Scott Penn, Inc. v. Mississippi Workers' Compensation Group Self-Insurer Guaranty Ass'n

IN THE SUPREME COURT OF MISSISSIPPI

NO. 2016-CA-00944-SCT

SCOTT PENN, INC., AUSTIN, INC., KENT
HILLMAN LOGGING, INC., WINONA
HARDWOOD, INC., TALLAHATCHIE
HARDWOOD, INC., GREG WINSTEAD
LOGGING, INC. AND SOUTHERN LOGGING,
INC.

v.

MISSISSIPPI WORKERS’ COMPENSATION
GROUP SELF-INSURER GUARANTY
ASSOCIATION

DATE OF JUDGMENT: 06/02/2016
TRIAL JUDGE: HON. JOHN HUEY EMFINGER
TRIAL COURT ATTORNEYS: ANDREW D. SWEAT
KIMBERLY NELSON HOWLAND
JAMES D. SHANNON
KATHRYN LINDSEY WHITE
M. GARNER BERRY
TROY PHILIP HUSKEY
JOHN DAVID PRICE
COURT FROM WHICH APPEALED: MADISON COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: KATHRYN LINDSEY WHITE
JAMES D. SHANNON
ATTORNEYS FOR APPELLEE: JENNIFER HUGHES SCOTT
ANDREW D. SWEAT
KIMBERLY NELSON HOWLAND
NATURE OF THE CASE: CIVIL - INSURANCE
DISPOSITION: AFFIRMED - 08/31/2017
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

BEFORE RANDOLPH, P.J., KITCHENS AND CHAMBERLIN, JJ.

RANDOLPH, PRESIDING JUSTICE, FOR THE COURT:
¶1. The Mississippi Workers’ Compensation Group Self-Insurer Guaranty Association

(“Guaranty Association”) was ordered by the Mississippi Workers’ Compensation

Commission (“Commission”) to assess former members of the Mississippi Comp Choice

Workers’ Compensation Self-Insurers Fund (“Comp Choice”). Subsequently, the Guaranty

Association filed suit in the Madison County Circuit Court to collect the assessments. Former

members of Comp Choice1 appealed the circuit court’s grant of summary judgment in favor

of the Guaranty Association. Finding no error, we affirm the judgment of the Madison

County Circuit Court, as to Austin Inc.-Randolph, MS and Winona Hardwood, Inc.

FACTS AND PROCEDURAL HISTORY

¶2. On January 20, 2009, the Commission entered an order accepting the surrender of

Comp Choice’s Certificate of Authority and terminated Comp Choice’s status as an approved

group self-insurer fund. Subsequently, the Commission

identified several failures by Comp Choice to satisfy its obligations and
requirements as a self-insurer, and despite repeated attempts by the
Commission and Comp Choice to rehabilitate these wrongs, surrender of the
Certificate became the only viable option at the end of the day. Based on the
facts leading to the surrender of the Certificate of Authority, the Commission
could easily find Mississippi Comp Choice to be a “self-insurer in default”
pursuant to the broad definition of such found in § 71-3-157, and we do hereby
find that in several respects, Mississippi Comp Choice has failed to satisfy

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Although the Guaranty Association filed suit against fifty-three members of Comp
Choice, only seven former members initially were involved in today’s appeal. Other
members paid the amounts invoiced or the Guaranty Association has obtained a default
judgment against them. Prior to this Court’s issuance of its opinion, defendants Greg
Winstead Logging, Inc.; Kent Hillman Logging, Inc.; Scott Penn, Inc.; Southern Logging,
Inc.; and Tallahatchie Hardwood, Inc. agreed to a compromise settlement of their dispute
with the Guaranty Association and filed a joint motion to dismiss, which is being
contemporaneously granted by this Court. Only two defendants remain in this appeal. They
are Austin, Inc.-Randolph, MS and Winona Hardwood, Inc.

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 many of its obligations under the Mississippi Workers’ Compensation Law.
Such default, which we hereby find to have occurred as of the effective date
of surrender of Certificate, or as of January 20, 2009, by operation of statute
authorizes this transfer of responsibility to the Group Guaranty Association for
the administration and payment of the workers’ compensation liability of the
Fund. . . .

The Commission finds that the indemnity agreements required by Commission
General Rule 7, which jointly and severally bind all members of Mississippi
Comp Choice to meet the workers’ compensation obligations of each and
every other member, are valid and enforceable. The Commission further finds
that should the remaining assets of Mississippi Comp Choice be exhausted in
the payment and administration of claims, the Group Guaranty Association
should then look to the enforcement of those agreements including making any
assessments necessary to satisfy those financial obligations.

The Guaranty Association is a “statutorily created legal entity formed to provide a

mechanism for payment of covered claims under the Workers’ Compensation Law, to avoid

financial loss to claimants because of the insolvency of a group self insurer, and to provide

an association to assess the cost of such protection among self-insurers.”

¶3. On April 19, 2010, the Commission found that “a careful evaluation of the remaining

assets and outstanding claims unfortunately shows an insufficient amount of Comp Choice

assets to cover the projected claim payout.” The Commission ordered an assessment in the

amount of $1,948,463 of the former members of Comp Choice for the last four years

showing losses. The amount was necessary to “cover the fund deficiency, the proper

estimated value of non-current assets, and the anticipated administrative and legal fees.” The

Commission ordered that all assessments be calculated based on each member’s share of the

total premiums earned and be paid within sixty days of receiving the assessment notice. The

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Commission also imposed a 5% per month fine, with a minimum fine of $100, for any

member failing to timely pay the assessment.

¶4. On May 18, 2010, former members of Comp Choice filed a Notice of Appeal in the

Hinds County Circuit Court, challenging the April 19, 2010, order of the Commission. Comp

Choice asserted that the order and assessment (1) were not supported by substantial evidence

and law; (2) were arbitrary and capricious; (3) were beyond the power of the Commission;

and (4) violated statutory and/or constitutional rights of Comp Choice. Comp Choice

requested that the appeal act as supersedeas to the Commission’s order. However, that

request, filed more than seven years ago, has been neither granted nor denied by the Hinds

County Circuit Court.

¶5. Pursuant to the Commission’s order, AmFed, as designee of the Guaranty Association,

invoiced all former members of Comp Choice for their specific shares of the assessment. On

August 24, 2010, more than sixty days after invoicing Comp Choice members and not

receiving payment, the Guaranty Association filed suit in the Madison County Circuit Court,

against former members of Comp Choice.

¶6. The Guaranty Association alleged that Austin, Inc., was a member of Comp Choice

during fund years ending 2003, 2004, and 2006. Austin, Inc., was assessed $25,823 for its

pro rata share of the total assessment.

¶7. The Guaranty Association alleged that Winona Hardwood, Inc., was a member of

Comp Choice during fund years ending 2003 and 2004. Winona Hardwood, Inc., was

assessed $3,596 for its pro rata share of the total assessment.

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¶8. The former members of Comp Choice filed a motion to dismiss, arguing that the

Guaranty Association ignored their right of appeal and that the action was not ripe for

consideration, was improper, and/or was premature and should be dismissed. They also

argued that the Guaranty Association’s claims against Comp Choice were compulsory

counterclaims which should have been raised as cross-appeals in the Hinds County action.

¶9. The Guaranty Association opposed the motion to dismiss, arguing that (1) the specific

Comp Choice members were not identified in the Hinds County appeal; (2) even if they were

identified, the appeal does not act as supersedeas and does not prevent the Guaranty

Association from collecting the assessment; (3) the Guaranty Association did not challenge

any part of the Commission’s order, maintaining that it is valid and enforceable; and (4) the

two suits did not have the same witnesses, evidence, law, facts, or parties. The Madison

County Circuit Court denied Comp Choice’s motion to dismiss.

¶10. The Guaranty Association filed motions for summary judgment against the Comp

Choice former members, arguing that each defendant was a former member of Comp Choice

and was statutorily obligated to pay the covered workers’ compensation claims of its

members. All former members had agreed contractually via an indemnity agreement to be

jointly and severally liable for all workers’ compensation obligations of Comp Choice for

losses which occurred in the fund years during which the specific defendant was a member.

¶11. In response, former members of Comp Choice disputed the debt as a whole and the

amount of the debt. They also made the same arguments regarding the Hinds County appeal

as it did in its motion to dismiss. They asserted that there was no evidence that all of the

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funds had been exhausted; therefore, the indemnity agreement could not be enforced. They

argued that there was no evidence supporting the $1,948,463 total, nor was there any

evidence to support the specific amounts owed by each former member. They further claimed

that there was no accounting to explain why the fund, which was operating at $2,984,800.58

in March 2009, had only $774,168.40 a year later. They contended that additional time was

needed to seek discovery regarding the figures.

¶12. After considering documentary and testamentary evidence, the circuit court granted

the Guaranty Association’s motions for summary judgment. The trial court found that:

a valid order from the Mississippi Workers’ Compensation Commission
(“Commission”) dated April 19, 2010, imposes the assessment liability at issue
in this action. The Court further finds that each of these Defendants could have
been held liable for the full amount of the Mississippi Comp Choice
assessment of $1,948,463 under said Commission Order, pursuant to the
indemnity agreement executed by each Defendant as a condition of
membership in the Mississippi Comp Choice Self-Insurers Fund, and that each
Defendant is liable to the Plaintiff for the amount of its individual assessment
as set forth in the Motions.

The Court is aware that some former members of the Mississippi Comp
Choice have appealed that Commission Order in the Circuit Court of Hinds
County and that said appeal is currently pending before that Court. However,
the Court further finds that, to the extent the instant Defendants are parties to
the Hinds County appeal, they could have obtained an order from that Court
directing the appeal to act as supersedeas, but did not.

The Court further finds that Defendants’ request for additional time pursuant
to M.R.C.P. 56(f) is not well taken and should be denied. This case has been
pending since 2010 and Defendants have had sufficient time to conduct
necessary discovery prior to this ruling.

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The Court further ordered that each of the remaining defendants were responsible for the

following amounts:2

Winona Hardwood, Inc., in the total amount of $14,744; and

Austin, Inc., in the total amount of $105,874.

The remaining members of Comp Choice timely filed notice of appeal, raising only one

issue: Whether the trial court’s June 2, 2016, Order Granting Summary Judgment and

Judgment of Dismissal was in error.

STANDARD OF REVIEW

¶13. It is well-settled that this Court applies a de novo standard of review to a circuit

court’s grant or denial of summary judgment. Indem. Ins. Co. of N. Am. v. Guidant Mut.

Ins. Co., 99 So. 3d 142, 149 (Miss. 2012). Summary judgment is appropriate “if the

pleadings, depositions, answers to interrogatories and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any material fact and that the

moving party is entitled to a judgment as a matter of law.” Miss. R. Civ. P. 56(c). This Court

views the evidence “in the light most favorable to the party against whom the motion has

been made.” Daniels v. GNB, Inc., 629 So. 2d 595, 599 (Miss. 1993). However, the

opposing party “may not rest upon the mere allegations or denials of his pleadings, but his

response, by affidavits or as otherwise provided in this rule, must set forth specific facts

showing that there is a genuine issue for trial.” Miss. R. Civ. P. 56(e).

ANALYSIS

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These amounts include the 5% per month fine imposed by the Commission.

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¶14. The remaining members of Comp Choice argue that issues remain in dispute as to

whether the former members owe any debt and whether the Commission’s assessment order

is valid, thus precluding summary judgment. However, they attack the validity of the

Commission order, an issue not before the Madison County Circuit Court and not relevant

to this collection action. That issue is currently before the Hinds County Circuit Court, with

no action taken since 2013 when the final appellate brief was filed.

¶15. The Guaranty Association argues that the undisputed facts established that each of the

former members of Comp Choice (1) was a member of the Comp Choice Fund for the years

corresponding to the Defendant’s pro rata share of the assessment; (2) had executed an

Indemnity Agreement making the Defendant jointly and severally liable for the workers’

compensation claims of Comp Choice; (3) had been given notice of the assessment and its

liability for the same; and (4) had not paid its assessment amount. Therefore, the Guaranty

Association was entitled to judgment as a matter of law.

¶16. The remaining members of Comp Choice submitted no evidence in response to the

motions for summary judgment. While they did request additional time for discovery, the trial

court denied the request, for this action had been pending for more than five years. During

that time, the former members of Comp Choice did not initiate any discovery to obtain the

information they claimed they needed to avoid summary judgment.

¶17. Moreover, Comp Choice’s appeal in the Hinds County Circuit Court does not bar

Guaranty Association’s right to collect the assessment, absent a supersedeas order from that

Court or an appeal bond. Although Comp Choice requested a supersedeas order, the Hinds

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County Circuit Court has not ruled on that issue. Comp Choice has had more than six years

to obtain a supersedeas order from the court to stay this collection action. However, Comp

Choice has failed to obtain the necessary order.

¶18. A motion for summary judgment under Rule 56 of the Mississippi Rules of Civil

Procedure “tests the notion of well-pled facts and requires a party to present probative

evidence demonstrating triable issues of fact.” Children’s Med. Group, P.A. v. Phillips, 940

So. 2d 931, 934 (Miss. 2006) (quoting Stuckey v. Provident Bank, 912 So. 2d 859, 865-66

(Miss. 2005)).

Those who practice before our trial courts are well advised to respond to
summary judgment motions with affidavits, deposition testimony, responses
to discovery, and other evidence approved by Rule 56, allowing our trial
judges a fair look at whether triable issues of material fact exist. As the rule
specifically provides, parties may not simply rely on their pleadings, nor may
they escape summary judgment by outlining what they might discover later.

Franklin Collection Serv. v. Kyle, 955 So. 2d 284, 291 (Miss. 2007). Rule 56 does not

provide for evidence which might be introduced or developed at trial. The nonmoving party

must produce any such evidence in opposition to the motion. Commercial Bank v. Hearn,

923 So. 2d 202, 210 (Miss. 2006). “It is thus incumbent upon a plaintiff to respond to a

motion for summary judgment by demonstrating material factual disputes.” Id. This Court

will reverse a trial court’s decision to grant summary judgment only if triable issues of fact

exist. Bowie v. Montfort Jones Mem’l Hosp., 861 So. 2d 1037, 1041 (Miss. 2003).

¶19. A mere allegation by the nonmoving party that a dispute over whether a material fact

exists will not defeat a movant’s otherwise properly supported motion for summary

judgment. Reynolds v. Amerada Hess Corp., 778 So. 2d 759, 765 (Miss. 2000).

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Additionally, a dispute about a material fact is genuine only if the evidence is such that a

reasonable jury could return a verdict for the nonmoving party. Id. The question is whether

all the evidence before the lower court, viewed in a light most favorable to the appellants,

demonstrates no material factual dispute. In today’s case, the appellants’ allegations that a

material fact exists is insufficient to reverse the circuit court’s decision.

¶20. There exists no genuine dispute of material fact as to whether the Guaranty

Association was entitled to judgment as a matter of law. The trial court properly found that

Austin, Inc.-Randolph, MS and Winona Hardwood, Inc. failed to timely pay the amounts

assessed to each member.

CONCLUSION

¶21. We affirm the judgment of the Madison County Circuit Court granting summary

judgment in favor of the Guaranty Association as to Austin, Inc.-Randolph, MS and Winona

Hardwood, Inc..

¶22. AFFIRMED.

WALLER, C.J., DICKINSON, P.J., KITCHENS, KING, COLEMAN,
MAXWELL, BEAM AND CHAMBERLIN, JJ., CONCUR.

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