Black v. Fidelity & Guaranty Ins. Underwriters, Inc.

• Decision Date: 27 October 1978
• Docket Number: No. 77-3470,77-3470
• Citation: 582 F.2d 984
• Parties: Boyd BLACK, Plaintiff-Appellee, Cross-Appellant, v. FIDELITY & GUARANTY INSURANCE UNDERWRITERS, INC., Defendant-Appellant, Cross-Appellee. Summary Calendar. *
• Court: U.S. Court of Appeals — Fifth Circuit

Page 984

582 F.2d 984

Boyd BLACK, Plaintiff-Appellee, Cross-Appellant, v. FIDELITY & GUARANTY INSURANCE UNDERWRITERS, INC. Defendant-Appellant, Cross-Appellee.

No. 77-3470

Summary Calendar. ^*

United States Court of Appeals Fifth Circuit.

Oct. 27, 1978.

John W. Crowell, Aubrey E. Nichols, Columbus, Miss., for defendant-appellant, cross-appellee.

James D. Waide, III, West Point, Miss., for plaintiff-appellee, cross-appellant.

Appeals from the United States District Court for the Northern District of Mississippi.

Before THORNBERRY, GODBOLD and RUBIN, Circuit Judges.

THORNBERRY, Circuit Judge:

This diversity insurance case ¹ requires us to interpret Mississippi law. A truck owned by plaintiff Black was destroyed in a collision with a car on July 18, 1975, in Choctaw County, Miss. However, 11 days before the wreck, defendant insurance company had mailed notice of cancellation to Black, advising him that his insurance policy covering the truck would be cancelled on July 17 for nonpayment of premium. The company refused to pay Black's ensuing claim on the ground that the policy had been cancelled on the day prior to the accident, and this suit followed.

The district court granted partial summary judgment for plaintiff on the issue of defendant's liability, holding that the cancellation became effective ten days following actual receipt of notice by plaintiff, not ten days after it had been mailed. A jury then found that the other vehicle in the accident was uninsured and awarded plaintiff $6000 for property damage and $2250 for loss of income resulting from the property damage. The district court, which had refused to present a punitive damages issue to the jury, subsequently held that, under the policy plaintiff was not entitled to recover for the lost income. Judgment for plaintiff was entered for $6000, plus statutory interest, and defendant appealed. Plaintiff cross-appealed on the issue of damages. For the reasons stated below, we affirm in part and reverse in part.

I. NOTICE OF CANCELLATION

Defendant contends that the district judge erred in holding that the cancellation became effective ten days after plaintiff received notice, and argues that under Mississippi law, cancellation for nonpayment of premiums is effective ten days after notice of such cancellation is mailed to the policyholder.

In 1964, the Mississippi Supreme Court held that an insurance policy was properly cancelled when the insurer mailed notice of that cancellation to the insured, since the policy itself provided that such mailing constituted sufficient proof of notice. Actual receipt of the notice was thus not required. Employers Mut. Cas. Co. v. Nosser, 250 Miss. 542, 164 So.2d 426 (1964).

The court was careful to point out that the state had no statutory provisions affecting notice and cancellation of insurance policies and indicated that the presence of such a statutory scheme would possibly call for a different result. 164 So.2d at 434. In 1970, the Mississippi Legislature filled the void by passing the following statutes:

§ 83-11-5. Notice of cancellation.

No notice of cancellation of a policy to which section 83-11-3 applies shall be effective unless mailed or delivered by the insurer to the named insured at least twenty (20) days prior to the effective date of cancellation; provided, however, that where cancellation is for nonpayment of premium at least ten (10) days' notice of cancellation accompanied by the reason therefor shall be given. Unless the reason accompanies or is included in the notice of cancellation, the notice of cancellation shall state or be accompanied by a statement that upon written request of the named insured, mailed or delivered to the insurer not less than fifteen (15) days prior to the effective date of cancellation, the insurer will specify the reason for such cancellation.

This section shall not apply to nonrenewal.

§ 83-11-9. Proof of notice.

Proof of mailing of notice of cancellation, or of intention not to renew, or of reasons for cancellation to the named insured by a certificate of mailing, at the address shown in the policy, shall be sufficient proof of notice.

The section references are to the Mississippi Code of 1972.

A case spawned by the ill winds of Hurricane Camille reached the state's highest court in 1975. In Nelson v. Phoenix of Hartford Ins. Co., 318 So.2d 839 (Miss.1975), the court distinguished Nosser and held that actual receipt of the notice was required when the insurance policy provided that notice of cancellation was to be Given. The policy in Nosser stated that the company could Mail notice to the insured and that the mailing constituted sufficient proof of notice. In Nelson, however, the policy required that notice be "given" to the insured.

The Nelson decision does not address the impact of the 1970 legislation because the policy was cancelled almost a year before the statutes became effective. Neither party in the instant case cites a Mississippi decision construing the statutes, and our research reveals none. Accordingly, we must embark on an Erie ² journey into virgin judicial territory. ³

Defendant argues that because the policy provided for cancellation "by mailing to the named insured . . . written notice," Nosser is controlling. In addition, defendant asserts that the statutes enacted in 1970 represent a codification of the Nosser decision.

We disagree, although candor compels admission that the statutory scheme is less than clear and is capable of varying interpretation. In these circumstances, and when state decisional law affords no guidance, the interpretation of the district judge, who is well versed in the intricacies and trends of local law, is entitled to great deference. Bishop v. Wood, 426 U.S. 341, 346 & n.10, 96 S.Ct. 2074, 48 L.Ed.2d 684 (1976) (citing cases).

Section 83-11-5 clearly distinguishes between cancellation for nonpayment of premium and cancellation for any other reason. ⁴ In the former situation, at least ten days' notice "accompanied by the reason therefor shall be given." In the latter, notice of cancellation is not effective "unless mailed or delivered by the insurer to the named insured at least twenty days prior to the effective date of cancellation." We can overlook neither the different terms employed in each situation nor the grammatical structure of each clause. The legislature could have easily repeated the words "mailed or delivered" in connection with notice of cancellation for nonpayment, but it utilized the word "given" instead. Moreover, the clauses are not parallel grammatically. One states that "no notice . . . shall be effective unless mailed or delivered," while the other says that "notice . . . shall be given." If, as defendant argues, the term "given" is simply a generalized synonym for the previously used terms "mailed or delivered," one would think that the sentence would have been written to make the parallel obvious. ⁵

More significantly, the Mississippi Supreme Court in Nosser emphasized that it was writing on a clean slate, unimpeded by statutes. The court said:

(I)n all cases with the exception of one California and one Minnesota case where actual receipt of the notice of cancellation was held necessary, despite the policy provision that notice of cancellation mailed to the address of the assured . . . should be sufficient notice, A statute required that the insured be given notice of the cancellation in a specified number of days. Apparently such a statutory provision overrides a clause in the policy which would tend to nullify the intention of the legislature . . . .

164 So.2d at 434 (emphasis original). After Nosser was decided, the Mississippi Legislature passed such a statute, requiring that at least ten days' notice "shall be given" when cancellation is for nonpayment of premium. The Nelson case, though decided after the adoption of § 83-11-5, also indicates the distinction between requiring that notice be "given" and allowing a mere "mailing" to be sufficient. 318 So.2d at 842.

In dealing with other types of insurance policies, the legislature has distinguished between notice of cancellation that must be "given" and notice of cancellation that may simply be "mailed or delivered." For example, § 83-9-5, which deals with accident and health insurance policies, provides in subsection (2)(e) that the insurer may cancel the policy at any time by written notice "delivered to the insured, or mailed to his last address as shown by the records of the insurer." In contrast, § 83-41-201, which pertains to hospital, medical, or surgical insurance, states a general rule that an insurer shall not cancel such a policy "without first giving written notice to the insured." Therefore, we cannot assume that the legislature picked the word "given" out of the air when writing § 83-11-5. ⁶

Accordingly, we hold that § 83-11-5 requires that notice of cancellation for nonpayment of premium be given at least ten days before the effective date of the cancellation and that the timeliness of the notice is to be determined by the date of its receipt rather than by the date of its mailing. If cancellation is for a reason other than nonpayment, the notice may be mailed or delivered at least twenty days before the cancellation date. The district court's grant of partial summary judgment on the issue of defendant's liability under the policy is thus affirmed.

II. LOSS OF INCOME

Plaintiff by cross-appeal argues that the district court erred in striking the jury's award of $2250 in damages for loss of income. The district court did so after defendant filed, some three months after entry of judgment, an amendment to its timely filed motion for judgment n. o. v., new trial, or remittitur. In this amendment, defendant argued for the first time that such an award is impermissible under the state's uninsured motorist statute, Miss.Code Ann. § 83-11-101. ⁷ The thrust of plaintiff's contention is that the issue was not...