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JOHN P. WILSON & VELMA R. WILSON v. GIORDANO INSURANCE AGENCY

JUNE 05, 1985

JOHN P. WILSON & VELMA R. WILSON
v.
GIORDANO INSURANCE AGENCY, INC.



EN BANC.

ROY NOBLE LEE, PRESIDING JUSTICE, FOR THE COURT:

On July 21, 1980, Bailey Mortgage Company [Bailey] brought suit in the names of John P. Wilson and Velma R. Wilson, husband and wife, in the Circuit Court of Rankin County, Mississippi, against Giordano Insurance Agency, Inc. [Giordano] seeking the sum of thirty-five thousand dollars ($35,000) damage to the Wilsons' home. The lower court, Honorable Charles Barber, special judge, presiding, heard and sustained affirmative defenses of Giordano in a bifurcated trial and entered judgment for Giordano.

Bailey has appealed to this Court and contends (1) there was a material question of fact as to whether Bailey was a joint tortfeasor; (2) the lower court's determination of a material issue of fact amounted to entry of summary judgment; and (3) Bailey Mortgage Company was not in fact a joint tortfeasor.

 Giordano pleaded affirmatively and contended (1) that Bailey was a joint tortfeasor because its negligence

 contributed to cancellation of a flood insurance policy; (2) a joint tortfeasor cannot settle with the injured party and seek contribution from another joint tortfeasor; and (3) Bailey could not use the Mississippi assignment statute as a vehicle to circumvent Mississippi law which prohibits one joint tortfeasor from seeking contribution from another.

 Shortly prior to April 1, 1977, the Wilsons, with the help of Bailey Mortgage Company, applied for a Veterans' Administration loan to obtain financing for the purchase of a home in Flowood, Mississippi. The loan was handled and closed through Mississippi Valley Title Insurance Company.

 On April 1, Bailey sent a speedletter to Mississippi Valley Title informing that company the Wilson loan required flood insurance. On the same day, Bailey sent to Mississippi Valley Title a memo stating "Per our conversation, please delete the requirement for flood insurance on the [Wilson] loan." Subsequently, flood insurance was obtained and cancelled, more than once, apparently with somebody having proper authority being unable to make a correct decision thereon. Loan closing documents and insurance forms were executed by Mississippi Valley Title, Bailey Company, and Giordano. Documents from Mississippi Valley Title to Bailey indicated flood insurance was required prior to the loan.

 On May 26, 1977, Bailey sent a speedletter to Mississippi Valley Title again stating, "Please send flood insurance policy back. There is no flood insurance required on this loan." On June 13, 1977, Mississippi Valley Title prepared a closing form which deleted the flood insurance policy. The Wilsons' flood insurance policy had been previously issued by Giordano and, on June 21, Bailey sent to Giordano a speedletter stating, "Enclosed is the flood policy and binder for the above referenced number. Flood insurance is not required on this loan, so we are returning the policy for cancellation."

 The policy returned by Bailey was dated as having been purchased April 6, 1977. The premium for the policy was eighty-eight dollars ($88.00), which had been paid and receipted on March 31, 1977. The HUD Disclosure/Settlement Statement dated May 26, 1977, shows a payment to Giordano of $88.00 for flood insurance and a deposit with Bailey for one month's flood insurance of $7.33. Both amounts were calculated as part of the total closing costs and the VA Certificate of Loan disbursement dated May 26, 1977, stated a total of $95.33.

 The Bailey Company instructed Giordano to cancel the

 flood insurance which was accomplished without the Wilsons' knowledge, although John Wilson's name was signed to the cancellation dated April 16, 1977. The Wilsons received no refund of the premiums paid pursuant to the cancellation.

 During the period April 13 through 16, 1979, (the 1979 Easter Flood) the Wilsons' home was flooded resulting in extensive damage. The flood insurance policy which the Wilsons thought was in effect amounted to thirty-five thousand dollars ($35,000). They immediately made contact for the insurance proceeds and, alas, to the consternation of many people, there was no flood insurance in effect, since Giordano had cancelled same when the loan was closed at the request of the Bailey Company.

 Bailey, obviously recognizing its vulnerability, negotiated an agreement with the Wilsons whereby the Bailey Company agreed to pay flood damages not to exceed $35,000, the amount of the cancelled flood insurance policy. Thereupon, the Wilsons agreed to release and discharge Bailey and its representatives of all claims and damages to the Wilsons' home in the April, 1979, flood as a result of the cancellation of, and failure to maintain, flood insurance coverage on the home. The Wilsons further assigned and transferred to Bailey all claims, causes of action, rights and damages which they may have had against Giordano as a result of their terminating the flood insurance policy. Subsequently, the present suit was filed by Bailey in the name of the Wilsons, for damages against Giordano.

 The threshold question is whether or not the lower court erred in proceeding to hear the affirmative defenses of Giordano that Bailey was a joint tortfeasor and was estopped from suing Giordano, a tortfeasor, and whether or not the ...


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