James v. State Farm Mutual Automobile Insurance

Case: 11-60458 Document: 00512514313 Page: 1 Date Filed: 01/28/2014

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
January 28, 2014

No. 11-60458 Lyle W. Cayce
Clerk

FAITH JAMES,

Plaintiff - Appellant,
v.

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,

Defendant - Appellee.

Appeals from the United States District Court
for the Southern District of Mississippi

Before STEWART, Chief Judge, and GARZA and ELROD, Circuit Judges.
CARL E. STEWART, Chief Judge:
IT IS ORDERED that the opinion previously filed in this case, James v.
State Farm Mut. Auto. Ins. Co., No. 11-60458, 719 F.3d 447 (5th Cir. June 21,
2013), is WITHDRAWN. The following opinion is substituted therefor:
Defendant-Appellee State Farm Mutual Automobile Insurance Co. (“State
Farm”) tendered the policy limit on its uninsured motor vehicle coverage to
Plaintiff-Appellant Faith James nearly thirty months after James was injured
in a car accident. James brought a bad faith claim under Mississippi law, and
the district court granted State Farm’s motion for summary judgment. For the
following reasons, we AFFIRM in part, REVERSE in part, and REMAND.
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I. BACKGROUND
A. Facts
On February 3, 2006, James was involved in a car accident with Jarvis
Smith. The parties do not dispute that Smith’s negligence was the sole cause of
the accident. James’s vehicle turned over at least once, and she was taken from
the scene in an ambulance to Wayne General Hospital. James received
numerous stitches for a head wound and testified in her deposition that she felt
significant pain in her chest, back, and head immediately after the accident.
At the time of the accident, James and/or her husband owned four State
Farm insurance policies. The policy on the vehicle James was driving at the
time of the accident included $5,000 in medical payments coverage, collision
coverage, and $10,000 per person in uninsured/underinsured motor vehicle
(“UM”) coverage. Each of the other three policies also provided $10,000 per
person UM coverage for a stacked total of $40,000 in UM benefits. The parties
do not dispute that James’s policies were in effect at the time of the accident.
After James promptly notified State Farm of the accident, State Farm quickly
paid out under its medical payments and collision coverage.
At issue is State Farm’s delay in paying James benefits under her UM
coverage. As the timeline of events contained in the record underpins our
analysis of James’s claims, we refrain from a lengthy factual recitation here and
instead present critical events in our below discussion. We now continue our
summary of this case’s background with an overview of its procedural history.
B. Procedural History
On October 23, 2007, James and her husband1 filed a complaint against
State Farm in federal district court on diversity grounds. On February 13, 2008,
James filed an amended complaint, which alleged that State Farm was

1
James’s husband later voluntarily dismissed his complaint.

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intentionally engaging in delaying tactics to avoid paying on the policies.
Because of this delay, the complaint alleged that State Farm had, inter alia,
committed the tort of bad faith.2 The complaint requested a jury trial and
sought $40,000 due under the policy, compensatory damages, and punitive
damages.
Over the next several months, the magistrate judge granted two motions
to compel against State Farm. On July 29, 2008, State Farm paid its stacked
UM policy limit of $40,000 to James. State Farm then filed a motion for
summary judgment on October 29, 2008. On May 6, 2011, the district court
granted State Farm’s motion for summary judgment, entered final judgment in
favor of State Farm, and dismissed the complaint with prejudice. No. 4:07-CV-
137, 2011 WL 1743421 (S.D. Miss. May 6, 2011). This appeal followed.3
II. DISCUSSION
On appeal, James makes two arguments related to her bad faith claim: (1)
State Farm withheld payment under one policy in order to coerce a lower
settlement for claims under other policies, and (2) State Farm unreasonably
delayed payment on the claim without a legitimate or arguable basis for doing
so.

2
James also asserted that State Farm’s actions were “a breach of Defendant’s duties
of good faith and fair dealings and duty to fairly and promptly adjust claims under the
Plaintiffs’ policy.” Even if the pleadings indicate James may have asserted these as claims
separate from her bad faith claim, James has pressed only her bad faith claim on appeal.
3
On appeal, James appears to assert a separate breach of contract claim. The district
court apparently interpreted this claim as a sub-issue within James’s bad faith claim. On
appeal, James combines this claim with her argument as to the independent tort of bad faith.
Assuming arguendo that James intended to assert a breach of contract claim separate from
her bad faith claim, we hold this claim to have been waived on appeal because James points
to no policy provisions supporting this claim. See Fed. R. App. P. 28. Accordingly, we affirm
the district court to the extent that it granted summary judgment to State Farm on a breach
of contract claim independent of James’s bad faith claim.

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A. Standard of Review
We review a district court’s grant of summary judgment de novo. Bradley
v. Allstate Ins. Co., 620 F.3d 509, 516 (5th Cir. 2010) (citation omitted).
Summary judgment is appropriate when “the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). A genuine dispute about a material
fact exists when the evidence presented on summary judgment is such that a
reasonable jury could find in favor of the non-moving party. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). We view all facts and evidence in the light
most favorable to the non-movant, here James. Bradley, 620 F.3d at 516
(citation omitted). When a defendant moves for summary judgment and
identifies a lack of evidence to support the plaintiff’s claim on an issue for which
the plaintiff would bear the burden of proof at trial, then the defendant is
entitled to summary judgment unless the plaintiff is able to produce “summary
judgment evidence sufficient to sustain a finding in plaintiff’s favor on that
issue.” Kovacic v. Villarreal, 628 F.3d 209, 212 (5th Cir. 2010) (citations
omitted) (quoting Thompson v. Upshur Cnty, Tex., 245 F.3d 447, 456 (5th Cir.
2001). “[T]he propriety of summary judgment [is] bound up in the burdens of
proof at trial . . . .” Steven Alan Childress & Martha S. Davis, 1 Federal
Standards of Review § 5.02, at 5-26 (4th ed. 2010) (citing Anderson, 447 U.S. at
247S48, 254).
We review the district court’s interpretation of state law de novo, and we
“give no deference to its determinations of state law issues.” Bradley, 620 F.3d
at 516 (citation omitted).
B. Applicable Law
Because James brought this case in federal court on diversity grounds,
Mississippi substantive law applies. See Erie R.R. Co. v. Tompkins, 304 U.S. 64
(1938). “To determine issues of state law, we look to final decisions of the state’s

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highest court, and when there is no ruling by that court, then we have the duty
to determine as best we can what the state’s highest court would decide.”
Westlake Petrochems., LLC v. United Polychem, Inc., 688 F.3d 232, 238 n.5 (5th
Cir. 2012) (citation omitted). “In making an [Erie] guess in the absence of a
ruling from the state’s highest court, this Court may look to the decisions of
intermediate appellate state courts for guidance.” Howe ex rel. Howe v.
Scottsdale Ins. Co., 204 F.3d 624, 627 (5th Cir. 2000) (citation omitted).
1. Claim against insurer for bad faith
James asserts that State Farm committed the tort of bad faith when it
delayed payment on her UM claim. “[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.” Spansel v. State Farm
Fire & Cas. Co., 683 F. Supp. 2d 444, 447 (S.D. Miss. 2010) (alteration in
original) (quoting Hartford Underwriters Ins. Co. v. Williams, 936 So. 2d 888,
895 (Miss. 2006)).
The Mississippi Supreme Court has recognized that claimants can bring
bad faith claims against and recover punitive damages from insurers who refuse
to pay out on a valid claim. See Caldwell v. Alfa Ins. Co., 686 So. 2d 1092, 1098
(Miss. 1996) (holding that denial of a valid insurance claim is critical for the
submission of punitive damages to a jury). Additionally, although Mississippi
courts are skeptical of such claims, they have permitted claimants to recover
damages on bad faith claims when resolution of an insurance claim is merely
delayed rather than ultimately denied.4 See, e.g., Travelers Indem. Co. v.
Wetherbee, 368 So. 2d 829, 834S35 (Miss. 1979) (affirming jury award for
punitive damages where insurer withheld payment for eight months); AmFed

4
Thus, here, we treat caselaw that refers to a “denial of a claim” as interchangeable
with a “delay of payment on a claim” unless the context indicates that the law pertains
specifically to a denial.

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Cos., LLC v. Jordan, 34 So. 3d 1177, 1191 (Miss. Ct. App. 2009) (affirming trial
judge’s decision to submit punitive damages issue to the jury in a delay-of-
payment case); Pilate v. Am. Federated Ins. Co., 865 So. 2d 387, 400 (Miss. Ct.
App. 2004) (“[T]here may be cases where a delay [of payment for one month]
could possibly be sufficient grounds for a bad faith claim.”); see also Essinger v.
Liberty Mut. Fire Ins. Co., 529 F.3d 264, 271 n.1 (5th Cir. 2008) (citation omitted)
(“Inordinate delays in processing claims and a failure to make a meaningful
investigation have combined to create a jury question on bad faith.”); but see
Tutor v. Ranger Ins. Co., 804 F.2d 1395, 1399 (5th Cir. 1986) (per curiam)
(reversing jury’s punitive damage award where payment was delayed during an
ongoing dispute between insured and insurer); Caldwell, 686 So. 2d at 1098
(affirming grant of summary judgment where insurance company delayed
payment for three months in complex wrongful death claim, including a six-week
delay after it completed its investigation).
Our review of the case law illustrates that whether to submit a delay-of-
payment claim to a jury is a highly fact-sensitive analysis. To establish a claim
for punitive damages in the context of a bad faith claim, James must establish
three factors: 1) State Farm had a contractual obligation to her; 2) State Farm
lacked an arguable or legitimate basis for its delay in paying her claim; and 3)
State Farm’s failure resulted “from an intentional wrong, insult, or abuse as well
as from such gross negligence as constitutes an intentional tort.”5 Jeffrey

5
We acknowledge that James must demonstrate her entitlement to compensatory
damages before she may receive punitive damages. See Broussard v. State Farm Fire & Cas.
Co., 523, F.3d 618, 628 (5th Cir. 2008) (“Mississippi law does not permit parties to recover
punitive damages unless they first prove that they are entitled to compensatory damages.”
(citations omitted)). See also Miss. Code Ann. § 11-1-65(1)(b), (c) (West 2012); Jordan, 34 So.
3d at 1189 (describing process whereby after the jury awarded the claimant compensatory
damages, the claimant moved to submit the issue of punitive damages to the jury). However,
because the only question before us is whether summary judgment in favor of State Farm was
proper on James’s bad faith claim, we refrain from determining James’s entitlement to
compensatory damages.

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Jackson, Miss. Ins. Law and Prac. § 13:2 (2012) (internal quotation marks and
citations omitted); see U.S. Fidelity & Guar. Co. v. Wigginton, 964 F.2d 487, 492
(5th Cir. 1992); see also Sobley v. S. Natural Gas Co., 210 F.3d 561, 564 (5th Cir.
2000). As a preliminary matter, the trial judge must decide, as a matter of law,
that the insurer lacked “a reasonably arguable basis” for denying the claim. See
Broussard v. State Farm Fire and Cas. Co., 523 F.3d 618, 628 (5th Cir. 2008)
(internal quotation marks and citation omitted) (quoting Andrew Jackson Life
Ins. Co. v. Williams, 566 So. 2d 1172, 1186 n.13 (Miss. 1990)); Wigginton, 964
F.2d at 492 (citation omitted); Fulton v. Miss. Farm Bureau Cas. Ins. Co., 105 So.
3d 284, 288 (Miss. 2012).
2. Arguable or legitimate basis
As noted above, whether an insurer possessed an arguable or legitimate
reason is a question of law. Wigginton, 964 F.2d at 492 (citation omitted);
Jenkins v. Ohio Cas. Ins. Co., 794 So. 2d 228, 232-33 (Miss. 2001). “Arguable
reason is defined as nothing more than an expression indicating the act or acts
of the alleged tortfeasor do not rise to [the] heightened level of an independent
tort.” Caldwell, 686 So. 2d at 1096 (citation and internal quotation marks
omitted). The initial burden placed on the insurer is low: it “need only show that
it had reasonable justifications, either in fact or in law” for its actions.
Wigginton, 964 F.2d at 492 (citation omitted). Once an insurance company
articulates an arguable or legitimate reason for its payment delay, the insured
bears the burden of demonstrating that the insurer had no arguable reason.
Caldwell, 686 So. 2d at 1097. “The plaintiff’s burden in this respect likewise
exists at the summary judgment stage where the insurance company presents
an adequate prima facie showing of a reasonably arguable basis for denial so as
to preclude punitive damages.” Id. at 1097 n.1 (citation omitted).
Whether a claimant has proven an insurer acted without a reasonable or
arguable basis is determined by a preponderance of the evidence. See, e.g., Miss.

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Power & Light Co. v. Cook, 832 So. 2d 474, 484 (Miss. 2002) (approving of jury
instructions that used preponderance of the evidence standard); Mut. Life Ins.
Co. of N.Y. v. Estate of Wesson, 517 So. 2d 521, 530 (Miss. 1987), abrogated on
other grounds by Gen. Am. Life Ins. Co. v. McCraw, 963 So. 2d 1111, 1114 (Miss.
2007) (same).6
3. Insurer duties under Mississippi law
Mississippi places a duty on insurers to properly investigate the claims
asserted by their insured. Specifically, “[u]nder Mississippi law, insurers have
a duty ‘to perform a prompt and adequate investigation and make a reasonable,
good faith decision based on that investigation’ . . . .” Broussard, 523 F.3d at
627-28 (quoting Liberty Mut. Ins. Co. v. McKneely, 862 So. 2d 530, 535 (Miss.
2003)). “A proper investigation means obtaining ‘all medical information
relevant to a policyholder’s claim.’” McLendon v. Wal-Mart Stores, Inc., 521 F.
Supp. 2d 561, 565 (S.D. Miss. 2007) (quoting Lewis v. Equity Nat’l Life Ins. Co.,
637 So. 2d 183, 187 (Miss. 1994)). To do so, an insurer must “make a reasonable
effort to secure all medical records relevant to the claim.” Stewart v. Gulf Guar.
Life Ins. Co., 846 So. 2d 192, 204 (Miss. 2002) (citation and internal quotation
marks omitted).

6
State Farm argues that James must establish the lack of an arguable or legitimate
basis by clear and convincing evidence. While it is clear that the second part of the punitive
damages test under State Farm Mut. Auto. Ins. Co. v. Grimes, 722 So. 2d 637, 641 (Miss.
1998), does require clear and convincing evidence, see Miss. Code Ann. § 11-1-65, State Farm
has identified no Mississippi court that has squarely addressed the question of whether
establishing the lack of an arguable basis requires a similarly heightened standard. Moreover,
the plain language of the Mississippi statute limits its heightened standard to proof of “actual
malice, gross negligence which evidences a willful, wanton or reckless disregard for the safety
of others, or . . . actual fraud.” Miss. Code Ann. § 11-1-65(1)(a). This plainly addresses the
second part of the punitive damages test, not the threshold issue that we consider today.
Therefore, as State Farm has presented no contrary authority, we hold that the lack of an
arguable or legitimate basis requires only proof by a preponderance of the evidence.

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C. Analysis
Having set up the legal background to James’s bad faith claim, we now
proceed to determine whether State Farm has an arguable or legitimate basis
for delaying payment on James’s claim.7 The parties have framed the analysis
of this issue as an all-or-nothing proposition. State Farm delayed payment from
February 2006, when James reported the accident to State Farm, until July 29,
2008, when State Farm tendered payment. James argues State Farm had no
arguable or legitimate basis for the entirety of this thirty month delay.
According to State Farm, it reasonably delayed payment during the entire
thirty-month period because it “was actively investigating the claim and
attempting to resolve the relevant issues,” namely, the cause of James’s injuries.
We agree that conducting a prompt and adequate investigation provides
a legitimate basis for a payment delay. See Caldwell, 686 So. 2d at 1098.
Therefore, to properly determine whether State Farm reasonably delayed
payment, we need to analyze the record to understand when State Farm was
actively investigating James’s claim and thus had a legitimate basis for its
payment delay. We look to the totality of the circumstances to determine
whether State Farm had an arguable or legitimate basis for its delay. See
Hartford Underwriters Ins., 936 So. 2d at 896. In keeping with the practice of
Mississippi courts, we analyze the entire investigation in discrete time periods
to better assess the claims. See Pilate, 865 So. 2d at 395 (“We consider AmFed’s
investigation in several different time periods.”).

7
James also argues that State Farm withheld payment under one policy in order to
coerce a lower settlement for claims under other policies. She concedes that she has no
evidence to support this contention, and so she has waived this argument on appeal. See Fed.
R. App. P. 28(a)(9)(A).

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1. February-May 30, 2006 (~4 months)
State Farm argues it had a legitimate or arguable basis for delay from
February through May 30, 2006 because it was attempting to determine whether
Smith, the accident’s tortfeasor, was insured. We agree that State Farm was
conducting a prompt and adequate investigation during this time period.
James promptly notified State Farm of the accident in early February, and
State Farm immediately began communicating with James about her collision
and medical payments coverage. At the same time, State Farm was
investigating whether Smith or the owner of the vehicle he was driving at the
time of the accident had insurance coverage. If they had adequate insurance
coverage, James’s UM coverage would not apply. During this period of time,
State Farm’s claim representative attempted to reach Progressive, Smith’s
former insurance company, multiple times, and left numerous voicemail
messages for a Progressive contact who never returned State Farm’s calls. On
May 30, 2006, State Farm confirmed that Progressive had denied coverage,
triggering State Farm’s UM coverage for accident-related injuries.
The record thus shows that State Farm had a legitimate basis for failing
to tender payment from February through May 30, 2006 as it was actively
investigating whether James was covered by her policy’s UM benefits.
2. May 31, 2006-July 20, 2006 (~6 weeks)
State Farm argues its active investigation of James’s claim provides a
legitimate or arguable basis for its delay. We agree with this contention for the
time period lasting from May 31 through July 20, 2006.
The record shows that State Farm received James’s signed medical
authorization form, authorizing State Farm to obtain James’s medical records,
on February 20, 2006. Thereafter, James continued to experience significant
back pain for which she sought treatment. On May 8, 2006, she began seeing
Dr. Ken Staggs at the Pain Treatment Center.

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On June 5, 2006, State Farm requested James’s medical records and bills
from three medical facilities. James continued to apprise State Farm of her on-
going medical treatment for which State Farm continued to promptly request
medical records and bills. On June 21, 2006, State Farm received medical
records from the Pain Treatment Center. The records stated that James had
“compression fractures at T2, T3, T5, and T11 all ensuing from a motor vehicle
accident presumed February 03, 2006 as there is edema on the MRI indicating
that these are new.” Soon after, Renee Powell, the State Farm claim
representative recently assigned to James’s file, noted that she had received the
Pain Treatment Center records and reported that they diagnosed James as
having “traumatic multi-thoracic compression fractures w/out retropulsion, T7-8
HNP w/o myelopathy or radiculopathy . . . .” Powell also observed the records
listed past medical and surgical treatment James had received, and she
specifically noted that the list did not include any spinal surgery. On July 18,
2006, Powell repeated her earlier entry about James’s diagnosis and further
stated that “[i]f records do not show any more evidence of pre-existing issues, it
seems that the medical records are supporting that [James’s] problems are a
result of the [motor vehicle accident].”
On July 20, 2006, Powell noted in James’s file, “Records from Wayne
General indicate some degenerative changes in thoracic vertebrae with
compression, but apparently the condition had not been causing any symptoms
prior to loss, but I will review material closely as rec’d [sic].”
By requesting and reviewing James’s medical records related to the
accident, State Farm was engaged in an active investigation of James’s bodily
injury claim during this time period.
3. July 20-October 4, 2006 (~11 weeks)
State Farm argues its active investigation of James’s claim provides an
arguable or legitimate basis for its payment delay. Because State Farm was not

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actively investigating James’s claim during this time period, we hold that there
is a question of fact as to whether James can satisfy her burden of
demonstrating by a preponderance of the evidence that State Farm did not have
an arguable reason for this eleven-week period of delay.
During this time period, James continued to receive medical treatment for
her injuries, about which she continued to apprise State Farm. On July 25,
2006, James reported to Powell that her doctors attributed her medical problems
to the motor vehicle accident. On July 30, 2006, State Farm received a bill from
Staggs, which indicated that James was being treated for a thoracic compression
fracture.
Although Powell’s July 20 review of James’s medical records recognized
that James’s symptoms might be due to a pre-existing injury that would not be
eligible for coverage under James’s UM motor vehicle coverage, State Farm did
not act on this concern until October 5, 2006. On that date, Powell sent James
a letter asking her to call to discuss the claim and, in the subsequent phone call,
she apprised James of her questions about whether the injuries were caused by
a pre-existing injury. The record does not show that Powell received any
additional information bolstering her concern about a potential pre-existing
injury during this time. Between July 20, 2006 and October 5, 2006, Powell
spoke to James at least twice, but Powell admitted in her deposition that she did
not discuss her pre-existing condition concerns “in detail.” Nor does the record
provide any evidence that Powell raised these concerns with James prior to
October 5, 2006.
Because State Farm was not conducting any investigation during this time
period, we conclude that it was not acting in accordance with its duty under
Mississippi law “to perform a prompt and adequate investigation.” Broussard,
523 F.3d at 627 (citation omitted). State Farm has provided no explanation for
its failure to inquire further into its concerns during this nearly three-month

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period. Critically, State Farm does not point to any evidence in the record that
Powell received any additional information during this time before she contacted
James on October 5, 2006 to obtain prior medical records. It thus follows that
Powell could have sought this information in July.
Accordingly, we hold that James has satisfied her burden of raising a fact
issue regarding whether State Farm had an arguable or legitimate reason for
this eleven-week delay between July 20 and October 4, 2006.
4. October 5, 2006-January 16, 2007 (~14 weeks)
State Farm argues its active investigation of James’s claim provides a
legitimate or arguable basis for its delay. During this period of time, Powell
acted on her concern that James’s injury may have pre-dated the accident. On
October 5, 2006, Powell sent James a letter asking her to call to discuss the
claim. The letter stated, “If I can obtain some of your prior records, I may then
be in a position to evaluate your uninsured motorist claim.” On October 9, 2006,
James disclosed to Powell that she had fallen on concrete over twenty years ago
and had been treated for lower back pain at that time but had not been recently
treated for any back problems. James also provided the names of all of her
doctors to Powell.
On October 10, 2006, Powell sent James an authorization for release of
prior medical records. On October 19, 2006, Powell wrote James a letter,
reminding her to return the medical authorization that would allow the release
of her prior medical records. On October 27, 2006, James left a message for
Powell, stating that she would not sign the medical authorization. The same
day, Powell sent James a letter acknowledging James’s refusal. The letter noted
in reference to some of the medical records State Farm had obtained, “As you can
see, this does not clearly relate your ongoing treatment to an injury sustained
in the accident and I am merely trying to determine if you had to treat for any
of these pre-existing conditions prior to the accident [or] if they became

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symptomatic following the loss. I do not know if I will be able to properly
evaluate your claim without that information, but I am waiting on some
information from Dr. Staggs at this time.” On October 30, 2006, James called
Powell to let her know that she would sign the medical authorization. James
then executed the prior records release on November 1, 2006, and State Farm
received it on November 6, 2006.
On October 27, 2006, State Farm sent a letter to Staggs, requesting all of
James’s medical records. The letter elaborated, “I am trying to determine if [the
thoracic compression fracture for which Staggs was treating James] was caused
by the accident of February 3, 2006, since the intial radiology report indicated
that this injury was probably old. If your notes do not comment on what injuries
were caused in this accident or how the accident may have affected any pre-
existing injuries, please advise via letter.” State Farm sent Staggs a second
request for James’s medical records on November 17, 2006. On January 16,
2007, Total Pain Care responded to State Farm’s medical records request but
advised that records prior to August 14, 2006 needed to be requested from a
different facility. Powell did not contact Staggs again.
Seeking further clarification from the insured’s treating physician as to
the cause of the insured’s injury is a legitimate basis for a delay of payment.
Therefore, we conclude that State Farm’s actions in attempting to resolve its
questions via James’s treating physician met State Farm’s low burden to provide
a legitimate justification for its delay during this time period.
5. January 17, 2007-July 11, 2007 (~25 weeks)
State Farm asserts its active investigation of James’s claim provides a
legitimate or arguable basis for its delay. Because State Farm was not engaged
in an active investigation between January 17, 2007 and July 12, 2007, we reject
this argument. State Farm also presses that James’s lawyer, Joe Clay
Hamilton, failed to provide medical records, the delay of which should not be

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attributed to State Farm. Because the record contains no evidence that State
Farm informed James’s lawyer that it was concerned about the etiology of
James’s injuries, we decline to attribute the delay to James. State Farm also
argues that the delay is attributable to Staggs, whose medical records allegedly
caused further confusion as to the cause of James’s injuries. We similarly reject
this argument because Staggs sufficiently responded to State Farm’s inquiry,
and State Farm did not follow up with Staggs to seek further clarification.
On December 11, 2006, Hamilton notified State Farm that he was
representing James and advised that he would forward James’s medical bills
and records when she had completed treatment. The same day, Powell
acknowledged Hamilton’s representation and added, “Please forward all related
medical and wage information you have concerning your client’s injuries.” Over
the next several months, Powell sent Hamilton several letters, requesting
“material” for James. Critically, it was not until July 12, 2007 that Powell
notified Hamilton that she required prior medical records to fully assess James’s
claim. State Farm argues on appeal that Staggs’s January 16, 2007 medical
records further confused its claim representatives, but the record does not
disclose that Powell ever mentioned that confusion to Hamilton or the need for
prior medical records until her July 12, 2007 letter.
While it is true that Powell sent several letters to Hamilton during this
time period to which he did not respond, Powell’s letters do not indicate any
active investigation into State Farm’s concern about the etiology of James’s
injury. The record does not demonstrate that Powell ever communicated to
Hamilton during this time period that she was concerned about the possible pre-
existing nature of James’s injuries, nor does the record show that Powell
indicated to Hamilton that he should seek to gather prior medical records, not

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just evidence of current treatment.8 Specifically, in her letter, Powell explained
that “the initial [radiologist] reports indicated the compression fractures that
Ms. James has are probably old. . . . We will likely need some of her prior
records to confirm her condition prior to loss as opposed to following the loss so
you may want to request those as well.” There is no evidence in the record that
Powell obtained these records after she became aware of Hamilton’s
representation. To the contrary, there is ample evidence that, prior to January
17, 2006, she had these records and had noted the possibility that James’s
injuries pre-dated the accident. Therefore, the record demonstrates no reason
why Powell waited until July 2007 to inform Hamilton of her concerns and her
need for prior medical records.
Under Mississippi law, a delay is not attributable to an insurer where the
insured or his counsel refuses to cooperate or provide the necessary information.
See Pilate, 865 So. 2d at 397. If an insured’s lawyer advises the insurer to stop
its investigation pending his sending medical records, the resulting delay until
the lawyer sends the records is attributable to the insured. However, as the
burden is on the insurer to gather all necessary medical records, if the insurer
fails to inform the lawyer of critical information necessary to further its
investigation, the delay in obtaining that information is not attributable to the
lawyer but to the insurer. As State Farm did not inform Hamilton that it needed
James’s prior medical records to resolve questions about the causation of her
injuries, State Farm is responsible for the resulting delay in investigating
James’s claim.
State Farm also argues that its delay should be attributed to Staggs
because he did not provide clarification as to whether James’s injuries were a

8
Indeed, it was not until September 25, 2007 that Powell informed Hamilton that she
required one year of prior records from all of James’s physicians, whom she specifically named.
James had disclosed the names of her physicians to Powell in October 2006.

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No. 11-60458

result of the motor vehicle accident. We disagree. We do not express an opinion
as to whether Staggs’s medical records actually were confusing. Instead, we
observe that after Powell received Staggs’s medical records in January 2007, she
never contacted Staggs to seek further clarification nor did she notify Hamilton
of her confusion. Moreover, the delay is not attributable to Staggs because, as
James argues, he reasonably could have believed that he had complied with
Powell’s request to provide further information. If Staggs believed his records
were clear, he needed to provide no further information. That they were unclear
to Powell, who did not seek further clarification, is not Staggs’s fault and thus
is not chargeable to James. See Stewart, 846 So. 2d at 204 (citation omitted).
Accordingly, we conclude that James has met her burden by raising a fact
issue as to whether State Farm had a legitimate or arguable basis for delaying
its payment during this time period.
6. July 12, 2007-March 28, 2008 (~8 months)
We agree that State Farm had a legitimate reason for the eight-month
period of delay between July 12, 2007 and March 28, 2008 because State Farm
was actively attempting to resolve causation issues related to James’s injuries.
As discussed above, on July 12, 2007, Powell informed Hamilton that the
medical records presented conflicting information about the age of James’s
injuries and advised him that “[w]e will likely need some of [James’s] prior
records to confirm her condition prior to the loss as opposed to following the loss
so you may want to request those as well.” Powell also talked to Hamilton
multiple times in August, and he assured her that he would obtain clarification
from Staggs. Once Powell received the medical records from Hamilton, Powell
conducted a prompt review and then sought a second opinion from another State
Farm employee, who also pointed out the conflicting information about the

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No. 11-60458

etiology of the injuries.9 On September 25, 2007, Powell requested that
Hamilton provide one year of prior records from all of James’s doctors. On
March 28, 2008, State Farm received, from Hamilton, Staggs’s clarification
about his medical records.
Therefore, based on the evidence in the record, we conclude that State
Farm was engaged in an active investigation of the cause of James’s medical
condition. As this justifies a payment delay, we conclude that State Farm had
a legitimate reason for its delay during this time period. See Caldwell, 686 So.
2d at 1098.
7. March 29, 2008-July 29, 2008 (~4 months)
State Farm argues that it paid James’s UM claims “in an attempt to
resolve and streamline issues of dispute in this case.” The record contains little
evidence of State Farm’s investigative actions during this time period because
State Farm’s claims file terminates on September 27, 2007.
The evidence in the record shows that James filed suit against State Farm
on October 23, 2007. On March 28, 2008, State Farm received Staggs’s
clarification about his medical records, although State Farm claims this
clarification only served to create further confusion. There is no evidence in the
record that State Farm received any additional information about James’s
medical claims between March 28, 2008 and July 29, 2008, when State Farm
paid James’s claims in full.10

9
James contends that this review was improper because the Injury Claim Trainer who
evaluated the records was not a medical doctor. However, James has provided no authority
to support her claim, so she has waived this argument. See Fed R. App. P. 28(a)(9)(A) (“The
appellant’s brief must contain . . . citations to the authorities . . . .”); see also Procter & Gamble
Co. v. Amway Corp., 376 F.3d 496, 499 n.1 (5th Cir. 2004) (collecting citations) (“Failure
adequately to brief an issue on appeal constitutes waiver of that argument.”).
10
For example, Staggs was not deposed until January 2009.

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No. 11-60458

“[A]n insured’s filing of a suit on the claim does not suspend the insurer’s
obligation to promptly pay claims that are admittedly owed.” Jeffrey Jackson,
Miss. Ins. Law & Pract. § 10.2 (2012). There is no evidence in the record that
State Farm received any additional information from James after March 28,
2008, yet State Farm waited an additional four months before it tendered
payment. State Farm has not advanced an explanation for this delay nor
presented any evidence of additional investigative actions it undertook during
this time period, even though it has had ample opportunity to do so over the
course of this lengthy litigation. Therefore, we hold that James has met her
burden by raising a fact issue regarding whether State Farm had a legitimate
or arguable basis for delaying its payment during this time period.
In summary, this case falls far short of any standard of prompt handling
by either side. Compounding this delay is that State Farm’s summary judgment
motion lay dormant in the district court for over two years. It is inexplicable
that an accident that occurred in February 2006 has not moved past the
preliminary stages of litigation by the Spring of 2013. All parties will be best
served by the expeditious resolution of this case.
After our careful review of the lengthy summary judgment record, we hold
that there is a question of fact as to whether State Farm had an arguable or
legitimate basis for its delay. Because James has raised fact issues on her bad
faith claim, she is entitled to present her claim to a finder of fact upon remand.11
Under Mississippi law punitive damages are only warranted if State Farm acted

11
The dissent asserts that the record shows “at most [] mere negligence” on the part
of State Farm and that negligence alone is insufficient to support a trial on compensatory
damages. Post, at 4. Neither party asserted that State Farm’s delay was due to negligence.
Therefore, we have not considered this issue, nor do we express an opinion on it. Our opinion
holds that James has raised an issue of fact regarding whether State Farm has an arguable
or legitimate basis for some of its payment delay. When James presents her claim to a fact
finder, our opinion does not preclude State Farm from arguing that its delay was attributable
to mere negligence. It is for the fact finder to determine whether James is entitled to punitive
damages—and if so, in what amount—given State Farm’s delays.

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with “actual malice, gross negligence, which evinces a willful, wanton or reckless
disregard for the safety of others, or committed actual fraud.” See Miss. Code
Ann. § 11-1-65(1)(a). In light of our holding that there is some evidence that
State Farm lacked an arguable or legitimate basis for delay we remand for the
district court to consider in the first instance whether this delay was negligent
or the result of “actual malice, gross, negligence, which evinces a wilful, wanton
or reckless disregard for the safety of others, or committed actual fraud.” See id.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s grant of
summary judgment as to any breach of contract claim independent of the bad
faith claim. We hold that there is a fact issue as to whether, under the totality
of the circumstances, State Farm had an arguable or legitimate basis for its
delay. Therefore, we REVERSE the district court’s grant of summary judgment
as to James’s bad faith claim and REMAND for further proceedings consistent
with this opinion. Given the length of time that has elapsed since James filed
suit, we ORDER the district court to proceed expeditiously.

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No. 11-60458
EMILIO M. GARZA, Circuit Judge, concurring in part1 and dissenting in part:
Because the majority opinion misapplies Mississippi law and omits
significant facts of this case, I am compelled to dissent.
The majority’s fundamental error lies in its failure to recognize, much less
address, the central issue in this case: James had to establish as a material issue
of fact that State Farm acted with actual malice or gross negligence in delaying
payment. Caldwell v. Alfa Ins. Co., 686 So. 2d 1092, 1095–96 (Miss. 1996).
Stated differently, the majority incorrectly holds that simple negligence is
sufficient to support James’s bad faith claim. Windmon v. Marshall, 926 So. 2d
867, 873 (Miss. 2006). Similarly, the majority errs in holding that James raised
a genuine issue of fact as to whether State Farm had an arguable or legitimate
basis for the delay—the record clearly reflects that State Farm was investigating
the true cause of James’s injury before making payment. Finally, the majority’s
use of arbitrary time periods is concerning and may create significant confusion
about insurers’ legal obligations to investigate claims and administer payments.
I
This is an appeal from a grant of summary judgment on James’s claim
that State Farm acted in bad faith when it delayed payment of her uninsured
motorist claim. James sought punitive damages based on this alleged
independent tort under Mississippi law. After discovery, State Farm moved for
summary judgment, and James opposed the motion, seeking to have the case
proceed to trial.2
Summary judgment is appropriate when the movant shows that there is
“no genuine dispute as to any material fact and the movant is entitled to

1
I agree with the majority that we should affirm the district court to the extent that
it granted summary judgment on James’s breach of contract claim.
2
James did not cross-move for summary judgment.

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No. 11-60458
judgment as a matter of law.” FED. R. CIV. P. 56(a). To do this, the movant may
“demonstrate that the evidence in the record insufficiently supports an essential
element of the opponent’s claim . . . .” Duplantis v. Shell Offshore, Inc., 948 F.2d
187, 190 (5th Cir. 1991) (citation omitted). Nonetheless, the non-movant can
respond by producing “evidence sufficient to sustain a finding in [its] favor” on
an issue for which the non-movant would bear the burden of proof at trial.
Kovacic v. Villarreal, 628 F.3d 209, 212 (5th Cir. 2010) (citations and quotations
omitted).3
To win on a bad faith claim and recover punitive damages under
Mississippi law, the plaintiff must establish “that the defendant . . . acted with
actual malice, gross negligence which evidences a willful, wanton or reckless
disregard for the safety of others, or committed actual fraud.” Miss. Code. Ann.
§ 11-1-65(1)(a). Additionally, the plaintiff must show that the insurer had no
arguable or legitimate reason for denying or delaying payment on the claim.
Caldwell, 686 So. 2d at 1096. An arguable reason is “nothing more than an
expression indicating the act or acts of the alleged tortfeasor do not rise to [the]
heightened level of an independent tort.” Id. (quoting Universal Life Ins. Co. v.
Veasley, 610 So. 2d 290, 293 (Miss. 1992)) (emphasis added). Where the record

3
The majority muddles basic summary judgment procedure. The opinion states:
“Because State Farm was not actively investigating James’s claim during this time period, we
hold that there is a question of fact as to whether James can satisfy her burden of
demonstrating by a preponderance of the evidence that State Farm did not have an arguable
reason for this eleven-week period of delay.” Ante, at 11. To defeat summary judgment,
James’s burden is simply to demonstrate that there is a genuine dispute of fact about whether
State Farm had an arguable or legitimate basis for the delay. Next, the majority explains that
“[b]ecause State Farm was not conducting any investigation during this time period, we
conclude that it was not acting in accordance with its duty under Mississippi law ‘to perform
a prompt and adequate investigation.’” Ante, at 12 (citation omitted). While the next
paragraph returns to the summary judgment posture, this language reads as a conclusion of
law—not a determination that James has raised a fact issue about whether State Farm was
acting in accord with its duty.

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No. 11-60458
at most demonstrates “mere negligence,” an insurer’s actions do not rise to the
level of an independent tort. Windmon, 926 So. 2d at 873.
Based on the governing law and the record evidence, the district court
determined that James could not establish that State Farm acted with actual
malice or gross negligence. It also found that State Farm had an arguable or
legitimate reason for delaying payment—namely, its ongoing investigation into
the cause of James’s injuries. See Faith James v. State Farm Mut. Auto. Ins. Co.,
No. 4:07-cv-137, 2011 WL 1743421, at *9 (S.D. Miss. May 6, 2011) [hereinafter
District Court Opinion]. As a result, the court held that James could not prevail
on her bad faith claim and, accordingly, that State Farm was entitled to
summary judgment. Id. at *9S10.4
II
The majority reverses without even considering whether James can show
that State Farm acted with “actual malice” or “gross negligence.” See Miss.
Code. Ann. § 11-1-65(1)(a).5 Today’s holding addresses only the existence of a

4
Like the district court, both James and State Farm recognize that a bad faith claim
requires proof of actual malice or gross negligence under Mississippi law. See, e.g., Appellant
Br. at 18 (“[A] plaintiff must show that the insurer lacked an arguable or legitimate basis for
denying a claim, or that the insurer committed a willful or malicious wrong, or acted with
gross and reckless disregard for the insured’s rights.”) (internal citations and quotations
omitted); Appellee Br. at 26 (“[T]here is no evidence or charge herein that State Farm has
acted with actual malice in this case.”).
5
Today’s opinion explicitly severs the question of whether State Farm acted with
actual malice from that of whether State Farm had an arguable or legitimate basis for its
delay. See ante, at 8 n.6 (addressing only the “threshold issue” of State Farm’s arguable or
legitimate reason for delay). The majority refuses to “express an opinion” about whether the
record demonstrates more than ordinary negligence, that is, whether the record shows the
conduct necessary for bad faith. See ante, at 19 n.11. Mississippi courts, however, consider
both aspects at the same time. See Windmon, 926 So. 2d at 872.

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No. 11-60458
legitimate or arguable reason for the delay in payment. Ante, at 19.6 But, the
record does not show that State Farm acted with malice or gross negligence.
During the delay period, because the etiology of James’s injury was legitimately
in doubt, State Farm made numerous attempts to obtain medical records from
James, her doctors, and her attorney. It was not until the necessary records
were produced that State Farm could complete its investigation and make a final
determination on James’s claim. Even under the assumption that State Farm’s
investigation lacked diligence during three periods of time, see infra Part III, the
record at most demonstrates “mere negligence,” which is insufficient to support
a bad faith claim. Windmon, 926 So. 2d at 873; see also Caldwell, 686 So. 2d at
1099. Thus, the district court properly granted summary judgment because the
facts did not present a genuine issue about “whether State Farm lacked a
legitimate or arguable reason for the delay and [whether] such delay amounted
to a willful or malicious wrong.” District Court Opinion, at *9 (emphasis added).
In an attempt to justify this departure from Mississippi law, the majority
claims that “[n]either party asserted that State Farm’s delay was due to
negligence.” Ante, at 19 n.11. This statement is misleading, as simple
negligence is not at issue in this case. Rather, the question is whether the record
can support a finding that the delay reflected malice or gross negligence

6
The only definitive pronouncement from today’s opinion is the majority’s specific
holding that “there is some evidence that State Farm lacked an arguable or legitimate basis
for delay.” Ante, at 19. While the opinion opines that James is “entitled to present her claim
to a finder of fact on remand,” id., and suggests that she will do so, id. at 19 n.11, nothing in
the majority opinion necessarily commands that the case proceed to trial. The district court
retains its discretion to hear additional motions in its management of the case. Should the
court continue to find that there is insufficient record evidence that State Farm’s conduct rises
to the level of an independent tort, it may grant summary judgment on this basis. Or, should
the case reach a jury, the district court retains power under Rule 50.

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No. 11-60458
amounting to bad faith; State Farm contends that it cannot. Thus, the issue of
bad faith is squarely before us on appeal, as it was before the district court.
Even if State Farm did not raise this issue, summary judgment requires a court
to determine whether the moving party is entitled to judgment as a matter of
law7—we must decide whether the record could show that State Farm committed
an independent tort.8
Accordingly, I would affirm the district court’s grant of summary judgment
on James’s bad faith claim.9
III
I further disagree with the majority’s holding that James raised a fact
issue concerning whether State Farm had an arguable or legitimate basis for
delaying payment. Ante, at 19.

7
See 10A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §
2725 (3d ed. 2013) (“Once it is determined that there is no genuine issue as to any material
fact and that a party is entitled to the benefit of a judgment as a matter of law, judgment
should be entered even though the legal principles relied upon by the court may differ from
those that have been urged upon it by the litigants.”).
8
On remand, the majority has tasked the district court with considering “in the first
instance whether this delay was negligent or the result of ‘actual malice . . . .’” Ante, at 19.
However, the district court has already done this. In its summary judgment order the court
stated that it “cannot conclude that State Farm’s conduct rose to the level of gross negligence
or an independent, intentional tort.” See District Court Opinion, at *9. Considering whether
the record shows malice or gross negligence is this court’s task on de novo review of the district
court’s order. The majority errs in refusing this responsibility.
9
Separately, as the majority correctly notes, “Mississippi law does not permit parties
to recover punitive damages unless they first prove that they are entitled to compensatory
damages.” Ante, at 6 n.5 (quoting Broussard v. State Farm Fire & Cas. Co., 523 F.3d 618, 628
(5th Cir. 2008)). Thus, to prevail on remand James must demonstrate that she suffered some
compensable damage because of the delay. Given that State Farm ultimately paid James’s
claim, it is not clear what damages she can demonstrate, and the majority fails to provide any
meaningful guidance. This is an open issue for the district court on remand.

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No. 11-60458
A. July 20, 2006 S October 4, 200610
The majority holds that James raised a fact issue regarding whether State
Farm had a legitimate basis for delay from July 20, 2006 until October 4, 2006
because, despite State Farm’s determination that James’s symptoms might be
due to pre-existing injuries, State Farm did not “act on this concern” until
October 5, 2006, when Powell wrote to James asking her to call to discuss her
claim. Ante, at 12.
I disagree. State Farm’s activity log indicates that Powell made multiple
attempts to reach James during this period, and that Powell and James had at
least three conversations. R. USCA5 1081S82. On July 18, 2006, just two days
prior to the start of this period, Powell sent medical record requests to six
different facilities. R. USCA5 1083. When Powell noted on July 20, 2006, that
the medical records from Wayne General indicated degenerative changes, State
Farm could not yet make a conclusive determination about James’s symptoms
because other record requests were still outstanding. R. USCA5 1077, 1083.
Moreover, during the next several weeks, Powell continued to contact healthcare
providers, gather medical records, and pay invoices for records. R. USCA5
1080S82. In light of the record evidence, James cannot show that there is a
genuine dispute about State Farm’s legitimate basis for delay during this period.
B. January 17, 2007 S July 11, 2007
The majority holds that James raised a fact issue as to whether State
Farm had a legitimate basis for delay from January 17, 2007 through July 11,

10
While I would not use arbitrary time periods to analyze the summary judgment
record for the reasons set forth in Part IV, infra, I use the majority’s own framework to
address their errors.

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No. 11-60458
2007, because even though State Farm did not yet have the requisite medical
records to evaluate James’s claim, the insurer did not specifically communicate
“the need for prior medical records” to James or her attorney, Hamilton. Ante,
at 15. The majority explains, “[b]ecause the record contains no evidence that
State Farm informed James’s lawyer that it was concerned about the etiology of
James’s injuries, we decline to attribute the delay to James.” Ante, at 14.
Again, the majority misreads the record. First, the majority overlooks the
fact that State Farm had previously informed James of the need for the medical
documents and the reasons for the request. State Farm requested James’s
medical records from (1) James on October 5, 2006 and October 27, 2006 (2)
James’s doctor, Dr. Staggs, on October 27, 2006 and November 17, 2006 and (3)
Hamilton on December 11, 2006, May 3, 2007, and June 13, 2007. R. USCA5
1060, 1292, 1297, 1302, Exh. 63S27, 63S28, 63S30 (sealed).11 Thus, inaction on

11
Letters from Powell to James and Dr. Staggs clearly state the need for prior medical
records in order to fully assess James’s claim and determine the etiology of James’s injury.
An October 5, 2006 letter to James stated: “If I can obtain some of your prior records, I may
then be in a position to evaluate your uninsured motorist claim.” R. USCA5 1060. The follow-
up letter on October 27, 2006 was even more specific: “I am merely trying to determine if you
had to treat for any of these pre-existing conditions prior to the accident or if they became
symptomatic following the loss. I do not know if I will be able to properly evaluate your claim
without that information, but I am waiting on some information from Dr. Staggs at this time.”
R. USCA5 1297. A letter to Dr. Staggs, sent first on October 27, 2006 and again on November
17, 2006 explained: “I am trying to determine if this was caused by the accident of February
3, 2006, since the initial radiology report indicated that this injury was probably old. If your
notes do not comment on what injuries were caused in this accident or how the accident may
have affected any pre-existing injuries, please advise via letter.” R. USCA5 1292, 1302.
Hamilton’s December 7, 2006 letter stated he would “forward to [State Farm] copies of all
medical bills and medical records when [his] clients have completed treatment.” R. Exh. 63S26
(sealed). Powell acknowledged receipt of Hamilton’s letter. And, in accordance with the
practices Powell and Hamilton had established over their 30 years of prior dealings, as well
as Hamilton’s December 7, 2006 letter, Powell waited for Hamilton to send a medical records
package. Powell Dep., R. Exh. 63S7 at 53 (sealed). In State Farm’s activity log, Powell noted

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No. 11-60458
State Farm’s part did not cause the delay. Moreover, State Farm needed time
to resolve a conflict between, on the one hand, Dr. Staggs’s report indicating that
the injuries were new, and on the other hand, notes from an office visit,
radiology reports, and James’s own report indicating that the fractures were pre-
existing. This conflict was not resolved—if at all—until March 28, 2008 when
Dr. Staggs clarified by fax that his opinion was that James’s injuries were new.12
R. USCA5 1305. Thus, on this record, James cannot show a genuine dispute
about State Farm’s legitimate basis for delaying payment during this period.
C. March 29, 2008 S July 29, 2008
The majority holds that James met her burden to raise a fact issue
regarding whether State Farm had an arguable basis for delaying payment from
March 29, 2008, the day after State Farm received the clarifying fax from Dr.
Staggs, until July 29, 2008, when State Farm actually tendered payment on
James’s uninsured motorist claim. Ante, at 18–19.
Although Dr. Staggs’s fax clarified his opinion on James’s injuries, the fax
conflicted with radiology reports,13 and State Farm never received some of

again on January 22, 2007 that Hamilton would send all material when he had it. R. USCA5
1077. Powell followed up with Hamilton on May 3, 2007 and June 13, 2007, reminding him
to forward James’s medical records when they became available, but Hamilton did not
respond. R. Exh. 63S28, 63S30 (sealed), 1076.
12
Dr. Staggs’s clarifying fax consisted only of the words, “According to my 7/6/06 notes
those fractures were recent at that time.” R. USCA5 1305.
13
In his deposition, Dr. Staggs stated that (1) the radiology reports were inconsistent
with his finding that the injuries were new,(2) the CT scan showed evidence of a preexisting
injury, and (3) there were inconsistencies in James’s medical records as to the origin of her
injury. R. USCA5 1179S80.

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James’s prior medical information, initially requested in October 2006.14 Even
assuming Dr. Staggs’s fax provided sufficient information to clarify the
inconsistences, State Farm needed at least some reasonable amount of time to
review the new information contained in the fax. The bad faith clock does not
begin to tick “as soon as there is any information available that could
subsequently be considered as sufficient evidence to support the payment of [the
claim].” Pilate v. Am. Federated Ins. Co., 865 So. 2d 387, 399 (Miss. Ct. App.
2004) (holding that payment five months after receiving medical records
sufficient to make disability determination was not bad faith); see also Caldwell,
686 So. 2d at 1098 (affirming a grant of summary judgment to insurer on a bad
faith claim even though payment came six weeks after completing investigation).
As the district court correctly observed, and the majority does not appreciate,
“[t]he standard is not whether State Farm could have investigated the claim in
a way that might have resulted in prompter payment of benefits; instead, the
standard is whether State Farm lacked a legitimate or arguable reason for the
delay . . . .” District Court Opinion, at *9. Again, James cannot establish a
genuine dispute about State Farm’s legitimate basis for delaying payment.
IV
The majority’s use of arbitrary time periods for its bad faith analysis is
concerning. This approach brings judicial scrutiny to the level of an insurer’s
daily activities and may cause significant uncertainty about insurers’ claims
investigation obligations under the law.

14
Powell logged a package of medical records as received from Hamilton on August 31,
2007. R. USCA5 1073. Powell wrote to Hamilton on September 25, 2007, requesting prior
medical records from Dr. Byrd, Dr. Green, and Dr. Daggett, but Hamilton never responded to
this request. R. Exh. 63S36 (sealed).

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The majority’s approach, as I understand it, uses time periods only to
facilitate its analysis of the record. See ante, at 9 (“We analyze the entire
investigation in discrete time periods to better assess the claims.”). While the
majority finds that James established a fact issue during three of the discrete
time periods it created, its ultimate holding is based on “the totality of the
circumstances.” See id. Moreover, because the date ranges are only the
majority’s analytical tools, they do not bind the district court on remand.
While a periodized approach might be a useful tool for analyzing a lengthy
factual record, the majority’s drawing legally significant conclusions about each
of the periods it created is troubling. First, even James herself did not use this
periodized approach in her briefs before this court or the district court. Second,
it is not clear that the majority’s approach reflects the actual practice of
Mississippi courts.15 Third, the majority’s analysis leads to arbitrary conclusions
about inactivity: In Part II.C.3, the majority starts one analytical period (July
20, 2006 S October 4, 2006) immediately after Powell sent letters, clearly part of
an active investigation, on July 18, 2006. In short, a periodized approach has
the strong potential to blind a reviewing court to the factual forest by focusing
on isolated trees. Because this approach is not the clear practice of the
Mississippi courts and muddles the legal standards for insurance claims
investigation, I would have evaluated State Farm’s actions throughout the
course of its investigation without creating discrete time periods.

15
The majority cites only one decision in support of this practice, and it is from a court
of appeals, not the Supreme Court. See Pilate v. Am. Federated Ins. Co., 865 So. 2d 387 (Miss.
Ct. App. 2004). A search of published Mississippi cases did not show others applying such a
segmented approach, and it certainly did not reveal a trend among the courts. The district
court’s more holistic approach of evaluating whether State Farm’s actions throughout the
course of the investigation constituted bad faith seems more in line with precedent.

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 Case: 11-60458 Document: 00512514313 Page: 31 Date Filed: 01/28/2014

No. 11-60458
The majority’s arbitrary periodization further suggests that an insurer
must take constant, visible actions to protect itself against allegations of bad-
faith delays, whether or not those actions are meaningful. Otherwise, a
reviewing court might simply choose to begin an analytical period on a day when
its claims investigator turned his or her attention to another matter. The
majority’s analysis thus has the potential to wreak havoc on insurers’ claims
processing and raise the cost of coverage, all in the name of requiring insurers
to avoid even a superficial appearance of bad faith.
V
Respectfully, I remain in dissent.

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