Ass'n Casualty Insurance v. Allstate Insurance

245 F.R.D. 245, 2007 U.S. Dist. LEXIS 61081
CourtDistrict Court, S.D. Mississippi
DecidedAugust 20, 2007
DocketCivil Action No. 1:06cv954KS-RHW
StatusPublished

This text of 245 F.R.D. 245 (Ass'n Casualty Insurance v. Allstate Insurance) is published on Counsel Stack Legal Research, covering District Court, S.D. Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ass'n Casualty Insurance v. Allstate Insurance, 245 F.R.D. 245, 2007 U.S. Dist. LEXIS 61081 (S.D. Miss. 2007).

Opinion

MEMORANDUM OPINION AND ORDER

STARRETT, District Judge.

This matter is before the court on Motion for Summary Judgment [# 102] filed on behalf of the individual defendants Terry Blalock and Charles Rice pursuant to Rule 56 of the Federal Rules of Civil Procedure and on the alternative Motion to Continue the motion for summary judgment [# 123] filed on behalf of the plaintiffs. The court, having reviewed the motions, the responses the briefs of counsel, the pleadings and exhibits on file and being otherwise fully advised in the premises finds that the motion for summary judgment is not well taken and should be denied and that the plaintiffs’ alternative motion to continue the motion for summary judgment is moot and should be denied. The court specifically finds as follows:

[247]*247FACTUAL BACKGROUND1

This case involves allegations by four insurer members2 (“the plaintiffs”) of the Mississippi Windstorm Underwriter’s Association (“the Association” or “the MWUA”) that five large private insurance companies (“insurer defendants”) and certain named representatives (“individual defendants”), operating as the Board of Directors of the MWUA intentionally or negligently failed to procure reasonable and appropriate reinsurance for the Association because of a conflict of interest. The plaintiffs are ultimately seeking certification as class representatives on behalf of a class alleged to be more than one hundred non-defendant insurer members of the Association.

The Complaint alleges that the defendants’ actions constituted negligence and breach of their fiduciary duty towards all members of the proposed Class, which caused the proposed Class unreinsured losses up to approximately $525 million. • The overarching loss allegation is calculated by the plaintiffs as the difference between (1) the approximately $700 million in claims that the Association is estimated to pay to its insureds as a result of property damage claims arising out of Hurricane Katrina, and (2) the $175 million in reinsurance actually procured by the MWUA Board on behalf of the Association for the 2004 and 2005 hurricane seasons.

CONTENTIONS OF THE PARTIES

Defendants Terry Blalock and Charles Bice (“Movants”) have filed their motion for summary judgment pursuant to Federal Buie of Civil Procedure 56. Movants are one current and one retired employee of Defendant Insurer State Farm Fire & Casualty Company (“State Farm”). Specifically, the defendants contend that the plaintiffs inappropriately named Blalock and Bice as defendants in this action under the false assumption that they were members of the Board of the MWUA.

The defendants contend that Blalock and Bice merely attended Board meetings on separate occasions in the place of Sam Branch (“Branch”). Branch, a non-party, is a fellow employee of State Farm who was appointed as a member/representative to the Board for the 2002-03 and 2003-04 terms. According to the defendants, because the plaintiffs have failed to produce evidence sufficient to create a genuine issue of material fact as to whether either Blalock or Bice were Board members, the plaintiffs’ claims against them should be dismissed.

One of the formative statutes of the MWUA, Miss.Code Ann. § 83-34-7 (2007)3 provides in pertinent part: “[t]he permanent board shall consist of five (5) representatives of the members to be appointed by the temporary board of directors subject to the approval of the commissioner and three (3) agents from the coast area to be appointed by the commissioner.” Section XI(2) of the MWUA “Plan of Operation” (“the Plan”) mirrors this language:

The permanent Board shall consist of eight members, five (5) to be representatives of the members to be appointed by the temporary Board of Directors subject to the approval of the Commissioner and three (3) agents from the coast area to be appointed by the Commissioner. The member representatives on the Board shall be appointed annually by the Commissioner of Insurance. Voting may be in person or by proxy. Not more than one insurer in a group under the same management or ownership shall serve on the Board at the same time. The Board shall also include three (3) licensed Mississippi Besident Local Agents from the Coast Area who shall be appointed annually by the Commissioner.

[248]*248The defendants aver that, pursuant to the implementing statutes of the MWUA, only the Insurance Commissioner for the State of Mississippi (“the Commissioner”) has the authority to appoint members to the Board. The defendants have produced uncontradicted evidence listing the individuals appointed by the Commissioner for the 2002-03 and 2003-04 terms. Neither document lists either Blalock or Rice.

The plaintiffs’ complaint alleges that the defendants participated in actions by the Board which breached duties owed to the plaintiffs and the proposed Class. (See Compl. ¶¶ 19, 45, 50, 51.) In rebuttal to the present motion, the plaintiffs contend that (1) sufficient evidence exists to create a genuine issue of material fact as to whether both Blalock and Rice were “Directors” on the Board and (2) Blalock and Rice may be held liable regardless of whether they are found to be Board members.

The plaintiffs assert that they have produced evidence which, given the benefit of all reasonable factual inferences, suggests that: (1) the Insurer Defendants served on the Board through representative employees; (2) Blalock and Rice, acting as “Directors” representing State Farm, attended meetings of the Board during which reinsurance matters pertinent to the instant dispute were discussed; and (3) Defendant Blalock, acting as a Board member representing State Farm, signed a written mail-in vote pertinent to an unrelated MWUA matter. The plaintiffs further contend that proof that the Commissioner appointed Blalock or Rice to the Board is immaterial to their potential liability. This argument is based upon the averment that “Movants may be held liable under Mississippi law for any duties they assumed, or even for unofficial or illegal Board service, ... [or] as agents of the Insurer Defendants.” (Pis.’ Mem. in Opp’n to Defs.’ Mot. for Summ. J. 9 n. 1 (citations omitted).)

In the event that the court fails to deny the defendants’ Motion for Summary Judgment, the plaintiffs have moved in the alternative for a continuance pursuant to Federal Rule of Civil Procedure 56(f) in order to allow discovery to be conducted on the issue contested in the present motion. The scheduling order limits discovery to class certification issues until a ruling on the defendants’ Joint Motion to Dismiss is rendered. (See Text Only Order Granting Motion to Suspend Scheduling Order Deadlines Pending Ruling on Motion to Dismiss.)

Further, at the time of the filing of this motion, the Complaint had not yet been answered by any Defendant. As such, the plaintiffs contend that additional discovery is necessary to determine “the Association’s appointment praetices[,] how Movants came to be listed as ‘Directors’ representing State Farm ... [and] whether Movants ...

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Cite This Page — Counsel Stack

Bluebook (online)
245 F.R.D. 245, 2007 U.S. Dist. LEXIS 61081, Counsel Stack Legal Research, https://law.counselstack.com/opinion/assn-casualty-insurance-v-allstate-insurance-mssd-2007.