IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_________________________
No.95-60678 (Summary Calendar) _________________________
CERTAIN INTERESTED UNDERWRITERS AT LLOYDS Plaintiff-Appellee,
versus
TUPELO PUBLIC SCHOOL DISTRICT, TUPELO, MISSISSIPPI,
Defendant-Third Party Plaintiff-Appellant
GULF NATIONAL INSURANCE COMPANY Third Party Plaintiff-Appellee.
____________________________________________________
Appeal from United States District Court for the Northern District of Mississippi 1:92CV317-S-D __________________________________________________
July 3, 1996 Before JOLLY, JONES and STEWART, Circuit Judges. PER CURIAM:*
When the district court granted summary judgment to Gulf National Insurance Company
(“Gulf”) and Lloyds, Tupelo Public School District appealed, arguing that the insurance contracts at
issue were ambiguous. Finding no ambiguity, and finding that Gulf is entitled to judgment in its favor
as a matter of law, we AFFIRM.
FACTS
The facts of this case are not at issue, and were clearly set forth in the district court’s opinion.
Thus, they need not be repeated here. Tupelo adopted a self-insured medical plan for its school
district employees and their dependents, and then insured the plan itself through the purchase of
excess loss indemnity insurance from Gulf. Gulf obtained reinsurance for its risk through Lloyds.
When Tupelo requested reimbursement for a claim incurred during the policy period, but paid after
its termination, Gulf denied the claim as outside the scope of the policy.
The district court found t hat the Gulf excess insurance policy clearly and unambiguously
covered only claims actually paid during the policy period. As the claim filed by Tupelo was paid
after the policy period, it was no t covered by Gulf’s and Lloyds excess insurance. The court also
found that this provision was not unconscionable, and granted summary judgment to Gulf and Lloyds
as a matter of law.
* Pursuant to Local Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in Local Rule 47.5.4.
2 Tupelo argues that the policy was ambiguous as a matter of law, and thus should have been
construed in favor of the insured to provide coverage for claims incurred but not actually paid during
the policy period. The Gulf policy provided that the policy period would be from September 1, 1990
to August 31, 1991, and that Gulf would be liable for “100% of paid aggregate losses .. in excess of
the aggregate attachment point.” The policy further delineated that Gulf would pay “a percentage
[in this case 100%] of the amount by which the aggregate losses you have paid,” and it defined
aggregate losses as “the total amount of money you have actually paid during your policy period to,
or on behalf of, all [covered] persons.” The Gulf policy further provided that the limit of its liability
would be “100% of paid specific losses in excess of the specific deductible amount.” It defined
specific losses as:
the total amount of money you have actually paid during our policy period to, or on behalf of, any one person covered under your Employee Benefit Plan. Such payments must have been made for covered expenses which were incurred after the Effective Date of your policy, or during the 12 month period immediately prior to such Effective Date.
DISCUSSION
The interpretation of an insurance contract, including the question of whether the contract is
ambiguous, is a legal determination, which, like the court’s summary judgment, is reviewed de novo
on appeal. Constitution State Ins. Co. v. Iso-Tex Inc., 61 F.3d 405, 407 (5th Cir. 1995). Summary
adjudications should be affirmed if, after an independent review of the record, there is no genuine
issue as to any material fact and the movant is entitled to judgment in its favor as a matter of law.
Gladney v. Paul Revere Life Ins. Co., 895 F.2d 238, 241 (5th Cir. 1990). The substantive law of
Mississippi governs the interpretation of the insurance policy in this diversity dispute. See id.
3 As a general rule, provisions of an insurance contract are to be construed strongly against the
drafter. Nationwide Mutual Ins. Co. v. Garriga, 636 So. 2d 658, 662 (Miss. 1994). Any ambiguities
in an insurance contract must be construed against the insurer and in favor of the insured and a finding
of coverage. Id. Nevert heless, where there is no substantial ambiguity requiring adjudication, a
contract must be enforced as written. Shaw v. Burchfield, 481 So. 2d 247, 252 (Miss. 1985); Dennis
v. Searle, 457 So. 2d 941, 945 (Miss. 1984). In construing particular provisions in a contract, a court
will look to the document as a whole, and the mere fact that the parties disagree about the meaning
of a provision of an insurance contract does not make the contract ambiguous as a matter of law.
Cherry v. Anthony, 501 So. 2d 416, 419 (Miss. 1987).
Tupelo argues that the policy, when read as a whole, is ambiguous because a reasonable
person could interpret the “incurred” language that accompanies the definitions of the terms
aggregate losses and specific losses as implying that Gulf will be liable for reimbursement of benefits
incurred during the policy period and the twelve months preceding it, not just reimbursement of
claims paid during the policy period.1 Furthermore, Tupelo argues that this interpretation is
buttressed by the purpose of the policy, and Gulf’s interpretation limiting reimbursement to “claims
paid” violates that purpose because it would lead to illogical consequences considering the purpose
of the policy. If, as was the case here, a covered person happened to be in the hospital on the day that
the policy expired, Tupelo would have to pay for that care before the insured even checked out of
the hospital in order to be reimbursed by Gulf. Tupelo posits that the policy does not contain a
1 The policy defines aggregate losses as “the total amount of money you have actually paid during your policy period to, or on behalf of, all persons covered under your Employee Benefit Plan. Such payments must have been made for covered expenses which were incurred after the Effective Date of your policy, or during the 12 month period immediately prior to such Effective Date.”
4 provision requiring that expenses be incurred and paid during the policy period, and nothing in the
Gulf policy unambiguously supports the contentions of Gulf and Lloyds that it does.
As the trial court found, the policy’s language clearly states that claims must have been paid
during the policy period to qualify for reimbursement. When read as a whole, the policy clearly and
repeatedly limits reimbursement to claims that have been paid during the policy period. The purpose
of the “incurred” language was clearly to further limit liability by explaining that of all the benefits
that Tupelo paid out during the term of the insurance, the only ones that would be reimbursed were
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_________________________
No.95-60678 (Summary Calendar) _________________________
CERTAIN INTERESTED UNDERWRITERS AT LLOYDS Plaintiff-Appellee,
versus
TUPELO PUBLIC SCHOOL DISTRICT, TUPELO, MISSISSIPPI,
Defendant-Third Party Plaintiff-Appellant
GULF NATIONAL INSURANCE COMPANY Third Party Plaintiff-Appellee.
____________________________________________________
Appeal from United States District Court for the Northern District of Mississippi 1:92CV317-S-D __________________________________________________
July 3, 1996 Before JOLLY, JONES and STEWART, Circuit Judges. PER CURIAM:*
When the district court granted summary judgment to Gulf National Insurance Company
(“Gulf”) and Lloyds, Tupelo Public School District appealed, arguing that the insurance contracts at
issue were ambiguous. Finding no ambiguity, and finding that Gulf is entitled to judgment in its favor
as a matter of law, we AFFIRM.
FACTS
The facts of this case are not at issue, and were clearly set forth in the district court’s opinion.
Thus, they need not be repeated here. Tupelo adopted a self-insured medical plan for its school
district employees and their dependents, and then insured the plan itself through the purchase of
excess loss indemnity insurance from Gulf. Gulf obtained reinsurance for its risk through Lloyds.
When Tupelo requested reimbursement for a claim incurred during the policy period, but paid after
its termination, Gulf denied the claim as outside the scope of the policy.
The district court found t hat the Gulf excess insurance policy clearly and unambiguously
covered only claims actually paid during the policy period. As the claim filed by Tupelo was paid
after the policy period, it was no t covered by Gulf’s and Lloyds excess insurance. The court also
found that this provision was not unconscionable, and granted summary judgment to Gulf and Lloyds
as a matter of law.
* Pursuant to Local Rule 47.5, the court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in Local Rule 47.5.4.
2 Tupelo argues that the policy was ambiguous as a matter of law, and thus should have been
construed in favor of the insured to provide coverage for claims incurred but not actually paid during
the policy period. The Gulf policy provided that the policy period would be from September 1, 1990
to August 31, 1991, and that Gulf would be liable for “100% of paid aggregate losses .. in excess of
the aggregate attachment point.” The policy further delineated that Gulf would pay “a percentage
[in this case 100%] of the amount by which the aggregate losses you have paid,” and it defined
aggregate losses as “the total amount of money you have actually paid during your policy period to,
or on behalf of, all [covered] persons.” The Gulf policy further provided that the limit of its liability
would be “100% of paid specific losses in excess of the specific deductible amount.” It defined
specific losses as:
the total amount of money you have actually paid during our policy period to, or on behalf of, any one person covered under your Employee Benefit Plan. Such payments must have been made for covered expenses which were incurred after the Effective Date of your policy, or during the 12 month period immediately prior to such Effective Date.
DISCUSSION
The interpretation of an insurance contract, including the question of whether the contract is
ambiguous, is a legal determination, which, like the court’s summary judgment, is reviewed de novo
on appeal. Constitution State Ins. Co. v. Iso-Tex Inc., 61 F.3d 405, 407 (5th Cir. 1995). Summary
adjudications should be affirmed if, after an independent review of the record, there is no genuine
issue as to any material fact and the movant is entitled to judgment in its favor as a matter of law.
Gladney v. Paul Revere Life Ins. Co., 895 F.2d 238, 241 (5th Cir. 1990). The substantive law of
Mississippi governs the interpretation of the insurance policy in this diversity dispute. See id.
3 As a general rule, provisions of an insurance contract are to be construed strongly against the
drafter. Nationwide Mutual Ins. Co. v. Garriga, 636 So. 2d 658, 662 (Miss. 1994). Any ambiguities
in an insurance contract must be construed against the insurer and in favor of the insured and a finding
of coverage. Id. Nevert heless, where there is no substantial ambiguity requiring adjudication, a
contract must be enforced as written. Shaw v. Burchfield, 481 So. 2d 247, 252 (Miss. 1985); Dennis
v. Searle, 457 So. 2d 941, 945 (Miss. 1984). In construing particular provisions in a contract, a court
will look to the document as a whole, and the mere fact that the parties disagree about the meaning
of a provision of an insurance contract does not make the contract ambiguous as a matter of law.
Cherry v. Anthony, 501 So. 2d 416, 419 (Miss. 1987).
Tupelo argues that the policy, when read as a whole, is ambiguous because a reasonable
person could interpret the “incurred” language that accompanies the definitions of the terms
aggregate losses and specific losses as implying that Gulf will be liable for reimbursement of benefits
incurred during the policy period and the twelve months preceding it, not just reimbursement of
claims paid during the policy period.1 Furthermore, Tupelo argues that this interpretation is
buttressed by the purpose of the policy, and Gulf’s interpretation limiting reimbursement to “claims
paid” violates that purpose because it would lead to illogical consequences considering the purpose
of the policy. If, as was the case here, a covered person happened to be in the hospital on the day that
the policy expired, Tupelo would have to pay for that care before the insured even checked out of
the hospital in order to be reimbursed by Gulf. Tupelo posits that the policy does not contain a
1 The policy defines aggregate losses as “the total amount of money you have actually paid during your policy period to, or on behalf of, all persons covered under your Employee Benefit Plan. Such payments must have been made for covered expenses which were incurred after the Effective Date of your policy, or during the 12 month period immediately prior to such Effective Date.”
4 provision requiring that expenses be incurred and paid during the policy period, and nothing in the
Gulf policy unambiguously supports the contentions of Gulf and Lloyds that it does.
As the trial court found, the policy’s language clearly states that claims must have been paid
during the policy period to qualify for reimbursement. When read as a whole, the policy clearly and
repeatedly limits reimbursement to claims that have been paid during the policy period. The purpose
of the “incurred” language was clearly to further limit liability by explaining that of all the benefits
that Tupelo paid out during the term of the insurance, the only ones that would be reimbursed were
the ones pertaining to benefits incurred during the term of the insurance or incurred during the twelve
months previous to that term. The language used in the policy consistently and repeatedly limits
reimbursement to claims that Tupelo actually paid during the one-year term of Gulf’s policy.
Tupelo argues that limiting repayment to claims paid is an unfair interpretation of the contract
with Gulf, and implies that such an interpretation would even be unconscionable and against the
purpose of the policy. An unconscionable contract is one “such as no man in his senses, and not
under delusio n, would make on the one hand, and as no honest and fair man would make on t e h
other. Terre Haute Cooperage v. Branscome, 35 So. 2d 537, 541 (Miss. 1948). Consistent with the
nature and purpose of a “claims paid” policy, the policy obligated Gulf to pay for medical expenses
that were paid during the policy period even though they may have been incurred up to twelve months
prior to the effective date of the policy. Viewed another way, in exchange for taking the chance that
it would have to cover losses incurred but not paid during the policy period, Tupelo received
coverage of losses incurred up to twelve months prior to the effective date of the policy. Because
of this substantial reciprocity, enforcing the contract as written is neither unfair nor unconscionable.
5 CONCLUSION
As the district court found, the policy was only seven pages long and was not confusing,
complex, or ambiguous. Because Lloyds’ duty to indemnify Gulf is founded upo a separate, n
derivative policy, Lloyds’ liability is contingent and arises only if Gulf is liable. As Gulf is not liable,
neither is Lloyds. AFFIRMED.