E-Filed Document Sep 11 2017 10:34:38 2016-CA-00359-SCT Pages: 12 IN THE SUPREME COURT OF MISSISSIPPI CONTINENTAL CASUALTY COMPANY APPELLANT v. No. 2016-CA-00359 ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY APPELLEE CONTINENTAL CASUALTY COMPANY S RESPONSE IN OPPOSITION TO ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY S MOTION FOR REHEARING On Appeal from the Circuit Court of Harrison County, Mississippi No. A2401-15-127 MICHAEL R. MOORE (MSB 104505) JOHN A. BANAHAN (MSB 1731) BRYAN, NELSON, SCHROEDER, CASTIGLIOLA & BANAHAN, PLLC Post Office Drawer 1529 Pascagoula, Mississippi 39568-1529 Telephone: (228) 762-6631 Facsimile: (228) 769-6392 michael@bnscb.com john@bnscb.com Attorneys for Plaintiff Appellant, Continental Casualty Company
TABLE OF CONTENTS TABLE OF CONTENTS... i TABLE OF AUTHORITIES... ii ARGUMENT AND CITATION OF AUTHORITY... 1 I. Allstate s arguments in its Motion for Rehearing are a mere repetition of the arguments already considered by the Court.... 1 II. The arguments raised in Allstate s Motion for Rehearing are unavailing.... 2 A. Allstate s focus on the instrumentalities involved in the underlying accident is misplaced as Allstate s proposed analysis fails to apply the policies other insurance clauses as required by Mississippi law.... 3 B. Allstate s reliance on Hill is unpersuasive and unavailing.... 5 CONCLUSION... 7 CERTIFICATE OF SERVICE... 9 i
TABLE OF AUTHORITIES Cases Allstate Ins. Co. v. Chicago Ins. Co., 676 So. 2d 271 (Miss. 1996)... 5 Blue Cross & Blue Shield of Miss., Inc. v. Larson, 485 So. 2d 1071 (Miss. 1986)... 5, 6 Brandau v. State, 662 So. 2d 1051 (Miss. 1995)... 1 EMJ Corp. v. Hudson Specialty Ins. Co., 833 F.3d 544 (5th Cir. Miss. 2016)... 5 Farmers Ins. Exchange v. Hartford Cas. Ins. Co., 907 F. Supp. 234 (S.D. Miss. 1995)... 5 Guidant Mutual Insurance Company v. Indemnity Insurance Company of North America, 13 So. 3d 1270 (Miss. 2009)... 4, 5 Hill v. General Insurance Company of America, 456 F. Supp. 2d 757 (N.D. Miss. 2006)... 2, 6, 7 International Service Ins. Co. v. Ballard, 216 So. 2d 535 (Miss. 1968)... 5 Southern Ins. Co. v. Affiliated FM Ins. Co., 830 F.3d 337 (5th Cir. Miss. 2016)... 5 Rules Mississippi Rule of Appellate Procedure 40... 1, 2 ii
ARGUMENT AND CITATION OF AUTHORITY I. Allstate s arguments in its Motion for Rehearing are a mere repetition of the arguments already considered by the Court. The Court should deny Allstate s request for rehearing because Allstate has already raised, and this Court has already considered, the arguments in Allstate s Motion for Rehearing. Pursuant to Mississippi Rule of Appellate Procedure 40, motions for rehearing are not intended to afford an opportunity for a mere repetition of argument already considered by the court. Miss. R. App. P. 40. Because the Court has already considered the arguments made in Allstate s Motion for Rehearing, the Court should find that Allstate s Motion presents a mere repetition of those arguments and deny the Motion for that reason. Mississippi Rule of Appellate Procedure 40(a) states, in pertinent part, the motion for rehearing is not intended to afford an opportunity for a mere repetition of the argument already considered by the court. Where a party s motion for rehearing is a mere repetition of the argument already considered by the court, the Court may summarily dismiss such argument. See, e.g., Brandau v. State, 662 So. 2d 1051 (Miss. 1995) ( Brandau s propositions I and III are mere repetitions of his original argument presented to this Court for its consideration. Both issues were thoroughly considered, determined to be without merit, and thus, need not be readdressed by this Court. ). Allstate raises two arguments in its Motion for Rehearing. First, Allstate argues that Allstate and Continental should share the loss on a pro rata basis because Mississippi case law has consistently held that the insurer of the owner of the vehicle involved in an accident provides primary coverage. See Mot. for Rehearing at 3. Second, Allstate argues that [p]rinciples of 1
equity require that the rule of mutual repugnancy be applied in this case. See Mot. for Rehearing at 7. Allstate previously raised both of these arguments to both the trial court and this Court. As in its Motion for Rehearing, Allstate argued in its Brief of Appellee, [p]ursuant to clear and established Mississippi law, insurance coverage follows the vehicle and coverage on the vehicle involved in an accident is always primary. See Brief of Appellee at 10. This is precisely the same argument Allstate makes in its Motion for Rehearing by claiming that the insurer of the owner of the vehicle involved in an accident provides primary coverage. See Mot. for Rehearing at 3. Similarly, in its Brief of Appellee, Allstate cited Hill v. General Insurance Company, 456 F. Supp. 2d 757 (N.D. Miss. 2006) for the proposition that it seems likely that a pro-rata and escape clause might validly be held to be mutually repugnant as a matter of equity in an appropriate case. See Brief of Appellee at 24. Again, this is the precise argument Allstate raises again in its Motion for Rehearing when it argues, citing Hill, that equity dictates a ruling in favor of Allstate. See Mot. for Rehearing at 7. The arguments raised in Allstate s Motion for Hearing are a mere repetition of arguments raised to, and considered by, this Court. Pursuant to Rule 40, the Court should find that rehearing is not appropriate under such circumstances and, accordingly, deny Allstate s Motion for Rehearing. II. The arguments raised in Allstate s Motion for Rehearing are unavailing. Should the Court find it appropriate to reconsider the arguments submitted in Allstate s Motion for Rehearing, the Court should find that Allstate s arguments fail as a matter of law. First, as argued in Continental s briefs and as noted by the majority, priority of coverage is determined by comparing the other insurance clauses in the Allstate and Continental policies. While this case presents a unique factual situation, no case cited by Allstate supports abandoning 2
well-established Mississippi precedent requiring application of the policies other insurance clauses. Second, Allstate s reliance on speculative dicta from the district court in Hill is wholly unpersuasive. The district court s ruling is not binding on this Court and, outside of Allstate s ipse dixit, nothing in that ruling suggests that this case is the appropriate case for finding distinguishable other insurance clauses mutually repugnant. Because the arguments raised in Allstate s Motion for Rehearing are without merit, the Court should deny Allstate s Motion. A. Allstate s focus on the instrumentalities involved in the underlying accident is misplaced as Allstate s proposed analysis fails to apply the policies other insurance clauses as required by Mississippi law. The Court should again reject Allstate s argument which seeks to avoid application of the insurers other insurance clauses. Allstate s argument that Continental provides primary coverage hinges on two sets of alleged facts: (1) that the boat and trailer are named in Continental s policy but not in Allstate s and (2) that the boat was actively in motion at the time of the accident. No case cited by Allstate suggests that either of these considerations are relevant to determining priority of coverage, and the Court should decline to reconsider this issue. With respect to the first item, neither insurer in this case denies that coverage exists under its respective policy, and both insurers contributed to the settlement of Mr. Williams claim. Rather, the issue in this case is determining priority of coverage, and the existence of coverage does not resolve the question of determining priority of coverage. In other words, as both insurers agree that coverage exists under their respective policies, it makes little sense to quibble over which insurer insured which instrumentality. Assuming that priority of coverage could be determined by simply looking at the language in the policies extending coverage (but ignoring the other insurance clauses), Allstate 3
would be the sole primary insurer under the facts of this case. The Allstate policy includes the trailer in the definition of insured auto. (C.P.819). The Allstate policy further states that it protects an insured person from liability for damages arising out of the ownership, maintenance or use, loading or unloading of an insured auto. (C.P.823). Pursuant to the Allstate policy, therefore, Allstate insured Mr. Peters from damages arising out of the loading of the trailer. This is precisely what occurred in this case: a component of the trailer struck Mr. Williams in the eye during the loading of the trailer. (C.P.225-29). In contrast to the Allstate policy, Continental only insured the trailer for property damage. (C.P.786). Under Allstate s proposed analysis (which lacks any legal foundation), the Court should find that the Allstate is the sole primary insurer because it is the only insurer that covers damages for bodily injury arising out of the loading of the trailer. Turning to the second part of Allstate s argument that the boat was actively in motion at the time of the accident the Mississippi Supreme Court has explained that priority of coverage cannot be resolved by examining the relative proximity the risk bears to the loss. Guidant Mutual Insurance Company v. Indemnity Insurance Company of North America, 13 So. 3d 1270 (Miss. 2009). Allstate s proposed analysis, if accepted, would turn every priority coverage dispute into a factual quagmire. Which vehicle was stopped at the time of the collision? In which building did the fire begin? Which insured was more negligent? In addition to creating the practical problem of rendering priority of coverage difficult, if not impossible, to determine, adopting such an analysis would render insurers other insurance clauses superfluous. The better course, and the course that has been adopted and upheld by this Court on many occasions, is to resolve priority of coverage disputes by reference to the insurers other insurance clauses. See, e.g., Allstate Ins. Co. v. Chicago Ins. Co., 676 So. 2d 271 (Miss. 1996) 4
(applying insurers other insurance clauses to determine priority of coverage); Guidant Mut. Ins. Co., 13 So. 3d 1270 (same); International Service Ins. Co. v. Ballard, 216 So. 2d 535 (Miss. 1968) (same); Blue Cross & Blue Shield of Miss., Inc. v. Larson, 485 So. 2d 1071 (Miss. 1986) (same); Southern Ins. Co. v. Affiliated FM Ins. Co., 830 F.3d 337 (5th Cir. Miss. 2016) (same); EMJ Corp. v. Hudson Specialty Ins. Co., 833 F.3d 544 (5th Cir. Miss. 2016) (same); Farmers Ins. Exchange v. Hartford Cas. Ins. Co., 907 F. Supp. 234 (S.D. Miss. 1995) (same). The Court should reject Allstate s request for a rehearing on this argument. Pursuant to well-established Mississippi law, priority of coverage is determined by comparing the insurers other insurance clauses. Injecting any additional factors into the priority-of-coverage analysis would, in addition to constituting a departure from Mississippi law, deprive insurers of the ability to contract to provide certain levels of coverage. B. Allstate s reliance on Hill is unpersuasive and unavailing. The Court should decline to reconsider Allstate s argument that [p]rinciples of equity require that the rule of repugnancy be applied in this case. See Mot. for Rehearing at 7. This Court has never adopted such an equitable rule, and doing so would obscure what is currently a clear rule of law. Furthermore, outside of its ipse dixit, Allstate offers nothing to show that the case at hand is the appropriate case warranting a departure from well-established precedent. As this Court recognized, [t]he general common law rule is that the liability of insurers under overlapping coverage policies is to be governed by the intent of the insurers as manifested by the terms of the policies which they have issued. Larson, 485 So. 2d at 1074 (citation omitted); Farmers Ins. Exch., 907 F. Supp. 234 at 236 ( When more than one insurance policy covers a particular incident, courts look first to the language of the policies to settle any disputes as to the application of the respective coverages. ). The terms which insurers use to manifest 5
this intent are generally divided into three types of other insurance clauses: pro rata clauses, excess clauses, and escape clauses. Id. at 1072-73. Regarding the rule of repugnancy, this Court has explained: [S]o long as the escape v. escape clauses, excess v. excess clauses, and prorata v. prorata clauses were identical, the courts held them to be conflicting and nugatory so as to cancel each other out, and therefore liability under the two policies was prorated between the two insurance policies in the ratio of the limits of liability fixed in each policy which bears to the total limits in all of the policies covering the risk. Id. at 1073. However, where an excess clause is in conflict with either an escape clause or a pro rata clause in the other policy, the excess clause ordinarily will be given full effect. Id. The Court appropriately applied this rule in this case by giving full effect to Continental s excess clause. Relying solely on Hill v. General Insurance Company of America, 456 F. Supp. 2d 757 (N.D. Miss. 2006), Allstate urges the Court to depart from entrenched Mississippi precedent permitting insurers to contract to provide certain levels of coverage. In Hill, the district court addressed a situation where the insured s house was insured by two fire insurers: (1) Farm Bureau pursuant to a policy purchased by the insured and (3) General pursuant to a policy purchased by the insured s lender. 456 F. Supp. 2d at 759. After the insured s house burned, the insured filed a claim with Farm Bureau. Id. Both Farm Bureau and the insured subsequently demanded that General contribute to the loss settlement on a pro rata basis, and General refused. Id. Applying Farm Bureau s pro rata clause and General s escape clause, the district court determined that General appropriately refused to contribute to the underlying settlement. Id. at 761. In reaching its decision that General was not required pursuant to the language of its policy s other insurance clause to contribute to the settlement, the district court remarked, 6
[w]hile it seems likely that a pro rata and escape clause might validly be held to be mutually repugnant as a matter of equity in an appropriate case, the court concludes that this is not such a case. Id. at 760. Importantly, the court elaborated that the insured was the paid the full amount of his fire loss by Farm Bureau. Id. According to the district court in Hill, it appears that the appropriate case requiring a departure from the rule of repugnancy is a case where the insured is left uninsured or underinsured via application of an insurer s escape clause. Such is not the case here. In the case at hand, Allstate and Continental both contributed significant sums of money to the settlement of Mr. Williams claim. Between the two insurers, Mr. Peters had ample liability coverage, and Mr. Williams never sought to recover from Mr. Peters personal assets. Continental has not attempted to escape liability so as to leave Mr. Peters under-insured, and the Court should accordingly find that this is not the appropriate case to deviate from the rule of repugnancy. Pursuant to well-established Mississippi law, where two insurers provide coverage for the same claim, priority of coverage is determined by comparing the policies other insurance clauses. Here, Allstate s policy contained a pro rata clause and Continental s contained an excess clause. Under such circumstances, courts are called to give full effect to the excess clause. Doing so in this case does not leave Mr. Peters under-insured or subject to personal liability and, accordingly, Allstate cannot offer any valid equitable argument for departing from established precedent. The Court should decline to revisit this issue. CONCLUSION Allstate s request for rehearing is procedurally improper because Allstate s arguments are a mere repetition of arguments already considered by this Court. Furthermore, Allstate s arguments fail as a matter of law. Priority of coverage is determined by comparing the insurers 7
other insurance clauses, and the application of the other insurance clauses in this case renders Allstate the sole primary insurer. The Court accordingly correctly found that Continental, as an excess insurer, is entitled to recover $20,000 from Allstate, and Allstate does not present any compelling reason to revisit this finding. Continental thus submits that the Court should deny Allstate s Motion for Rehearing. Dated: September 11, 2017. Respectfully submitted, CONTINENTAL CASUALY COMPANY BY: /s/ Michael R. Moore MICHAEL R. MOORE (MSB 104505) JOHN A. BANAHAN (MSB 1731) BRYAN, NELSON, SCHROEDER, CASTIGLIOLA & BANAHAN, PLLC Attorneys at Law 1103 Jackson Avenue Post Office Drawer 1529 Pascagoula, Mississippi 39568-1529 (228) 762-6631 (228) 769-6392 (fax) michael@bnscb.com john@bnscb.com 8
CERTIFICATE OF SERVICE I, Michael Moore, one of the attorneys for the Plaintiff Appellant, Continental Casualty Company, do hereby certify that I have this date electronically filed the foregoing Response in Opposition to Motion for Rehearing with the Clerk of the Court using the MEC system which sent notification to the following: Robert E. Briggs SHARP LAW FIRM, PLLC P.O. Box 6669 D Iberville, MS 39540 bob@thesharplawfirm.com In addition, I certify that a copy of the foregoing Brief of Appellant was sent via United States Mail, postage prepaid to the following: Honorable Christopher Schmidt Harrison County Circuit Court, First Judicial District P.O. Box 1461 Gulfport, MS 39502 Dated: September 11, 2017. BY: /s/ Michael R. Moore MICHAEL R. MOORE (MSB 104505) BRYAN, NELSON, SCHROEDER, CASTIGLIOLA & BANAHAN, PLLC Attorneys at Law 1103 Jackson Avenue Post Office Drawer 1529 Pascagoula, Mississippi 39568-1529 (228) 762-6631 (228) 769-6392 (fax) michael@bnscb.com 9