United States District Court, S.D. Mississippi, Southern Division
MEMORANDUM OPINION AND ORDER GRANTING SUMMARY
JUDGMENT IN FAVOR OF DEFENDANT AND DENYING AS MOOT MOTION TO
GUIROLA, JR. CHIEF U.S. DISTRICT JUDGE.
THE COURT are the [8, 16] Cross Motions For Summary Judgment
filed by Defendant First Specialty Insurance Corporation and
Plaintiff Colony Insurance Company, respectively, and the
 Motion to Strike Portions of the Affidavit of Larry I.
Gramovot filed by Defendant First Speciality. The parties
agree that Mississippi law applies to this diversity action.
Having considered the submissions of the parties, the oral
arguments of counsel, and the relevant law, the Court is of
the opinion that Colony's equitable subrogration claim is
subject to Mississippi's voluntary payment doctrine, and,
further, that Colony cannot sustain an implied indemnity
claim against First Speciality under Mississippi law.
Accordingly, the Court will grant summary judgment in favor
of First Speciality. Because the Court did not consider the
Gramovot affidavit in ruling on the pending Motions, the
Court will deny the Motion to Strike as moot.
parties have conceded that the underlying facts necessary to
decide the cross motions are not genuinely disputed. Although
the parties have set out those facts in great detail in their
briefing, the Court will include a short discussion of the
facts here. This action arose out of an industrial explosion
that occurred at the Omega Protein plant in Moss Point,
Mississippi, tragically killing Jerry Lee Taylor, II, and
seriously injuring three others. The workers were employees
of Accu-Fab, which is insured by Plaintiff Colony. Defendant
First Speciality is the excess insurer for Omega.
estate brought a separate wrongful death claim against Omega.
According to Colony, Omega was insured by Ace American
Insurance Company (AAIC) up to $1, 000, 000, and First
Speciality was Omega's excess carrier in the amount of
$10, 000, 000. Omega subsequently made a demand against
Accu-Fab's insurer, Plaintiff Colony. Omega claimed that
it was an “additional insured” under
Accu-Fab's policy with Colony. Omega “tendered the
defense of the Taylor Action to Colony, and Colony provided
and funded a defense to Omega” under a reservation of
rights. (See Compl. 3 (¶12), ECF No. 1).
in the litigation, the Taylor plaintiff made a
policy limits settlement demand on Colony, which Colony
ultimately agreed to pay. AAIC also settled for its policy
limits. Colony states that “[p]rior to settlement, [it]
made a demand on” First Specialty, contending that
coverage was precluded under the Colony policy, and that
“First Specialty, as Omega Protein's excess
liability insurer, was . . . obligated to defend and
indemnify Omega Protein for those amounts in excess of the
$1, 000, 000 policy limits provided by the Underlying AAIC
policy.” (See Compl. 5 (¶18), ECF No. 1).
Colony claims that First Speciality declined to do so
“and refused to contribute to the settlement of the
Taylor Action.” (See Id. (¶19)).
Colony specifically contends that the Underlying AAIC Policy
provided coverage to Omega Protein, and the First Specialty
Policy provided excess coverage for the claims asserted
against Omega Protein in the Taylor Action. Since the policy
limit of the Underlying AAIC policy was insufficient to
satisfy the claims against Omega Protein, First
Specialty's duty to defend and indemnify its insured was
triggered under the First Speciality Policy.
(Id. at 6 (¶22)). Colony further contends that
“Omega Protein did not qualify as an additional insured
under the Colony policy, and therefore the Colony policy
provided no coverage whatsoever for Omega Protein.”
(Id. (¶23)). As a result, Colony instituted this
action against First Specialty seeking equitable subrogation
and/or indemnity from First Specialty for the $1, 000, 000
settlement and defense costs expended in Taylor.
Speciality has moved for summary judgment, arguing, inter
alia, that Mississippi's voluntary payment doctrine
precludes Colony's claims for equitable subrogation and
implied indemnity. Colony has also filed a cross motion,
arguing that the Court should hold that it is entitled to
subrogation and/or indemnity as a matter of law. The Court
discusses each of Colony's claims in turn below.
Payment Doctrine/ Equitable Subrogation
Mississippi law, the Fifth Circuit recently explained that
“[a] voluntary payment is a payment made without
compulsion, fraud, mistake of fact, or agreement to repay a
demand which the payor does not owe, and which is not
enforceable against him.” S. Ins. Co. v. Affiliated
FM Ins. Co., 830 F.3d 337, 347 (5th Cir. 2016) (citation
and quotation marks omitted). “Such a payment, once
made, cannot be recouped.” Id. “Courts
analyzing the doctrine have concluded payments were
involuntary in a variety of circumstances.”
Id. (collecting cases). Relevant to this action,
where an insurer acts “pursuant to its duty to pay, it
cannot be considered a volunteer.” See Id. In
other words, “a contractually-obligated payment between
insurer and insured” is not voluntary. See id.
Mississippi Supreme Court most recently discussed voluntary
payments in Indemnity Insurance Co. of North America v.
Guidant Mutual Insurance Co., 99 So.3d 142
(2012). It stated that “[a]n insurer has a
duty to protect the interests of its insured, ‘which
includes the duty to settle claims within the policy limits
on objectively reasonable terms.'” See Id.
at 151 (citation omitted). It continued that “[i]n
addition to the requirement that an insurer protect the
interests of its insured, this Court recognizes that the law
and public policy favor the settlement of disputes.”
See Id. It concluded that an insurer has “a
legal duty to consider the insured's best interest and to