Wiley v. State Farm Fire and Cas. Co.

• Decision Date: 09 October 2009
• Docket Number: No. 09-60191.,09-60191.
• Citation: 585 F.3d 206
• Parties: Christopher M. WILEY, Plaintiff-Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

585 F.3d 206

Christopher M. WILEY, Plaintiff-Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellee.

No. 09-60191.

United States Court of Appeals, Fifth Circuit.

October 9, 2009.

Joe Sam Owen, Charles Corbett Wimberly, III, Owen, Galloway & Myers, P.L.L.C., Gulfport, MS, for Wiley.

Hal Scot Spragins, Hickman, Goza & Spragins, Oxford, MS, for Defendant-Appellee.

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

Before REAVLEY, JOLLY, and WIENER, Circuit Judges.

WIENER, Circuit Judge:

Hurricane Katrina reduced Plaintiff-Appellant Christopher M. Wiley's home to a slab. Although he carried a homeowner's insurance policy from Defendant-Appellee State Farm Fire and Casualty Company ("State Farm"), State Farm rejected his claims thereunder because his policy contained a water damage exclusion and an anti-concurrent cause provision. Wiley subsequently entered the Mississippi Department of Insurance ("MDI") Hurricane Katrina Mediation Program, and in 2006 signed a settlement agreement (the "2006 Settlement") with State Farm in which he released all claims for known damage in exchange for $80,235. Over a year later, State Farm sent Wiley a letter offering him an additional $26,798.13 "pursuant to the agreement reached between State Farm and the Mississippi Department of Insurance" in exchange for an additional release. Wiley rejected the second offer and brought suit, seeking to recover an even greater additional amount under his original homeowners' policy.

The district court granted State Farm's motion for summary judgment, holding that the 2006 Settlement barred Wiley's present claims. We affirm.

I. FACTS AND PROCEEDINGS

In our review of a district court's grant of summary judgment, we present the facts in the light most favorable to the non-moving party.¹

The facts of this case are sadly familiar: On August 29, 2005, Hurricane Katrina completely obliterated Wiley's Biloxi, Mississippi home, save for its slab. Wiley had insured his property² with State Farm for $444,000. Wiley's policy contained a water damage exclusion that included an anti-concurrent cause provision, however, and State Farm denied Wiley's wind-damage claim.

In October 2006, Wiley and State Farm entered the MDI's Hurricane Katrina Mediation Program. According to Wiley, the State Farm representative informed him that Mississippi law entitled State Farm to deny his entire claim because his home had been destroyed by the storm surge, an excluded peril under his policy. Wiley took this description of the law to be true, and, after considering and rejecting several offers, signed a settlement agreement (the "2006 Settlement") in exchange for $80,235. The 2006 Settlement provided that "if the insured(s) discovers additional insured damage that was not known to the parties prior to this mediation, the insured(s) may file a supplemental Katrina claim, which shall be treated as a new claim." Wiley maintains that the State Farm representative assured him that the 2006 Settlement entitled him to re-open or seek additional compensation for his Katrina-related losses.

Over a year after the 2006 Settlement, Wiley received a letter from State Farm (the "2007 Letter"), which explained that "pursuant to the agreement reached between State Farm and the Mississippi Department of Insurance,"³ State Farm had re-evaluated Wiley's claim and was prepared to offer him an additional $26,798.13. In exchange, Wiley would have to sign a release (the "2007 Release"), in which he would agree to "release[], acquit[], and forever discharge[] [State Farm] from any and all claims that [Wiley] has or could have asserted, now or in the future . . . arising out of or related to the damage or loss from Hurricane Katrina. . . ."

Wiley contends that between the time of the 2006 Settlement and the 2007 Letter, he had learned from his neighbor, a civil engineer, that wind—and not solely storm surge—had caused part of the damage to his property. Wiley consequently refused to sign the 2007 Release and in May 2008, brought this suit against State Farm, alleging breach of contract and tortious breach of contract.

After completion of discovery, State Farm moved for summary judgment seeking dismissal of all of Wiley's claims. State Farm grounded its motion on the doctrine of settlement and release based on the 2006 Settlement. In December 2008, the District Court agreed, but held its order in abeyance and offered Wiley two weeks in which to present an affidavit that set forth any "new additional insured damage" that might support his claim. Wiley subsequently moved for reconsideration, which the district court denied and, in the same opinion, also rejected Wiley's argument — raised for the first time in his motion to reconsider—that the 2007 Letter and 2007 Release constituted a waiver of the 2006 Settlement. This timely appeal followed.

II. ANALYSIS

The district court exercised diversity jurisdiction under 28 U.S.C. § 1332(a),⁴ so we apply the substantive law of the forum state, in this case Mississippi.⁵

We review a district court's grant of summary judgment de novo. Summary judgment should be granted only if there is no genuine issue of material fact.⁶ A fact is material only if its resolution would affect the outcome of the action,⁷ and an issue is genuine only "if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party."⁸ We may, however, affirm a grant of summary judgment "on any legal ground raised below, even if it was not the basis for the district court's decision."⁹

The district court held that the 2006 Settlement barred Wiley's suit because it unambiguously constituted a complete release of all Katrina-related claims arising from insured damage known to Wiley at the time of the settlement, i.e., the total loss of his insured property. On appeal Wiley makes several claims of error: (1) The 2006 Settlement did not constitute a "full, final, and complete" settlement of Wiley's Katrina-related claims; (2) in the alternative, the 2007 Letter constituted a modification or waiver of the 2006 Settlement;¹⁰ (3) State Farm should be estopped from relying on the 2006 Settlement because its agent misled Wiley with respect to State Farm's ability to deny Wiley any benefits under his policy and also with respect to Wiley's right to pursue additional payment for his Katrina-related losses under the 2006 Settlement. State Farm continues to defend on the ground that the 2006 Settlement constitutes a settlement and release of all Wiley's Katrina-related claims, as held by the district court.

A. The 2006 Settlement, 2007 Letter, and 2007 Release

1. The 2006 Settlement

Titled "Mississippi Department of Insurance Hurricane Mediation Program Settlement Agreement," the 2006 Settlement is a standard, one-page form with blank spaces for the parties' names. It states in relevant part:

This settlement amount is full, complete and total final payment by the insurance company to the insured(s) for the Katrina claim brought to the mediation. Both parties release any and all Katrina claims of any kind whatsoever against one another, except that if the insured(s) discovers additional insured damage that was not known to the parties prior to this mediation, the insured(s) may file a supplemental Katrina claim, which shall be treated as a new claim.

2. The 2007 Letter

The 2007 Letter states in relevant part:

[State Farm] has completed its reevaluation of your claim pursuant to the agreement reached between State Farm and the Mississippi Insurance Department ("MID"). Based upon the information you have provided, our review of pertinent components of the claim file, and our agreement with the MID, State Farm is willing to offer you $26,798.13 to conclude this disputed claim. You can accept or reject this settlement offer.

This settlement offer represents a compromise and is not an admission by State Farm that your claim was not correctly evaluated during its first review or of any wrongdoing on State Farm's part or a concession by State Farm as to any interpretation of the relevant insurance policy.

. . . .

If you reject the offer, you can request mediation or a non-binding arbitration of your claim through the Mississippi Insurance Department. . . . You can also do nothing. If you do not accept the offer from State Farm you retain all rights that you have, including the right to pursue litigation.

3. 2007 Release

The unsigned 2007 Release states in relevant part:

("Releasor") . . . RELEASES, ACQUITS, AND FOREVER DISCHARGES the Released Parties . . . [State Farm] from any and all claims that Releasor has or could have asserted, now or in the future, against the Released Parties, arising out of or related to damage or loss from Hurricane Katrina to property insured by State Farm . . . .

As noted, Wiley did not accept the 2007 offer of an additional $26,798 and did not sign the 2007 Release.

B. Mississippi Law

The Mississippi Supreme Court has established "a three-tiered approach to contract interpretation"¹¹ that begins with the text and applies the familiar "four corners test," which focuses exclusively on "an objective reading of the words employed in the contract to the exclusion of parol or extrinsic evidence."¹² "Only if the contract is unclear or ambiguous" is a court authorized to resort to canons of interpretation and parol evidence.¹³

1. Whether the 2006 Settlement was a final settlement

There can be no serious argument that the 2006 Settlement unambiguously represented the "full, complete and a total final payment" for all insured damages that were known to Wiley at the time of the settlement. It is equally unambiguous that Wiley, in exchange for the payment of $80,325, released State Farm from "any and all Katrina claims of any kind whatsoever."¹⁴ As Wiley forthrightly admits, Hurricane Katrina had already reduced his home to a slab at the time of the 2006 Settlement. Thus, although the...