Miga v. Cole ex rel. Dillon

Decision Date01 March 2007
Docket NumberNo. 2005-IA-02238-SCT.,No. 2005-IA-02246-SCT.,2005-IA-02238-SCT.,2005-IA-02246-SCT.
Citation954 So.2d 407
PartiesMISSISSIPPI INSURANCE GUARANTY ASSOCIATION v. Kyndall COLE, a Minor, By and Through Wendy DILLON as Next Friend and Natural Mother. Southwest Mississippi Regional Medical Center v. Kyndall Cole, a Minor By and Through Wendy Dillon as Next Friend and Natural Mother.
CourtMississippi Supreme Court

Clifford C. Whitney, III, Vicksburg, attorney for appellant in No. 2005-IA-02238-SCT.

T. Mack Brabham, McComb, attorney for appellee.

R. Mark Hodges, Gretchen W. Kimble, Jackson, attorneys for appellant in No. 2005-IA-02246-SCT.

Before SMITH, C.J., DIAZ and EASLEY, JJ.

EASLEY, Justice, for the Court.

¶ 1. These two consolidated interlocutory appeals were filed by the Mississippi Insurance Guaranty Association (MIGA) and Southwest Mississippi Regional Medical Center (SMRMC). Finding no error, this Court affirms the trial court's denial of MIGA's and SMRMC's motion for summary judgment.


¶ 2. On December 31, 2002, Wendy Dillon (Dillon) filed suit in the Circuit Court of Pike County, Mississippi, individually and on behalf of her minor child Kyndall Cole, for negligent care and treatment given to Dillon in the course of her pregnancy, which she alleged resulted in injuries to Cole.1 Dillon filed suit against Dr. Dawn Sumrall (Sumrall), McComb OB-GYN Associates (McComb OB-GYN), and SMRMC.

¶ 3. At the time Dillon filed suit, all three defendants had solvent insurance companies. Thereafter, SMRMC's insurer, Reciprocal of America (ROA), became insolvent. MIGA assumed the defense of SMRMC pursuant to Miss.Code Ann. § 83-23-115 (Rev.1999), the Mississippi Insurance Guaranty Act Association Law (the Guaranty Act). The Legislature enacted the Guaranty Act to provide payment of covered claims and avoid financial losses to claimants and insurance policyholders in the event an insurer becomes insolvent. Miss.Code Ann. § 83-23-103(Rev.1999).

¶ 4. Dillon settled her claim against Sumrall and McComb OB-GYN for an amount in excess of $300,000, but less than the maximum insurance policy limits. As part of the settlement terms, Sumrall and McComb admitted no liability. Sumrall and McComb OB-GYN were dismissed from the lawsuit.2

¶ 5. Dillon filed a second amended complaint, which added MIGA as a defendant, and sought declaratory judgment against MIGA regarding coverage. MIGA and SMRMC filed separate motions for summary judgment. MIGA's summary judgment motion sought relief from any obligation to pay Dillon. MIGA's interpretation of the Guaranty Act was that a joint tortfeasor's solvent insurance coverage had to be exhausted before MIGA had any responsibility to pay. MIGA also had a $300,000 statutory maximum obligation per claim. Sumrall and McComb OB-GYN had already settled with Dillon for an amount in excess of $300,000. Under MIGA's interpretation of the Guaranty Act, the plain language of its exhaustion provision (Miss. Code Ann. § 88-23-123 (Rev.1999)) required that Dillon's recovery of more than $300,000 from a solvent insurance policy be credited against any MIGA obligation. Because Dillon had received more than MIGA's $300,000 statutory maximum payment, MIGA argued it could credit that payment against its obligation.

¶ 6. SMRMC's summary judgment motion sought dismissal of the action based on immunity. SMRMC asserted immunity for any recovery by Dillon in excess of $250,000 pursuant to the Mississippi Torts Claim Act (the MTCA). Miss.Code Ann. § 11-46-15 (Rev.2002). Since SMRMC's insurer, ROA, had become insolvent, SMRMC also asserted that it was protected by the Guaranty Act. SMRMC maintained that it was not liable to Dillon for the same reason that MIGA claimed it was not liable to Dillon.

¶ 7. The trial court denied MIGA's and SMRMC's motions for summary judgment. Thereafter, MIGA and SMRMC separately petitioned this Court for interlocutory appeal. See M.R.A.P. 5. This Court granted both interlocutory appeals and stayed the trial court proceedings on January 12, 2006. This Court then consolidated the two interlocutory appeals. MIGA and SMRMC raise the following issues on appeal:

I. Whether the exhaustion provision of Miss.Code Ann. § 83-23-123 of the Mississippi Insurance Guaranty Association Law requires a claimant to exhaust a solvent insurance policy covering joint tortfeasors, and whether MIGA is entitled to a credit against its statutory obligation in the amount of the solvent insurance.

II. Whether SMRMC, a community hospital, is entitled to immunity under the Mississippi Tort Claims Act.


¶ 8. In Gorman-Rupp Co. v. Hall, 908 So.2d 749, 753-54 (Miss.2005), this Court set forth the standard of review in summary judgment issues as follows:

This Court applies a de novo standard of review on appeal from a denial of summary judgment by the trial court. Saucier ex rel. Saucier v. Biloxi Reg'l Med. Ctr., 708 So.2d 1351, 1354 (Miss.1998). See also Jenkins v. Ohio Cas. Ins. Co., 794 So.2d 228, 232 (Miss.2001); Russell v. Orr, 700 So.2d 619, 622 (Miss.1997); Richmond v. Benchmark Constr. Corp., 692 So.2d 60, 61 (Miss.1997); Northern Elec. Co. v. Phillips, 660 So.2d 1278, 1281 (Miss.1995).

Gorman-Rupp, 908 So.2d at 753-54.

I. Miss.Code § 83-23-123
A. The trial court order denying summary judgment

¶ 9. The trial court denied the separate summary judgment motions of MIGA and SMRMC.3 The trial court considered whether Dillon's claim against Sumrall was a "covered claim" and whether the exhaustion provision of Miss.Code Ann. § 83-23-123 was applicable. The trial court order stated, in part:

The court finds that the claim settled with Sumrall and McComb/OB-Gyn is not a "covered claim["] within the meaning of the Guaranty Act as it was written. The Act does not eliminate the Plaintiff's claim against SMRMC because a joint tortfeasor settled. Instead[,] it caps the potential recovery from MIGA if any on the claim against SMRMC.

The court finds that MIGA and SMRMC are not entitled to offset amounts paid by or for the co-defendants in this case. Indeed[,] a holding to the contrary would shift all of the "loss" to the settling co-defendant and plaintiff. Logic and simple economics dictate that the "loss" caused by insolvency cannot be eliminated, only redistributed. It appears that the purpose of the Guaranty Act is to cap the liability of the fund and distribute liabilities incurred among the contributing members. The act does not exist to shift the burden entirely to the solvent insurers of co-defendants. The Motions for Summary Judgments (granting the offset) are denied.

(Emphasis added).

B. The Guaranty Act

¶ 10. To determine if the exhaustion provision of the Guaranty Act is applicable, this Court must review the purpose and definition sections of the Guaranty Act in conjunction with the exhaustion provision. Miss.Code Ann. § 83-23-103 provides:

The purpose of this article is to provide a mechanism for the payment of covered claims under certain insurance policies to avoid excessive delay in payment and to avoid financial loss to claimants or policyholders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies, and to provide an association to assess the cost of such protection among insurers.

¶ 11. Therefore, the Guaranty Act is, in part, a mechanism to provide payment of "covered claims" and to avoid delays in payments and financial loss to a claimant or policyholder in the event an insurer becomes insolvent. This Court has held that the Guaranty Act statutes are to be construed liberally. Miss. Ins. Guar. Ass'n v. Byars, 614 So.2d 959, 963 (Miss. 1993). "[The] guidelines for the proper construction of this law can be found in Miss.Code Ann. § 83-23-107 (1972). `This article shall be liberally construed to effect the purpose under section 83-23-103, which shall constitute an aid and guide to interpretation.'" Miss. Ins. Guar. Ass'n v. Harkins & Co., 652 So.2d 732, 735 (Miss. 1995). In Byars, 614 So.2d at 963, this Court further held:

The Mississippi Insurance Guaranty Association Law was enacted to protect policy holders of certain kinds of insurance in the event of their insurer's insolvency. MIGA is a statutorily-created unincorporated association consisting of insurance companies doing business in Mississippi. Each solvent insurer doing business in this state is assessed a pro rata share of amounts paid on behalf of insolvent insurers. Bobby Kitchens v. Mississippi Insurance Guaranty Association, 560 So.2d 129, 131 (Miss.1989); Mississippi Insurance Guaranty Association v. Gandy, 289 So.2d 677, 681 (Miss.1973). MIGA is prohibited by statute from paying anything other than a covered claim, and the statute further requires that all other sources of insurance must be exhausted before looking to MIGA for any coverage. Id. at 131.

¶ 12. While Byars cites to Kitchens, 560 So.2d at 131, for the proposition that "MIGA is prohibited by statute from paying anything other than a covered claim, and the statute further requires that all other sources of insurance must be exhausted before looking to MIGA for any coverage[,]" this Court never reached the issue of the exhaustion provision. See also Miss.Code Ann. § 83-23-123.

¶ 13. This Court must examine what constitutes a "covered claim" as defined by the Guaranty Act. Miss.Code Ann. § 83-23-109(f) defines a "covered claim" as follows:

"Covered claim" means an unpaid claim, including one of unearned premiums, which arises out of and is within the coverage and not in excess of the applicable limits of an insurance policy to which this article applies issued by an insurer, if such insurer becomes an insolvent insurer and (1) the claimant or insured is a resident of this state at the time of the insured event, provided that for entities other than an individual, the residence of a claimant or insured is the state in which its principal place of business is located at the time of...

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