IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
October 31, 2007
No. 06-60498 Charles R. Fulbruge III
Clerk
NATIONAL UNION FIRE INSURANCE COMPANY
Plaintiff-Appellant
v.
MISSISSIPPI INSURANCE GUARANTY ASSOCIATION
Defendant-Appellee
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 3:04-CV-340
Before REAVLEY, BARKSDALE, and PRADO, Circuit Judges.
PER CURIAM:
This diversity action involves an important and determinative question of
Mississippi law for which there is no controlling Mississippi Supreme Court
precedent. Accordingly, that unresolved question is certified to the Supreme
Court of Mississippi.
CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR
THE FIFTH CIRCUIT TO THE SUPREME COURT OF MISSISSIPPI.
PURSUANT TO RULE 20 OF THE MISSISSIPPI RULES OF APPELLATE
PROCEDURE.
TO THE SUPREME COURT OF MISSISSIPPI AND THE HONORABLE
JUSTICES THEREOF:
No. 06-60498
I. STYLE OF THE CASE
The style of the case in which this certification is made is National Union
Fire Insurance Company v. Mississippi Insurance Guaranty Association, No. 06-
60498 in the United States Court of Appeals for the Fifth Circuit, on appeal from
the United States District Court for the Southern District of Mississippi.
Federal jurisdiction is based on diversity of citizenship.
II. STATEMENT OF FACTS
National Union Fire Insurance Company (NUFIC) seeks a determination
of the obligations of the Mississippi Insurance Guaranty Association (MIGA) for
a claim against an insured. NUFIC asks us to decide whether Mississippi’s
exhaustion statute requires a solvent-carrier’s policy, containing an “other-
insurance” clause, to pay ahead of MIGA’s statutory coverage of an insolvent-
carrier’s primary policy.
Drs. Orr and Mettetal were sued for medical malpractice by Kathleen
Wright. The action was covered by two insurance policies: one issued by
Pennsylvania Hospital Indemnity Company (PHICO); one, by NUFIC. The
PHICO policy provided primary coverage. The NUFIC policy provides coverage,
but contains the above-referenced “other-insurance” clause:
A loss covered under this policy may also be covered
under another policy you have. If it is, [NUFIC’s] policy
will apply only in excess of such other coverage no
matter how such other coverage is described. This
clause will not apply to coverage which is expressly
stated to apply in excess of this specific policy.
Subsequent to Wright’s medical-malpractice action’s being filed, PHICO
was declared insolvent. This occurred after PHICO reached an agreement to
settle Wright’s claim against Dr. Mettetal. MIGA immediately undertook review
of Wright’s action against Dr. Orr and provided a defense. That action has been
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settled, and the only issues remaining are those in the present declaratory-
judgment action involving MIGA and NUFIC.
NUFIC filed this action to determine whether MIGA or NUFIC was
primarily responsible for providing indemnity and a defense for Dr. Orr. NUFIC
maintains: because PHICO provided primary coverage, the “other-insurance”
clause in the NUFIC policy makes it an excess-insurance provider; and
Mississippi’s exhaustion statute does not require NUFIC to pay until the limits
of the primary policy have been satisfied.
MIGA filed a counter-claim for declaratory relief and an ancillary award
for the costs and expenses incurred by MIGA in defending Dr. Orr. Upon cross-
motions for summary judgment, the district court granted MIGA’s motion and
denied NUFIC’s, holding: under Mississippi Code Annotated § 83-23-123,
NUFIC’s policy must be exhausted before MIGA can be called upon to make
payment. In so holding, however, the district court noted this is an unsettled
point of state law which required the court to make an “Erie guess” on how the
Mississippi Supreme Court would interpret its own law. See Branch-Hines v.
Hebert, 939 F.2d 1311, 1320 (5th Cir. 1991).
The exhaustion requirement in the above-referenced section provides:
“Any person having a claim against an insurer under any provision in an
insurance policy other than a policy of an insolvent insurer, which is also a
covered claim, shall be required to exhaust first his right under such a policy”.
MISS. CODE ANN. § 83-23-123. Although MIGA concedes “true excess” insurance
cannot be made to drop down and provide primary coverage, it maintains:
NUFIC’s policy is not true excess, but rather true primary, insurance with a
boilerplate “other-insurance” clause; and, therefore, the exhaustion requirement
obligates NUFIC to pay first-dollar coverage on Wright’s claim against Dr. Orr.
Conversely, NUFIC asserts: the clear language of its policy states it is excess
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No. 06-60498
coverage; and, as a result, MIGA (standing in PHICO’s shoes) is required to pay
first-dollar coverage on the claim.
Recently, the Mississippi Supreme Court held MIGA is not entitled to
credit for payments to the claimant from solvent insurance covering a joint
tortfeasor. Miss. Ins. Guar. Assoc. v. Cole, 954 So. 2d 407 (Miss. 2007).
Therefore, Cole resolves one issue for this appeal: whether MIGA’s obligations
were discharged under the exhaustion statute by the settlement paid from
solvent policies on behalf of Dr. Mettetal, the alleged joint tortfeasor. The
parties concede Cole settles this issue. (After hearing oral argument on both
issues, this court required supplemental briefing to address the effect of Cole and
to clarify the remaining issue, which is now being certified.) On the other hand,
NUFIC and MIGA agree Cole is not directly on point regarding the remaining
exhaustion-requirement issue. Indeed, as noted, no case has directly decided the
issue.
In Caldwell Freight Lines, Inc. v. Lumbermens Mutual Casualty Co., 947
So. 2d 948 (Miss. 2007), the Mississippi Supreme Court interpreted North
Carolina’s exhaustion requirement as not requiring an excess carrier to “drop
down” and provide first-dollar coverage upon the insolvency of the primary
carrier. The excess-carrier provision at issue in Caldwell provided: “[The
insurer] will pay only the amount in excess of the sums actually payable under
the terms of the ‘underlying insurance’”. Id. at 953 (emphasis omitted). While
NUFIC urges this court to read Caldwell as determinative of the issue at hand,
we cannot do so. First, the excess provision in the Caldwell policy is worded
differently than in NUFIC’s. Indeed, MIGA asserts the provision in Caldwell
is “true excess” insurance while NUFIC’s policy contains only an “other-
insurance” clause. Second, the Mississippi Supreme Court was interpreting
North Carolina, not Mississippi, law. Although the court stated the law “is not
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No. 06-60498
materially different from our own”, it is not clear how the Supreme Court of
Mississippi would decide the issue being certified. Id. at 952.
MIGA asserts Gauze v. Reed, 633 S.E.2d 326 (W.Va. 2006), should guide
this court in affirming the district court. In Gauze, the West Virginia Supreme
Court held an exhaustion requirement identical to that of Mississippi’s requires
all other solvent-carrier insurance be exhausted before looking to the state’s
insurance-guaranty association. Id. at 334. The facts in Gauze are nearly
identical to this case; indeed, the excess-carrier policy at issue was the exact
NUFIC policy at issue here. The case provides no guidance, however, on how the
Supreme Court of Mississippi would rule and therefore does not inform our “Erie
guess”.
As noted, the Mississippi Supreme Court has not addressed whether a
policy containing an “other-insurance” clause can be required to drop down and
pay first-dollar coverage ahead of MIGA. Therefore, the standard for
certification is met. See MISS. R. APP. P. 20(a) (certification proper when “no
clear controlling precedents in the decisions of the Mississippi Supreme Court”
regarding the issue before the court). Furthermore, because a ruling on this
issue is determinative of the rights and obligations of Mississippi’s statutorily-
created insurance-guaranty association, the decision is more properly for the
courts of Mississippi. Along that line, an action involving a similar issue is
pending before the Mississippi Supreme Court: William Leitch v. Mississippi
Insurance Guaranty Association, No. 2007-TS-01263.
III. QUESTION CERTIFIED
We hereby certify the following determinative question of law to the
Supreme Court of Mississippi:
Whether a solvent-carrier’s insurance policy, which
provides an “other-insurance” clause stating it is in
excess to any other primary insurance, must be
exhausted under Mississippi Code Annotated § 83-23-
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No. 06-60498
123, ahead of MIGA’s statutory coverage of the
insolvent-carrier’s primary policy.
This court disclaims any intention or desire that the Supreme Court of
Mississippi confine its reply to the precise form or scope of the question certified.
The answer provided by the Supreme Court of Mississippi will determine the
remaining issue on appeal here. The record and copies of the parties’ briefs are
transmitted herewith.
This panel retains cognizance of the appeal of this case pending response
from the Supreme Court of Mississippi, and this court hereby CERTIFIES the
question posed above.
QUESTION CERTIFIED.
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