IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 95-60601
Summary Calendar
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LYDIA BETH HUGHES PALMISANO, Individually, as Widow, Heir at
Law and Statutory Beneficiary of Darby John Hughes,
Deceased, and as Mother of Rebecca Rachelle Hughes,
Deceased; and as Mother and Natural Guardian and Next Friend
and duly appointed and acting General Guardian of the Person
and Estate of Misty Lynn Hughes, a minor, individually, as
Daughter, Heir at Law and Stuatory Beneficiary of Darby John
Hughes, Deceased, and as sister, Heir at Law and Statutory
Beneficiary of Rebecca Rachelle Hughes, Deceased; JENNIFER
HUGHES HETRICK, Individually, as Daughter, Heir at Law and
Statutory Beneficiary of Darby John Hughes, Deceased, and as
Sister, Heir at Law and Statutory Beneficiary of Rebecca
Rachelle Hughes, Deceased
Plaintiffs - Appellants
v.
AVIS RENT A CAR SYSTEMS, INC. ET AL
Defendants
AVIS RENT A CAR SYSTEMS, INC.; P.V. HOLDING CORPORATION;
PATHFINDER INSURANCE COMPANY
Defendants - Appellees
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Mississippi
(1:94CV303GR)
_________________________________________________________________
April 12, 1996
Before KING, SMITH, and BENAVIDES, Circuit Judges.
PER CURIAM:*
Based on uninsured motorist ("UM") coverage, Lydia Beth
Hughes Palmisano and her two surviving daughters, Misty Lynn
Hughes and Jennifer Hughes Hetrick (collectively, the
"Claimants"), brought a claim against Avis Rent A Car System,
Inc., P.V. Holding Corporation, and Pathfinder Insurance Co.
(collectively "Avis") arising out of an automobile accident
resulting in the death of Darby John Hughes ("Mr. Hughes") and
Rebecca Rachelle Hughes, husband and daughter, respectively, of
Lydia Beth Hughes Palmisano. The Claimants appeal the district
court's grant of summary judgment in favor of Avis and denial of
the Hugheses' motion to amend their complaint as moot. We
affirm.
I. BACKGROUND
On July 2, 1992, Mr. Hughes entered into an agreement with
Avis for the rental of an automobile to drive to Florida from his
home in Mississippi with his wife and three daughters. In the
rental agreement, Mr. Hughes was presented with four nonexclusive
insurance options--loss damage waiver, personal accident
insurance, personal effects protection, and additional liability
insurance. The instructions "READ OTHER SIDE" were printed on
the agreement immediately under the heading for each option,
*
Pursuant to Local Rule 47.5, the court has determined
that this opinion should not be published and is not precedent
except under the limited circumstances set forth in Local Rule
47.5.4.
2
except the second, and detailed terms were printed on the back of
the page. To indicate his choice with regard to each option, Mr.
Hughes initialed either a box labeled "I ACCEPT" or one labeled
"I DON'T ACCEPT." The agreement reflects that Mr. Hughes chose
to accept the loss damage waiver but that he rejected personal
accident insurance, personal effects protection, and additional
liability insurance.
According to the amended complaint filed by the Claimants,
Mr. Hughes and Rebecca Rachelle Hughes were killed on July 3,
1992, while riding in the automobile rented from Avis. The
accident allegedly occurred as a result of a head-on collision
with an uninsured drunk driver.
The Claimants filed suit against the driver of the other car
and Avis in the United States District Court for the Southern
District of Mississippi. The Claimants brought suit against Avis
based on UM coverage because the other driver was an uninsured
motorist. Avis answered and then moved for summary judgment
contending that its agreement with Mr. Hughes was a bailment and
not an insurance agreement. Holding that Avis was an insurer,
the district court denied Avis's motion. In addition, the court
found that Avis--as an insurer--was required by Mississippi law
to furnish Mr. Hughes and his family with UM coverage.
Avis moved for summary judgment once again, this time
contending that it was obligated to pay no more than $20,000 in
UM coverage--the statutory minimum--because Mr. Hughes had
rejected the additional liability insurance offered in the
3
agreement. The Claimants argued that Avis was obligated to
furnish $ 1,000,000 in UM coverage based on the amount of
additional liability coverage listed as an option in the
agreement. In addition, the Claimants moved to amend their
complaint to allege that Avis did not give Mr. Hughes an
opportunity to purchase additional liability insurance. The
district court granted Avis's motion for summary judgment and
denied as moot the Claimants' motion to amend. The Claimants
appeal from this final order of the district court.
II. ANALYSIS
A. Summary Judgment
We review the granting of summary judgment de novo, applying
the same criteria used by the district court in the first
instance. Norman v. Apache Corp., 19 F.3d 1017, 1021 (5th Cir.
1994); Conkling v. Turner, 18 F.3d 1285, 1295 (5th Cir. 1994).
First, we consult the applicable law to ascertain the material
factual issues. King v. Chide, 974 F.2d 653, 655-56 (5th Cir.
1992). We then review the evidence bearing on those issues,
viewing the facts and inferences to be drawn therefrom in the
light most favorable to the nonmoving party. Lemelle v.
Universal Mfg. Corp., 18 F.3d 1268, 1272 (5th Cir. 1994); FDIC v.
Dawson, 4 F.3d 1303, 1306 (5th Cir. 1993), cert. denied, 114 S.
Ct. 2673 (1994). Summary judgment is proper "if the pleadings,
depositions, answers to interrogatories, and admissions on file,
together with the affidavits, if any, show that there is no
4
genuine issue as to any material fact and that the moving party
is entitled to judgment as a matter of law." Fed. R. Civ. P.
56(c).
It is undisputed that the legal issues in this diversity
case must be decided under Mississippi law. Exxon Corp. v.
Burglin, 4 F.3d 1294, 1298 (5th Cir. 1993). The Claimants' cause
of action is based in the Mississippi Uninsured Motorists Act
("MUMA"), Miss. Code Ann. § 83-11-101(1) et seq., which provides,
in pertinent part:
(1) No automobile liability insurance policy or
contract shall be issued or delivered after January 1, 1967,
unless it contains an endorsement or provisions undertaking
to pay the insured all sums which he shall be legally
entitled to recover as damages for bodily injury or death
from the owner or operator of an uninsured motor vehicle,
within limits which shall be no less than those set forth in
the Mississippi Motor Vehicle Safety Responsibility Law, as
amended, under provisions approved by the commissioner of
insurance; however, at the option of the insured, the
uninsured motorist limits may be increased to limits not to
exceed those provided in the policy of bodily injury
liability insurance of the insured or such lesser limits as
the insured elects to carry over the minimum requirement set
forth by this section. The coverage herein required shall
not be applicable where any insured named in the policy
shall reject the coverage in writing . . . .
Miss. Code Ann. § 83-11-101 (emphasis added). The purpose of
MUMA is to provide relief for "innocent insured motorists and
passengers injured as a result of the negligence of financially
irresponsible drivers". Rampy v. State Farm Mut. Auto Ins. Co.,
278 So. 2d 428, 432 (Miss. 1973). It is intended "to provide the
same protection to one injured by an uninsured motorist as that
individual would have if injured by a financially responsible
driver." Lawler v. Government Employees Ins. Co., 569 So. 2d
5
1151, 1153 (Miss. 1990). "Carriers are commanded by [the]
statute to provide coverage up to the amount of liability
insurance purchased where the insured so desires." Nationwide
Mut. Ins. Co. v. Garriga, 636 So. 2d 658, 665 (Miss. 1994). In
order to compensate innocent insured motorists, the statute is to
be liberally construed. Harris v. Magee, 573 So. 2d 646, 654
(Miss. 1990).
Under Mississippi law, an insurer has a duty to explain UM
coverage to the insured "in order for the insured to have the
option to increase UM limits not to exceed the limits of the
policy." Aetna Casualty & Sur. Co. v. Berry, No. 91-CA-00107-
SCT, 1996 WL 64756, *23 (Miss. Feb. 15, 1996). Although "[a]n
insurer is not necessarily under a duty to recommend that the
insured exercise the option of obtaining UM coverage up to the
limits of the policy," Id., the insurer bears the burden of proof
to show that any rejection of uninsured motorist insurance was a
knowing and informed decision. Atlanta Casualty Co. v. Payne,
603 So. 2d 343, 348 (Miss. 1992).
The contested issue in this case is whether Mr. Hughes was
entitled to UM coverage in an amount greater than the minimum
amount of liability insurance prescribed by law. The district
court determined that, after consciously considering his options,
Mr. Hughes rejected the additional $1,000,000 liability coverage
offered in the rental agreement.2 Nonetheless, pursuant to the
2
Mr. Hughes initialed the box marked "I ACCEPT," for the
loss damage waiver, and he initialed the box marked "I DON'T
ACCEPT," for additional liability insurance. The district court
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Mississippi Motor Vehicle Safety Responsibility Law, despite Mr.
Hughes's rejection of liability insurance, he was insured by Avis
at the minimum level of liability coverage allowed under
Mississippi law--$10,000 per person and $20,000 per occurrence.
Miss. Code Ann. §§ 63-15-31 & 43. Avis does not deny that
Mississippi's UM coverage scheme was not explained to Mr. Hughes,
and that therefore, he was entitled to UM coverage in addition to
his liability coverage. However, because Mr. Hughes chose not to
accept the additional liability coverage, Avis argues that his UM
coverage was limited to the $10,000/20,000 statutory minimum.
Asserting that "high UM coverage is the intent and public
policy of the State," the Claimants contend that Mr. Hughes was
extended UM coverage in the amount of $1,000,000. The heart of
the Claimants' argument is that, because the insurance agreement
did not contain a separate offer of UM coverage, the UM coverage
limits were merged with the $1,000,000 offer of additional
liability insurance. They argue that, had Mr. Hughes been
informed of the connection between UM coverage and liability
insurance, he might have opted for the additional liability
insurance offered in the agreement. Additionally, the Claimants
charge that the agreement itself was ambiguous.3 The district
notes that, "although not controlling in this case, the question
whether [Mr.] Hughes consciously considered his options might
have been a closer one had he made a blanket rejection of all his
options" rather than accepting the loss damage waiver and
rejecting the other three.
3
The Claimants argue that the lease agreement was
ambiguous because it included the statement," I will pay for
additional liability insurance if available . . . ." They
7
court found the argument of ambiguity unpersuasive, as do we:
"The clear terms of the contract reflect that the additional
insurance was both offered to Hughes and that he rejected it."4
Moreover, we reject the Claimants' proposed merger of upper UM
coverage limits and liability options.
The upper limit of UM coverage mandated by MUMA under an
insurance policy is governed by the actual level of liability
insurance provided under that policy--not the amount of liability
insurance that the insured might have chosen. Miss. Code Ann. §
83-11-101. Where, for example, an insured has contracted for
liability insurance in the amount of $1,000,000, he may choose to
carry up to $1,000,000 worth of UM coverage.5 Where he has opted
wonder, "How was Mr. Hughes to know if this $1,000,000.00
liability coverage was available or not?"
4
The Claimants also charge that Mr. Hughes exercised no
choice at all regarding the insurance options offered in the
lease agreement. They offer the affidavit of Jennifer Hughes
Moyer in support of this contention. Moyer attests that Avis
office personnel "gave my father the contract and showed him
where to initial several items and then where he was to sign,
which he did."
Under Mississippi law, such extrinsic evidence may not be
considered when the contract is unambiguous, as in the case sub
judice. Sonat Exploration Co. v. Mann, 785 F.2d 1232, 1235 (5th
Cir. 1986) ("Under Mississippi law, . . . . parol evidence may
not be used in the interpretation of an unambiguous contract.");
Foreman v. Continental Casualty Co., 770 F.2d 487, 489 (5th Cir.
1985) (noting that, an insurance contract, "where clear and
unambiguous, must be construed exactly as written"); Weatherford
v. Martin, 418 So. 2d 777, 778 (Miss. 1982).
5
It should be noted that the statute does not prohibit
the insured from purchasing UM coverage in an amount greater than
the level of his liability insurance. "From the beginning, the
[Mississippi] legislature provided that the parties were free to
contract for coverage in excess of that mandated and that such
coverage was not governed by the act." Garriga, 636 So. 2d at
664-65 (overruling In re Koestler, 608 So. 2d 1258 (Miss. 1992),
8
for $300,000 worth of liability insurance, he may choose to carry
up to $300,000 worth of UM coverage. In any event, however, an
insured is guaranteed coverage in an amount no less than the
statutory minimum level of liability insurance. Miss. Code Ann.
§§ 63-15-31 & 43. Where the insurance agent has failed to
explain UM coverage to the insured, "damages should not be
awarded in an amount less than the statutory minimum for UM
coverage, $10,000, nor in an amount more than the limits of the
particular policy in question--i.e., no more than [the amount of
UM coverage] the insured could have opted for under the terms of
the policy. Aetna Casualty & Sur. Co. v. Berry, No. 91-CA-00107-
SCT, 1996 WL 64756, at *23. In the instant case, for purposes of
the statute, Mr. Hughes could not have opted for UM coverage in
an amount greater than the statutory minimum because he did not
accept liability coverage over the statutory minimum.
Therefore, we find untenable the Claimants' conclusion that
Mr. Hughes was protected by UM coverage in the amount of
$1,000,000. We find no support in Mississippi law to justify a
jump from the rule explicitly set forth in MUMA to the one
proposed by the Claimants. The notion that Mississippi law
reflects a policy preference for "high" UM coverage per se is a
leap of logic not supported by MUMA or Mississippi caselaw. To
require the insurance carrier to provide UM coverage in an amount
that dwarfs an insured's liability coverage is contrary to the
and holding that insurer cannot reduce, via workers' compensation
offset, amount of UM coverage chosen by insured up to "that
amount equal to the liability amount acquired").
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clear language of the statute. Miss. Code Ann. § 83-11-101. To
provide every innocent insured some level of protection against
injury inflicted by uninsured motorists is the public policy goal
of MUMA. Rampy, 278 So. 2d at 432. The amount of UM coverage
required by law is keyed to the amount of liability insurance
purchased because the level of protection mandated is not the
highest conceivable level of protection but rather the amount of
protection that the insured would enjoy "if injured by a
financially responsible driver." Lawler, 569 So. 2d at 1153
(citations omitted). There is an inescapable logical symmetry
inherent in extending to an insured in the form of UM coverage
the same amount of protection that he has elected to acquire for
the protection of those who might be injured at his hands. We
conclude that under Mississippi law the amount of UM coverage
extended to Mr. Hughes through the Avis rental agreement was the
statutory minimum amount of coverage allowed--$20,000 per
accident.
B. Motion to Amend
The decision to grant or deny a motion to amend is entrusted
to the sound discretion of the district court. Norman v. Apache
Corp., 19 F.3d 1017, 1021 (5th Cir. 1994); Avatar Exploration,
Inc. v. Chevron, U.S.A., Inc., 933 F.2d 314, 320 (5th Cir. 1991).
This discretion, however, is limited by the Federal Rules of
Civil Procedure, which state that "leave shall be freely given
when justice so requires." Fed. R. Civ. P. 15(a). We have
stated that the district court's discretion does not permit
10
denial of a motion to amend unless there is a substantial reason
to do so. Dussouy v. Gulf Coast Inv. Corp., 660 F.2d 594, 598
(Former 5th Cir. 1981).
Two reasons that we have recognized as valid in the past for
the denial of a motion to amend are untimeliness and futility.
E.g., Avatar Exploration, 933 F.2d at 320-21. In the instant
case, the district court denied as moot the Claimants' motion to
amend their complaint to allege that Mr. Hughes was not given an
opportunity to purchase additional liability insurance. The
court found that even if the Claimants were granted leave to
amend their complaint the outcome of the case would not change.
We agree and therefore, under the circumstances of this case we
conclude that it was not error for the district court to deny the
Claimants motion to amend.
III. CONCLUSION
For the foregoing reasons, we AFFIRM the judgment of the
district court.
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