails to make a showing sufficient to establish the existence of an element essential to that party's case on which that party would bear the burden of proof at trial, summary judgment should be granted to the moving party. Complete failure of proof on an essential element renders all other facts immaterial because there is no longer a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 2552-53, 91 L.Ed.2d 265 (1986). Rule 56(c) requires the district court to enter summary judgment if the evidence favoring the non-moving party is not sufficient for the jury to enter a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). When the moving party has carried his burden under Rule 56(c), his opponent must present more than a metaphysical doubt about the material facts. Matsushita Electric Industrial Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). Now, having identified the juridical yardstick, the court takes measure of the arguments.

Material Misrepresentation

To prevail on this claim at trial, National would have to establish by clear and convincing evidence that there was a factual misstatement, and it was material to the issuance of the policy. See Brewster v. Bubba Oustalet, Inc., 231 So.2d 189 (Miss.1970) (evidence must be clear and convincing). To prevail on this motion for summary judgment in advance of trial, National need show that under the undisputed facts it is entitled to a verdict and that no submissions from plaintiff establish a jury issue on the matter. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986). As stated earlier, this court is satisfied that defendant insurer is entitled to a grant of summary judgment on this claim.

There is no dispute that plaintiff signed the application. There is no dispute that the application asked whether plaintiff owned the insured property in fee simple. Neither is there any dispute that plaintiff answered in the affirmative, when in truth she only possessed a life estate. So, clearly, there is a misrepresentation here.

In her affidavit, plaintiff claims that she but signed the application, without a careful reading of same, at the behest of National's agent, who filled out the application for her from information contained on prior policies of insurance begotten by that agent.

This defense is too weak to withstand the thrust of Pedersen v. Chrylser Life Insurance Co., 677...