USF&G CO. v. Omnibank

• Decision Date: 28 March 2002
• Docket Number: No. 2000-FC-01015-SCT.,2000-FC-01015-SCT.
• Citation: 812 So.2d 196
• Court: Mississippi Supreme Court
• Parties: UNITED STATES FIDELITY & GUARANTY COMPANY v. OMNIBANK.

812 So.2d 196

UNITED STATES FIDELITY & GUARANTY COMPANY v. OMNIBANK.

No. 2000-FC-01015-SCT.

Supreme Court of Mississippi.

March 28, 2002.

W. Shan Thompson, Charles G. Copeland, Ridgeland, attorneys for petitioner.

Sam Starnes Thomas, Jackson, attorneys for respondent.

EN BANC.

WALLER, J., for the Court.

¶ 1. This case presents a certified question from the United States Court of Appeals for the Fifth Circuit. See Ramsay v. OmniBank, 215 F.3d 502 (5th Cir. 2000)

; M.R.A.P. 20. We are asked to determine whether, under Mississippi law, an insurer's duty to defend under a general commercial liability policy for injuries caused by accidents extends to injuries unintended by the insured but which resulted from intentional actions of the insured if those actions were negligent but not intentionally tortious. This case involves an insured filing a third-party complaint against its insurer, alleging that the insurer had a duty to defend under the coverage of the policy. The insurer filed a motion for summary judgment asserting that the policy did not cover the allegations and there was no duty to defend. The United States District Court for the Southern District of Mississippi granted the insurer's motion for summary judgment as to its bad faith claim, but denied summary judgment as to the issue of whether the insurer had a duty to defend, and ordered the insurer to pay a portion of the insured's cost. The insured appealed to the Fifth Circuit. We conclude that according to the policy language, even if an insured acts in a negligent manner, that action must still be accidental and unintended in order to implicate policy coverage.

FACTS

¶ 2. Georgia Ramsay financed the purchase of her car through OmniBank, which required Ramsay to maintain insurance on the car.¹ After Ramsay failed to obtain the required insurance, OmniBank allegedly "force-placed" insurance coverage on the car and charged and added to the amount of loan the premiums and interest.

¶ 3. In September, 1995, Ramsay and other people similarly situated filed a complaint against OmniBank in the United States District Court for the Southern District of Mississippi. In November, 1995, Ramsay filed an amended complaint alleging that OmniBank "wrongfully forceplaced collateral protection insurance" on the plaintiffs at a cost around $1,500. The amended complaint also alleged that Omni-Bank, either negligently or intentionally, committed fraud, breach of fiduciary duty, breach of duty of good faith and fair dealing, breach of contract, violation of various statutes, violation of civil rights, negligence, loss of property rights, loss of reputation, injury to credit, creation of fictitious indebtedness, and mental and emotional distress.

¶ 4. In April, 1996, OmniBank filed a third-party complaint naming its insurer, United States Fidelity & Guaranty Company and Deposit Company of Maryland as third-party defendants. The third-party complaint alleged that USF&G owed OmniBank a defense against Ramsay's claims, potential indemnification in the event of an adverse verdict against OmniBank, and "bad faith" damages under the coverage of the commercial general liability policy and its umbrella policy with USF&G.

¶ 5. In October, 1997 USF&G filed a motion for summary judgment asserting that OmniBank's insurance policies did not provide coverage for Ramsay's allegations and did not require USF&G to provide OmniBank with a defense against Ramsay's claim. Ramsay filed a motion to dismiss the claims against OmniBank without prejudice, which motion was granted in November, 1997.

¶ 6. In May, 1998, the district court granted USF&G's motion for summary judgment as to OmniBank's bad faith claim, but denied the motion with respect to the duty to defend claim. In April, 1999, the district court entered a final judgment pursuant to Fed.R.Civ.P. 54(b) on OmniBank's duty to defend claim and ordered USF&G to pay OmniBank $10,856 in costs associated with OmniBank's defense of the Ramsay claims.

¶ 7. USF&G appealed the part of the order holding that USF&G owed Omni-Bank a duty to defend against the underlying claims to the Fifth Circuit. The Fifth Circuit subsequently certified the question now presented before this Court.

DISCUSSION

I. WHETHER THE TERMS OF THE INSURANCE POLICY ARE AMBIGUOUS.

¶ 8. Where a contract is clear and unambiguous, its meaning and effect are matters of law. Universal Underwriters Ins. Co. v. Buddy Jones Ford, Lincoln-Mercury Inc., 734 So.2d 173, 176 (Miss.1999); Overstreet v. Allstate Ins. Co., 474 So.2d 572, 575 (Miss.1985); Dennis v. Searle, 457 So.2d 941, 945 (Miss. 1984). OmniBank contends that the policy language which implicates coverage for "occurrences" or "incidents" is rendered ambiguous by exculpatory language which exempts coverage for "bodily injury" or "property damage" "expected" or "intended" from the standpoint of the insured.

¶ 9. It is well settled that ambiguous terms in an insurance contract are to be construed most strongly against the preparer, the insurance company. Nationwide Mut. Ins. Co. v. Garriga, 636 So.2d 658, 662 (Miss.1994); Government Employees Ins. Co. v. Brown, 446 So.2d 1002 (Miss.1984); McLaurin v. Old So. Life Ins. Co., 334 So.2d 361 (Miss.1976). OmniBank contends that any ambiguity as to whether USF&G owed a duty to defend against the Ramsay lawsuit, should be resolved in its favor. The language at issue in the commercial general liability policy provides:

COMMERCIAL GENERAL LIABILITY COVERAGE FORM

SECTION I—COVERAGES

* * *

b. This insurance applies to "bodily injury" and "property damage" only if:

(1) The "bodily injury" or "property damage" is caused by an occurrence that takes place in the "coverage territory"; and

(2) The "bodily injury" or "property damage" occurs during the policy period.

* * *

SECTION V—DEFINITIONS

* * *

12. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.

* * *

The commercial umbrella liability policy provides:

COMMERCIAL UMBRELLA LIABILITY COVERAGE FORM

* * *

SECTION I—COVERAGE

* * *

b. This insurance only applies to:

(1) "Bodily injury" or "property damage":

(a) Occurring during the policy period; and

(b) Caused by an "incident" that takes place in the "coverage territory";

(2) "Personal injury" caused by an "incident":

* * *

SECTION VI—DEFINITIONS

6. "Incident" means:

a. An accident, including continuous or repeated exposure to the same general harmful conditions, that results in "bodily injury" or "property damage."

All damages arising from continuous or repeated exposure to the same general harmful conditions shall be deemed to arise from one "incident."

b. An offense that results in "advertising injury."

* * *

¶ 10. The exculpatory language provides:

This insurance does not apply to:

a. Expected or Intended Injury

"Bodily injury" or "property damage" expected or intended from the standpoint of the insured. This exclusion does not apply to "bodily injury" resulting from the use of reasonable force to protect persons or property.

¶ 11. Thus language in both policies provides that "bodily injury" or "property damage" must be caused by either an "incident" or an "occurrence." The policies define "occurrence" and "incident," respectively, as an "accident." The exclusion in both policies mandates that coverage does not apply to "bodily injury" or "property damage" that is expected or intended from the standpoint of the insured. An accident by its very nature, produces unexpected and unintended results. It follows that bodily injury or property damage, expected or intended from the standpoint of the insured, cannot be the result of an accident. We have held that unless the clause of an insurance agreement is ambiguous it should be enforced as written. Gulf Guar. Life Ins. v. Duett, 671 So.2d 1305, 1308 (Miss.1996); Nationwide, 636 So.2d at 662. Based upon the foregoing analysis, there is no ambiguity in the policy language, and OmniBank's argument is without merit.

II. WHETHER USF&G HAD A DUTY TO DEFEND.

¶ 12. Under Mississippi law, the determination of whether a liability insurance company has a duty to defend depends upon the language of the policy. Sennett v. United States Fid. & Guar. Co., 757 So.2d 206, 212 (Miss.2000). The obligation of the insurer to defend is to be determined by analyzing the allegations of the complaint or declaration in the underlying action. Id.; see also Delta Pride Catfish, Inc. v. Home Ins. Co., 697 So.2d 400, 403 (Miss.1997)

; State Farm Mut. Auto. Ins. Co. v. Taylor, 233 So.2d 805, 808 (Miss.1970). OmniBank submits that USF&G's obligation to defend is triggered by the characterization of the claims contained in the complaint: since the complaint alleges negligence, OmniBank submits that USF&G owes a duty to defend. The complaint reads as follows:

The Defendants, jointly and severally, and in concert each with the other, negligently and/or intentionally chose an insurer which charged an exorbitant rate for collateral protection insurance which provided protection only for OmniBank.

¶ 13. The complaint further alleges that OmniBank "engaged in a course of conduct which constituted a negligent disregard for the right of the Plaintiffs." (emphasis added).

¶ 14. Mississippi federal courts have held that an insurer has a duty to defend when there is a basis for potential liability to the insured under the policy for the claims alleged against the insured. See Merchants Co. v. American Motorists Ins., 794 F.Supp. 611, 617 (S.D.Miss.1992)

.

¶ 15. In Allstate Ins. Co. v. Moulton, 464 So.2d 507, 510 (Miss.1985), we found that there was no coverage for unintended damages arising out of a malicious prosecution claim. Id. at 507. The insured, Moulton, swore out a complaint asserting that the defendant, Walls, stole her dog. Id. Walls was acquitted and subsequently sued Moulton for malicious prosecution. Id. Moulton then requested a defense from her insurer asserting that she...