NOXUBEE CO. SCH. DIST. v. UNITED NAT. INS.

Decision Date30 September 2004
Docket NumberNo. 2003-CA-00936-SCT.,2003-CA-00936-SCT.
Citation883 So.2d 1159
PartiesNOXUBEE COUNTY SCHOOL DISTRICT v. UNITED NATIONAL INSURANCE CO. and Murdock Claims Management Company.
CourtMississippi Supreme Court

Kenneth Mayfield, Tupelo, Bennie L. Turner, West Point, William E. Catledge, Tupelo, attorneys for appellant.

Rebecca Suzanne Blunden, Charles G. Copeland, Ridgeland, J. Wade Sweat, attorneys for appellees.

EN BANC.

GRAVES, Justice, for the Court.

¶ 1. This case involves an insurance dispute between an insurer and an insured with the central issue bearing on coverage and the applicability of an exclusionary clause. The trial court granted summary judgment in favor of defendants United National Insurance Company and Murdock Claims Management Company. We are called upon to consider whether the trial court's grant of summary judgment was proper in this case. Finding no reversible error, we affirm the trial court's judgment.

FACTS AND PROCEEDINGS BELOW

¶ 2. On November 11, 1999, United National Insurance Company ("United") issued and Noxubee County School District ("Noxubee County") purchased a School Board Legal Liability policy.1 The policy contained the following relevant language:

The Company will pay on behalf of the INSURED all sums which the INSURED shall become legally obligated to pay as DAMAGES to which this insurance applies, not exceeding the limit of liability, as a result of CLAIMS first made against any INSURED during the POLICY PERIOD or, if applicable, the Basic Extended Discovery Period and/or the Supplemental Extended Discovery Period, as provided for in ARTICLE III, below, by reason of WRONGFUL ACTS OR WRONGFUL EMPLOYMENT ACTS in the performance of duties on behalf of the EDUCATIONAL ENTITY. This insurance does not apply to WRONGFUL ACTS or WRONGFUL EMPLOYMENT ACTS which occurred before the Retroactive Date, if any, shown in the Declarations or which occur after the end of the POLICY PERIOD.

The policy also contained the following exclusionary clause ("Exclusion 12") which is applicable:

The Company shall not make any payment relative to, nor defend any suit in connection with, any CLAIMS made against an INSURED: . . . . . . . (12) For back wages, overtime, or future wages (even if designated as liquidated damages); or arising from collective bargaining agreements.

¶ 3. On July 12, 2000, more than 100 of its employees and former employees ("Plaintiffs") brought suit against Noxubee County in federal district court alleging that Noxubee County failed to compensate them for overtime work pursuant to § 216(b) of the Fair Labor Standards Act ("FLSA") (hereinafter "overtime suit").2 The Plaintiffs sought compensation for their overtime pay, statutory penalties permitted by the FLSA, and an award of attorneys' fees as mandated by the FLSA.3 Shortly thereafter, Noxubee County forwarded a demand letter along with the Plaintiffs' complaint to Chandler-Sampson Insurance Agency ("Chandler-Sampson"), the local agent for United. In its letter to Chandler-Sampson, Noxubee County stated it had been made a defendant in a lawsuit by employees asserting that they were entitled to overtime compensation. During the claims process, Noxubee County also notified Southern Cross Underwriters, Inc. ("Southern Cross"), the underwriter of this particular policy, concerning the overtime suit and the possible exposure to liability. Shortly thereafter, Murdock Claims Management Company ("Murdock"), the claims adjuster for United, informed Noxubee County that United was denying Noxubee County's request for coverage. United identified the basis for this denial was Exclusion 12 of the policy, which provided that Noxubee County was not entitled to a defense to or indemnification for a claim against it for overtime.

¶ 4. Seven months later, Noxubee County stated its disagreement with United's response and memorialized its position in a letter dated May 11, 2001. Upon receipt of this letter, Murdock reopened the file and sought an outside legal opinion as to the coverage issues presented by Noxubee County. Murdock hired an independent law firm to review the merits of the overtime suit, the applicable provisions of the school board policy, and any controlling case law. Its findings revealed that the prior denial of coverage was "both appropriate and correct." Murdock communicated its continuing denial of Noxubee County's request for coverage in the overtime suit.

¶ 5. As a result, on August 27, 2001, Noxubee County filed this suit in the Circuit Court of Noxubee County, Mississippi, against United, Murdock, Southern Cross, and Chandler-Sampson.4 Noxubee County filed an Amended Complaint against Wellington & Associates as an additional defendant, but Wellington & Associates was never served. On January 17, 2003, United and Murdock filed a joint motion for summary judgment. On January 29, 2003, Noxubee County moved for partial summary judgment. On March 12, 2003, the trial court, from the bench, granted summary judgment in favor of United and Murdock. Noxubee County appeals the ruling of the trial court, citing three errors. Finding none, we affirm the trial court's grant of summary judgment in favor defendants, United and Murdock.

DISCUSSION

¶ 6. The standard for summary judgment is governed by Rule 56 of the Mississippi Rules of Civil Procedure. Miss. R. Civ. P. 56. Under Rule 56(c), "judgment shall be rendered ... if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Id. In reviewing a trial court's grant of summary judgment, the standard of review is well settled in Mississippi. This Court employs a de novo standard in reviewing a trial court's grant of summary judgment. O'Neal Steel, Inc. v. Millette, 797 So.2d 869, 872 (Miss.2001). In conducting the de novo review, this Court looks at all evidentiary matters, including admissions in pleadings, answers to interrogatories, depositions, and affidavits. Lee v. Golden Triangle Planning & Dev. Dist., Inc., 797 So.2d 845, 847 (Miss.2001). This evidence must be viewed in the light most favorable to the party against whom the motion for summary judgment has been made. See Hartford Cas. Ins. Co. v. Halliburton Co., 826 So.2d 1206, 1209 (Miss.2001); Leslie v. City of Biloxi, 758 So.2d 430, 431 (Miss. 2000); Brown v. Credit Ctr., Inc., 444 So.2d 358, 362-65 (Miss.1983).

I. Did the trial court prematurely and incorrectly grant summary judgment in favor of United and Murdock?

¶ 7. Noxubee County argues that the trial court failed to examine all the evidence as well as the briefs before granting summary judgment in favor of United and Murdock. Also, Noxubee County alleges that the grant of summary judgment was a premature approach to dispose of this litigation considering that the impending trial date was but a few weeks away from the summary judgment hearing. Thus, Noxubee County believes that the trial court's grant of summary judgment improper, and too hasty. We hold that both these contentions lack legal substance and are without merit.

¶ 8. In reaching its decision on summary judgment, the trial court referred to and relied upon Oktibbeha County Sch. Dist. v. Coregis Ins. Co., 173 F.Supp.2d 541, 543 (N.D.Miss.2001), for the proposition that a school district's failure to comply with FLSA in a manner which makes the school district liable for overtime compensation is not a "loss" within the meaning of a district's legal liability policy. We note that Coregis is factually similar to this case. In Coregis, Plaintiffs brought suit against the Oktibbeha County School District alleging that the school district failed to pay them overtime compensation in violation of FLSA. Id. at 542. The Oktibbeha County School District had a school board policy with Coregis Insurance Company which provided coverage for damages resulting from a "wrongful act." Id. at 543. The school board argued that insurance policy issued to the school district indemnified the district for damages paid as a result of the overtime suit. Id. In Coregis, the trial court disagreed with the school district and held that the school district's failure to comply with FLSA in a manner which makes the school district liable for overtime compensation is not within the scope of coverage of the district's legal liability policy. Id.

¶ 9. In comparing the instant action with Coregis, we note that the policy language presented in this case is actually clearer than the policy language in Coregis. For instance, the policy in Coregis defined a wrongful act as "any act, error or omission of an Insured constituting a breach of a duty imposed by law or a breach of an Employment Contract." Id. The policy here "wrongful act" as follows:

[A]ny actual or alleged errors, misstatements, misleading statements, acts or omissions, neglect or breach of duty, individually or collectively including actual or alleged violations of civil rights protected under 42 U.S.C. § 1981 et. seq., or any similar federal, state or local laws, or any matter claimed against an INSURED solely by reason of their being or having been INSUREDS which were committed solely in the performance of duties for the EDUCATIONAL ENTITY .....

Likewise, the United policy defines a "wrongful employment act" as either the "refusal to employ," the "termination of employment," or "coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination or other employment-related practices, policies, acts or omission." It is clear to this Court that Noxubee County's deliberate decision not to compensate its employees for overtime pay is neither a "wrongful act" nor a "wrongful employment act" within the definitions under this policy. Such a deliberate decision would certainly not give rise to coverage under these facts before this Court.

¶ 10. F...

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