US Fidelity & Guarnt v. Omnibank

• Court: Court of Appeals for the Fifth Circuit
• Decided: June 20, 2000
• Docket: 99-60349
• Status: Published

Opinion

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 99-60349

GEORGIA RAMSAY, ET AL., Plaintiffs,

versus

OMNIBANK, ET AL., Defendants.

OMNIBANK, Defendant - Third Party Plaintiff - Appellee,

UNITED STATES FIDELITY AND GUARANTY CO., Third Party Defendant - Appellant.

Appeal from the United States District Court For the Southern District of Mississippi

June 20, 2000

Before REYNALDO G. GARZA, HIGGINBOTHAM, and BENAVIDES, Circuit Judges.

PER CURIAM:

CERTIFICATE FROM THE UNITED STATES COURT OF APPEALS FOR THE FIFTH

CIRCUIT TO THE SUPREME COURT OF MISSISSIPPI, PURSUANT TO

MISSISSIPPI RULE OF APPELLATE PROCEDURE 20

TO THE SUPREME COURT OF MISSISSIPPI AND THE HONORABLE JUSTICES

THEREOF:

1. STYLE OF THE CASE

The style of the case in which this certificate is made is

OmniBank v. United States Fidelity and Casualty Co., Case No. 99- 60349, in the United States Court of Appeals for the Fifth Circuit,

on appeal from the United States District Court for the Southern

District of Mississippi. This question involves a question of state

law. The Fifth Circuit, on its own motion, has decided to certify

this question to the Honorable Justices of the Mississippi Supreme

Court.

2. STATEMENT OF THE CASE

United States Fidelity & Guaranty Co. (USF&G) appeals summary

judgment in favor of OmniBank on a duty to defend claim. At issue

is whether any of the injuries OmniBank allegedly caused arguably

resulted from a covered occurrence under Mississippi law, thus

triggering a duty to defend.

The underlying plaintiff, Georgia Ramsay, financed her

purchase of a car through OmniBank, who required Ramsay to maintain

insurance on the car. When Ramsay did not obtain such insurance,

OmniBank allegedly “force-placed” insurance coverage on the car and

charged the premiums and interest to Ramsay, on top of the loan.

On September 28, 1995, Ramsay, John McIntosh, and Troy M. Sims

filed suit on behalf of themselves and similarly situated borrowers

against OmniBank and others. On November 7, 1995, Ramsay filed an

amended complaint alleging that OmniBank “wrongfully force-placed

collateral protection insurance in the approximate sum of

$1,428.46.”

The amended complaint asserted various claims against

OmniBank, including fraud, breach of fiduciary duty, breach of duty

of good faith and fair dealing, breach of contract, violation of

2 various statutes, violation of civil rights, negligence, loss of

property rights, loss of reputation, injury to credit, creation of

fictitious indebtedness, and mental and emotional distress.

OmniBank denied the allegations of the complaint, and Ramsay

subsequently filed a motion to dismiss the claims against OmniBank

without prejudice, which was granted by the district court on

November 18, 1997.

At the time of the incidents alleged in the amended complaint,

OmniBank had both a Commercial General Liability (CGL) policy and

an umbrella policy with USF&G. OmniBank’s CGL policy covered

claims of liability for bodily injury, property damage, and

personal injury caused by an “occurrence,” which is synonymous with

“accident.” The umbrella policy provided additional insurance

limits but not wider coverage.

Bodily injury under the CGL policy included mental and

emotional distress. The underlying claims against OmniBank

included allegations that the plaintiffs suffered such distress.

Property damage under the policy included not only physical injury

to tangible property, but also the loss of use of tangible property

that is not physically injured. The underlying claims against

OmniBank included allegations that the plaintiffs suffered vehicle

repossessions which fit the definition of property damage.

Under the CGL policy, UFS&G had a duty to defend OmniBank if

there was any basis for potential liability of the insured for

3 covered claims,1 reading coverage broadly in favor of the insured.2

OmniBank requested USF&G to provide coverage and a defense, but

USF&G declined to do so.

On April 10, 1996, prior to the dismissal, OmniBank filed a

third-party complaint naming USF&G and Deposit Company of Maryland

as third-party defendants. The third-party complaint asserted that

USF&G owed OmniBank a defense against the plaintiffs’ claims,

indemnification in the event of an adverse verdict, and bad faith

damages. USF&G moved for summary judgment asserting a lack of

coverage.

USF&G argued that because OmniBank intentionally “force-

placed” collateral protection insurance on the vehicles at issue,

any damages complained of by the plaintiffs were not the result of

an “accident,” even if OmniBank negligently chose exorbitantly

priced insurance. USF&G cited Allstate Ins. Co. v. Moulton,3 which

stated that an “accident . . . does not mean the natural and

ordinary consequences of a negligent act”4 and held that damages

resulting from an intentional malicious prosecution were not the

result of an accident even if unintended by the insured.5

1 See Great Northern Nekoosa Corp. v. Aetna Cas. and Sur. Co., 921 F. Supp. 401, 406 (N.D. Miss. 1996); Merchants Co. v. American Motorists Ins. Co., 794 F. Supp. 611, 617 (S.D. Miss. 1992). 2 See Merchants Co., 794 F. Supp. at 619. 3 464 So.2d 507 (Miss. 1985). 4 Id. at 509 (quoting Ed Winkler & Son, Inc. v. Ohio Cas. Ins. Co., 441 A.2d 1129, 1132 (Md.App. 1982) (quoting 7A APPLEMAN, INSURANCE LAW AND PRACTICE § 4492 (Berdal ed. 1979)), disapproved by Sheets v. Brethren Mut. Ins. Co., 679 A.2d 540, 549-50 (Md. 1996)) (emphasis added). 5 Id. at 510.

4 OmniBank argued, among other things, that Moulton is

inconsistent with the more recent case Southern Farm Bureau

Casualty Insurance Co. v. Allard6 which considered the

applicability of an intentional damage exclusion, but which did not

explicitly address Moulton or Moulton’s definition of “accident.”7

The district court granted USF&G’s motion as to OmniBank’s bad

faith claim, but denied the motion with respect to the duty to

defend issue. Then, on April 15, 1999, the district court entered

a final judgment pursuant to Rule 54(b) on OmniBank’s duty to

defend claim and ordered USF&G to pay OmniBank $10,856 in costs

associated with OmniBank’s defense of the Ramsay claims. USF&G

appealed.

3. QUESTION CERTIFIED

Whether an insurer’s duty to defend under a general commercial

liability policy for injuries caused by accidents extends, under

Mississippi law, to injuries unintended by the insured but which

resulted from intentional actions of the insured if those actions

were negligent but not intentionally tortious?

CONCLUSION

This Court disclaims any intention that the Supreme Court of

Mississippi confine its reply to the precise form or scope of the

legal question that we certify. If the Supreme Court of Mississippi

6 611 So.2d 966 (Miss. 1992). 7 Id. at 968.

5 accepts this Certificate, the answers provided by that court will

determine the issues on appeal in this case.

We transfer to the Supreme Court of Mississippi with our

certification the record on appeal, the appellate briefs and

related documents of this case.

This panel retains cognizance of the appeal of this case

pending response from the Supreme Court of Mississippi, and this

Court hereby CERTIFIES the question posed above.

QUESTION CERTIFIED.