Sharel A. Kenney v. Foremost Insurance Company

IN THE SUPREME COURT OF MISSISSIPPI
NO. 2015-CA-01051-SCT
SHAREL A. KENNEY
v.
FOREMOST INSURANCE COMPANY AND USAA
CASUALTY INSURANCE COMPANY
DATE OF JUDGMENT: 06/17/2015
TRIAL JUDGE: HON. LAWRENCE PAUL BOURGEOIS, JR.
COURT FROM WHICH APPEALED: HANCOCK COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT: CHUCK McRAE
SETH CLAYTON LITTLE
ATTORNEYS FOR APPELLEES: DALE GIBSON RUSSELL
MICHAEL CHRISTOPHER GATLING
TIMOTHY JOHN STERLING
CHARLES G. COPELAND
NATURE OF THE CASE: CIVIL - INSURANCE
DISPOSITION: AFFIRMED IN PART; REVERSED IN PART
AND REMANDED - 09/22/2016
MOTION FOR REHEARING FILED:
MANDATE ISSUED:
BEFORE RANDOLPH, P.J., LAMAR AND KITCHENS, JJ.
RANDOLPH, PRESIDING JUSTICE, FOR THE COURT:
¶1. Sharel A. Kenney appeals the trial court’s grant of summary judgment in favor of
USAA Casualty Insurance Company (USAA-CIC) and Foremost Insurance Company
(Foremost). Finding that the trial court erred in granting summary judgment as to Foremost
but not as to USAA-CIC, we affirm the trial court in part and reverse and remand in part.
FACTS AND PROCEEDINGS BELOW
¶2. In June 2011, Kenney purchased a motorcycle in Slidell, Louisiana. Kenney, a
Louisiana resident, completed a Louisiana Motorcycle Insurance Application with Foremost,
which included an Uninsured/Underinsured Motorist Bodily Injury Coverage Form (“UMBI
Form”). Pursuant to the UMBI Form, Kenney elected not to purchase UMBI coverage.
Following receipt of the application and the UMBI Form, Foremost issued Policy No. 276
0072696768 to Kenney. Daniel Steilberg, Kenney’s fiancé, was listed as an operator on the
insurance policy.
¶3. In May 2012, while riding the motorcycle, Kenney and Steilberg were involved in an
accident with an uninsured motorist on Highway I-90 in Bay St. Louis, Mississippi. After the
accident, Kenney made claims for uninsured-motorist coverage under three separate policies.
First, Kenney made a claim from Foremost. She was informed that “the policy in existence
at the time of the accident did not include payment of medical expenses or
uninsured/underinsured coverage.” Kenney did receive payments totaling $18,096.86 from
Foremost, representing the actual cash value for property damage to the motorcycle. Kenney
also filed a claim with USAA-CIC, the insurer for Kenney’s Dodge Charger, but she was
denied payment for medical expenses and uninsured/underinsured-motorist coverage.1
¶4. After the denials of coverage, Kenney filed suit in the Circuit Court of Hancock
County against the uninsured motorist, Foremost, USAA-CIC, and Steilberg, alleging bad-
faith denial of insurance/breach of contract, breach of fiduciary duty/duty of good faith and
1
Kenney filed a claim under a second USAA-CIC policy issued to Kenney’s
daughter. That claim was denied but is not at issue in this appeal.
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fair dealing, negligence/gross negligence, and intentional infliction of emotional distress,
inter alia. Kenney also prayed for declaratory relief.
¶5. Steilberg moved to dismiss Kenney’s complaint, as the complaint “merely identifies
Defendant Steilberg as a party but nowhere in the Amended Complaint is there any allegation
of wrongdoing, breach of duty or any attempt whatsoever to describe a factual or legal basis
for Defendant Daniel R. Steilberg to remain a party defendant to this action.” The trial court
granted Steilberg’s motion to dismiss and granted Kenney sixty days to file an Amended
Complaint.
¶6. USAA-CIC filed a motion for summary judgment, arguing that Kenney’s USAA-CIC
policy named Kenney as the named insured and insured only Kenney’s 2009 Dodge Charger.
USAA-CIC further argued that the policy afforded Kenney no uninsured-motorist coverage
for the accident and USAA-CIC had an arguable basis for denying Kenney’s claim for such
coverage. USAA-CIC averred that, pursuant to Boardman v. USAA, 470 So. 2d 1024 (Miss.
1985), and O’Rourke v. Colonial Ins. Co., 624 So. 2d 84 (Miss. 1993), Louisiana law
applied to Kenney’s policy dispute.
¶7. Foremost also moved for summary judgment, arguing that Kenney had waived
uninsured-motorist coverage when she elected not to purchase coverage from Foremost.
Foremost argued it was not liable to Kenney and that all claims should be dismissed.
Foremost also averred that Louisiana law applied to Kenney’s claim for uninsured-motorist
benefits pursuant to Boardman and Colonial.
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¶8. During the hearing on the motions for summary judgment, the trial court ruled that
Louisiana law applied to the policy disputes, that Kenney had opted out of uninsured-
motorist coverage from Foremost, that Kenney was afforded no uninsured-motorist coverage
under USAA-CIC’s policy, and that there was no bad faith on Foremost’s or USAA-CIC’s
part in denying uninsured-motorist coverage. The trial court granted both motions for
summary judgment.
¶9. The trial court entered a final judgment pursuant to Rule 54(b) of the Mississippi
Rules of Civil Procedure as to USAA-CIC and Foremost. After the sixty-day time period
lapsed without Kenney filing an amended complaint, the trial court also dismissed Steilberg’s
claim with prejudice.2 Kenney timely filed notice of her appeal.
ISSUES
¶10. Kenney argues the following issues:
I. THE TRIAL COURT ERRED IN ITS CHOICE OF LAW
DETERMINATION BY FINDING THAT LOUISIANA LAW AND
NOT MISSISSIPPI LAW GOVERNED THE UNDERLYING
INSURANCE CONTRACT DISPUTES BETWEEN APPELLANT
KENNEY, FOREMOST INSURANCE COMPANY AND USAA-CIC.
II. THE TRIAL COURT ERRED IN ITS FINDING THAT APPELLANT
KENNEY EXECUTED A VALID WAIVER OF UNINSURED
MOTORIST INSURANCE IN HER APPLICATION WITH
FOREMOST INSURANCE COMPANY.
ANALYSIS
2
Kenney did not appeal Steilberg’s dismissal.
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¶11. This Court applies a de novo standard of review for grants of summary judgment.
Harris v. Darby, 17 So. 3d 1076, 1078 (Miss. 2009). For sake of clarity, the issues identified
by Kenney have been restated in this opinion.
I. THE PROPER CHOICE OF LAW IN THIS MATTER IS LOUISIANA.
¶12. The precedent set by this Court and relied upon by the trial court dictates that
Louisiana law should apply to this dispute. See O’Rourke v. Colonial Ins. Co., 624 So. 2d
84 (Miss. 1993), and Boardman v. USAA, 470 So. 2d 1024 (Miss. 1985). Mississippi’s
choice-of-law rules use the “center of gravity” concept. Boardman, 470 So. 2d at 1031.
When courts are presented with a question as to what state’s substantive law applies, the
court determines “which state has the most substantial contacts with the parties and the
subject matter of the action.” Id. (citing Mitchell v. Craft, 211 So. 2d 509, 512 (Miss. 1968);
Craig v. Columbus Compress & Warehouse Co., 210 So. 2d 645, 649 (Miss. 1968)).
¶13. In Boardman, this Court determined that:
(a) the place of contracting was in Nebraska,
(b) the place of negotiation of the contract was in Nebraska,
(c) the place of performance was substantially in Nebraska,
(d) the location of the subject matter of the contract, i.e., the principal location
of the risks insured against, was in Nebraska. . . , and
(e) the residence of Henry W. Boardman was Nebraska. . . .
Id. at 1034. The Court held Nebraska law applied. Id. In Colonial, this Court found that:
(a) the O’Rourkes were both residents of Tennessee
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(b) the insurance policy was issued by Colonial through an insurance agency
located in Bartlett, Tennessee, [and]
(c) the premiums [were] paid to Colonial either through a Tennessee agent or
directly to Colonial in Georgia.
Colonial, 624 So. 2d at 87. The Colonial Court held Tennessee law applied. Id.
¶14. Boardman and Colonial are strikingly similar to today’s case. All three share common
facts including, but not limited to: (1) nonresident insureds, (2) policies insuring vehicles
principally garaged outside of Mississippi, (3) policies issued by out-of-state insurers, (4)
policies that excluded from uninsured-motorist coverage any bodily injury to covered persons
while occupying a vehicle owned by the covered person but not insured under the policy at
issue, (5) accidents occurring in Mississippi, (6) denied uninsured-motorist claims, and (7)
lawsuits filed in Mississippi. The Boardman and Colonial courts found that Mississippi law
did not apply to the insurance contract dispute. This trial court ruled the same conclusion
follows in this case.
¶15. Kenney was a longtime resident of Louisiana. The Foremost-insured motorcycle was
principally garaged at Kenney’s residence in Louisiana. The USAA-CIC-insured Dodge
Charger also was principally garaged at Kenney’s Louisiana residence. Both the Foremost
and USAA-CIC policies were Louisiana policies. Mississippi contacts included the location
of the accident and the residence of the uninsured motorist. However, this Court has held that
the location of the accident is “fortuitous and hence irrelevant.” Boardman, 470 So. 2d at
1036.
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¶16. Applying the center-of-gravity test, we find that the trial court properly held that
Louisiana has the most substantial contacts with the parties and subject matter in this action
and that Louisiana law must be applied to the contract disputes between Kenney and her
insurers.
II. KENNEY IS NOT OWED UNINSURED MOTORIST BENEFITS UNDER THE
USAA-CIC POLICY.
¶17. In Louisiana, an insurer offering uninsured-motorist coverage legally can exclude
bodily injury sustained by a covered person while occupying a vehicle owned by the covered
person but not insured under the insurance policy. See Sandoz v. State Farm Mut. Auto. Ins.
Co., 620 So. 2d 441, 444 (La. Ct. App. 1993); Gaudet v. Southern Farm Bureau Cas. Ins.,
600 So. 2d 892 (La. App. 1st Cir.1992); Galliano v. State Farm, 606 So. 2d 580 (La. App.
5th Cir.1992); Haltom v. State Farm Mut. Auto. Ins. Co., 588 So. 2d 792 (La. App. 2nd
Cir.1991). Additionally, Louisiana statutory law further provides:
The uninsured motorist coverage does not apply to bodily injury, sickness, or
disease, including the resulting death of an insured, while occupying a motor
vehicle owned by the insured if such motor vehicle is not described in the
policy under which a claim is made, or is not a newly acquired or replacement
motor vehicle covered under the terms of the policy. This provision shall not
apply to uninsured motorist coverage provided in a policy that does not
describe specific motor vehicles.
La. R. S. § 22:1295(1)(e).
¶18. Kenney’s USAA-CIC policy specifically excluded uninsured-motorist coverage for
bodily injury “sustained by any covered person while occupying . . . any motor vehicle owned
by that covered person which is not insured for UM under this policy.” Kenney’s motorcycle
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was not insured for uninsured-motorist coverage under the USAA-CIC policy. We find that
the trial court did not err in granting summary judgment in favor of USAA-CIC.
III. A QUESTION OF FACT REMAINS AS TO WHETHER KENNEY
EXECUTED A VALID WAIVER OF UNINSURED MOTORIST INSURANCE
IN HER APPLICATION WITH FOREMOST INSURANCE COMPANY.
¶19. Louisiana law establishes a clear framework and provides a specific form for the
rejection of uninsured-motorist, body-injury coverage. “A properly completed and signed
form creates a rebuttable presumption that the insured knowingly rejected coverage. . . .” La.
R.S. § 22:1295(1)(a)(ii). The rejection “shall be made only on a form prescribed by the
commissioner of insurance.” Id. Pursuant to the authority given to the Commissioner of
Insurance by the legislature to create a waiver form, “compliance with the form prescribed
by the commissioner of insurance is necessary for the UM waiver to be valid.” Duncan v.
U.S.A.A. Ins. Co., 950 So. 2d 544, 553 (La. 2006). In order to have effectively waived
uninsured-motorist coverage, the waiver form must be executed as follows:
(1) initialing the selection or rejection of coverage chosen; (2) if limits lower
than the policy limits are chosen (available in options 2 and 4), then filling in
the amount of coverage selected for each person and each accident; (3)
printing the name of the named insured or legal representative; (4) signing the
name of the named insured or legal representative; (5) filling in the policy
number; and (6) filling in the date.
Id. at 551.
¶20. On August 29, 2008, the Commissioner of Insurance issued Bulletin No. 08-02.
Pursuant to the Bulletin, the following tasks must be completed by the insured:
His/Her signature
His/Her printed name to identify his/her signature
The date the form is completed
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Initials to select/reject UMBI coverage prior to signing the form.
LDOI Bulletin No. 08-02 (emphasis added).
¶21. The UMBI form completed by Kenney shows her initials beside the section of the
form which reads:
I do not want UMBI Coverage. I understand that I will not be compensated
through UMBI Coverage for losses arising from an accident caused by an
uninsured/underinsured motorist.
In her deposition, Kenney acknowledged that those were her initials and signature on the
form. However, she testified that she did not “recall printing my name because I do not write
my name like that.” While the form is dated June 2, 2011, Kenney testified that she did not
recall dating the form and that she did not “write [her] twos like that.” Although Kenney’s
responses were tentative, a question of fact remains as to whether Kenney knowingly rejected
UMBI coverage. Material issues of fact exist as to whether Kenney printed her name and
dated the form. Accordingly, we find that the trial court prematurely granted summary
judgment in favor of Foremost, absent a finding of fact regarding compliance in completing
the UMBI Form as prescribed by the Commissioner of Insurance of Louisiana.
CONCLUSION
¶22. Following this Court’s center-of-gravity test applied in Boardman and Colonial,
Louisiana law applies to these contract disputes. Pursuant to Louisiana law, the USAA-CIC
policy did not provide uninsured-motorist coverage to Kenney for injuries sustained while
operating her motorcycle, a non-USAA-CIC covered vehicle. We affirm the trial court’s
grant of summary judgment in favor of USAA-CIC. However, material issues of fact remain
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as to whether the UMBI form as completed complies with Louisiana law. We reverse the
summary judgment for Foremost and remand this matter for further proceedings consistent
with this opinion.
¶23. AFFIRMED IN PART; REVERSED IN PART AND REMANDED.
WALLER, C.J., DICKINSON, P.J., LAMAR, KITCHENS, KING, COLEMAN,
MAXWELL AND BEAM, JJ., CONCUR.
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