Mississippi Ins. Guar. Ass'n v. Harkins & Co., 92-CA-00350-SCT

Decision Date16 March 1995
Docket NumberNo. 92-CA-00350-SCT,92-CA-00350-SCT
Citation652 So.2d 732
PartiesMISSISSIPPI INSURANCE GUARANTY ASSOCIATION v. HARKINS & COMPANY.
CourtMississippi Supreme Court

Robert H. Pedersen, Watkins & Eager, Jackson, for appellant.

Mark C. Baker, Wilburn Hyche, Rainer & Hyche, Brandon, for appellee.

Before HAWKINS, C.J., and McRAE and JAMES L. ROBERTS, Jr., JJ.

HAWKINS, Chief Justice, for the Court:

On July 11, 1991, appellee Harkins & Company (hereinafter "Harkins") filed a complaint against appellant Mississippi Insurance Guaranty Association (hereinafter "MIGA"). After 30 days passed without any action by MIGA, Harkins filed an Application for Entry of Default and Supporting Affidavit on August 22, 1991. That same day a Docket Entry of Default was entered against MIGA by the Rankin County clerk. On August 30, 1991, Harkins filed an Amended Complaint against MIGA. This time, MIGA responded with a filing styled Defenses and Answer of Mississippi Insurance Guaranty Association which was entered September 30, 1991. Harkins then entered a Motion for Summary Judgment on November 8, 1991, which was followed by MIGA's Motion to Strike and Set Aside Entry of Default on November 27, 1991. An Order setting aside Default was entered on December 12, 1991.

On November 27, 1991, MIGA filed a motion styled MIGA's Opposition to Plaintiff's Motion for Summary Judgment and MIGA's Cross-Motion for Summary Judgment, which was supplemented on January 8, 1992. MIGA's Rebuttal Brief in Support of Its Summary Judgment and in Opposition to Harkins' Motion for Summary Judgment was filed on January 2, 1992. Harkins filed a Reply to Defendant's Response to Plaintiff's Motion for Summary Judgment and to Defendant's Cross-Motion for Summary Judgment on December 6, 1991, to which they added a Supplemental Reply to Defendant's Response to Plaintiff's Motion for Summary Judgment and to Defendant's Cross-Motion for Summary Judgment on January 7, 1992.

A Memorandum Opinion and Order granting Harkins' motion for summary judgement and denying MIGA's motion for summary judgment was entered on February 20, 1992. A final judgment, which differed from the Memorandum Opinion and Order only as to the amount awarded, was filed on March 4, 1992. On March 4, 1992, MIGA filed an appeal to this Court.

FACTS

The facts in this case are essentially undisputed. Harkins & Company is a Texas corporation which was authorized to do business in Mississippi from March 13, 1970, to February 16, 1990. The Mississippi Insurance Guaranty Association is a nonprofit unincorporated legal entity created by statute under Sec. 83-23-111. In 1985 Harkins owned a 25% share and operated the Fortenberry Unit 10-11 No. 1 Well located in Jefferson Davis County, Mississippi. In the summer of that year, the company rented 432 joints of tubing from the Louisiana-based LTM Rental Tools, which were run into the well on June 12, 1985. It was soon discovered that in the course of operation the tubing had accidentally been cemented in the hole. After the tubing was removed, tests of the tubing conducted by Free State Tool Company revealed that three joints of tubing leaked and that these leaks had caused the tubing to be improperly cemented.

Harkins sued LTM Rental Tools and four other defendants in the United States District Court for the Southern District of Mississippi, Hattiesburg Division, on March 28, 1989. A Motion for Judgment by Default entered on April 24, 1990, by Harkins against LTM Rental Tools claimed that the tubing caused $219,274.09 in damages. MIGA's Rebuttal Brief in Support of Its Summary Judgment and in Opposition to Harkins' Motion for Summary Judgment gives a useful point-by-point summary of these damages as described in an affidavit and exhibits entered by Harkins in conjunction with their motion for default against LTM. According to MIGA's brief the damages consisted of:

1. $71,657.90 for rig charges paid to Triple S Oil Service for pulling the defective tubing from the gas well.

2. $22,620.00 for renting the tubing from LTM at the rate of $780.00 per day for 29 days.

3. $8,063.74 for renting other tubing.

4. $5,913.72 to McMullough Tool Company for running a piece of equipment called a "jet cutter."

5. $1,709.74 to Free State Tool Company for testing the tubing 6. $950.82 to Free State Tool Company for running the bailer during the removal of the tubing from the well.

7. $2,523.00 to Halliburton for pumping services provided while the tubing was being removed from the well.

8. $4,326.29 to Dresser Atlas to re-perforate a formation during the removal of the tubing.

9. $97,566.60 to Rainbow Rental & Fishing Tools for equipment used during the removal of the tubing.

10. $3,942.28 to Halliburton for damage that occurred to a setting tool during the removal of the tubing.

LTM did not answer Harkins' complaint or oppose Harkins' motion for default. A judgment dated May 4, 1990, found for Harkins against LTM in the amount of $219,274.09 plus prejudgment interest and costs.

At the time of the well tubing incident, LTM was insured by Westmoreland Casualty Company under a comprehensive general liability insurance contract. According to the Mississippi Department of Insurance, Westmoreland Casualty Company was licensed in Mississippi from May 1, 1983, to November 23, 1987. Westmoreland Casualty was later declared insolvent by the Commonwealth Court of Pennsylvania on September 27, 1988.

The present lawsuit began with Harkins' July 11, 1991, filing of a Complaint against MIGA in the circuit court of Rankin County. On August 22, 1991, Harkins applied for an entry of default against MIGA which was entered by the Circuit Clerk that same day. Harkins then filed an Amended Complaint on August 30, 1991, to which MIGA filed defenses and an answer on September 30, 1991. About a month later, on November 27, 1991, MIGA filed a motion to Strike and Set Aside Entry of Default, which was granted on December 12, 1991.

On November 8, 1991, Harkins filed a Motion for Summary Judgment against MIGA. MIGA responded on November 27, 1991, with a motion styled MIGA's Opposition to Plaintiff's Motion for Summary Judgment and MIGA's Cross-Motion for Summary Judgment which they supplemented on January 8, 1992. Harkins then filed a Reply to Defendant's Response to Plaintiff's Motion for Summary Judgment and to Defendant's Cross-Motion for Summary Judgment on December 6, 1991, which was followed on January 7, 1992, by their Supplemental Reply to Defendant's Response to Plaintiff's Motion for Summary Judgment and to Defendant's Cross-Motion for Summary Judgment.

On February 20, 1992, a Memorandum Opinion and Order was handed down by Circuit Court Judge John Toney which denied MIGA's motion for summary judgment, granted Harkins' motion for summary judgment, and awarded Harkins $219,274.09 plus court costs and eight percent interest from September 1, 1985, until the date of payment of the judgment. MIGA then entered a motion to amend the Memorandum Opinion and Order on February 28, 1992. According to this motion, the total amount of the judgment as outlined by the Memorandum Opinion and Order would be $332,791.81 and that under Miss.Code Ann. Sec. 83-23-101 et seq. (1972), MIGA's maximum obligation was only $300,000.00. Therefore, claimed MIGA, the court should amend its opinion and hold that they be required to pay Harkins only $300,000. This motion was granted by Judge Toney on March 4, 1992. That same day, Judge Toney also granted Harkins' motion for summary judgment and awarded them $300,000.00. MIGA appealed to this Court on March 31, 1992.

LAW

The standard of review in summary judgment cases is well established. According to Townsend v. Estate of Gilbert, 616 So.2d 333 (Miss.1993):

This Court employs a de novo standard of review in reviewing a lower court's grant of a summary judgment motion. This entails reviewing all the evidentiary matters in the record: affidavits, depositions, admissions, interrogatories, etc. The evidence must be viewed in the light most favorable to ... the non-moving parties, and they are to be given the benefit of every reasonable doubt. A motion for summary judgment lies only when there is no genuine issue of material fact, and the moving party is entitled to a judgment as a matter of law. M.R.C.P. 56(c) This Court does not try issues on a Rule 56 motion; it only determines whether there are issues to be tried.

Id. at 335 (citations omitted).

In the case at bar, the parties have agreed that there are no genuine issues as to material fact. All that remains is to determine if one of the parties is entitled to a judgment as a matter of law.

Before dealing with the specific claims of the appellant, Mississippi Insurance Guaranty Association, it is useful to take a close look at the Association itself and the laws which govern it. 1 The Mississippi Insurance Guaranty Association was created by Miss.Code Ann. Sec. 83-23-111 (1972):

There is created a nonprofit unincorporated legal entity to be known as the Mississippi Insurance Guaranty Association. All insurers defined as member insurers in section 83-23-109 shall be and remain members of the association as a condition of their authority to transact insurance in this state....

"Member insurer" is defined in Miss.Code Ann. Sec. 83-23-109(e) as "any person who (1) writes any kind of insurance to which this article applies under section 83-23-105, including the exchange of reciprocal or interinsurance contracts, and (2) is licensed to transact business in this state." According to Miss.Code Ann. Sec. 83-23-105, "This article shall apply to all kinds of direct insurance except life, title, surety, disability, credit, mortgage guaranty, and ocean marine insurance."

Furthermore, under Miss.Code Ann. Sec. 83-23-103 (1972):

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 ...

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