Mississippi Farm Bureau Cas. Ins. Co. v. Orme
| Decision Date | 07 March 2006 |
| Docket Number | No. Civ.A. 3:04CV811LN.,Civ.A. 3:04CV811LN. |
| Citation | 422 F.Supp.2d 685 |
| Parties | MISSISSIPPI FARM BUREAU CASUALTY INSURANCE COMPANY Plaintiff v. Jennifer I. ORME Defendant |
| Court | U.S. District Court — Southern District of Mississippi |
J. Tucker Mitchell, John E. Gough, Jr., Copeland, Cook, Taylor & Bush, Ridgeland, MS, for Plaintiff.
Michael F. Myers, Currie, Johnson, Griffin, Gaines & Myers, Jackson, MS, for Defendant.
This cause is before the court on defendant Jennifer I. Orme's motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiff Mississippi Farm Bureau Casualty Insurance Company (Farm Bureau) has responded in opposition to the motion and the court, having considered the memoranda of authorities submitted by the parties, concludes that defendant's motion is well taken and should be granted.1
This case stems from an October 17, 1997 automobile accident that occurred when a vehicle in which Tommy Vaughn was a passenger was rear-ended by the vehicle of Jennifer Orme. Orme had a liability insurance policy with State Farm Insurance Company which provided coverage limits of $100,000; Vaughn was covered under a Farm Bureau policy which provided uninsured/underinsured motorist (UM) limits of $450,000. State Farm paid for the property damage to Vaughn's vehicle, and apparently made some payments for injuries to other occupants of the Vaughn vehicle, but it made no payments initially for any injuries sustained by Vaughn.
Two years after the accident, in July 1999, Vaughn made a claim with Farm Bureau under his UM coverage, following which Farm Bureau put State Farm on notice that it would seek subrogation in the event it had to pay under its policy due to Orme's negligence. Meanwhile, Farm Bureau began investigating Vaughn's claim. Farm Bureau states that after receiving some of his medical records and bills, it began to suspect that some of his claimed injuries were not related to the accident with Orme, or that his claims were exaggerated in general. It explained this to Vaughn when, in August 2000, it made an offer to settle his UM claim for $20,000. Vaughn rejected the offer, and not long thereafter, on October 13, 2000, four days before the three-year statute of limitations would have run on his claims against Orme, Vaughn filed suit against Farm Bureau and Orme in the Circuit Court of Hinds County. Vaughn served process on Farm Bureau on October 17th, one day before the statute of limitations would have run, but he never served process on Orme. A year later, in October 2001, Farm Bureau filed a cross-claim against Orme for contractual and/or statutory subrogation; however, like Vaughn, Farm Bureau never served her with process in the case.
Nearly three years later, after discovery in the state court action, Farm Bureau and Vaughan unsuccessfully mediated their dispute. According to Farm Bureau, while the mediation was unsuccessful, it did become apparent during the course of the mediation that at least some of Vaughn's injuries were legitimate and were legitimately related to the Orme accident. As Farm Bureau states in its brief:
Until very shortly before the mediation, Mr. Vaughn had not produced a complete set of his medical bills or medical records. After Farm Bureau was able to analyze and investigate the complete set of Mr. Vaughn's medical records and bills, which again were produced just prior to mediation, it became obvious to any reasonable person reviewing the evidence that the reasonable value of Mr. Vaughn's claim at that point was $100,000.
Thus, on June 3, 2004, seven years after the accident, Farm Bureau tendered $100,000 to Vaughn under his UM coverage.2 It then filed the present action on October 4, 2004 seeking "equitable indemnity" from Orme for the $100,000 it paid Vaughn.
A company providing coverage for uninsured or underinsured motorists has a right, by statute, and typically by contract as well, to seek reimbursement from the tortfeasor.3 To enforce that right, the insurer is entitled to be subrogated to the rights of its injured insured. Jackson v. State Farm Mut. Auto. Ins. Co., 852 So.2d 641, 644 (Miss.Ct.App.2003) (citing Miss.Code Ann. § 83-11-107 (Supp. 2002), rev'd on other grounds, 880 So.2d 336 (Miss.2004)). This right to seek subrogation is derivative, and as such, as the Mississippi Supreme Court has long recognized, "a subrogated insurer stands in the shoes of its insured, and takes no rights other than those that the insured had, and is subject to all defenses which the third party tort feasor might assert against the insured." Indiana Lumbermen's Mutual Insurance Co. v. Curtis Mathes Mfg. Co., 456 So.2d 750, 754 (Miss.1984); see also Jackson v. State Farm Mut. Auto. Ins. Co., 852 So.2d 641, 644 (Miss.Ct.App.2003), rev'd on other grounds, xxx (recognizing that insurer's subrogation rights by definition are derivative and that "[t]herefore, the subrogation claim is `bound by the same statute of limitations, and in the same manner, as a claim by the plaintiff against the tortfeasor would be."). Farm Bureau thus concedes, as it must, that its rights to contractual and statutory subrogation, being solely derivative of the rights of its insured, are barred by the three-year statute of limitations of Mississippi Code Annotated § 15-1-49.
Farm Bureau contends, though, that while it is barred from proceeding against Orme for subrogation, it is entitled to proceed against her for "equitable indemnification," which it submits is not derivative and, such claim having accrued at the time of Farm Bureau's payment to Vaughn under its policy, is not time barred. In her motion for summary judgment, Orme argues that Mississippi law does not give an insurer such as Farm Bureau a right to equitable indemnification but rather limits such insurers to recovery according to their subrogation rights, but that even if Mississippi did recognize an equitable indemnity theory of recovery, Farm Bureau could not meet the necessary elements of such a claim under the facts of this case.
Neither the Mississippi Supreme Court nor the Mississippi Court of Appeals has had occasion to consider whether an insurer has a right to proceed against a tortfeasor for equitable indemnification. Farm Bureau points out, however, that the United States District Court for the Northern District of Mississippi has ventured an Erie-guess that the Mississippi Supreme Court would recognize such a right of recovery. See Coleman v. American Manufacturers Mutual Insurance Co., 930 F.Supp. 255 (N.D.Miss.1996). Coleman involved an October 3, 1993 accident in which Coleman's vehicle was struck in an intersection by a fire truck operated by the City of Greenville. When the City refused Coleman's demand for payment for compensation for his injuries on the basis of immunity, Coleman turned to his own insurer, claiming the City's fire truck was an uninsured vehicle under Mississippi's Uninsured Motorist Act. Id. at 261. The claim was denied, following which Coleman filed suit against his sued his insurer, American Manufacturers, which in turn filed a third-party claim for indemnification against the City. The court initially considered whether the City fire truck qualified as an uninsured vehicle under the Uninsured Motorist Act, and, being unable to conclude as a matter of law that it was not, denied the insurer's motion for summary judgment. The court then considered to the City's contention that the insurer's suit against it for indemnification was time-barred.
The court first concluded that the insurer's claim for subrogation was "bound by the same statute of limitations, and in the same manner, as a claim by the plaintiff (Coleman) against the third-party defendant City of Greenville would be." Id. at 261-62. Accordingly, the insurer's subrogation claim against the City by virtue of the accident arose on the same day as the insured's actionable claim against the City, i.e., the date of the accident. As the insurer's third-party complaint against the City was filed...
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