Court of Appeals affirms Judgment of No Coverage in a Mississippi Case

On October 28, 2021, the Fifth Circuit Court of Appeals affirmed a denial of coverage in an uninsured motorist case described by the Court as tragic. The basis for the decision was an exclusion of an otherwise covered claim. The alleged wrongful death occurred when a truck ran into a gate to a lumber yard/sawmill and the gate swung into the decedent’s pathway.  He was grievously injured and died at the scene.  After the accident, the decedent’s beneficiaries put the insurer, Colony, on notice and submitted a claim. The claim was denied within three weeks.

Colony then filed a declaratory judgment against the wrongful death beneficiaries and the employer of the truck driver, V & B International, Inc. It is not clear but, presumably, their coverage included the driver as well. Colony pleads its absolute exclusion for automobile liability which is provided as follows, in the original and an amended version:

The policy provides coverage for bodily injury and property damage suffered on V & B’s premises during the coverage period. Section 2.g of the policy, though, excludes coverage for “ ‘bodily injury or ‘property damage’ arising out of the ownership, maintenance, use, or entrustment to others of any aircraft, auto or watercraft owned or operated by or rented or loaned to any insured.” Further, an endorsement titled the “absolute auto exclusion” purports to replace Section 2.g and excludes “bodily injury" or "property damage."

The district court granted Colony’s motion for summary judgment in a brief opinion holding that, indeed, there was an absolute bar to any underinsured or uninsured motorist coverage for the benefit of the claimants, regardless of ownership or dominion of the truck and trailer. Presumably, the exclusion was in the Uninsured /Underinsured portion of the CGL. Otherwise, the holding here is inconsistent with years of application of Mississippi UM law.

The holding may be problematic because it, too, without the Court providing more facts, appears to be contrary to the many holdings that any policy providing auto liability coverage, unless rejected, is required to have UM/UIM coverage. In this case, coverage was agreed to, but the exclusion was used to wipe out statutorily mandate UM/UIM coverage.

Be careful casually applying this case without detailed analysis to your UM/UIM claims.  It is a federal court’s opinion applying its interpretation of Mississippi law.  Mississippi Courts are not bound to treat federal opinions as controlling precedent.              

Also, some of the issues raised do not seem to be relevant.  The plaintiffs attempted to argue a version of the concurrent cause doctrine.  That doctrine normally applies when two causes, one covered, one not covered, coincide to cause a loss. Here, the majority rejected the argument only because it was not argued or addressed in the Court below and therefore under Fifth Circuit cases could not be argued on appeal.

The concurrence, while agreeing with the holding, went the extra mile to explain why that waiver rule is not absolute. Yet in this case, where summary judgment was granted based on no issue of material fact at first blush, the waiver rule would seem inapplicable. The concurring opinion concurred in the district grant of summary judgment in the “case before it”, no doubt a reference to the attempt by the claimants to urge that waiver for the first time on appeal. In doing so, this opinion holds contract interpretation on summary judgments and declaratory actions.  Thus there is no “pure question of law”  even though not requiring forfeiture of the waiver on appeal would result in a “manifest injustice." 

In light of this concurrence, it seems that this argument may become more popular with claimants in coverage cases when such issues arise.  For the defense, if it is alleged in the trial court, andnot argued, do not raise it there or on appeal. As long as this Court views insurance coverage issues as not pure questions of law, the waiver will not be forfeited.  That nonforfeiture will apply in the Fifth Circuit regardless of the extent of injustice that has occurred.

I suspect none of us have heard the last of these arguments.  If you have any questions about this case and where it may go from here, please contact us. 

WSW has many years of experience dealing with enterprise defense, coverage opinions. That experience includes coverage and bad faith defense and of course third-party defense for insurers as well as commercial advice and litigation as well. Our experience includes cases in Mississippi and generally in the midsouth area. We would appreciate the opportunity to assist you and discussing any questions you have regarding these issues.