Cossitt v. Nationwide Mut. Ins. Co.

• Decision Date: 21 June 1989
• Docket Number: No. 07-58460,07-58460
• Citation: 551 So.2d 879
• Parties: Lillian Janice COSSITT and Joseph Q. White, Sr. v. NATIONWIDE MUTUAL INSURANCE COMPANY.
• Court: Mississippi Supreme Court

Page 879

551 So.2d 879

Lillian Janice COSSITT and Joseph Q. White, Sr. v. NATIONWIDE MUTUAL INSURANCE COMPANY.

No. 07-58460.

Supreme Court of Mississippi.

June 21, 1989.

As Corrected on Denial of Petitions for Rehearing Oct. 18, 1989.

Rehearing Denied Oct. 18, 1989.

Margaret P. Ellis, C.R. McRae, Pascagoula, Charles R. Wilbanks, Sr., Wilbanks Law Firm, Corinth, for appellants.

Thomas M. Murphree, Jr., David L. Ayers, Watkins & Eager, Robert M. Carpenter, McCoy, Wilkins, Noblin & Stephens, Jackson, for appellee.

Before ROY NOBLE LEE, C.J., and ROBERTSON and SULLIVAN, JJ.

ROY NOBLE LEE, Chief Justice, for the Court:

This case arises from an automobile accident in which Lillian Janice Cossitt and Joseph Q. White, Sr. were seriously injured and one Odom McDaniel was killed. Nationwide Mutual Insurance Company (Nationwide) was the uninsured motorist carrier for a Morrison Heights Baptist Church bus in which they were traveling on a church trip. Nationwide interpled uninsured motorist coverage of twenty-five thousand dollars ($25,000) on the bus into the Chancery Court of Hinds County, Mississippi. Cossitt and White counterclaimed for seventy-five thousand dollars ($75,000) uninsured motorist coverage on three (3) buses owned and operated by the church, contending that the policies should be "stacked," and for punitive damages based on a "bad faith" refusal to pay the claim. Shelby Mutual Insurance Company (Shelby) the workers' compensation insurance carrier for Morrison Heights Baptist Church, for whom Cossitt worked, intervened and sought to recover from Cossitt and Nationwide the amount of twenty-five thousand eight hundred seven dollars and ninety cents ($25,807.90), workers' benefits paid to Cossitt by Shelby.

The lower court denied all relief sought by Cossitt and White and divided the interpled sum of $25,000 between Cossitt, White and the Estate of Odom McDaniel. Shelby's claim for reimbursement of worker's benefits was granted, but attorney's fees in the sum of three thousand six hundred fifty-seven dollars seventy-two cents ($3,657.72) were paid to Cossitt and her attorney for collection of Cossitt's share in the interpled money.

Cossitt and White have appealed from the judgment entered by the lower court. Cossitt assigns fourteen (14) errors in the trial below, and White assigns six (6) errors.

The facts of the case are undisputed and were stipulated by the parties. On April 10, 1984, Odom McDaniel, Joseph Q. White, Sr., and Lillian Janice Cossitt (Activities Director of Morrison Heights Baptist Church) were traveling on a church-owned bus for an outing to Belzoni, MS. The bus came to a stop at a railroad crossing on Highway 49 East between Thornton, Mississippi, and Eden, Mississippi, because the highway was blocked at the railroad intersection. While the bus was stopped, McDaniel needed to answer a call of nature, and Cossitt and White departed the bus with him in order to assist in finding an appropriate restroom, either natural or constructed. While on the shoulder of the road, approximately four feet from the bus, Cossitt, White and McDaniel were struck by a truck driven by one Lester Davis. McDaniel was killed and Cossitt and White were injured.

At the time of the collision, Nationwide had in full force and effect an automobile insurance policy with Morrison Heights Baptist Church as the named insured and policyholder on the bus from which Cossitt, White and McDaniel alighted. Lester Davis, driver of the truck involved, had in effect at the time of the collision an automobile insurance policy with Southern Farm Bureau Insurance providing bodily injury liability limits of ten thousand dollars ($10,000) per person and twenty thousand dollars ($20,000) per occurrence. The amounts of the Davis policy limits in comparison to the damages inflicted upon the three passengers resulted in Davis being classified as an underinsured motorist.

On April 18, 1984, Nationwide's local agent in Clinton where Morrison Heights Baptist Church is located, notified Nationwide of the accident and the claims of the appellants and the Estate of McDaniel. On April 24, 1984, an adjuster from Nationwide, Jo Beth Glassco, interviewed the bus driver and learned that the three injured parties were outside the bus when the accident occurred. On April 26, 1984, Glassco took a statement from Cossitt, and on May 4, from Lester Davis, driver of the truck. She conducted a full investigation of the facts, and on June 7, 1984, wrote a letter to the injured parties denying all the uninsured motorist claims on the ground that the injured parties were not occuping the insured bus at the time the accident occurred. The pertinent part of the letter follows:

We have investigated the above captioned accident and the coverage under our insured's automobile policy. Under the automobile policy, underinsured motorist coverage provides coverage for only those persons occupying the automobile. Occupying means in, upon, getting in, on, out or off the automobile. Our investigation indicates that you were approximately four feet from the bus at the time of the accident. Therefore, you were not occupying the bus at the time of the accident. In view of these facts, there is no coverage under the underinsured motorist coverage of the automobile policy, and we must respectfully deny your claim. If you feel we are not in possession of all the facts, we will be happy to consider any information you wish to submit.

White's attorney wrote Nationwide asking for a copy of the church's insurance policy on the bus and a copy of the declaration sheet. In July, Glassco responded by again denying the claim in much the same language set forth above.

On receiving notice of White's lawsuit, the entire claim file on the accident was transferred to Virgil Bowles, Regional Claims Attorney for Nationwide, in Memphis, Tennessee. After studying the file and the applicable law, on October 24, 1984, Bowles wrote to Attorney Tom Murphree, Jackson, Mississippi, asking, inter alia, whether Murphree thought the uninsured motorist provision of the Nationwide policy on the bus would apply to the accident in question, since the claimants were pedestrians and were not "occupying" or using the bus at the time of the accident. Bowles was aware that this Court in Stevens v. United States Fidelity & Guaranty, 345 So.2d 1041 (Miss.1977), had held that a wrecker operator was "using" the wrecker while sweeping debris from the highway.

On November 13, 1984, Murphree wrote Bowles and indicated that he thought the Mississippi Supreme Court would hold that the use of the bus would be sufficient under the Stevens rationale to invoke the uninsured motorist provision of the policy. Murphree also inquired whether the church's policy insured more than one vehicle and, if so, whether there was a possibility of "stacking" the coverage. On January 15, 1985, Bowles wrote to Murphree agreeing that the Court would probably find coverage but contending that even though the church's policy covered three buses, coverage under a commercial policy could not be stacked.

In February, 1985, Bowles and Murphree made the decision to interplead the $25,000 coverage amount on the involved bus, and, on February 15, 1985, Bowles set forth Nationwide's position in a letter to the attorney representing the estate of Odom McDaniel.

On April 19, 1985, Nationwide filed in the Chancery Court of the First Judicial District of Hinds County a complaint for interpleader and declaratory judgment and tendered $25,000 into court. White, Cossitt and the Estate of McDaniel were all made parties. The Estate of McDaniel did not pursue a bad faith claim and has not appealed from the judgment of the lower court. Shelby sought to intervene in the suit pursuant to Mississippi Code Annotated Sec. 71-3-71 (1972) to recover the sums it had paid in workers' compensation benefits to Cossitt. At the time of the suit, Shelby had paid $25,807.90 as benefits to Cossitt and has since paid additional sums.

The appellants moved to transfer the case to Circuit Court, which motions were denied, and subsequently they moved for a jury trial in chancery court, which was also denied. The case was tried on November 13-14, 1986, and on January 21, 1987, the chancellor issued his opinion. On March 2, 1987, there was a hearing before the chancellor to establish attorney's fees for Cossitt, and the chancellor issued a supplemental opinion. Those opinions may be examined as Appendix I and II.

On April 21, 1987, judgment was entered awarding to White, the Estate of McDaniel, and Shelby Mutual Insurance Company the sum of eight thousand three hundred thirty-three dollars thirty-three cents ($8,333.33) each, plus prejudgment interest at eight percent (8%), amounting to one thousand eight hundred fifty-five dollars ($1,855.00) each. Shelby Mutual was ordered to pay Jan Cossitt the sum of three thousand six hundred fifty-seven dollars seventy-two cents ($3,657.72) as her costs of recovery.

LAW

Cossitt assigns fourteen (14) errors in the trial below, and White assigns six (6) errors. The assignments of error will be consolidated for discussion under the following issues: (1) denial of right to jury trial; (2) the propriety of "stacking" the uninsured motorist coverage on all three buses covered by the church's business policy in order to compensate Class II insured persons; (3) the issue of whether Nationwide's conduct constitutes such "bad faith" as to amount to an independent tort for which punitive damages should have been imposed; and (4) the question of whether the workers' compensation carrier was properly allowed to intervene and recover that portion of Cossitt's award up to the amount which it had already provided to Cossitt in workers' compensation benefits.

I. Jury Trial

Appellants contend that the lower court should have transferred the case to circuit court in order to provide them with a jury trial in compliance with Miss. Const....