Bank of Miss. V. Miss. Life and Health Ins. Guar. Ass'n.


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Docket Number: 2001-CA-00546-COA
Linked Case(s): 2001-CA-00546-COA

Court of Appeals: Opinion Link
Opinion Date: 03-04-2003
Opinion Author: Lee, J.
Holding: Affirmed

Additional Case Information: Topic: Insurance - Interest - Section 83-23-205(3)(a) - Attorneys’ fees - Section 11-55-5(1) - M.R.C.P. 11(b)
Judge(s) Concurring: King, P.J., Bridges, Thomas and Myers, JJ.
Non Participating Judge(s): Griffis, J.
Dissenting Author : Southwick, P.J.
Dissent Joined By : McMillin, C.J., Irving and Chandler, JJ.
Procedural History: Jury Trial
Nature of the Case: CIVIL - INSURANCE

Trial Court: Date of Trial Judgment: 02-15-2001
Appealed from: Hinds County Circuit Court
Judge: W. Swan Yerger
Disposition: TRUSTEE’S MOTION DENIED
Case Number: 251-95-986

  Party Name: Attorney Name:  
Appellant: BANK OF MISSISSIPPI, TRUSTEE OF MFC SERVICES LIQUIDATING TRUST




C. DELBERT HOSEMANN JR. MICHAEL B. WALLACE



 

Appellee: MISSISSIPPI LIFE AND HEALTH INSURANCE GUARANTY ASSOCIATION ROBERT B. HOUSE NEVILLE H. BOSCHERT KRISTINA M. JOHNSON  

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Topic: Insurance - Interest - Section 83-23-205(3)(a) - Attorneys’ fees - Section 11-55-5(1) - M.R.C.P. 11(b)

Summary of the Facts: Issue 1: Interest The Association conceded that it was obligated to the policyholders as of December 6, 1991, and the circuit court agreed that as of that date the Association became responsible for payment of Executive Life's debt which included interest. The Trustee argues that the court erred in calculating the interest. Under section 83-23-205(3)(a), the Association’s contractual obligations shall be as great but no greater than the contractual obligations of the insolvent insurer would have been in the absence of an insolvency. In the absence of an insolvency, Executive Life would have been contractually obligated to pay the full amount of the annuity, with accrued interest on November 18, 1992. After failing to do so, interest would have continued to accrue at 8%. The Association became liable for the contractual failures of Executive Life and the appropriate interest rate of 8% from and after the maturity date of the annuity. The Association's purpose is to protect insureds, in certain cases, from the failures of other similarly situated insurance companies. The purpose is not to give the claimants more than they would have received had Executive Life been held directly accountable for the amounts owed rather than sheltered by the tent of bankruptcy proceedings. Therefore, the circuit court appropriately utilized the lower interest rates. Issue 2: Attorneys’ fees and expenses The Trustee argues that it has incurred the expenses for ten years of litigation, including two appeals, to compel the Association do what it ought to have done in the beginning, and that the Association’s arguments were wholly without substantial justification and were vexatious. Section 11-55-5(1) permits an award of attorney's fees where the court finds that an attorney or party brought an action, or asserted any claim or defense, that is without substantial justification, or that the action, or any claim or defense asserted, was interposed for delay or harassment, or if it finds that an attorney or party unnecessarily expanded the proceedings by other improper conduct. M.R.C.P. 11(b) permits an award of attorney's fees when a party files a motion or pleading which is frivolous or is filed for the purpose of harassment or delay. Generally, absent a statute allowing such an award, attorney's fees and costs are not awarded unless punitive damages are or may be awarded. Pursuant to case and statutory law, punitive damages may not be levied against the Association. Although there is little doubt that the Association stretched the limits in various defenses raised, its actions did not justify imposing a penalty against them.

Summary of Opinion Analysis: Issue 1: Interest The Association conceded that it was obligated to the policyholders as of December 6, 1991, and the circuit court agreed that as of that date the Association became responsible for payment of Executive Life's debt which included interest. The Trustee argues that the court erred in calculating the interest. Under section 83-23-205(3)(a), the Association’s contractual obligations shall be as great but no greater than the contractual obligations of the insolvent insurer would have been in the absence of an insolvency. In the absence of an insolvency, Executive Life would have been contractually obligated to pay the full amount of the annuity, with accrued interest on November 18, 1992. After failing to do so, interest would have continued to accrue at 8%. The Association became liable for the contractual failures of Executive Life and the appropriate interest rate of 8% from and after the maturity date of the annuity. The Association's purpose is to protect insureds, in certain cases, from the failures of other similarly situated insurance companies. The purpose is not to give the claimants more than they would have received had Executive Life been held directly accountable for the amounts owed rather than sheltered by the tent of bankruptcy proceedings. Therefore, the circuit court appropriately utilized the lower interest rates. Issue 2: Attorneys’ fees and expenses The Trustee argues that it has incurred the expenses for ten years of litigation, including two appeals, to compel the Association do what it ought to have done in the beginning, and that the Association’s arguments were wholly without substantial justification and were vexatious. Section 11-55-5(1) permits an award of attorney's fees where the court finds that an attorney or party brought an action, or asserted any claim or defense, that is without substantial justification, or that the action, or any claim or defense asserted, was interposed for delay or harassment, or if it finds that an attorney or party unnecessarily expanded the proceedings by other improper conduct. M.R.C.P. 11(b) permits an award of attorney's fees when a party files a motion or pleading which is frivolous or is filed for the purpose of harassment or delay. Generally, absent a statute allowing such an award, attorney's fees and costs are not awarded unless punitive damages are or may be awarded. Pursuant to case and statutory law, punitive damages may not be levied against the Association. Although there is little doubt that the Association stretched the limits in various defenses raised, its actions did not justify imposing a penalty against them.


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