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First Trinity Capital Corp. v. Catlin Specialty Ins. & Crump Ins. Servs., Inc.

United States District Court, S.D. Mississippi, Jackson Division

December 2, 2013

FIRST TRINITY CAPITAL CORPORATION, PLAINTIFF
v.
CATLIN SPECIALTY INSURANCE AND CRUMP INSURANCE SERVICES, INC., DEFENDANTS

For First Trinity Capital Corporation, Plaintiff: John Graham Holaday, HOLADAY LAW FIRM, PLLC, Flowood, MS; William C. Walter, GRAND BANK FOR SAVINGS, FSB, Hattiesbrug, MS.

For Crump Insurance Services, Inc., Defendant: Charles Greg Copeland, Timothy J. Sterling, COPELAND, COOK, TAYLOR & BUSH, PA - Ridgeland, Ridgeland, MS.

OPINION

Tom S. Lee, UNITED STATES DISTRICT JUDGE.

Page 643

MEMORANDUM OPINION AND ORDER

This cause is before the court on the motion of defendant Crump Insurance Services, Inc. (Crump) for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiff First Trinity Capital Corporation (First Trinity) has responded to the motion and the court, having considered the memoranda of authorities, together with attachments, submitted by the parties, concludes that the motion is well taken and should be granted.[1]

Plaintiff First Trinity is engaged in the business of financing insurance premiums.

Page 644

In a premium finance arrangement, the premium finance company advances an amount to an insurer or insurance agent or broker in payment of premiums on an insurance contract which the insured under such policy must repay in regular monthly installments. See Miss. Code Ann. § 81-21-1 (defining premium finance agreement as " an agreement by which an insured or prospective insured promises to pay to a premium finance company the amount advanced or to be advanced to an insurer or to an insurance agent or broker in payment of premiums of an insurance contract together with interest or discount and a service charge...." ). In First Trinity's standard finance agreement, the insured grants First Trinity a security interest in any unearned premiums and further grants First Trinity the power to cancel the policy if the insured defaults on its monthly payments. Thus, in the event an insured defaults on its repayment obligation, First Trinity may cancel the policy and collect the unearned premiums.

This case involves a premium finance agreement alleged to have been entered between First Trinity and B& W Auto Sales (B& W) to finance B& W's premium for a garage policy allegedly obtained by B& W from Catlin Specialty Insurance (Catlin), through Catlin's alleged general agent Crump, with effective dates of March 19, 2009 to March 19, 2010. First Trinity alleges that it provided premium financing for this policy by payment of $17,850 to Central Mississippi Insurance (CMI), which acted as the authorized agent for Catlin and Crump. First Trinity asserts that under the terms of the premium finance agreement executed by B& W, B& W agreed to repay the monies advanced, with interest and finance charges, in amortized monthly installments; assigned to First Trinity all unearned premiums as collateral for the loan to B& W; and gave First Trinity power of attorney to cancel the policy in the event of a default by B& W.

The complaint alleges that B& W defaulted on its repayment obligations under the premium finance agreement, whereupon First Trinity exercised its right to cancel the policy by sending a Notice of Cancellation to B& W, and to Catlin and Crump, directing that the policy be cancelled effective August 7, 2009. First Trinity alleges that upon cancellation, Catlin and Crump were obligated by law to return unearned premiums totaling $13,077.59 and yet they have failed and refused to refund the unearned premium to First Trinity.

On the basis of these allegations, First Trinity brought this action purporting to assert causes of action against Catlin and Crump for breach of statutory law and negligence per se (Count Oneo); breach of contract (Count Two); negligence (Count Three); fraud (Count Four); constructive trust (Count Five); actual and apparent authority (Count Six); ratification and estoppel (Count Seven); and punitive damages (Count Eight).[2] It has since voluntarily dismissed Catlin, leaving Crump as the only defendant. Crump has now moved for summary judgment as to each of plaintiff's putative causes of action.

In its motion, Crump explains what plaintiff's complaint does not: that Jan Gunn, who owned and operated CMI, was engaged in a scheme to defraud First Trinity, and that in this, and numerous other transactions involving at least eight other putative insurers and eight alleged general agents, premium finance monies

Page 645

forwarded to CMI/Gunn by First Trinity were not paid over to the putative insurers but rather were misappropriated by Gunn. Gunn has acknowledged that she misappropriated $1,293,450 from First Trinity through " fraudulent loans and financial transactions." According to Crump, the $13,077.59 in damages sought by First Trinity in this litigation relates to a " fraudulent premium financing arrangement for a purported insured, B& W, for a fictitious policy allegedly (but not actually) ...


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