Noxubee County Sch. Dist. v. United Nat'l Ins. Co.
| Docket Number: | 2003-CA-00936-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 09-30-2004 Opinion Author: Graves, J. Holding: Affirmed |
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| Additional Case Information: |
Topic: Insurance - Premature summary judgment - M.R.C.P. 56(c) - Wrongful act - Exclusion - Coverage - Bad faith Judge(s) Concurring: Smith, C.J., Waller and Cobb, P.JJ., Carlson, Dickinson and Randolph, JJ. Non Participating Judge(s): Diaz, J. Dissenting Author : Easley, J. Procedural History: Summary Judgment Nature of the Case: CIVIL - INSURANCE |
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| Trial Court: |
Date of Trial Judgment: 03-07-2003 Appealed from: NOXUBEE COUNTY CIRCUIT COURT Judge: James T. Kitchens, Jr. Disposition: Granted summary judgment in favor of defendants. |
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| Party Name: | Attorney Name: | |||
| Appellant: | Noxubee County School District |
KENNETH MAYFIELD
BENNIE L. TURNER
WILLIAM E. CATLEDGE |
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| Appellee: | United National Insurance Co. and Murdock Claims Management Company | REBECCA SUZANNE BLUNDEN CHARLES G. COPELAND J. WADE SWEAT |
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| Topic: | Insurance - Premature summary judgment - M.R.C.P. 56(c) - Wrongful act - Exclusion - Coverage - Bad faith |
| Summary of the Facts: | In 1999, United National Insurance Company issued and Noxubee County School District purchased a School Board Legal Liability policy. In 2000, more than 100 of its employees and former employees brought suit against Noxubee County in federal district court alleging that Noxubee County failed to compensate them for overtime work pursuant to §216(b) of the Fair Labor Standards Act. They sought compensation for their overtime pay, statutory penalties permitted by the FLSA, and an award of attorneys’ fees. Noxubee County forwarded a demand letter along with the complaint to Chandler-Sampson Insurance Agency, the local agent for United. During the claims process, Noxubee County also notified Southern Cross Underwriters, Inc., the underwriter of this particular policy, concerning the overtime suit and the possible exposure to liability. Shortly thereafter, Murdock Claims Management Company, the claims adjuster for United, informed Noxubee County that United was denying Noxubee County’s request for coverage. Seven months later, Noxubee County stated its disagreement with United’s response. Murdock sought an outside legal opinion as to the coverage issues presented by Noxubee County. Based on the findings of the independent law firm, Murdock communicated its continuing denial of Noxubee County’s request for coverage in the overtime suit. Noxubee County filed suit against United, Murdock, Southern Cross, and Chandler-Sampson. United and Murdock filed a joint motion for summary judgment. Noxubee County moved for partial summary judgment. The court granted summary judgment in favor of United and Murdock. Noxubee County appeals. |
| Summary of Opinion Analysis: | Issue 1: Premature summary judgment Noxubee County argues that the court failed to examine all the evidence as well as the briefs and that the grant of summary judgment was a premature approach to dispose of this litigation considering that the impending trial date was but a few weeks away from the summary judgment hearing. The United policy defines a “wrongful employment act” as either the “refusal to employ,” the “termination of employment,” or “coercion, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination or other employment-related practices, policies, acts or omission.” Noxubee County’s deliberate decision not to compensate its employees for overtime pay is neither a “wrongful act” nor a “wrongful employment act” within the definitions under this policy. Such a deliberate decision would not give rise to coverage under these facts. In addition, Noxubee County’s policy contained an exclusion which expressly excludes any claim for back wages, overtime, or future wages (even if designated as liquidated damages). Therefore, the grant of summary judgment in favor of United and Murdock was proper. Where the threshold requirements of M.R.C.P. 56(c) have been satisfied, a trial court’s grant of summary judgment from the bench is within the court’s discretion. Issue 2: Coverage Noxubee County argues that the court erroneously gave the policy exclusion the broadest interpretation possible. Only when the policy language is ambiguous and unclear will the trial court resolve any differing interpretations in favor of the nondrafting party, usually the insured. Here, a fair reading of the exclusion communicates its perfect clarity. Noxubee County also argues that United should be forced to indemnify it for statutory penalties and attorneys’ fees which were requested by the plaintiffs but are not specifically excluded in the policy. The umbrella paragraph preceding the listed exclusions contains that “the Company shall not make any payment relative to, nor defend any suit in connection with, any claims made against an insured.” When these phrases are afforded their ordinary meanings, the policy must be construed in such a fashion that the exclusion completely disallows coverage for overtime claims, as well as, payments made relative to, or in connection with overtime claims. Because the exclusion prohibits overtime claims, it also bars statutory penalties and attorneys’ fees arising from such overtime claims. Issue 3: Bad faith Noxubee County argues that United’s denial of coverage constituted bad faith so as to give rise to a jury question. However, the record contains ample evidence that United and Murdock acted in good faith and thoroughly considered the merits of the overtime suit before denying coverage. |
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