author: WALLER, CHIEF JUSTICE, FOR THE COURT:

text:
    Kathryn Schroeder CLARK, With Power of Attorney for Helen Schroeder v. Lisa Younger NEESE, Administratrix of the Estate of Harry L. Schroeder, Deceased
    NO. 2016-CA-01052-SCT CONSOLIDATED WITH NO. 2012-CA-00653-SCT
    Supreme Court of Mississippi.
    January 31, 2019
    ATTORNEYS FOR APPELLANT: DUNBAR DOWDY WATT, WAYNE DOWDY, MAGNOLIA
    ATTORNEYS FOR APPELLEE: NORMA CARR RUFF, DAN W. WEBB, ROECHELLE RYANN MORGAN, TUPELO
    BEFORE WALLER, C.J., MAXWELL AND ISHEE, JJ.
    ON MOTION FOR REHEARING
   WALLER, CHIEF JUSTICE, FOR THE COURT:

¶1. The motion for rehearing is denied. The previous opinion is withdrawn, and this opinion is substituted therefor. Helen Schroeder appeals the Lowndes County Circuit Court's grant of summary judgment to the Estate of Harry Schroeder, arguing that the trial court erred in finding that the Estate was entitled to judgment as a matter of law on the grounds of release, res judicata, and accord and satisfaction. We reverse and remand to the trial court for further proceedings.

FACTS & PROCEDURAL HISTORY

¶2. This is the second time we have considered an appeal by Helen Schroeder ("Helen"), after the grant of summary judgment to the Estate of Harry Schroeder ("Harry"). The facts regarding the car accident and the original cause of action are set out in this Court's opinion in Clark v. Neese ("Clark I "), 131 So.3d 556, 558 (Miss. 2013) :

A log truck driven by Royce Sullivan collided with the rear of an automobile being driven by Harry Schroeder, who had just pulled his car onto a highway in Lowndes County. Harry died as a result of the accident, and his wife, Helen-who was a passenger in her husband's car-suffered severe injuries, permanent disability, and diminished mental capacity. Helen-both individually, and as one of Harry's wrongful-death beneficiaries-sued Sullivan in federal court, alleging that Sullivan's negligence had caused Harry's death and her permanent disability.... Sullivan moved for summary judgment at the close of discovery, arguing that the uncontradicted evidence established Harry's negligence as the sole cause of the accident. In denying summary judgment, the federal judge stated that the evidence created a jury question as to Sullivan's fault, and that "plaintiffs do not appear to dispute Harry Schroeder's potential contributory negligence." The parties settled and agreed to a release of claims, and the district court dismissed the case.

Following the settlement agreement, release, and subsequent dismissal of the action against Sullivan, Helen filed suit against Harry in the Circuit Court of Lowndes County, Mississippi. Id. Helen alleged that Harry negligently had failed to yield the right of way and pulled in front of Sullivan's log truck at an extremely slow rate of speed, causing the accident which resulted in Helen's permanent disability. Id.

¶3. In response, on August 17, 2010, Harry moved for summary judgment and argued that Helen had pleaded facts in her complaint that were materially different from the facts she had alleged in the federal district court. Id. Harry asserted that the trial court should grant summary judgment based on the doctrines of judicial and equitable estoppel. Id. Harry also argued that the settlement and release of claims against Sullivan in federal court barred the circuit-court action under the doctrines of contractual release, accord and satisfaction, and res judicata. Id.

¶4. The trial court granted summary judgment in favor of Harry and found that Helen was judicially estopped from bringing a claim against Harry. Id. The trial court reasoned that, although Helen discovered Harry's potential fault during discovery, she had made the conscious decision not to add Harry as a defendant to avoid losing diversity jurisdiction, and as a result, her failure to add Harry in federal court barred her from bringing suit in the circuit court. Id. The trial court declined to rule on the merits regarding Harry's arguments of equitable estoppel, accord and satisfaction, and merger. Id.

¶5. On December 12, 2013, this Court reversed the judgment and remanded the case. Id. at 562. In regard to whether Helen's suit was barred by judicial estoppel, this Court held

[W]e need not determine whether Helen's positions actually were knowingly inconsistent because we find it abundantly clear from the record that, when the federal district court denied Sullivan's motion for summary judgment, [it] was not required to accept or rely on Helen's prior position-an absolute requirement for the application of judicial estoppel.

Id.

¶6. In reversing the trial court's grant of summary judgment, this Court directed the trial court to rule on Harry's claims of equitable estoppel, accord and satisfaction, contractual release, and merger. Id.

¶7. On remand, Harry again moved for summary judgment, which the trial court granted on the basis of res judicata, accord and satisfaction, and contractual release.

¶8. Aggrieved, Helen again has appealed, raising the following issues:

I. Whether the Circuit Court of Lowndes County, Mississippi ("trial court") erred in granting summary judgment on the basis that the suit was barred by the doctrine of merger because all four elements of res judicata were satisfied.
II. Whether the trial court erred in finding that the satisfaction, release, and indemnity agreement ("release agreement") was "clear, definite, explicit, harmonious in all its provisions, and free from ambiguity throughout," and therefore, was a valid release of all claims stemming from the collision.
III. Whether the trial court improperly determined that the release agreement, coupled with the $ 300,000 payment, and the plaintiff's subsequent acceptance of the payment, operated as an accord and satisfaction of all the plaintiff's claims stemming from the cause of action.

STANDARD OF REVIEW

¶9. We review the trial court's grant of summary judgment de novo. City of Jackson v. Shavers , 97 So.3d 686, 688 (Miss. 2012) (citing Arcadia Farms P'ship v. Audubon Ins. Co. , 77 So.3d 100, 104 (Miss. 2012) ).

DISCUSSION

I. Whether Helen's suit is barred by res judicata.

¶10. In its order granting summary judgment, the trial court found, "Because the four identities of res judicata are present, the Court rules that the doctrine of merger as it relates to res judicata applies to this action." Merger is a bar under res judicata for an action that should have been litigated, rather than a claim that actually was litigated. See Jeffrey Jackson & Mary Miller, Encyclopedia of Mississippi Law § 14:6 (2001). See also Hill v. Carroll Cty. , 17 So.3d 1081, 1084-85 (Miss. 2009). Helen argues that the trial court erred in barring her suit under the merger doctrine because the elements required for res judicata are not met. Helen asserts that, since Harry was not a party to the original suit, the identities of the parties are different in the two suits, and the federal district court's final judgment was "not a judgment on the merits" as contemplated by the doctrine of res judicata.

¶11. Conversely, Harry responds that the doctrine of merger is appropriate, because Helen's claims for personal injuries resulting from the accident merged into the agreed judgment against Sullivan. As a result, Harry contends that Helen is barred from continuing to pursue her claims against Harry that could have been asserted in the federal suit.

¶12. The doctrine of res judicata operates to bar a subsequent attempt to litigate a claim already decided. Harrison v. Chandler-Sampson Ins., Inc. , 891 So.2d 224, 232 (Miss. 2005). Further, the doctrine

[R]eflects the refusal of the law to tolerate a multiplicity of litigation. It is a doctrine of public policy designed to avoid the "expense and vexation" of attending multiple lawsuits, conserve judicial resources and foster reliance on judicial action by minimizing the possibilities of inconsistent decisions.

Little v. V & G Welding Supply, Inc. , 704 So.2d 1336, 1337 (Miss. 1997) (citing Montana v. United States , 440 U.S. 147, 153-54, 99 S.Ct. 970, 973-74, 59 L.Ed.2d 210 (1979) ).

¶13. The doctrine of res judicata generally requires the presence of four identities: "(1) identity of the subject matter of the action, (2) identity of the cause of action, (3) identity of the parties to the cause of action, and (4) identity of the quality or character of a person against whom the claim is made." Hinton v. Rolison , 175 So.3d 1252, 1258 (Miss. 2015) (quoting Anderson v. LaVere , 895 So.2d 828, 832 (Miss. 2004) ). When those identities are present, res judicata precludes "parties from litigating in a second action claims within the scope of the judgment of the first action." Anderson , 895 So.2d at 832.

A. Identity of the Subject Matter of the Action

¶14. Res judicata "bars a second action between the same parties on the subject matter directly involved in the prior action." Harrison , 891 So.2d at 232. This Court's ruling in Harrison referred to subject matter as "the substance of the lawsuit." Id. at 232-33. In the current case, the subject matter presented before both the federal and state suits is the same. In Bell v. Dixon , the Court of Appeals found that where both cases concerned the same automobile accident, the subject-matter identity of res judicata was met. Bell v. Dixon , 976 So.2d 965, 968 (Miss. Ct. App. 2008) ; see also Little , 704 So.2d at 1338 (holding that the subject matter of a federal suit and state suit, both of which concerned who was responsible for the death of two welders, satisfied the subject-matter requirement of res judicata). Likewise, in the current action, the subject matter of both the federal and state lawsuits was the automobile collision that occurred between Sullivan and Harry. Therefore, this element of res judicata is met.

B. Identity of the Cause of Action

¶15. This identity requires the "cause of action" in both suits to be the same. This Court has defined "cause of action" as the underlying facts and circumstances upon which a claim has been brought. Hill , 17 So.3d at 1085. Moreover, this Court has stated that "[w]here one has a choice of more than one theory of recovery for a given wrong, she may not assert them serially in successive actions but must advance all at once on pain of the bar of res judicata." Walton v. Bourgeois , 512 So.2d 698, 702 (Miss. 1987).

¶16. This Court follows a transactional approach to determine whether the identity of the cause-of-action requirement is met. Hill , 17 So.3d at 1086. Specifically, courts are to "look past the legal bases asserted and rely more on the factual and transactional relationship between the original action and the subsequent action." Id. In defining transaction, this Court looked to the approach found in the Restatement (Second) of Judgments and articulated by the Supreme Court of the United States:

[C]auses of action are the same if they arise from the same "transaction"; whether they are products of the same "transaction" is to be determined by "giving weight to such considerations as whether the facts are related in time, space, origin, or motivation, whether they form a convenient trial unit, and whether their treatment as a unit conforms to the parties' expectations or business understanding or usage."

Harrison , 891 So.2d at 234 (quoting Nevada v. United States , 463 U.S. 110, 131, 103 S.Ct. 2906, 77 L.Ed.2d 509 (1983) ).

¶17. Both parties disagree as to when Helen discovered she had a potential claim against Harry. However, Helen does not contend that the identity of the causes of action against Harry and Sullivan are different. The legal theory contained in Helen's federal suit against Sullivan is based on the same underlying facts and circumstances as the case at bar. Helen argues that both Sullivan and Harry were negligent in causing the accident. Helen charged in the federal action that Sullivan's liability for the wreck was based on his speeding, while Helen now contends that Harry failed to yield before entering onto Highway 45. Thus, both causes of action stem from the same set of underlying facts, and thus both actions arise from the same transaction. The requirement that the cause of action must be the same is satisfied.

C. Identity of the Parties to the Cause of Action

¶18. For the third identity to be satisfied under the doctrine of res judicata, the parties must be in privity with one another. Bell , 976 So.2d at 968. While a nonparty defendant can assert res judicata if it is in "privity" with the named defendant, there is no one prevailing definition of privity. Russell v. SunAmerica Sec., Inc., 962 F.2d 1169, 1173 (5th Cir. 1992). It is not necessary, however, to use strict identity. See Little , 704 So.2d at 1339 (privity existed between different defendants because in both cases defendants were distributor-retailers who were alleged to have caused the death of the welders). When trying to determine whether privity exists, this Court has looked to the comment to Section 83 of the Restatement of Judgments (1942), which provides,

Privity is a word which expresses the idea that as to certain matters and in certain circumstances persons who are not parties to an action but who are connected with it in their interests are affected by the judgment with reference to the interests involved in the action, as if they were parties. The statement that a person is bound ... as a privy is a short method of stating that under the circumstances and for the purpose of the case at hand he is bound by ... all or some of the rules of res judicata by way of merger, bar or collateral estoppel.

Little , 704 So.2d at 1339 (citing Restatement of Judgments § 83 cmt. (1942) ). "Thus, 'privity' is ... a broad concept, which requires us to look to the surrounding circumstances to determine whether claim preclusion is justified." EMC Mortg. Corp. v. Carmichael , 17 So.3d 1087, 1091 (Miss. 2009) (quoting Hogan v. Buckingham , 730 So.2d 15, 18 (Miss. 1998) ).

¶19. Nevertheless, the doctrine of res judicata bars only claims against parties who were adverse to each other in the original action. Holland v. Mayfield , 826 So.2d 664, 671 (Miss. 1999) (citing Heller Fin., Inc. v. Grammco Computer Sales, Inc. , 71 F.3d 518, 523 (5th Cir. 1996) ), abrogated on other grounds by Harrington v. Office of Miss. Sec'y of State , 129 So.3d 153, 161 (Miss. 2013). Further, parties are adversaries only as to those claims actually asserted. Jackson v. Lemler , 83 Miss. 37, 42-44, 35 So. 306, 307-08 (1903).

¶20. Sullivan and Harry are not in privity with one another. Instead, both were independent tortfeasors who Helen alleged were contributorily negligent in causing the accident. Privity, the third element of res judicata, is not satisfied.

D. The Identity of the Quality or Character of a Person Against Whom the Claim is Made

¶21. This Court has noted that it "has not explicitly defined the identity of the quality or character of a person against whom the claim is made." Hill , 17 So.3d at 1086. Examples of this identity and its application exist, particularly where the parties are the same in the relevant actions and are acting in the same interests or capacity. See Avakian v. Wilmington Trust, Nat'l Ass'n , 242 So.3d 961, 970 (Miss. Ct. App. 2018) (citing Hill , 17 So.3d at 1086-87 ). However, "[w]here someone is sued in a limited or representative capacity in one cause and then personally in another, the party's quality or character is not the same in both actions." Bell , 976 So.2d at 968.

¶22. In the original federal case, Helen sued Sullivan, both individually and as a wrongful-death beneficiary. Harry was not named as a party plaintiff or a party defendant. Moreover, Harry's estate did not exist in any form during the time the original suit was pending. Thus, the identity of the quality or character element of res judicata is not met.

E. Determination on the Merits

¶23. Even if all four elements of res judicata are satisfied, the prior judgment also must be final and on the merits. Anderson , 895 So.2d at 832-33. See also Kremer v. Chem. Constr. Corp. , 456 U.S. 461, 482, 102 S.Ct. 1883, 1898, 72 L.Ed.2d 262 (1982) (for res judicata to apply, there must have been a full and fair opportunity to litigate, and a state court may not grant preclusive effect to a judgment that violated the applicable requirements of the Due Process Clause); Harrison , 891 So.2d at 232 (res judicata applies when a court of competent jurisdiction has entered a final judgment on the merits, and "res judicata precludes claims that were actually litigated in a previous action."). Furthermore, not all judgments are on the merits. Bowen v. Bowen , 688 So.2d 1374, 1384 (Miss. 1997).

¶24. Harry contends that the order to dismiss with prejudice, entered after an offer of settlement made pursuant to Rule 68 in the original action, is a final judgment on the merits and has preclusive effect for res judicata purposes. Rocha v. California Dep't of Corr. & Rehab. , 691 F. App'x 433, 434 (9th Cir. 2017) (holding Rule 68 judgment entered in prior action was judgment on the merits which precluded subsequent lawsuit under res judicata). However, res judicata still does not apply because the parties were not in privity, nor does the current suit share the same quality or character of the original action. Both elements are required for a suit to be barred by res judicata.

¶25. Thus the trial court improperly granted summary judgment on the basis of res judicata.

II. Whether the release agreement releases the Estate of Harry Schroeder.

¶26. Helen claims that the trial court erred in granting Harry's motion for summary judgment on the basis that the Satisfaction, Release, and Indemnity Agreement ("release") was meant to release any and all claims stemming from the initial collision, including Helen's claim against Harry. The trial court found that the release was "clear, definite, explicit, harmonious in all its provisions, and free from ambiguity throughout."

¶27. This Court previously has been confronted with the issue of whether a plaintiff may pursue a remedy against one joint tortfeasor after another joint tortfeasor was released by the plaintiff from liability. For instance, in Medley v. Webb , 288 So.2d 846, 848-49 (Miss. 1974), this Court found that there is no doubt that a plaintiff may sue another joint tortfeasor after releasing the other alleged tortfeasor from liability. Further, this Court has delineated the difference between being jointly liable and being a joint tortfeasor. See J & J Timber Co. v. Broome , 932 So.2d 1, 7 (Miss. 2006) (quoting Richardson v. APAC-Miss., Inc. , 631 So.2d 143, 151 n.7 (Miss. 1994) ) ("Joint tortfeasor claims arise where the separate wrongful conduct of two or more individuals combine to cause an injury, and each because his conduct bears some responsibility for the injury."). The key distinction is whether the claimant is settling with one joint tortfeasor and then pursuing a remedy against another, independently liable, tortfeasor. Id.

¶28. In Smith v. Falke , 474 So.2d 1044, 1047 (Miss. 1985), this Court sought to determine whether the plaintiff had the right to pursue an action against a driver who struck her vehicle from behind after she had released the second driver who had caused the chain reaction. The first driver argued that he was a third-party beneficiary of the release. Id. at 1045. This Court rejected that argument because "in a release contract a party releases only those parties whom he intends to release." Id. at 1047. Likewise in Country Club of Jackson v. Saucier , 498 So.2d 337, 338 (Miss. 1986), the plaintiff, who had been injured in an automobile riding as a passenger, entered into a settlement and release with the estate of the driver and the driver's insurer. Id. The plaintiff then filed suit against the Jackson Country Club, which the plaintiff asserted was another joint tortfeasor, as the country club allegedly had furnished alcohol to the driver while he was visibly intoxicated. Id. This Court found that the country club was not intended to be released and therefore was "a stranger to the release contract and paid no consideration for it, nor was consideration paid for its benefit." Id. at 339. Thus, this Court must look to the language of the release agreement to find whether Helen had intended to release Harry.

¶29. This Court applies a three-tiered process to contract interpretation. Pursue Energy Corp. v. Perkins , 558 So.2d 349, 351 (Miss. 1990). First, the Court must look to the "four corners" of the agreement and review the actual language the parties used in their agreement. Id. at 352. When the language of the contract is clear and unambiguous, "the parties' intent must be effectuated." Id.

¶30. Helen contends that the language of the release agreement is unambiguous and releases only the specific parties mentioned within the release. The release contained the following relevant provisions:

[F]or and in consideration of the payment of the sum of $ 300,000... I HELEN SCHROEDER as wrongful death beneficiaries of Harry L. Schroeder, do hereby fully, finally and forever release, remise, and discharge ROYCE SULLIVAN, ROYCE SULLIVAN TRUCKING, PROGRESSIVE INSURANCE COMPANY, their employers, principals, agents, officers, employees, servants, successors and insurers (hereinafter known as Releasees "), from any and all claims, demands, actions, causes of action or suits of any kind whatsoever, known or unknown, for damages and injuries of any kind... which may have occurred on our about May 23, 2007, when the vehicle operated by Harry Schroeder in which Helen Schroeder was a passenger was struck by the vehicle operated by Royce Sullivan at the Intersection of U.S. Highway 45.
The undersigned declare that the terms of this Release have been completely read and are fully understood and voluntarily accepted for the express purpose of precluding forever any further or additional claims arising out of the aforesaid accident against any of the parties aforementioned .

(Emphasis added.)

¶31. Harry cites Scott v. Gammons , 985 So.2d 872, 875 (Miss. Ct. App. 2008), in support of his position that the release agreement applies to Harry because the court held there that the release that had been signed releasing one joint tortfeasor, released any other joint tortfeasor who may have been discovered. Unlike the current case, however, the release agreement that had been executed in Scott designated not only the sole alleged tortfeasor, but also "any other person, firm or corporation who may, in any manner, be liable" as releasees. Id.

¶32. Looking to the language of the release agreement in the current case, the only parties specifically designated by the release were: (1) Helen Schroeder, ("the Undersigned"); (2) Helen Schroeder, Kathryn Schroeder Clark, and John Schroeder, ("Wrongful Death Beneficiaries of Harry Schroeder"); and (3) Royce Sullivan, Royce Sullivan Trucking, and Progressive Gulf Insurance Company ("Releasees"). The agreement is not ambiguous as to who was released. Unlike the plaintiff in Scott , Helen specifically named the persons and entities she intended to release from future claims arising from the accident. Even further, the release agreement stated that only the "parties aforementioned" were precluded forever from "any further or additional claims arising out of the aforesaid accident." Harry was not among those released, nor was he "any other parties who may be liable." Therefore, we find that the trial court erred in granting summary judgment on the basis of the release agreement between Helen and Sullivan, to which Harry was not a signatory.

III. Whether Helen's suit is barred under the doctrine of accord and satisfaction.

¶33. Mississippi follows the majority rule "that for a release of one joint tortfeasor to release other joint tortfeasors, the satisfaction received by the injured party must be intended and must be accepted as full and total compensation for damages sustained." Falke , 474 So.2d at 1045. According to the ruling in Falke , a plaintiff never should surrender his cause of action unless he has received such satisfactory compensation that he is "no longer entitled to maintain it." Id. at 1046 (citing Prosser, Law of Torts § 301 (4th ed. 1971).

¶34. This Court consistently has recognized that the elements of accord and satisfaction consist of four basic requirements. Royer Homes of Miss., Inc. v. Chandeleur Homes Inc. , 857 So.2d 748, 753 (Miss. 2003). First, something of value must be offered in full satisfaction of the demand. Id. at 754 (citing Wallace v. United Miss. Bank , 726 So.2d 578, 589 (Miss. 1998) ). Second, the offer must be accompanied by acts and a declaration which amount to a condition that if the thing is accepted, it is accepted in satisfaction. Id. Third, the party offering the thing of value is bound to understand that if he takes it, he takes it subject to conditions. Id. Fourth, the party actually must accept the item offered. Id.

¶35. In order to constitute an effective accord and satisfaction, that which is accepted "must have been accepted in full satisfaction of the demand in question." Austin v. Padgett , 678 So.2d 1002, 1004 (Miss. 1996). Here, the $ 300,000 settlement accepted in "satisfaction of all claims," according to the release agreement, referred only to those claims of the designated "Releasees" against Sullivan. Helen made no demand against Harry, nor was Harry a party to the release agreement in the federal suit. Thus, the first element of accord and satisfaction is not met. Accordingly, we find that the trial court erred in granting Harry's motion for summary judgment under the doctrine of accord and satisfaction.

CONCLUSION

¶36. For the foregoing reasons, we reverse the trial court's grant of summary judgment and remand this case to the trial court for further proceedings consistent with this opinion.

¶37. REVERSED AND REMANDED.

RANDOLPH AND KITCHENS, P.JJ., KING, MAXWELL, BEAM, CHAMBERLIN AND ISHEE, JJ., CONCUR. COLEMAN, J., NOT PARTICIPATING.

      Kathryn Clark filed suit on behalf of her mother, Helen Schroeder. The defendant, Harry L. Schroeder, deceased, is the husband of Helen Schroeder and father of Kathryn Schroeder Clark.

      Helen contends that Harry failed to raise the affirmative defense of accord and satisfaction in the seven years that this case has been pending; however, the record is clear that the defense of accord and satisfaction was raised at the trial-court level.

      When ruling on Sullivan's motion for summary judgment during the federal suit, the federal district court acknowledged that "the alleged contributory negligence of Harry Schroeder was a prominent (and obvious) point of contention."

      Helen also asserts the federal court was aware of potential contributory negligence of Harry presumably to show no issue was made to require that Harry be made a party to the settlement.


source: Caselaw Access Project

author: KING, JUSTICE, FOR THE COURT:

license: Public Domain

text:
    COLONY INSURANCE COMPANY v. FIRST SPECIALTY INSURANCE CORPORATION
    NO. 2018-FC-00574-SCT
    Supreme Court of Mississippi.
    January 31, 2019
    ATTORNEYS FOR APPELLANT: RICHARD EDWARD KING, OLIVIA YEN TRUONG
    ATTORNEYS FOR APPELLEE: DAVID A. BARFIELD, DALE T. MILLER
    EN BANC.
   KING, JUSTICE, FOR THE COURT:

¶1. Under the provisions of Rule 20 of the Mississippi Rules of Appellate Procedure, the United States Court of Appeals for the Fifth Circuit has certified questions to this Court. An incident at Omega Protein Corporation's (Omega) facility resulted in the death of an employee of Accu-Fab & Construction, Inc. (Accu-Fab). Although Colony Insurance Company (Colony) continually maintained that it did not insure Omega, Colony negotiated and paid a settlement claim under a reservation of rights on Omega's behalf. Because Colony took the position that it had no duty to defend Omega at all, the district court concluded that Mississippi's voluntary-payment doctrine precluded Colony's claims for equitable subrogation and implied indemnity.

¶2. Pursuant to this Court's precedent, an insurer is barred from seeking indemnity for a voluntary payment. Keys v. Rehab. Ctrs., Inc. , 574 So.2d 579, 584 (Miss. 1990) ; see McDaniel Bros. Const. Co. v. Burk-Hallman Co. , 253 Miss. 417, 175 So.2d 603, 605 (1965) ("[A] voluntary payment can not be recovered back...."). In order to recover, the indemnitee must prove that it both paid under compulsion and that it was legally liable to the person injured. Id. The Fifth Circuit certified the following questions to this Court:

1) Does an insurer act under "compulsion" if it takes the legal position that an entity purporting to be its insured is not covered by its policy, but nonetheless pays a settlement demand in good faith to avoid potentially greater liability that could arise from a future coverage determination?
2) Does an insurer satisfy the "legal duty" standard if it makes a settlement payment on behalf of a purported insured whose defense it has assumed in good faith, but whose coverage under the policy has not been definitively resolved, even if the insurer maintains that the purported insured is not actually insured under the policy?

Colony Ins. Co. v. First Specialty Ins. Corp. , 726 F. App'x 992, 995-96 (5th Cir. 2018)

FACTS AND PROCEDURAL HISTORY

¶3. On July 28, 2014, an explosion at Omega's facility in Moss Point, Mississippi, killed an employee of Accu-Fab, Jerry Lee Taylor II. At the time of the incident, Omega was the named policyholder of two third-party insurance policies. ACE American Insurance Company (AAIC) provided a $1,000,000 primary commercial general liability policy to Omega, subject to a $250,000 deductible. First Specialty Insurance Corporation also provided a $10,000,000 excess liability policy, which provided limits in excess of the underlying AAIC policy. In addition, Accu-Fab was the named policyholder of a third-party insurance policy issued by Colony. Colony issued to Accu-Fab a primary liability policy with a $1,000,000 liability limit. The Colony Policy contained an "Additional Insured" provision, which designated "[a]ll persons or organizations as required by written contract with the Named Insured" as being insureds under the Colony Policy as well, subject to certain limitations and exclusions.

¶4. The Fifth Circuit summarized the subsequent events as follows:

On March 4, 2015, Omega informed Colony that it expected to receive "claims for personal injury and/or wrongful death" arising out of the July 2014 explosion. Asserting that it qualified as an "additional insured" under the Colony Policy, Omega demanded that Accu-Fab and Colony "defend and fully indemnify [it] from any [such] claims."
On March 13, 2015, Colony notified Omega that it was conducting an investigation into the explosion "under a full and complete reservation of rights ... including the right to disclaim coverage in whole or in part should it consider such denial warranted." Colony contended that the Colony Policy's "Total Pollution Exclusion may apply to preclude coverage in this matter" and expressed doubt that Omega qualified as an "additional insured."
On April 17, 2015, Colony filed a complaint for declaratory judgment in the Circuit Court of Jackson County, Mississippi. The complaint, which named Accu-Fab and Omega as defendants, sought a court order "declaring that the [Colony Policy] does not provide any coverage for any and all damages or injuries sustained as a result of the [July 2014] explosion."
On September 2, 2015, Taylor's estate and survivors filed a wrongful death action against Omega in federal district court. Colony subsequently agreed to fund Omega's defense, subject to a "full and complete" reservation of rights, "including the right to seek recovery of all defense costs it incurs on behalf of Omega should a court determine that Colony does not in fact owe a defense to [Omega]." In a letter dated December 9, 2015, Colony informed Omega's attorney that:
Colony's position is that it does not believe the policy of insurance it issued to Accu-Fab provides any coverage whatsoever for the unfortunate incident which occurred at the Omega Protein facility on July 28, 2014. Nevertheless, at your request Colony has agreed to fund the defense of Omega Protein, and is pursuing a declaratory judgment action in order to have the court determine whether its coverage position is or is not correct. Colony is providing a good-faith defense to Omega through the services of your law firm and yourself. If the court ultimately determines that the policy issued by Colony to Accu-Fab does not require that it fund Omega's defense, Omega will have been unjustly enriched to the extent Colony paid its defense costs when it had no obligation to do so.
Colony also wrote that, "[w]ith regard to Taylor's settlement demand, Colony will of course consider any reasonable demand sent to it," but "any demands for settlement made on behalf of the estate and survivors of Mr. Taylor will be reviewed in light of the insurance coverage issue which is currently the subject of Colony's declaratory judgment action."

Colony Ins. Co. , 726 F. App'x at 992-93.

¶5. The court scheduled a settlement conference in the Taylor lawsuit for January 14, 2016. Two days before the settlement conference, First Specialty wrote to Colony and requested that Colony settle the lawsuit. The letter stated in relevant part,

The Colony Additional Insured endorsement amends its Other Insurance clause, stating that the Colony coverage "is primary insurance and [Colony] will not seek contribution from any other insurance available to [Colony] additional insured." Colony, therefore, is primary to [AAIC]. The Taylor claim will certainly not settle for $1 million. As noted, failure to take advantage of the opportunity on January 14 to settle the Taylor claim for $2 million or less may not come again and may result in substantial unnecessary losses for Omega and its excess insurers, potentially including [First Specialty]. Accordingly, [First Specialty] respectfully requests Colony to be prepared to tender its limits to settle the Taylor claim during the January 14 settlement conference....

At the settlement conference, Colony excluded First Specialty's representative from the conference and agreed to pay its $1,000,000 policy limit in exchange for Omega's "full and complete release" from the lawsuit. Colony subsequently dismissed its declaratory-judgment action against Omega.

¶6. Colony then demanded that First Specialty reimburse the full amount Colony contributed to the Taylor settlement. When First Specialty refused, Colony filed an action against it seeking reimbursement of the amount it had contributed to the settlement of Taylor's wrongful-death lawsuit against Omega. Colony asserted claims of equitable subrogation and implied indemnity.

¶7. In response, First Specialty filed a Motion for Summary Judgment, and Colony filed a Cross Motion for Summary Judgment. The district court found that Mississippi's voluntary payment doctrine precluded Colony from recovery for payments made on behalf of a defendant that it did not insure and granted First Specialty's motion. The district court then entered a final judgment dismissing Colony's suit with prejudice. Colony appealed to the Fifth Circuit. The Fifth Circuit then certified the above-stated questions to this Court.

ANALYSIS

¶8. Mississippi law provides that a voluntary payment cannot be recovered back. McLean v. Love , 172 Miss. 168, 157 So. 361, 362 (1934). A voluntary payment is one which is made "[w]ithout compulsion or fraud, and without any mistake of fact, of a demand which the payor does not owe, and which is not enforceable against him...." Id. A "voluntary payor" is a "stranger or intermeddler who has no interest to protect and is under no legal or moral obligation to pay." Indem. Ins. Co. of N. Am. v. Guidant Mut. Ins. Co. , 99 So.3d 142, 150 (Miss. 2012) (" Guidant II ").

¶9. A payment may not be considered voluntary unless the payor had "full knowledge of all the facts which would render the payment voluntary." Glantz Contracting Co. v. Gen. Elec. Co. , 379 So.2d 912, 917 (Miss. 1980). To determine whether payments are made on a voluntary basis, this Court looks at the facts of each particular case. Id. at 917-18.

I. Compulsion

¶10. In Mississippi, "[t]o recover indemnity it is necessary for the plaintiff to allege and prove that he was legally liable to the person injured, and consequently, paid under compulsion. Otherwise, the payment is a voluntary one for which there can be no recovery." Sw. Miss. Elec. Power Ass'n v. Harragill , 254 Miss. 460, 182 So.2d 220, 223 (1966). The first question certified to this Court asks whether an insurer acts under "compulsion" if it takes the legal position that an entity purporting to be its insured is not covered by its policy, but nonetheless pays a settlement demand in good faith to avoid potentially greater liability that could arise from a future coverage determination.

¶11. Colony argues that, because it had an interest to protect when it made the settlement payment, it paid under compulsion no matter the extent or quantity of its interest. In contrast, First Specialty contends that "compulsion" requires more than a potential lawsuit against the payor or the payor's perception of potential liability if it does not make the subject payment. It argues that compulsion requires "urgent and immediate circumstances" in which the failure to pay risks severe consequences to the payor or threatens the payor's financial viability.

¶12. We answer the first certified question in the negative. As First Specialty argued, Colony maintained from the beginning that it did not insure Omega. Colony argued that its policy did not cover Omega for two reasons. First, Colony argued that a provision in its policy excluded the injuries suffered by Taylor from coverage. Colony's policy included a "Total Pollution Exclusion" which stated,

This insurance does not apply to:
f. Pollution
(1) 'Bodily injury' or 'property damage' which would not have occurred in whole or in part but for the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of 'pollutants' at any time ...

Its policy defined "pollutants" as "any solid, liquid, gaseous or thermal irritant or contaminant[.]" Colony argued that it was not obligated to defend Omega because Taylor's death was caused by "the ignition of several combustible gases" contained within a tank that had an approximately twenty thousand pound lid. Colony argued that for the lid to have blown off the tank, seepage or release of the contained gasses, which constituted pollutants had to have occurred.

¶13. Second, Colony argued that Omega was not considered an "additional insured" under its policy. Pursuant to the policy, an "additional insured" was defined as

the person(s) or organization(s) shown in the Schedule, but only with respect to liability for 'bodily injury', 'property damage' or 'personal and advertising injury' caused, in whole or in part, by:
1. Your acts or omissions; or
2. The acts or omissions of those acting on your behalf in the performance of your ongoing operations for the additional insured(s) at the location(s) designated above.

Accordingly, Colony contended that a person or entity may only be an additional insured for bodily injury caused in whole or in part by Accu-Fab's acts or omissions or by acts or omissions of someone acting on behalf of Accu-Fab. Colony argued that because the policy specifically stated "liability ... caused, in whole or in part, by," it required that the underlying complaint allege that the named insured (Accu-Fab) or someone acting on behalf of Accu-Fab was negligent and proximately caused the injury. Because Taylor did not include Accu-Fab as a party or allege any negligence or fault on its part, Colony argued that Omega was not an additional insured. Therefore, when Colony negotiated the settlement payment, Colony did not merely dispute that its policy excluded coverage for the injuries Taylor suffered, but it maintained that it did not insure Omega at all. Colony's fear that Omega might be an additional insured under its policy does not amount to compulsion.

¶14. Black's Law Dictionary provides two definitions of the word "compel": 1) "to cause or bring about by force, threats, or overwhelming pressure" or 2) "to convince (a court) that there is only one possible resolution of a legal dispute." Compel , Black's Law Dictionary (10th ed. 2014). Previously, this Court has found that a threat to sue is not considered compulsion. McLean , 157 So. at 362. In McLean , a milling company was indebted to a bank in the total amount of $79,540.40. Ten stockholders guaranteed the notes and secured the notes with collateral. Id. at 361. When the milling company was thrown into bankruptcy, the bank demanded that the ten guarantors pay the entire balance without applying the collateral to the reduction of the stated balance. Id. The ten stockholders paid the full balance. When the collateral was sold, the stockholders sought to be reimbursed. Id. at 362. This Court found that payment of the full balance had been voluntary, holding that "the only compulsion suggested was a threat to sue, which is not compulsion." Id. The Court reasoned,

It is axiomatic in equity jurisprudence that a court of equity makes no exertion to extend relief to those who, being able to take care of their interests, have neglected to do so, and thereupon find themselves in predicaments which ordinary care would have avoided. And for the stronger reason, where an unjust demand has been made upon a party, a demand for a debt which he does not owe, or for more than he owes, he must, when he knows or ought to know the facts, avail of the means which the law affords him to resist the demand, and if he do not, and make the payment demanded, he has not taken due care.

Id.

¶15. Even the possibility of foreclosure on a deed of trust for land has been found to lack compulsion for purposes of the voluntary-payment doctrine. Rowe v. Union Cent. Life Ins. Co. , 194 Miss. 328, 12 So.2d 431, 434 (1943). In Rowe , the appellant sought recovery for a portion of the purchase price paid for farm land. Id. at 432. After executing a special warranty deed for more than one thousand acres of farm land, the appellant discovered that the appellee did not own all of the land specifically described in the deed of conveyance. Id. The appellee declined to adjust the purchase price, and the appellant continued to pay the monthly sum agreed upon in the deed of conveyance, eventually paying off the full purchase price. Id. at 433. The appellant wrote that the payments were "being paid under protest and without waiving any rights that the grantee may have to recover the same...." This Court found that

The mere fact, however, that she may have been compelled to resort to equity to obtain a surrender of the notes and a cancellation of the lien of the deed of trust securing the same, upon a tender of the correct amount admitted to be due, does not render her payment of the full amount an involuntary payment, and this is especially true where it was made at a time when payment of the full balance was not being demanded under penalty of immediate foreclosure, and at a time when no coercion, duress or compulsion was being employed to exact such payment, and where no fraud or concealment was being practiced by the payee in connection with the receipt, acceptance, and collection of any part of the sum so paid.

Id. at 434-35.

¶16. We decline to adopt Colony's argument that a payment is not voluntary if the payor is acting under compulsion to protect its own interests. The above cases each contain payments that the payors made to protect their own interests; and yet were not considered to be made under compulsion. Additionally, Colony was not under an immediate and urgent necessity to pay the settlement demand. The explosion occurred on July 28, 2014. On April 17, 2015, Colony filed its declaratory judgment action, seeking a court order "declaring that the [Colony Policy] does not provide any coverage for any and all damages or injuries sustained as a result of the [July 2014] explosion." Taylor's estate did not file its wrongful-death action until September 2, 2015. Colony then settled the action on January 14, 2016. Thus, at the time Colony negotiated the settlement, the Taylor action had been filed only for approximately four months, and Colony's declaratory-judgment action against Omega remained pending. In civil cases, the purpose of courts is to "extend aid to those who have not been able by lawful means to aid themselves, and relief is not available to those who have neglected to take care of their interests." Harragill , 182 So.2d at 223. Here, Colony had the option to pursue its declaratory-judgment action before it paid the Taylor settlement. Instead, approximately four months after the Taylor actions was filed, Colony negotiated and agreed to pay the settlement. Thus, pursuant to this Court's precedent, the Colony settlement lacked compulsion.

¶17. Colony argues that it made "an uncommon decision in our modern litigious society" to protect and defend Omega under a reservation of rights, quoting the Court of Appeals in Gray Properties, LLC v. Utility Constructors, Inc. , 168 So.3d 1164 (Miss. Ct. App. 2014). In Gray Properties , however, the issue of compulsion was not discussed. And although Colony argues that it was under a "solemn obligation to defend its insured," as discussed above, Colony continually maintained that Omega was not its insured. "An insurance company's duty to defend its insured is triggered when it becomes aware that a complaint has been filed which contains reasonable, plausible allegations of conduct covered by the policy. However, no duty to defend arises when the claims fall outside the policy's coverage. " Minn. Life Ins. Co. v. Columbia Cas. Co. , 164 So.3d 954, 970 (Miss. 2014) (emphasis added) (quoting Baker Donelson Bearman & Caldwell, P.C. v. Muirhead , 920 So.2d 440, 450-51 (Miss. 2006) ).

¶18. The critical distinction in this case is that if Colony continually maintained that it was not Omega's insured, Colony did not act out of compulsion when it negotiated the settlement. Because Colony failed to pursue its legal remedies, we answer the first certified question in the negative.

II. Legally Liable

¶19. Because the first question is dispositive for purposes of the voluntary-payment doctrine, we find it unnecessary to answer the second certified question.

CONCLUSION

¶20. We find that an insurer does not act under compulsion if it takes the legal position that an entity purporting to be its insured is not covered by its policy but nonetheless pays a settlement demand in good faith to avoid potentially greater liability that could arise from a future coverage determination. Because the first certified question is dispositive, we decline to address the second certified question.

¶21. CERTIFIED QUESTION NO. 1: ANSWERED. CERTIFIED QUESTION NO. 2: DECLINED.

RANDOLPH AND KITCHENS, P.JJ., COLEMAN, MAXWELL, BEAM, CHAMBERLIN AND ISHEE, JJ., CONCUR. WALLER, C.J., NOT PARTICIPATING.

      Mississippi Rule of Appellate Procedure 20 provides,
      [W]hen it shall appear to the Supreme Court of the United States or to any United States Court of Appeals that there may be involved in any proceeding before it questions or propositions of law of this state which are determinative of all or part of that cause and there are no clear controlling precedents in the decisions of the Mississippi Supreme Court, the federal court may certify such questions or propositions of law of this state to the Mississippi Supreme Court for rendition of a written opinion concerning such questions or propositions of Mississippi law. The Supreme Court may, in its discretion, decline to answer the questions certified to it.
      M.R.A.P. 20(a).

      Taylor's estate did not name Accu-Fab as a party.