US Fidelity & Guarnt v. Omnibank

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,
versus
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
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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
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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.
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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.
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