American National Property and Casualty Company v. Estate of Farese
| Decision Date | 30 March 2021 |
| Docket Number | CIVIL ACTION NO. 3:18CV0177-TSL-RPM |
| Parties | AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, Plaintiff/Counter-Defendant v. ESTATE OF Jason FARESE; Estate of Lea Farese; John S. Farese, as Guardian of L.V.F., L.W.F., and A.P.F., the Natural Children and Wrongful Death Beneficiaries of Lea and Jason Farese; Estate of Austin Poole; Estate of Angela Roark Poole; Leslie Herring Miley, as Guardian of W.J.P. and K.W.P., the Minor Natural Children and Wrongful Death Beneficiaries of Austin Poole; James K. Warrington, as Guardian of K.E.W., W.A.W, and J.P.W., the Minor Natural Children and Wrongful Death Beneficiares of Angela Roark Poole; Estate of Michael McConnell Perry; Estate of Kimberly Westerfield Perry; Robert Perry, as Guardian of S.M.P., J.W.P., and A.R.P., the Minor Natural Children and Wrongful Death Beneficiaries of Michael McConnell Perry and Kimberly Westerfield Perry; Oxford University Aircraft Charters, LLC; Oxford Aircraft Charters, LLC; and North Mississippi Equipment, Inc., Defendants/Counter-Plaintiffs |
| Court | U.S. District Court — Southern District of Mississippi |
Mark D. Fijman, William T. Siler, Jr., Phelps Dunbar, LLP, Jackson, MS, for Plaintiff/Counter-Defendant.
Lewis W. Bell, Hugh Ruston Comley, Watkins & Eager, PLLC, Jackson, MS, Bryan J. Wick, Pro Hac Vice, Molly M. Jones, Pro Hac Vice, Wick Phillip, Dallas, TX, for Defendants/Counter-Plaintiffs.
This action involves an insurance dispute relating to an August 2016 airplane crash in which the pilot and all five passengers were killed. American National Property and Casualty Company (ANPAC), which insured the plane, a 1984 Piper PA 325 CR Navajo airplane (FAA Registration No. N4447S), has brought this action pursuant to 28 U.S.C. § 2201 and Federal Rule of Civil Procedure 57 for a declaratory judgment that the bodily injury and property damage coverage under its Policy No. AC-01252-00, does not apply to losses resulting from the crash. The defendant insureds and claimants under the policy have generally denied that the accident is not covered and have also asserted various counterclaims against ANPAC, claiming, among other things, that by its post-crash conduct, ANPAC waived its right to deny coverage and/or is estopped from doing so.1
ANPAC has moved for summary judgment regarding coverage (Dkt. No. 159) and regarding the various counterclaims (Dkt. No. 161). The defendant claimants have responded in opposition to ANPAC's motion but have also moved pursuant to Rule 54(d) for deferral of ruling on the motions pending further discovery (Dkt. No. 177), and they have filed their own motion for summary judgment on their waiver defense (Dkt. No. 167). ANPAC has responded in opposition to these motions. For reasons which follow, the court concludes that the motion for deferral of ruling on ANPAC's summary judgment motions should be denied; ANPAC's motion for summary judgment regarding coverage should be granted; ANPAC's motion for summary judgment regarding counterclaims should be granted in part and denied in part; and the claimant defendants’ motion for summary judgment as to waiver should be denied.
On August 14, 2016, an airplane piloted by Dr. Jason Farese departed Orlando, Florida, with an intended destination of Oxford, Mississippi. Five passengers were onboard: Lea Farese, Dr. Farese's wife, and two other couples, Austin and Angela Poole and Michael and Kimberly Perry. Approximately an hour and fifteen minutes after taking off from Kissimmee Gateway Airport, Dr. Farese reported a failure of a fuel pump and requested diversion to the nearest airport; at that time, Tuscaloosa Regional Airport was approximately twenty miles away. When the plane was about thirteen miles from the Tuscaloosa airport, Dr. Farese reported the plane had lost "the other fuel pump" and had "no power." Approximately 1,650 feet from the approach end of the runway, the plane crashed, killing everyone onboard.
The cause of the crash, as eventually determined by the National Transportation Safety Board (NTSB), was not a failure of the fuel pumps. Rather, the immediate cause was fuel starvation: Although the plane had enough fuel to complete the flight from Orlando to Oxford, Dr. Farese failed to switch from the outboard fuel tanks to the inboard tanks once the fuel in the outboard tanks was exhausted.
Dr. Farese had purchased the accident airplane five months earlier, on March 15, on behalf of Oxford University Aircraft Charters, LLC (OUAC), and had secured insurance coverage on the plane from ANPAC, through Acceleration Aviation Underwriters, Inc. (AAU), which handled all of ANPAC's aviation insurance business, including underwriting and claims management. The ANPAC policy provided hull coverage of $650,000, and single limit bodily injury and property damage coverage of $1 million.
On August 15, the day after the crash, ANPAC and AAU received notice of the crash when Dr. Farese's father, John Farese, requested payment under the policy's $650,000 hull coverage for loss of the plane. AAU, on behalf of ANPAC, retained an independent adjusting firm to handle the claim, which assigned the claim to adjuster Hope DeLong. Following her investigation, Ms. DeLong reported to AAU on October 4, 2016 that she had "everything [she] needed for the hull payment" and there was "nothing to preclude loss payment." Accordingly, on October 6, 2016, ANPAC paid the available hull coverage of $650,000, less a $1,000 deductible.2
Just over a year later, on October 13, 2017, the Perry defendants3 filed a wrongful death lawsuit in Lafayette County Circuit Court, Cause No. L17-439, against the Estate of Jason Farese, OUAC and its members – all ANPAC insureds.4 ANPAC undertook to defend the Estate of Jason Farese (Farese Estate) without reservation of rights by retaining attorney David O'Donnell to file an answer on behalf of OUAC and Dr. Farese's estate, which he did on January 12, 2018.5 Two months later, in March 2018, O'Donnell, as attorney for ANPAC, filed an interpleader action in Lafayette County Chancery Court, Cause No. CV2018-137, representing ANPAC was a "disinterested stakeholder" that was "ready, willing and able" to pay its $1 million liability limit into the court's registry, so that the court could determine the rights of the various claimants to the policy proceeds.
On April 27, 2018, the NTSB, having completed its investigation of the crash, released its Factual Report, which recited, among other things, the following:
The pilot's logbook noted that he received a total of 2.9 hours of dual flight instruction during two flights on March 17, 2016. The flight instructor who flew with the pilot on March 17 and accompanied him on several other flights stated that he did not provide the pilot with any multi-engine training and he believed that the pilot had not received any training in the accident airplane. The pilot "took the airplane pilot operating handbook home and read it." In addition, the flight instructor did not practice any single-engine operations or emergency procedures with the pilot in the accident airplane. He stated that they couldn't practice those procedures with "people in the airplane and we always flew" with passengers. When asked about the pilot's checklist usage, he stated that the pilot would use the checklists and "go through the cockpit like [he] should."
The NTSB's Final Report, issued May 9, 2018, found the probable cause of the crash to be "[a] total loss of power in both engines due to fuel starvation as a result of the pilot's fuel mismanagement, and his subsequent failure to follow the emergency checklist." The NTSB determined that the pilot's "lack of emergency procedures training in the accident airplane" was a contributing cause of the accident.
After receiving the NTSB Factual Report, ANPAC immediately began reassessing its position on coverage. Under the terms of ANPAC's policy, Dr. Farese was required to "receive at least 10 hours of flight instruction to include an instrument proficiency check in the insured aircraft from an FAA certified flight instructor ..." before acting as sole pilot in command, yet according to the NTSB report, Dr. Farese had received only 2.9 hours of instruction. On May 1, 2018, Chris Jones, President of AAU, e-mailed David O'Donnell, stating:
On May 10, after receiving the NTSB Final Report, Jones wrote to O'Donnell, again noting that "[p]er the NTSB report, Mr. Farese did not complete that training and therefore did not meet the pilot requirements of the policy." Jones expressed that "[d]ue to the lapse of time and since we have paid the hull claim, I don't know if this makes a difference in our strategy relative to the liability claim, but it is worth noting." O'Donnell responded: "Assuming the coverage is there (interpleader), I think now is the time to pursue a mediation in an effort to achieve a global settlement." Jones replied that this "sound[ed] like a reasonable approach." O'Donnell told Jones, "Let me know if, and when, a final decision on coverage has been made, that is, whether the insurer intends to pursue a failure of policy conditions or not." Jones responded:
It is unlikely that we will be able to assert a policy defense at this point in time. Had the pilot's lack of training been discovered sooner we may have been in a different position. I will be discussing this with...
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