Byrd & Associates PLLC v. Evanston Insurance

Case: 09-60219 Document: 00511036369 Page: 1 Date Filed: 02/26/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 26, 2010
No. 09-60219
Summary Calendar Charles R. Fulbruge III
Clerk
BYRD & ASSOCIATES PLLC, formerly known as Byrd, Gibbs & Martin
PLLC; ISAAC BYRD, JR.; KATRINA GIBBS,
PlaintiffsSAppellants
v.
EVANSTON INSURANCE COMPANY; GILSBAR, INC; JOHN LOWE
SMITH,
DefendantsSAppellees
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 3:07cv00487
Before BENAVIDES, PRADO, and ELROD, Circuit Judges.
PER CURIAM:*
Byrd & Associates PLLC, Isaac Byrd, Jr., and Katrina Gibbs (“Appellants”)
filed a claim for declaratory judgment and injunctive relief against their legal
malpractice insurer, Evanston Insurance Co. (“EIC”). Appellants claimed that
EIC breached its contractual obligation to represent and indemnify them in a
*
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not be published and is not precedent except under the limited circumstances set forth in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.
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No. 09-60219
legal malpractice suit. The district court granted summary judgment to EIC,
finding that the act underlying the malpractice claim fell within a policy
exclusion, and Appellants did not disclose their knowledge of the act that formed
the basis of the claim in their application for coverage. We affirm.
I. FACTUAL AND PROCEDURAL BACKGROUND
A. The Bowie Action
Appellants represented the Bowie family in a medical malpractice suit (the
“Montfort Action”), filed in November 1999. The trial court imposed a
scheduling order, instructing the parties to designate their experts by December
31, 2000. When Appellants failed to comply, the defendants filed a motion to
dismiss or for summary judgment. Appellants answered with a motion to extend
time to designate experts. The trial court denied Appellants’ motion and granted
the defendant’s motion to dismiss in March 2001.
Appellants appealed the dismissal to the Mississippi Court of Appeals.
The intermediate court reversed on October 29, 2002, Bowie v. Montfort Jones
Memorial Hospital, 850 So. 2d 1210, 1214 (Miss. Ct. App. 2002), and denied
rehearing on January 21, 2003. But the Mississippi Supreme Court reversed the
intermediate court and affirmed the trial court’s dismissal of the Montfort Action
on December 31, 2003. Bowie v. Montfort Jones Mem’l Hosp., 861 So. 2d 1037,
1043 (Miss. 2003).
The Montfort Action plaintiffs filed a legal malpractice claim against
Appellants on April 29, 2004 (the “Bowie Action”), and served Appellants with
process shortly thereafter. Appellants timely notified EIC of the Bowie Action.1
1
Appellants also held legal malpractice insurance with American
National Lawyers Insurance Reciprocal (“ANLIR”). ANLIR went into
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B. The EIC Insurance Policy
Appellants submitted their application to EIC for legal malpractice
insurance on November 13, 2002, after the intermediate state court decision in
the Montfort Action and before the Mississippi Supreme Court decision. On this
application, Appellants indicated that they were unaware of any act that may
reasonably be expected to form the basis of a claim against them. EIC issued the
insurance policy with an effective date of February 28, 2003. Appellants
renewed their policy a year later, effective February 28, 2004, and continuing
through February 28, 2005, and again indicated that they were unaware of any
basis for a claim against them.
Under paragraph 1(bb) of the renewal policy, if the act that formed the
basis of the claim occurred before the effective policy period, the policy provided
coverage so long as “no Insured was aware of any facts or circumstances from
which a reasonable person would have anticipated a Claim.” The policy also
contained a Prior Acts Exclusion, which stated that the policy did not apply “to
any claim made against the Insured arising out of any act, error or omission in
professional services of Personal Injury in professional services happening prior
to February 28, 2003.” 2 The policy defined an “Act” as the “performance of or
omission of a duty by the Insured in rendering legal advice.”
receivership before the filing of the Bowie Action, and ANLIR did not have
funds available to cover Appellants’ claim.
2
We note that paragraph 1(bb) and the Prior Acts Exclusion work in
conjunction to create a “window” of coverage for acts that occurred between
February 28, 2003 and February 28, 2004, so long as a reasonable person
would not have anticipated a claim from facts that were known to Appellants.
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C. Appellants’ Claim under the Policy and the District Court’s Order
After Appellants notified EIC of the Bowie Action, EIC denied Appellants’
claim. EIC contended that Appellants’ failure to timely comply with the trial
court’s scheduling order in the medical malpractice case in 2001 was the act in
question, and therefore the act occurred before the policy took effect. Based on
this contention, EIC argued that the policy’s exclusions barred Appellants’ claim.
Appellants disagreed with this interpretation and filed suit for both declaratory
judgment and injunctive relief.
The district court, in an oral order, granted EIC’s motion for summary
judgment. The court first found that the renewal policy provided the applicable
coverage period. The court then applied Mississippi law and found that the
policy was not ambiguous. The court concluded that the act in question was the
Appellants’ error in 2001 and faulted Appellants for failing to disclose this fact.
Appellants timely appealed.
II. ANALYSIS
We have jurisdiction under 28 U.S.C. § 1291 and review de novo a district
court’s award of summary judgment. Ford Motor Co. v. Tex. Dep’t of Transp.,
264 F.3d 493, 498 (5th Cir. 2001). Summary judgment is proper when “the
pleadings, the discovery and disclosure materials on file, and any affidavits show
that there is no genuine issue as to any material fact and that the movant is
entitled to judgment as a matter of law.” F ED. R. C IV. P. 56(c). “A genuine issue
of material fact exists when the evidence is such that a reasonable jury could
return a verdict for the non-moving party.” Gates v. Tex. Dep’t of Protective &
Regulatory Servs., 537 F.3d 404, 417 (5th Cir. 2008) (citing Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986)).
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Appellants argue that the policy is ambiguous, and thus the district court
granted summary judgment prematurely. “An ambiguity in an insurance policy
exists when the policy can be interpreted to have two or more reasonable
meanings.” J&W Foods Corp. v. State Farm Mut. Auto. Ins. Co., 723 So. 2d 550,
552 (Miss. 1998) (citing Ins. Co. of N. Am. v. Deposit Guar. Nat. Bank, 258 So.
2d 798, 800 (Miss. 1972)). Of course, “‘[t]he mere fact that the parties disagree
about the meaning of a provision of a contract does not make the contract
ambiguous as a matter of law.’” Burton v. Choctaw County, 730 So. 2d 1, 5
(Miss. 1997) (quoting Cherry v. Anthony, Gibbs, Sage, 501 So. 2d 416, 419 (Miss.
1987)). In our construction of the disputed particular policy provisions, we may
look to the document as a whole. Cherry, 501 So. 2d at 419 (citing Hinds Motor
Co. v. Hederman, 30 So. 2d 70, 72 (Miss. 1947)).
When more than one reasonable interpretation exists, we “will apply a
construction permitting recovery.” J&W Foods Corp., 723 So. 2d at 552
(citations omitted). Because EIC attempts to enforce an exclusion to the policy,
we should “construe the policy even more stringently.” Id. (citation omitted).
However, absent ambiguity, “‘insurance policies which are clear and
unambiguous are to be enforced according to their terms as written [and thus,]
the plain terms of the insurance contract should be binding and controlling.’”
State Farm Mut. Auto. Ins. Co. v. Universal Underwriters Ins. Co., 797 So. 2d
981, 985–86 (Miss. 2001) (quoting Hare v. State, 733 So. 2d 277, 281 (Miss.
1999)).
Specifically, Appellants argue that the defined term “Act” in the policy is
ambiguous because the definition necessarily implicates a negligence standard.
Alternatively, Appellants argue that their failure to disclose the 2001 error
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should not bar recovery under the policy because, at the time that they originally
applied for coverage, they were not aware of any facts or circumstances from
which a reasonable person would anticipate a claim. Appellants point to the
timing of the intermediate state court’s decision in the Montfort Action to argue
that when they applied for insurance coverage, there was no basis for a claim.
Appellants’ arguments are unavailing.
As noted above, the policy defines an “Act” as the “performance of or
omission of a duty by the Insured in rendering legal advice.” Appellants argue
that an “Act” under the policy cannot happen until an attorney is actually found
negligent by a court or jury. Therefore, Appellants would have us find that the
“Act” in question occurred when the Bowie Action ripened; namely, when the
Mississippi Supreme Court reinstated the dismissal of the medical malpractice
claim in December 2003.
Appellants’ argument avoids the plain meaning of the policy’s terms. We
agree with the district court that Appellants’ proffered alternate definition grafts
extraneous language onto plain language. The plain language definition of “Act”
as provided in the policy does not require a finding of negligence before a court
may find that an “Act” occurred.
As to Appellants’ argument that the Prior Acts Exclusion should not apply
because they were unaware of facts giving rise to a claim, we note that the
renewal policy is the policy at issue here, and was effective February 28, 2004.
In their application for renewal, Appellants responded “No” when asked whether
they were aware “of any incident, circumstance, error, omission, or personal
injury which may give rise to a claim.” Regardless of whether we interpret the
2001 failure to submit experts or the 2003 reinstatement of the dismissal of the
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Montfort Action as the facts giving rise to a claim, both occurred before the
application for the renewal policy. Appellants failed to disclose the facts giving
rise to the Bowie Action in their renewal application and, under the plain terms
of the policy, EIC has no obligation to provide coverage.
III. CONCLUSION
For the reasons set forth above, we AFFIRM the district court’s grant of
summary judgment to EIC.
AFFIRMED.
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