Moore v. United Services Auto. Ass'n

• Decision Date: 05 February 1987
• Docket Number: No. 86-4080,86-4080
• Citation: 808 F.2d 1147
• Parties: Orma G. MOORE, Plaintiff-Appellant, v. UNITED SERVICES AUTOMOBILE ASSOCATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1147

808 F.2d 1147

Orma G. MOORE, Plaintiff-Appellant, v. UNITED SERVICES AUTOMOBILE ASSOCATION, Defendant-Appellee.

No. 86-4080.

United States Court of Appeals Fifth Circuit.

Feb. 5, 1987.

C.R. McRae, Margaret P. Ellis, Pascagoula, Miss., for plaintiff-appellant.

Harry R. Allen, Cynthia M. Sarthou, Gulfport, Miss., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Mississippi.

Before GARZA, DAVIS, and JONES, Circuit Judges.

GARZA, Circuit Judge:

BACKGROUND

This case concerns a dispute over recovery under an insurance policy held by decedent Francis E. Shine. On January 26, 1979, appellant Orma Moore left Boca Raton, Florida, with Francis Shine, Diane Shine, and Patricia Shine for a ski holiday in Colorado. At approximately 3:30 a.m. on January 27, 1979, the group was involved in a two-car accident on U.S. 98 in George County, Mississippi. Francis Shine and his wife, Diane Shine, a passenger in the front seat, were both pronounced dead at the scene. Patricia Shine and her friend Mr. Orma Moore were asleep in the back seat of the Ford van; though they suffered various injuries, they survived. Mr. Moore received medical treatment immediately after the accident at George County Hospital in Mississippi and then returned to Florida--his state of residence.

Francis Shine was the named insured on an automobile insurance policy issued by appellee United Services Automobile Association (USAA) which covered the vehicle involved in the crash. This policy provided uninsured motorist coverage with limits on recovery of $100,000 per person and $200,000 per accident for each of Shine's two vehicles, the Ford van and a Toyota. The policy also provided $100,000 liability coverage in case of Shine's negligence and medical payments up to $5,000 per person for any medical care required due to an accident. The other car involved in the crash was not covered by insurance.

USAA began an investigation of the accident by hiring some independent adjusters to evaluate the underlying facts and assess liability. One of these adjusters, Jack Pane, phoned Moore in Florida to discuss the automobile accident. Moore claims that Pane was interested only in obtaining a release absolving USAA of any financial liability for the accident. Moore did tell Pane that he had hired counsel, a Mr. Mark Schecter, but Moore refused to make any statements regarding the collision. Pane called Mr. Schecter and inquired about Moore's medical condition and the potential claim on any insurance proceeds. Schecter told Pane only that Moore was not hospitalized and that his medical bills were being taken care of by Southern Bell Telephone Company, Moore's employer; no other substantial information about the accident was discussed. After this telephone conversation Pane wrote Schecter and requested that he contact Pane upon receipt of the letter. Both sides agree that no further contact occurred between the parties.

On March 27, 1979, the estate of Francis Shine brought suit against USAA for uninsured motorist benefits. ¹ USAA defended Shine's suit by claiming that any negligence by the uninsured motorist was secondary to the primary negligence of Shine himself. The jury considered Shine's negligence, proximate cause, and intervening cause and found in favor of Shine's estate. The jury awarded the estate $135,000, but an appeal to this Court reduced the award to $100,000, the "per person" recovery limit under Shine's insurance policy. ²

USAA originally offered the estate of Diane Shine, wife of the insured, only $10,000 to settle its claim. However, after the adverse decision in the trial of the claim brought by Francis Shine's estate, Diane Shine's estate demanded $100,000 of uninsured motorist benefits too. Patricia Shine had previously settled her claim for injuries against USAA for $65,000. USAA's internal accounting procedures attributed the payments made to Patricia Shine as payments due under both liability and uninsured motorist coverage in order to procure a general release from Patricia Shine for all possible claims. Since Diane Shine's estate wanted $100,000 to settle out of court, the $65,000 settlement with Patricia Shine was recoded as payments due under the liability portion of the insurance policy. Diane Shine's estate was paid the remaining $100,000 of uninsured motorist benefits. ³

A few years later, on May 30, 1984, plaintiff-appellant Moore filed a direct suit against USAA both for the insurer's liability coverage and the uninsured motorist coverage. Moore advanced two theories of recovery. The first theory of recovery depends upon the "stacking" of insurance policies. Each of Shine's vehicles was covered for uninsured motorist benefits of $100,000 recovery per person, $200,000 per accident. Moore argues that the unused portion of Shine's policy covering the vehicle that wasn't involved in the accident (the Toyota) should be "stacked" on top of the damaged vehicle policy (the Ford van) to permit Moore to recover uninsured motorist benefits. Second, Moore claims there is no limit on the liability coverage under Shine's policy. Moore contends that USAA could have paid the claims of the decedents' estates out of liability coverage instead of uninsured motorist coverage. If USAA had done so, Moore could now successfully claim uninsured motorist benefits under Shine's policy without the $200,000 limit already having been paid out to the estates of Francis and Diane Shine. USAA's failure to provide insurance benefits to Moore is alleged as an independent tort of bad faith which entitles Moore to punitive damages. USAA responded: (1) that it had paid the full $200,000 "per accident" limit under the uninsured motorists provision of Shine's policy; and (2) that Moore's suit for Shine's negligence could not be brought against USAA directly and was barred by the statute of limitations.

The district court agreed with Moore that available benefits under Shine's policy were not exhausted--uninsured motorist benefits still existed under the Toyota portion--but granted summary judgment in favor of USAA by finding that Florida law prohibited the "stacking" of insurance policies at the time relevant to this lawsuit and that USAA properly paid the $200,000 recovery out of uninsured motorist benefits. The district court also concluded that there was no evidence of an independent tort supporting the award of punitive damages. Moore appeals from this adverse ruling on summary judgment.

DISCUSSION

There are two issues of substance on appeal: (1) whether Mississippi law or Florida law governs the case; and (2) whether the district court properly entered summary judgment for USAA.

A) Choice of Law

The district court in this diversity case was bound by Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), to apply the choice of law rules utilized by the state in which it sits. Mississippi applies the "center of gravity" test to determine which state's law controls a suit. Craig v. Columbus Compress & Warehouse Co., 210 So.2d 645 (Miss.1968); Boardman v. United Services Automobile Assn., 470 So.2d 1024 (Miss.1985) (certified by Fifth Circuit to Mississippi Supreme Court). The "center of gravity" test is an evaluation of which state has the greatest concern for the rights and liabilities of the parties to the litigation. Tideway Oil Programs, Inc. v. Serio, 431 So.2d 454, 458 (Miss.1983). According to the Mississippi Supreme Court decision in Boardman, the factors to be considered in a contract action include: (a) the place of contracting; (b) the place of negotiation of the contract; (c) the place of performance; (d) the location of the subject matter of the contract; and (e) the domicile, residence, nationality, and place of business of the parties. Boardman, 470 So.2d at 1032; RESTATEMENT (2d) Conflict of Law Sec. 188 (1971).

Francis Shine was a resident of Florida and entered into an insurance contract with USAA while in Florida. Both cars covered by the USAA policy were registered in Florida, and all occupants of the vehicle at the time of the accident were Florida residents. The only contact with Mississippi was the fortuitous circumstance that the automobile crash occurred there. The district court concluded that Florida has by far the most significant relationship to the parties and issues involved in this litigation.

Moore acknowledges that Mississippi attempts to ascertain where a lawsuit's "center of gravity" is in order to determine which state's substantive law controls. But Moore emphasizes that the Boardman Court added two qualifications to the choice of law test. First, the law of a single state may not control every issue in a case--different issues may have a different "center of gravity" and may, therefore, require application of a different state's law. 470 So.2d at 1031. Second, even though another state's law should be applied under the "center of gravity" test, where that state's law "is contrary to the deeply ingrained and strongly felt public policy of this state [Mississippi] ... we may nevertheless apply and enforce this state's positive substantive law." Id. (citing McNeal v. Administrator of Estate of McNeal, 254 So.2d 521, 524 (Miss.1971)).

Moore argues that Mississippi has long recognized that the insurance business is affected with a public or quasi-public interest; the Mississippi Motor Vehicle Act and Uninsured Responsibility Act have both been liberally construed as a matter of public policy to protect innocent motorists. Therefore, according to Moore, the district court failed to consider the "public importance" of Mississippi's policy that protects motorists and allows Mississippi law to control the "stacking" of insurance policies. This choice of law is crucial: Mississippi arguably allows the "stacking" of insurance policies to enhance an accident victim's recovery, but a Florida statute in effect from 1976-1980 strictly prohibited...