Nationwide Mut. Ins. Co. v. Yelverton

• Court: U.S. District Court — Southern District of Mississippi
• Writing for the Court: Bramlette
• Citation: Nationwide Mut. Ins. Co. v. Yelverton, 417 F.Supp.2d 817 (S.D. Miss. 2006)
• Decision Date: 02 March 2006
• Docket Number: No. 3:03 CV 1053 DCB JCS.,3:03 CV 1053 DCB JCS.
• Parties: NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff v. Alice YELVERTON; Rebecca Lafitte, Mother of Justin Dylan Grant, Deceased, for and on Behalf of Herself and All Heirs at Law, Defendants.

417 F.Supp.2d 817

NATIONWIDE MUTUAL INSURANCE COMPANY, Plaintiff v. Alice YELVERTON; Rebecca Lafitte, Mother of Justin Dylan Grant, Deceased, for and on Behalf of Herself and All Heirs at Law, Defendants.

No. 3:03 CV 1053 DCB JCS.

United States District Court, S.D. Mississippi, Jackson Division.

March 2, 2006.

Patrick Marvin Tatum, Upshaw, Williams, Biggers, Beckham & Riddick, LLP, Jackson, MS, for Plaintiff.

James G. McIntyre, Attorney, Jackson, MS, for Defendants.

BENCH OPINION

BRAMLETTE, District Judge.

This cause came on for trial before the Court without a jury on January 10, 2006. At the conclusion of the evidence, the Court announced to the parties that the record would remain open to receive the deposition of Tommy Carpenter in lieu of his live testimony,¹ and that deposition has been received by the Court. Having carefully considered the pleadings, the submissions of the parties, the record in this case and all evidence received at trial, the Court finds as follows:

This is a declaratory judgment action concerning a homeowner's insurance policy issued by Nationwide Mutual Insurance Company ("Nationwide") to defendant Alice Yelverton. Defendant Rebecca Lafitte commenced suit in state court against Yelverton alleging that Yelverton was negligent in failing to protect Lafitte's son, Justin Grant, from a fire which broke out in Yelverton's home, resulting in Justin's death.

Yelverton is the named insured in the homeowner's policy. Nationwide is defending Yelverton in the state court suit under reservation of rights. Nationwide seeks a declaratory judgment stating that the policy's exclusion from coverage for bodily injuries to an "insured" includes Justin Grant within the definition of "insured." Lafitte contends that Justin was not an "insured" under the policy exclusion.

The language in this particular policy specifically excludes coverage for any personal liability for "bodily injury to an insured as defined in Definitions 3a and 3b." (Nationwide's Homeowners Policy, p. 14, Section II—Exclusions). The policy language exempts Nationwide from liability to persons qualifying as an "insured" under the definitions set forth in the policy. "Insured" is defined in the policy as follows:

"Insured" means you and the following who live in your household:

a. your relatives.

b. any other person under age 21 and in the care of you or your relatives.

(Nationwide's Homeowners Policy, p. 2, Definitions ¶ 3).

After a partial ruling on the parties' motions for summary judgment, the issues were narrowed as follows: Whether Justin Grant was living in Alice Yelverton's household at the time of the fire, and if so, whether he was in the care of Alice Yelverton or her relatives.

On October 16, 2001, the day of the fire, Justin Grant was present in the home of Alice Yelverton in Hinds County, Mississippi. Also present that day were Tommy Carpenter, Yelverton's grandson, and Rebecca Lafitte, who had been living with Carpenter for a number of years. Justin was Rebecca Lafitte's son but Tommy Carpenter was not his father. Carpenter and Lafitte were the parents of an infant daughter, Kayla Lafitte, who was with her parents. Also present were Pamela Feathers, Yelverton's daughter, and Adam Hennington.

Tommy Carpenter and Rebecca Lafitte, along with Kayla and Justin, had moved into Alice Yelverton's home approximately two weeks prior to October 16, 2001. They had moved from Memphis; Tennessee, and were living with Yelverton while Carpenter looked for permanent employment and housing. Justin had been enrolled at Oak Forest Elementary School in Hinds County.

On the night of October 16, 2001, Carpenter and Lafitte, along with Kayla, left the Yelverton home to visit a friend. They allege that they told Yelverton they were leaving Justin asleep in the bedroom. Yelverton contends that she believed Justin to have left with Carpenter and Lafitte. Sometime that evening, a fire started in the house. Although Yelverton escaped from the house, Justin did not, and he died later that night from smoke inhalation.

"The construction and effect of an insurance policy are matters of law to be decided by the court." Jones v. Southern Marine & Aviation Underwriters, Inc., 888 F.2d 358, 360 (5th Cir.1989) (citations omitted). Inasmuch as this Court's jurisdiction is grounded in diversity, the oft-cited case of Erie Railroad Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938), commands the Court to employ the substantive law of Mississippi to determine the outcome of this dispute. See Sentry Ins. v. R.J. Weber Co., 2 F.3d 554, 556 (5th Cir.1993).

Regarding construction of insurance policies, Mississippi law is clear that an insurance contract, like any other contract, must be interpreted according to its terms. Foreman v. Continental Casualty Co., 770 F.2d 487, 489 (5th Cir.1985). The interpretation of an insurance policy is a question of law for the court when the meaning of the terms is clear and unambiguous. See Aero Int'l, Inc. v. United States Fire Ins. Co., 713 F.2d 1106, 1109 (5th Cir.1983); Reece v. State Farm Fire & Cas. Co., 684 F.Supp. 140, 143 (N.D.Miss. 1987). "No rule of construction requires or permits the court to make a contract differing from that made by the parties themselves, or to enlarge an insurance company's obligations where the provisions of its policy are clear.'" Id. at 489 (quoting State Auto. Mut. Ins. Co. v. Glover, 253 Miss. 477, 176 So.2d 256, 258 (1965)).

"Where terms of insurance contracts are ambiguous or doubtful, the contract must be construed most favorably to insured and against insurer. Terms of insurance policies are construed favorably to insured wherever reasonably possible, particularly exclusion clauses." State Farm Mut. Auto. Ins. Co. v. Scitzs, 394 So.2d 1371, 1372 (Miss.1981). "A supplemental rule of construction is that when the provisions of an insurance policy are subject to two interpretations equally reasonable, that interpretation which gives greater indemnity to the insured will prevail." Caldwell v. Hartford Accident & Indemnity Co., 248 Miss. 767, 160 So.2d 209 (1964).

However, it is also well-settled law that "the special rules favoring the insured are only applicable when there is an ambiguity ... [and that] courts ought not to strain to find such ambiguities, if, in so doing, they defeat probable intentions of the parties ... even when the result is an apparently harsh consequence to the insured." Courts will neither create an ambiguity where none exists nor make a new contract for the parties. If the policy language is clear, unequivocal, and, hence unambiguous, its terms will be enforced. Brander v. Nabors, 443 F.Supp. 764, 769 (N.D.Miss.1978) (internal citations omitted).

In determining whether an insurance policy is ambiguous, "[t]he mere fact that policy language requires interpretation does not render the policy ambiguous." Employers Ins. of Wausau v. Trotter Towing Corp., 834 F.2d 1206, 1210 (5th Cir.1988) (citations omitted). The construction of an insurance contract is limited to an examination of the "written terms" of the policy itself. Employers Mut. Casualty Co. v. Nosser, 250 Miss. 542, 553, 164 So.2d 426, 430 (1964). The policy itself is the sole manifestation of the parties' intent, and no extrinsic evidence is permitted absent a finding by a court that the language is ambiguous and cannot be understood from a reading of the policy as a whole. Cherry v. Anthony, Gibbs, Sage, 501 So.2d 416, 419 (Miss.1987). If an insurance contract is clear and unambiguous, the language therein must be given its plain meaning. Gulf Nat'l Bank v. United States Fire Ins. Co., 713 F.2d 1106, 1109 (5th Cir.1983); see also Putman v. Insurance Co. of North America, 673 F.Supp. 171, 175 (N.D.Miss.1987) ("Mississippi law requires that the words of the contract be given their ordinary meaning.") (citing Mississippi Power and Light v. United Gas Pipe Line, 760 F.2d 618 (5th Cir. 1985)). The Court must construe the policy in a manner that effectuates the parties' intentions. See Western Line Consol. School Dist. v. Continental Cas. Co., 632 F.Supp. 295, 302 (N.D.Miss.1986) (citing Monarch Ins. Co. v. Cook, 336 So.2d 738, 741 (Miss.1976)).

The first question for this Court is whether, under Mississippi law, the phrase "live in [the insured's] household" in the context of a homeowner's policy is ambiguous. "Live" can be considered synonymous with "reside." Webster's International Dictionary (3^rd Ed.); see also Davis v. State Farm Mut. Auto. Ins. Co., 583 So.2d 225, 229-30 (Ala.1991) and cases cited therein; St. Paul Fire and Marine Ins. Co. v. Lewis, 935 F.2d 1428 (3^rd Cir.1991).

In Merrimack Mutual Fire Ins. Co. v. McDill, 674 So.2d 4 (Miss.1996), the issue before the Mississippi Supreme Court was whether the lower court had erred in entering summary judgment holding that the insureds' child was a member of his parents' household under a homeowner's policy. Finding the case "inundated with disputed facts, material in nature," the Mississippi Supreme Court reversed the grant of summary judgment and remanded for a jury trial on the "household resident" issue. Merrimack Mutual, 674 So.2d at 10. In doing so, the state Supreme Court noted that the Fifth Circuit Court of Appeals had recently addressed the meaning of the phrase "resident of the insureds' household" under Texas law:

"the term `household' is not defined within the four corners of the Policy; neither is household truly a legal term of art. Rather, it is a term of ordinary, conversational usage and understanding."

Cicciarella v. Amica Mutual Ins. Co., 66 F.3d 764, 768 (5^th Cir.1995) (quoted in Merrimack Mutual, 674 So.2d at 9). The Mississippi Supreme Court added:

Significant to the case sub judice is whether it can be said with certainty that, as used in the Merrimack policy, "household" can mean any household or only the primary household, principal household, permanent household, or household for the...