Opinion
Case No. 1:97cv417-S-A.
Filed Date: January 22, 1999.
OPINION
In this declaratory judgment action, plaintiff seeks a determination that no coverage exists under the subject policy of insurance and that it owes no duty to defend its insured in a pending state court proceeding. Plaintiff also requests that defendants be restrained from instituting any other actions against it under the policy at issue. Presently before the court is plaintiff's motion for summary judgment against the remaining defendants in this case — Frances Howard, Shirley J. Smith, and Chuck Easley, default judgment having previously been entered as to the other defendants, including the insured, James E. Sherman. Only Easley responded to the instant motion. Although this court cannot grant summary judgment against Frances and Shirley by default, i.e., simply because they offered no opposition to the motion, Hibernia National Bank v. Administracion Central Sociedad Anonima, 776 F.2d 1277, 1279 (5th Cir. 1985), the court may accept as undisputed the movant's version of the facts and grant the motion where the movant has made a prima facie showing of its entitlement to summary judgment. Eversley v. Mbank Dallas, 843 F.2d 172, 174 (5th Cir. 1988).
The facts in this case are not disputed. On September 22, 1991, Sherman was a guest passenger in his own automobile which was being driven by Clinton Howard. The car was involved in a one-vehicle accident, and Howard was killed. At the time of the accident, Sherman was insured by Shelter. That policy contained the following provisions:
In the event of an accident or loss, notice must be given to us promptly. The notice must give the time, place and circumstances of the accident or loss, including the names and addresses of injured persons and witnesses.
* * *
A person claiming coverage under this policy must also:
(1) Cooperate with us and assist us in any matter concerning a claim or suit;
(2) Send us promptly any legal papers received relating to any claim or suit. . . .
In early 1994, Howard's sisters, Frances Howard and Shirley Smith, filed a wrongful death action against Sherman in the Circuit Court of Oktibbeha County, Mississippi. In that action, Frances and Shirley alleged that Sherman "negligently caused or allowed his motor vehicle to wreck resulting in the death of the plaintiff's brother, Clinton Howard." Sherman received service of process in that suit on February 7, 1994, but did not file any responsive pleading. Consequently, a default judgment was entered against him in 1997 in the sum of $808,450.00. Shelter did not learn of the state court proceeding until Easley, counsel for Frances and Shirley, demanded payment of the judgment. This lawsuit ensued. Approximately one month ago, the state court set aside the default judgment entered against Sherman.
In its motion for summary judgment, Shelter raises three arguments. Each will be addressed in turn. First, Shelter argues that Sherman's failure to give it notice of the Oktibbeha County lawsuit as required by the policy bars all claims brought under the policy. In Shelter's view, this language operates as a condition precedent to any obligation it may have to defend or indemnify him. Sherman has admitted that he never provided Shelter with notice of the state court proceedings.
In West v. Bankers and Shippers Insurance Company, 643 F. Supp. 992, 995 (N.D.Miss. 1986), aff'd, 814 F.2d 657 (5th Cir. 1987), Chief Judge Biggers found that "an unreasonable delay in providing notice to the insurer will bar the insured and third parties from recovering under the policy. . . ." (Emphasis added). In that case, suit was filed against the insured in 1978, and a default judgment was entered against him in 1980. The insurance company did not learn of the suit until 1981, when the attorney for the plaintiff's estate demanded payment under the policy. The policy at issue in West required the insured to "immediately forward to the company every demand, notice, summons or other process received by him or his representatives." After analyzing the applicable Mississippi case law, the court found that the notice received by the insurance company was "unreasonably delayed." West, 643 F. Supp. at 994. In part, the court reasoned that "the notice eventually received by [the company] [did not] serve to effectuate the purpose of the notice clause," which is to allow the insurer "`to investigate a claim against the insured which may be covered by the policy; to itself decide whether the claim should be settled without litigation, and if not, to prepare its defense thereto.'" Id. (citation omitted). The court further found that "[a]lthough the defendant insurance company has also made a showing of prejudice, the court finds that where a notice clause is expressly made a condition precedent to recovery under the policy . . . an inquiry into prejudice is unnecessary." Id.
In this case, the court likewise finds that the notice received by Shelter, over three years after suit was instituted, was unreasonably delayed. Although it is clear that Shelter knew about the accident (Sherman's claim for the injuries he sustained in the accident was concluded in 1993), it is equally clear that the company had no knowledge of the Oktibbeha County suit until three years after it was instituted. Therefore, as this condition precedent as not fulfilled, no recovery under this policy is available to either Sherman or any third party, including Frances, Shirley, and Easley.
The court does not believe it necessary to discuss Shelter's second argument in support of summary dismissal, i.e., that it has been prejudiced by Sherman's failure to advise it of the state court suit. See West, 643 F. Supp. at 994. With the entry of default judgment against Sherman in this action, Shelter no longer has any duty to defend Sherman or "to provide coverage to [him] as a result of an automobile accident which serves as the basis of the litigation filed in the Circuit Court of Oktibbeha County, Mississippi. . . ." The court therefore turns to Shelter's final argument neither — Frances, Shirley, nor Easley has any standing under the policy because they are not wrongful death beneficiaries. Without a doubt, Easley is not a wrongful death beneficiary of Clinton Howard; his right to recovery arises only derivatively, if at all, through his clients, the sisters of the decedent. Although there are situations under Mississippi's wrongful death statute in which sisters can be beneficiaries, this case does not present that situation, as Howard was survived by three children, Clinton Howard, Jr., Anita Howard, and Ethel Howard, who have had a default judgment entered against them in this case. Under Fillingame v. Patterson, 704 F. Supp. 702, 704 (S. D. Miss. 1988), "should a spouse or children survive the decedent, only they may bring suit under the statute, to the exclusion of all other surviving relatives." See also Jones v. Steiner, 481 F.2d 392, 394 (5th Cir. 1973) (only administrator or heirs, "but not both," may bring suit under Mississippi wrongful death statute). Because Frances and Shirley are not the rightful wrongful death beneficiaries of Clinton Howard, they have no rights of recovery under the subject Shelter policy, and Easley therefore has no derivative right of recovery.
The court closes by briefly addressing Easley's response to Shelter's motion for summary judgment and his objections to the magistrate judge's stay of discovery. Having determined that Shelter's motion for summary judgment is well taken, the court finds that Easley's objections to the stay of discovery have no merit and are denied. As to his response to summary judgment, the court is obviously unpersuaded that the motion for summary judgment is moot based on the state court's decision to set aside the default judgment against Sherman. Easley does not explain the basis for this position, and this court does not, on its own, fathom any reason to accept such a position.
Therefore, having carefully considered the matter, the court finds that the motion of Shelter Insurance Companies for summary judgment is well taken and is granted, as there are no genuine issues of material fact and Shelter is entitled to judgment as a matter of law and that the objections of defendant Chuck Easley to the stay of discovery are denied.
An appropriate final judgment shall issue.
SO ORDERED.