United States District Court, S.D. Mississippi, Southern Division
MEMORANDUM OPINION AND ORDER REGARDING MOTIONS FOR
GUIROLA, JR. UNITED STATES DISTRICT JUDGE.
THE COURT are the  Motion for Summary Judgment filed by
USAA Insurance Agency, Inc., and the  Motion for Summary
Judgment filed by Southwest Business Corporation, d/b/a
Insurance Partners. Both Motions seek dismissal of Defendant
Curtis Guilbeaux's counterclaims and have been fully
briefed. After due consideration of the parties'
submissions and the relevant law, it is the Court's
opinion that there are questions of material fact for the
jury regarding certain of Guilbeaux's numerous
counterclaims against Insurance Partners. However, USAA has
shown there is no question of material fact for the jury
regarding Guilbeaux's counterclaims against it.
Accordingly, USAA's Motion will be granted, and Insurance
Partners' Motion will be granted in part and denied in
case originated as a Complaint for Declaratory Judgment filed
by American Zurich Insurance Company against its insured,
Curtis Guilbeaux. (Compl. 1, ECF No. 1). Guilbeaux obtained
builder's risk insurance from Zurich on his property, and
two months later the property was destroyed by fire. Zurich
denied the claim, contending material misrepresentation on
the application form as to the stage of completion of the
property. Zurich alleges that Guilbeaux's application
asserted 30 percent completion, but “had it been
properly informed that the Property had been under
construction for two (2) years without being insured and that
it was 80-90% completed at the time the insurance application
was submitted, it would not have agreed to write the
risk.” (Id. at 4). Zurich alleges that
Guilbeaux made material misrepresentations that justify
rescission of the policy, and requests that the Court declare
the policy void under Mississippi law.
answered the complaint and counterclaimed against Zurich,
USAA Insurance Agency, Inc., and Southwest Business
Corporation d/b/a Insurance Partners. (Guilbeaux Answer 5,
ECF No. 10). In his counterclaims, Guilbeaux alleges that he
began construction on his log home in early 2015, and in May
2016 called USAA to purchase a builder's risk policy for
the property. (Id. at 7-8). USAA transferred the
call to its “partner, ” Insurance Partners, who
could handle the request. The agent at Insurance Partners
asked Guilbeaux questions to fill out the builder's risk
insurance application, and the electronic application was
sent to Guilbeaux to review and sign. Guilbeaux alleges that
the Insurance Partners agent failed to fill out the
application form correctly, (id. at 10), and that he
did not sign the application. (Id. at 12).
counterclaims against Insurance Partners are for bad faith,
negligent failure to procure insurance coverage, breach of
contract/tortious breach of contract, breach of fiduciary
duty, gross negligence, negligent misrepresentation,
conversion, civil conspiracy, intentional or fraudulent
misrepresentation, infliction of emotional distress, breach
of the duty of good faith and fair dealing, and respondeat
superior/vicarious liability. Guilbeaux's counterclaims
against USAA are all of these plus negligence, waiver and
estoppel, and negligent supervision. Both Insurance Partners
and USAA move for summary judgment as to all of
Guilbeaux's counterclaims against them.
motion for summary judgment may be filed by any party
asserting that there is no genuine issue of material fact and
that the movant is entitled to prevail as a matter of law on
any claim. Fed.R.Civ.P. 56. The movant bears the initial
burden of identifying those portions of the pleadings and
discovery on file, together with any affidavits, which it
believes demonstrate the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S.
317, 325 (1986). Once the movant carries its burden, the
burden shifts to the non-movant to show that summary judgment
should not be granted. Id. at 324-25. The non-movant
may not rest upon mere allegations or denials in its
pleadings but must set forth specific facts showing the
existence of a genuine issue for trial. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986).
Because this case arises under the Court's diversity
jurisdiction, the substantive law of Mississippi applies.
Cox v. Wal-Mart Stores E., L.P., 755 F.3d
231, 233 (5th Cir. 2014).
Breach of Contract/Tortious Breach of Contract, Breach of the
Duty of Good Faith and Fair Dealing
and Insurance Partners argue that Guilbeaux cannot maintain a
breach of contract claim against them because they had no
contract with Guilbeaux. The contract of insurance at issue
in this case was issued by Zurich, and neither USAA nor
Insurance Partners is a party to it. Guilbeaux argues in
response that he had separate contracts with USAA and
Insurance Partners to properly procure an insurance policy.
Specifically, Guilbeaux alleges that he paid premiums to
Insurance Partners for the insurance policy, and
“Insurance Partners breached its contracts with
Guilbeaux through its actions.” (Guilbeaux Answer 29,
ECF No. 10). He also alleges that “USAA undertook on
behalf of Guilbeaux to secure insurance coverage for him and
breached its contracts with Guilbeaux through its
actions.” (Id. at 22).
allegations describe possible negligence claims against USAA
and Insurance Partners, but they do not show that
Guilbeaux's interactions with USAA or Insurance Partners
somehow created a contract and that the contract was
breached. The lack of evidence of a contract with
USAA or Insurance Partners is also fatal to Guilbeaux's
good faith and fair dealing claim. The covenant of good faith
and fair dealing applies to performance and enforcement of a
contract, and none has been shown between Guilbeaux and USAA
or Insurance Partners. Limbert v. Miss. Univ. for Women
Alumnae Ass'n, 998 So.2d 993, 998 (¶11) (Miss.
2008). As a result, Guilbeaux's breach of contract,
tortious breach of contract, and breach of duty of good faith
and fair dealing must be dismissed.
courts “have come to term an insurance carrier which
refuses to pay a claim when there is no reasonably arguable
basis to deny it as acting in ‘bad faith, ' and a
lawsuit based upon such an arbitrary refusal as a ‘bad
faith' cause of action.” Blue Cross & Blue
Shield of Miss., Inc. v. Campbell, 466 So.2d 833, 842
(Miss. 1984). Guilbeaux bears a higher burden of proof on his
claim of bad faith than on his breach of contract claim.
Reece v. State Farm Fire & Cas. Co., 684 F.Supp.
140, 146 (N.D. Miss. 1987) (citing Vicksburg Furniture
Mfr., Ltd. v. Aetna Cas. & Sur. Co., 625 F.2d 1167
(5th Cir. 1980)). “[A] bad faith refusal claim is an
‘independent tort' separable in both law and fact
from the contract claim asserted by an insured under the
terms of the policy.” Hartford Underwriters Ins.
Co. v. Williams, 936 So.2d 888, 895 (Miss. 2006).
basis of Guilbeaux's bad faith claim against USAA is his
allegation that USAA denied his insurance claim “with
knowledge that no grounds for denial existed.”
(Guilbeaux Answer 20, ECF No. 10). He also alleges that both
USAA and Insurance Partners “are sophisticated
insurance people who drafted, filled out and then presented
Guilbeaux with application information containing confusing,
misleading, self-serving and self-saving language, meant to
confuse, entrap, and mislead an unsuspecting reader.”
(Id. at 20, 28). He alleges that Insurance
Partners' actions in filling out the application and
assisting in the denial of the claim were committed in bad
Bad Faith Denial of Claim
USAA and Insurance Partners argue that they cannot be liable
for bad faith denial of benefits because neither of them
denied benefits. The letter informing Guilbeaux that benefits
would be denied and the policy rescinded is from Zurich, and
references a Zurich “‘One-Shot' Builders Risk
Policy number BR09227689.” (Guilbeaux Responses, Ex. B,
ECF Nos. 100-2, 101-2). Guilbeaux argues only that USAA and
Insurance Partners acted as Zurich's agent in procuring
the insurance. (See Guilbeaux Ins. Ptnrs. Resp. Mem.
33, ECF No. 106; Guilbeaux USAA Resp. Mem. 8, ECF No. 108).
There is no allegation or evidence that USAA or Insurance
Partners was a party to the Zurich insurance contract or that
either had a role in the decision to deny benefits. The Court
finds an insufficient basis for holding USAA or Insurance
Partners liable for Zurich's refusal to pay benefits.
See Rogers v. Nationwide Prop. & Cas. Ins. Co.,
433 F.Supp.2d 772, 776 (S.D.Miss. 2006) (citations omitted)
(agent, as a non-party to the contract cannot be liable under
a bad-faith theory of recovery). Therefore, USAA and
Insurance Partners are entitled to summary judgment in regard
to the bad faith denial of benefits claim.
Bad Faith in Application Process
alleges that Insurance Partners “filled out and then
presented Guilbeaux with application information containing
confusing, misleading, self-serving and self-saving language,
meant to confuse, entrap, and mislead an unsuspecting
reader.” (Guilbeaux Answer 28, ECF No. 10). He alleges
that USAA is legally responsible for Insurance Partners'
actions. (Id. at 20).
does not cite any case law indicating that a “bad
faith” claim exists under these circumstances.
(See Guilbeaux Ins. Ptnrs. Resp. Mem. 33, ECF No.
106). However, somewhat similar allegations against an
insurance agent for intentionally and knowingly incorrectly
completing an application for insurance have been construed
simply as a fraud claim. Wildmon v. EMC Nat. Life
Co., No. 1:08CV173-SA-JAD, 2009 WL 691226, at *3 (N.D.
Miss. Mar. 11, 2009). The elements of a fraud claim are (1) a
representation; (2) its falsity; (3) its materiality; (4) the
speaker's knowledge of its falsity or ignorance of the
truth; (5) his intent that it should be acted on by the
person and in the matter reasonably contemplated; (6) the
hearer's ignorance of its falsity; (7) his reliance upon
its truth; (8) his right to rely thereon; and (9) his
consequent and proximate injury. Id. (citing
Great S. Nat'l Bank v. McCullough Env't
Servs., 595 So.2d 1282, 1289 (Miss. 1992)).
bad faith claim is construed as a fraud claim,
Guilbeaux's allegations and evidence do not show that he
was ignorant of the falsity of the misrepresentation, or that
he had the right to rely on the misrepresentation that his
house was thirty percent completed. He testified that Ms.
Trigg, the Insurance Partners agent, asked him if the house
“was almost 30 percent complete or more than 30 percent
complete.” (Ins. Ptnrs. Mot. Ex. 1, at 24-25, ECF No.
85-1). He responded, “I'm much more than 30 percent
complete.” (Id. at 25). He further testified
that he reviewed the application before electronically
signing it, and he saw the part of the application that
stated the house was thirty percent complete. (Id.
at 29). Nevertheless, he did not inform Insurance Partners
that the percent complete information was
incorrect. (Id). He signed the application
without changes. (Id. at 30-31, 88). Guilbeaux's
testimony shows that he will be unable to establish a claim
of fraud or bad faith in the application process against
argues that USAA is liable for bad faith in the application
process because 1) he called USAA asking for a builder's
risk policy; 2) USAA did not tell him that homeowner's,
rather than builder's risk, insurance was appropriate for
his circumstances; and 3) USAA transferred his call to its
partner, Insurance Partners, to complete the transaction.
(Guilbeaux USAA Resp. Mem. 8, ECF No. 108). Guilbreaux does
not cite any case law indicating that Mississippi recognizes
a bad faith claim arising from actions like these, and the
Court has found none. Accordingly, USAA is entitled to
summary judgment in regard to the bad faith in application
Breach of ...