Harrison v. Ohio Casualty Ins Co

• Court: Court of Appeals for the Fifth Circuit
• Decided: January 8, 2002
• Docket: 01-60386
• Status: Unpublished

Opinion

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 01-60386 Summary Calendar

NEIL R. HARRISON; JULIA A. HARRISON

Plaintiffs-Appellants,

versus

OHIO CASUALTY INSURANCE COMPANY; GREAT AMERICAN INSURANCE COMPANY; CHANDLER-SAMPSON INSURANCE COMPANY, INC.; AMERICAN NATIONAL FIRE INSURANCE COMPANY

Defendants-Appellees.

CHANDLER-SAMPSON INSURANCE COMPANY, INC.; STATE AUTOMOBILE INSURANCE COMPANY; STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANIES

Appeal from the United States District Court For the Southern District of Mississippi (Consol. Nos. 3:98-CV-377 & 3:98-CV-493)

January 4, 2002

Before DeMOSS, PARKER and DENNIS, Circuit Judges. PER CURIAM:*

Plaintiffs-Appellants Neil R. Harrison and Julia A. Harrison

contest the district court’s granting summary judgment on their

claims against Defendants Ohio Casualty Insurance Company and

State Automobile Mutual Insurance Company and State Auto Property

and Casualty Insurance Companies (together, “State Auto”), and

its dismissing their claims against Chandler-Sampson Insurance

Company, Inc. We affirm.

BACKGROUND

The Harrisons sold a house they manufactured to Fred L.

McMillian, who then turned around and sued the Harrisons for

breach of contract, negligence, fraud, and misrepresentation,

among other bases, alleging that the Harrisons sold him a

defective home. McMillian succeeded in his suit, which he

brought in Mississippi state court. The Harrisons then brought

the instant action against the above-named insurers, arguing that

the Harrisons’ policy with each mandated reimbursement for the

judgment McMillian sustained against them. The suit was removed

to federal district court in accordance with that court’s

diversity jurisdiction. The district court denied the Harrisons’

motion to remand, agreeing that Chandler-Sampson, which like the

Harrisons is domiciled in Mississippi, had been fraudulently

* Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should not be published and is not precedent except under the limited circumstances set forth in 5TH CIR. R. 47.5.4.

-2- joined to defeat diversity of citizenship. The court then

granted Chandler-Sampson’s motion to dismiss for failure to state

a claim and later granted Ohio Casualty’s and State Auto’s

motions for summary judgment. The Harrisons made a timely

appeal.

DISCUSSION

Each action taken by the district court insofar as this

appeal is concerned is reviewed de novo. See Bejil v. Ethicon,

Inc., 269 F.3d 477, 479 (5th Cir. 2001)(reviewing de novo the

district court’s grant of summary judgment); Stripling v. Jordan

Prod. Co., L.L.C., 234 F.3d 863, 868 (5th Cir. 2000)(reviewing de

novo the district court’s order of dismissal for failure to state

a claim); Johnson v. Heublein, Inc., 227 F.3d 236, 240 (5th Cir.

2000)(reviewing de novo the district court’s determination of its

jurisdiction).

The Harrisons contend that Chandler-Sampson is responsible

for its own conduct, and that the company is not shielded from

liability as an agent of Ohio Casualty. The Harrisons make much

of this point because Chandler-Sampson’s joinder would destroy

diversity and thus require remand to Mississippi state court. It

is true that an agent generally is responsible for its own

conduct. See RESTATEMENT (SECOND) OF AGENCY § 343 (1958)(“An agent

who does an act otherwise a tort is not relieved from liability

by the fact that he acted at the command of the principal. . .

-3- .”). In Mississippi, however, “insurance agents and adjusters .

. . are not liable for ordinary negligence in performing their

duties on behalf of insurers.” Jenkins v. Farmington Casualty

Co., 979 F. Supp. 454, 457 (S.D. Miss. 1997). Although

Mississippi law does provide that agents and adjustors can “incur

independent liability when their conduct constitutes gross

negligence, malice, or reckless disregard for the rights of

others,” see id. (internal quotations omitted), the Harrisons do

not suggest that in this case Chandler-Sampson has committed any

conduct of the sort. We therefore affirm the district court’s

order of dismissal.

We also affirm the district court’s granting Ohio Casualty’s

motion for summary judgment. The Harrisons argue that the policy

obtained by Service Air Heating & Air Conditioning Company

(Service Air), a company in which the Harrisons are officers,

directors, and sharholders, requires that Ohio Casualty defend

and indemnify the Service Air employees and agents against any

claim stemming from that company’s business. That much is

apparently true, but we agree with the district court that the

Harrisons were not insureds under Service Air’s policy when they

sold their house to McMillian. The term “insured” under that

policy covers the negligence of officers and directors only to

the extent such persons are acting in their capacity as agents of

the company. The jury’s findings regarding the Harrisons’

-4- liability to McMillian, however, have nothing to do with the

Harrisons’ duties or work for Service Air. The jury found the

Harrisons liable for breach of contract and of the implied

warranty of merchantability and for negligence, but not for

anything having to do with the Harrisions’ securing a subcontract

for Service Air. Ohio Casualty, therefore, is not contractually

required to indemnify the Harrisons’ for McMillian’s claims

against them.

Finally, we affirm the district court’s granting State

Auto’s motion for summary judgment. The Harrisons lived in the

subject house for over two years before they sold it to

McMillian. During that occupancy, the Harrisons maintained

homeowners insurance with State Auto. That policy, however,

merely protected the Harrisons against liability to the extent

they were living in the house, and even then specifically

excluded coverage for cracking in the house’s foundation, which

is what McMillian was complaining of in the underlying suit.

CONCLUSION

The judgment of the district court is affirmed in all

respects.

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