GARY W. NETTO; DEJUANA L. NETTO, Plaintiffs - Appellees
ATLANTIC SPECIALTY INSURANCE COMPANY, Defendant-Appellant
from the United States District Court for the Southern
District of Mississippi
OWEN, SOUTHWICK and HIGGINSON, Circuit Judges.
H. SOUTHWICK, CIRCUIT JUDGE:
case presents a question of first impression under
Mississippi insurance law: may an insurer rely on a
consent-to-settle exclusion in an insurance policy to deny
coverage of a claim made by an unnamed additional insured
under that policy? We conclude that absent evidence that the
unnamed insured knew or should have known of the exclusion,
the insurer may not enforce its contractual right to deny
coverage because it had not consented to the settlement.
AND PROCEDURAL BACKGROUND
Netto was involved in an automobile accident while acting in
the scope of his employment for Pearl River County,
Mississippi. The automobile in which Netto was a passenger
was owned by Pearl River County and insured by Atlantic
Specialty Insurance. Netto was not a party to the policy
between the county and Atlantic, but was an unnamed
additional insured under its terms. The at-fault vehicle was
two years after the accident, Netto's attorney sent a
letter to the Pearl River County Board of Supervisors
advising the Board that she had been "retained to
represent the interest of Gary Netto, involved in an
automobile accident in Pearl River County, Mississippi on
August 14, 2013." The letter requested that the Board
"forward this correspondence to the insurance carrier in
force at the time of [the] accident and request that they
make contact with our office immediately." Atlantic
received the forwarded letter on June 2, 2015 and assigned
the case to claims adjuster Barbara McConnell that same day.
claim-file notes from June 3-4 confirm that Atlantic
considered Netto's claim to be a possible uninsured
motorist ("UM") claim. The notes indicate that
Atlantic contacted a representative of Pearl River County to
discuss Netto's potential claim. McConnell admitted in
her deposition that no one from Atlantic gave Netto any
information regarding the applicable policy.
Netto's counsel sought unsuccessfully to contact the
county's insurer, she was negotiating a settlement with
the at-fault driver and the Mississippi Workers'
Compensation Trust. Netto reached a settlement with both, and
the Mississippi Workers' Compensation Commission approved
did not attempt to contact Netto until the day the Commission
approved the settlement, when McConnell left a message with
Netto's attorney requesting a return call. There is no
evidence that Netto's counsel returned the call, or of
any additional attempts by Atlantic to contact Netto.
two months later, Netto's counsel, having learned that
Atlantic was Pearl River County's insurer through an
unrelated suit, sent a second letter directly to Atlantic
through its website. That letter informed Atlantic of the
settlement and raised a possible claim:
The policy limits have been collected from the at-fault
driver, and we intend to make a UM claim. Currently there are
two (2) possible UM policies at issue - the county's and
Mr. Netto's GEICO policy. I believe the first step is to
determine whether Mr. Netto is eligible to make a claim under
the county UM policy, pending the policy language, since he
was a passenger in a county owned truck and has a
worker's compensation claim.
Considering the foregoing, I ask that you assign an adjuster
to this claim and provide the relevant policy documents so
that we can ...