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Employers Mutual Casualty Company v. Normmurray Springs Bottled Water Co.

March 14, 2011


The opinion of the court was delivered by: Sharion Aycock United States District Judge


Before the Court is Plaintiff's Renewed Motion for Summary Judgment [73], Motion In Limine Regarding Burden and Presentation of Proof [78], and Motion In Limine to Preclude Testimony [81]. After reviewing the motions, rules, and authorities, the Court finds as follows:


This case arises from a vehicular accident which resulted in the death of a passenger, Joseph K. Stonestreet, on October 6, 2007. Joseph Stonestreet was riding in the back seat of a vehicle owned and operated by Kenneth Newbegin. Newbegin was speeding, lost control of the vehicle, and hit a tree. Stonestreet was ejected from the vehicle and pronounced dead at the scene. Newbegin was insured with Progressive Insurance with a $25,000 per person limit. Stonestreet's heirs presented an under-insured motorist claim (UIM claim) under the Employers Mutual Casualty Company (EMCC) policy number 0E6-30-61 (the Policy) issued to Stonestreet's employer, Normmurray Spring's Bottled Water Company, Inc. (Normmurray Springs). The Policy provides UIM coverage limited to $75,000. There are four vehicles scheduled on the Policy. While Stonestreet was an employee of Normmurray Springs at the time of his death, it is undisputed he was not traveling in a vehicle insured under the Policy and was not acting in the course and scope of his employment. EMCC instituted this action against Tami Stonestreet, as executrix of the Estate of Joseph K. Stonestreet, and the named insured under the Policy, Normmurray Springs. EMCC seeks a declaration that Joseph K. Stonestreet was not an insured under the Policy or the UM Act, and that EMCC is not liable to the Estate of Joseph K. Stonestreet for any amount. Defendants cross-claimed against EMCC seeking judicial estoppel, reformation of the Policy, and asserting negligence.

On March 25, 2010, this Court entered its Order [33] and separate Memorandum Opinion [34] denying without prejudice as premature Plaintiff's Motion for Summary Judgment, or in the Alternative, Motion for Partial Summary Judgment. The Court held in its previous opinion that Joseph Stonestreet was not riding in a covered vehicle; thus, he is not an insured under the Policy. The Court further found that under the UM Act and the Policy as written, Stonestreet is not an insured. However, the Court, pursuant to Federal Rule of Civil Procedure 56(f), denied EMCC's Motion for Summary Judgment as premature to allow Stonestreet time for discovery.

Shortly thereafter, Plaintiff filed a Motion for Reconsideration, or in the Alternative, Motion for Certification for Interlocutory Appeal and to Stay the Case Pending Interlocutory Appeal [36]. The Court granted in part and denied in part EMCC's Motion for Reconsideration [54]. The Court granted EMCC's Motion as to Defendants' judicial estoppel cross-claim, finding that the doctrine of judicial estoppel was not applicable in this case. However, the Court denied the Motion concerning reformation of the Policy. The Court found that Stonestreet was entitled to additional discovery on the reformation issue. The Court left open the question of what legal effect reformation of the Policy would have. Instead, the Court held: "If the Court later determines the Policy should not be reformed, Stonestreet is not entitled to coverage. However, if the Court determines that the Policy should be reformed, the Court will determine the legal effect of reformation at that stage in the litigation."

On January 7, 2011, EMCC filed a Renewed Motion for Summary Judgment [73]. The parties have now completed the discovery process, and the discovery deadline has expired. As such, the issue of reformation of the Policy is now ripe for adjudication by the Court.


Summary judgment is warranted under Rule 56(c) when evidence reveals no genuine dispute regarding any material fact, and that the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). The party moving for summary judgment bears the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). The non-moving party must then go beyond the pleadings and designate "specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S. Ct. 2548. Conclusory allegations, speculation, unsubstantiated assertions, and legalistic arguments are not an adequate substitute for specific facts showing a genuine issue for trial. TIG Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir. 2002); SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1997); Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994) (en banc).

In reviewing the evidence, factual controversies are to be resolved in favor of the non-movant, "but only when . . . both parties have submitted evidence of contradictory facts." Id. In the absence of proof, the court does not "assume that the nonmoving party could or would prove the necessary facts." Id.


In this case, Defendants claim that there was a mutual mistake of fact justifying reformation of the Policy. Mississippi courts apply the general law of contracts to insurance cases including the rules governing reformation. Pride v. General Agents Insurance Co., 697 F. Supp. 1417, 1423 (N.D. Miss. 1988). The general rule in Mississippi is that reformation of a contract is justified only (1) if the mistake is a mutual one, or (2) where there is a mistake on the part of one party and fraud or inequitable conduct on the part of the other.*fn1 Allison v. Allison, 203 Miss. 15, 33 So. 2d 289 (1948). No fraud or inequitable conduct is alleged (or proven) in this case; thus, the Court focuses its attention on whether Defendants have proven the existence of a mutual mistake in the drafting of the contract.

As noted, an insurance contract may be reformed where it is shown to result from the mutual mistake of the parties in contracting for it. Brown v. Chapman, 809 So. 2d 772, 774 (Miss. Ct. App. 2002). The mistake must be in the drafting of the policy, not in the making of the agreement. Johnson v. Consol. Am. Life Ins. Co., 244 So. 2d 400, 402 (Miss. 1971). A mutual mistake is defined as "[a] mistake that is shared and relied on by both parties to a contract." BLACK'S LAW DICTIONARY (8th ed. 2004).

In order to reform a contract on the ground of mutual mistake, the evidence must be clear and convincing. Hartford Fire Ins. Co. v. Associates Capital Corp., 313 So. 2d 404, 408 (Miss.1975) (citing Lamar v. Lane, 154 So. 709 (Miss. 1934); St. Paul Fire & Marine Ins. Co. v. McQuaid, 75 So. 255 (Miss. 1917); Mosby v. Wall, 23 Miss. 81 (1851)). However, the Mississippi Supreme Court has also "even said that the proof must establish mutual mistake beyond a reasonable doubt." Hartford Fire Ins., 313 So. 2d at 408 (citing Rogers v. Clayton, 115 So. 106 (Miss. 1928); Progressive Bank of Summit v. McGehee, 107 So. 876 (Miss. 1926)); see ...

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