Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ared-4_14-cv-00475/USCOURTS-ared-4_14-cv-00475-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 28:1441 Petition for Removal- Insurance Contract

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IN THE UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF ARKANSAS

LITTLE ROCK DIVISION

TED CHANDLER and

MARTHA CHANDLER PLAINTIFFS

v. Case No. 4:14-cv-475 KGB

TRANSGUARD INSURANCE

COMPANY DEFENDANT

v. 

JOHNSON D. OGLES and

THE OGLES LAW FIRM, P.A. THIRD PARTY DEFENDANTS

OPINION AND ORDER

Before the Court is defendant TransGuard Insurance Company’s (“TransGuard”) motion 

for summary judgment (Dkt. No. 14). Plaintiffs Ted and Martha Chandler have responded, and 

TransGuard has replied (Dkt. Nos. 26; 29). For the following reasons, the motion for summary 

judgment is denied

I. Factual Background

The following facts are taken from Mr. and Mrs. Chandler’s response to defendant 

TransGuard’s Rule 56.1 statement in support of its motion for summary judgment (Dkt. No. 27), 

unless otherwise indicated. On September 27, 2010, Mr. Chandler, the owner-operator of a 2005 

International 9200I Tractor-Trailer, signed an agreement “with Intermodal Cartage Company, 

Inc. in Memphis, TN to operate a route between Intermodal’s Dallas, TX and Memphis, TN 

terminals” (Dkt. No. 27, ¶1). This agreement required Mr. Chandler to obtain occupational 

accident insurance coverage. To meet this requirement, Mr. Chandler completed an application 

to join the National Association of Independent Truckers (“NAIT”), listing his home address in 

New Albany, Mississippi (Dkt. No. 15-4, at 1). He also completed an application to enroll in 

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NAIT’s group insurance program for occupational accident insurance. Mr. Chandler ultimately 

enrolled in a group occupational accident and collision insurance policy that was issued and 

delivered by TransGuard to the NAIT. Both TransGuard and the NAIT are located in 

Naperville, Illinois, and that is where the group insurance policy was issued and delivered. Mr. 

and Mrs. Chandler are residents of Mississippi. Mr. and Mrs. Chandler claim, and TransGuard

does not dispute, that Mr. Chandler’s certificate of insurance was delivered to him in Mississippi.

On January 18, 2011, Mr. Chandler was involved in a motor vehicle accident in West 

Memphis, Arkansas. Mr. Chandler sustained personal injuries and property damage as a result 

of the accident. He submitted claims for the damage to his truck to TransGuard under the 

property damage coverage of his insurance policy, and he assigned his property damage claim to 

TransGuard in the proof of loss. He also incurred medical bills and lost wages, and he submitted 

those claims to TransGuard under the occupational accident coverage of his insurance policy. 

TransGuard ultimately distributed $23,199.23 in property damage benefits and $157,449.831 in 

occupational accident benefits to and on behalf of Mr. Chandler. 

Mr. Chandler’s insurance policy with TransGuard (“the Policy”) included a subrogation 

provision purporting2 to give TransGuard the right to recover the amount of any benefits it paid 

to Mr. Chandler out of any recovery he obtained against a third party for his accident, regardless 

of whether Mr. Chandler was “made whole” (Dkt. No. 15-5, at 25). Mr. Chandler initially 

retained attorney Vicki Gilliam to represent him in his personal injury suit arising out of his 

accident, and TransGuard communicated with Ms. Gilliam regarding its potential subrogation 

interest in the suit. Almost a year later, on March 14, 2012, attorney Johnson Ogles informed 

 1

 The occupational accident benefits consist of $115,075.03 in medical benefits and 

$42,374.80 in disability benefits.

2

 Mr. and Mrs. Chandler admit that the Policy contains this provision, but they contest 

whether it has any legal effect.

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TransGuard that he also represented Mr. and Mrs. Chandler in the suit. Mr. Ogles’ letter to 

TransGuard stated:

Vicki Gilliam and I represent Ted Chandler. It is my understanding that your 

company has a subrogation lien. Please send me a copy of the agreement you 

propose for subrogation. In Arkansas we are allowed a one-third attorney’s fee 

for collecting the subrogation for your company pursuant to A.C.A. §23-79-146. 

I am enclosing a copy of the statute.

(Dkt. No. 15-11, at 1). The same day, Mr. Ogles filed a personal injury complaint on 

behalf of the Chandlers, which did not include any allegations of property damage. 

TransGuard responded to Mr. Ogles’ letter the next day. Kathy Maish, a 

TransGuard employee, emailed Mr. Ogles informing him that: 

I have received your letter regarding the Oc/Ac lien. We are in agreement in 

regards to the one-third attorney’s fee for collecting on that lien. We do however 

have a physical damage claim that will not be a part of that lien or the one-third 

attorney’s fee. I have spoken to Vicki Gilliam regarding this. I provided the very 

powerful scene photos in exchange for the contact information on the negligent 

parties. I would appreciate your cooperation by forwarding this contact 

information to me as soon as possible. . . .

(Dkt. No. 15-11, at 3). 

On March 23, 2012, TransGuard retained separate counsel, Ryan Woody and 

Matthiesen, Wickert & Lehrer, S.C., to monitor Mr. and Mrs. Chandler’s personal injury 

suit. Although TransGuard had provided the photos, Mr. Ogles and Ms. Gilliam did not 

supply the contact information for the negligent parties (Dkt. No. 15, ¶ 21). Mr. Woody 

contacted Mr. Ogles on March 25, 2012, regarding the case and whether any formal 

agreement regarding the one-third reduction in the subrogation lien was made. Mr. 

Woody also asked Mr. Ogles about the property damage claim, which Mr. Ogles 

responded to by writing that he and Ms. Gilliam “were led to believe that [TransGuard] 

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did not want us to pursue the property damage. We will be glad to do so but we will need 

to file an amended complaint” (Dkt. No. 15-2, at 2). 

Mr. Woody wrote back that he would:

[G]et authority from [TransGuard] for your representation on the property damage 

claim and then we can confirm an agreement on the 1/3 for both [subrogation] 

components in writing . . . I will be sure to get you the supporting documentation 

for the property damage claim once my client has approved the representation.

(Dkt. No. 15-2, at 1). Mr. Ogles replied, writing “[j]ust send everything to us and we will add 

the property claim in” (Dkt. No. 15-2, at 1). 

On June 19, 2012, Mr. Woody sent Mr. Ogles a letter acknowledging and referencing 

their previous correspondence, and Mr. Woody included documentation related to the property 

damage claim. The letter states, in part:

Please let this follow on our prior email correspondence whereby you agreed to 

represent the subrogation interest of TransGuard Insurance Company relative to 

the property damage claim and protect the subrogation interest for medical and 

temporary total disability benefits paid. In exchange, my client has agreed to a 

1/3 reduction for your attorneys’ fees. Please let me know immediately if there is 

any misunderstanding. . . . I would ask that you provide me with periodic updates 

as the case moves on and notify me of any settlement discussions or mediation. 

In addition, I will be your point of contact for TransGuard should you need 

anything. . . .

(Dkt. No. 15-2, at 5). There is no indication in the record before the Court that Mr. Ogles 

responded to, or confirmed, any statements included in this letter. 

Several months passed without any amendment to Mr. and Mrs. Chandler’s complaint 

that would include the property damage claim. On October 19, 2012, Mr. Woody contacted Mr. 

Ogles to ask whether the complaint had been amended, and he expressed that TransGuard would 

prefer to not have to intervene as a party to the suit. Mr. Ogles responded by stating that “[w]e 

intend to pursue it as we discussed” (Dkt. No. 15-2, at 7). 

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On November 14, 2012, Mr. Ogles next contacted Mr. Woody; he sent an email with an 

attached letter from one of the tort defendants asking why TransGuard allowed the attorney to 

obtain certain investigative documents. Mr. Ogles stated, “We represent your company in this 

case.” (Dkt. No. 15-1, at 13). In opposing the pending motion for summary judgment, Mr. 

Ogles disputes what he intended with this language. 

On January 9, 2013, Mr. Woody again asked Mr. Ogles to confirm whether he was 

pursuing the property damage claim, as the complaint had not been amended to include any such 

claims. Mr. Ogles responded, “Yes, we are pursuing it. we [sic] have an agreement. why [sic] do 

you keep asking me this question?” (Dkt. No. 15-2, at 11). A month later, on February 6, 2013, 

Mr. Woody again contacted Mr. Ogles regarding whether an amended complaint would be filed 

to include the property damage claim. Mr. Woody stated as follows in that correspondence:

TransGuard has asked that I follow up with you on your plans to amend the 

Complaint to allege property damage. As you know, we already have an 

agreement in place whereby TransGuard agreed to a 1/3 reduction in its medical 

and indemnity lien. Based on that agreement, TransGuard would not formally 

intervene on that lien. However, as you know Mr. Chandler’s truck was 

significantly damaged and TransGuard paid $22,766.46 in property damage. You 

advised that you would amend the Complaint to add a claim for property damage.

I just reviewed the court’s docket on Pacer and the Amended Complaint has not 

yet been filed. Please advise when you intend to amend the Complaint or whether 

you would prefer that TransGuard retain Arkansas counsel to intervene on that 

portion of the claim. I would like to have this issue resolved within 30 days so 

that we do not jeopardize the property damage claim.

I look forward to hearing from you on the plan regarding property damage.

(Dkt. No. 15-2, at 15). Mr. Ogles responded by reiterating that “[w]e intend to amend and add 

the TransGuard claim” (Dkt. No. 15-2, at 16). On February 11, 2013, Mr. Ogles filed a motion 

for leave to file an amended complaint that included the property damage claim, which was 

granted two days later. 

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Mr. Woody and Mr. Ogles continued to correspond regarding other issues pertaining to 

the case up to June 3, 2014. Specifically, they corresponded regarding discovery issues related 

to TransGuard’s claims; preparations for the depositions of Lynn Parrish, the Safety and Risk 

Manager for Intermodal Companies; and evidence for the upcoming June 2014 trial. On or 

around June 10, 2014, Mr. Woody discovered that Mr. and Mrs. Chandler had settled the 

personal injury case. Mr. Ogles never informed TransGuard of any settlement offers in the case, 

and Mr. Ogles first informed TransGuard that the case had settled after being contacted by Mr. 

Woody on June 10, 2014.

II. Standard of Review

Summary judgment is proper if the pleadings, the discovery and disclosure materials on 

file, and any affidavits, show that there is no disputed genuine issue as to any material fact and 

that the movant is entitled to judgment as a matter of law. Gibson v. Am. Greetings Corp., 670 

F.3d 844, 852-53 (8th Cir. 2012). The movant bears the initial responsibility of informing this 

Court of the basis for its motion and must identify those portions of the record which it believes 

demonstrate the absence of a disputed genuine issue of material fact. Id. If the movant does so, 

the nonmovant must respond by submitting evidentiary materials that set out specific facts 

showing that there is a disputed genuine issue of material fact for trial. Id. 

For summary judgment, facts must be viewed in the light most favorable to the 

nonmoving party only if there is a genuine dispute as to those facts. Id. Credibility 

determinations, the weighing of the evidence, and the drawing of legitimate inferences from the 

facts are jury functions, not those of a judge. Id. The nonmovant must do more than simply 

show that there is some metaphysical doubt as to the material facts; the nonmovant must come 

forward with specific facts showing that there is a disputed genuine issue of material fact for 

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trial. Id. See also Wingate v. Gage Cnty. Sch. Dist., No. 34, 528 F.3d 1074, 1078–79 (8th Cir.

2008) (“Although the burden of demonstrating the absence of any genuine issue of material fact 

rests on the movant, a nonmovant may not rest upon mere denials or allegations, but must instead 

set forth specific facts sufficient to raise a genuine issue for trial.”). Where the record taken as a 

whole could not lead a rational trier of fact to find for the nonmoving party, there is no disputed 

genuine issue of material fact for trial. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th 

Cir. 2011) (en banc) (internal quotation marks and citation omitted). “The mere existence of a 

scintilla of evidence in support of the plaintiff’s position will be insufficient; there must be 

evidence on which the jury could reasonably find for the plaintiff.” Anderson v. Liberty Lobby, 

Inc., 477 U.S. 242, 252 (1986). 

III. Analysis

Mr. and Mrs. Chandler settled their personal injury case for $375,000.00 (Dkt. No. 2, at 

1). TransGuard claims that it is entitled to a portion of the settlement in accordance with the 

subrogation provision included in Mr. Chandler’s Policy (Dkt. No. 15-5, at 25). Mr. and Mrs. 

Chandler ask this Court to declare that they were not made whole by the tort settlement, and that 

under the made whole doctrine as recognized under Arkansas and Mississippi law, TransGuard

has no right of subrogation to the settlement despite the contractual provision (Dkt. No. 26, at 

22). Mr. and Mrs. Chandler also request that the Court order TransGuard to pay certain medical 

bills that they claim have not been paid. They also ask that the Court determine which portion of 

the settlement funds were for Ms. Chandler’s loss of consortium claim. 

TransGuard moves for summary judgment on several grounds: (1) that Mr. and Mrs. 

Chandler must reimburse them for all occupational accident benefits paid under the Policy 

because the parties entered into an enforceable settlement agreement; (2) that the Court should 

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apply Illinois, not Arkansas, law and that, under Illinois law, TransGuard’s contractual right to 

subrogation is not extinguished despite the fact that Mr. and Mrs. Chandler were not made whole 

by the settlement; (3) that, even if the Court finds that there was no enforceable settlement 

agreement and that Arkansas law applies, TransGuard is entitled to complete reimbursement for 

the property damage claim; and (4) that TransGuard has satisfied and has no further obligation to 

pay any outstanding medical provider liens or bills. 

A. Subrogation For Occupational Accident Benefits

TransGuard paid Mr. and Mrs. Chandler $157,449.83 in occupational accident benefits as 

a result of Mr. Chandler’s accident. It is undisputed that Mr. Chandler’s Policy includes a 

subrogation provision purporting to give TransGuard the right to recover this amount out of any 

recovery he has against a third party liable for his injuries, and that Mr. and Mrs. Chandler 

recovered $375,000.00 in the settlement of their personal injury case. Mr. and Ms. Chandler 

argue that the made whole doctrine bars enforcement of the subrogation provision. The made 

whole doctrine, as interpreted under Arkansas and Mississippi law, provides that “the insured 

must be wholly compensated before an insurer’s right to subrogation arises; therefore, the 

insurer’s right to subrogation arises only in situations where the recovery by the insured exceeds 

his or her total amount of damages incurred.” Franklin v. Healthsource of Arkansas, 942 S.W.2d 

837, 840 (Ark. 1997); see also Hare v. State, 733 So. 2d 277, 284 (Miss. 1999) (“[T]his Court 

adopts the ‘made whole’ rule and holds that it is not to be overridden by contract language, 

because the intent of subrogation is to prevent a double recovery by the insured, especially here 

as expressly stated in the State Health Plan. Until the insured has been fully compensated, there 

cannot be a double recovery.”). TransGuard does not appear to dispute in their motion for 

summary judgment that Mr. and Mrs. Chandler were not made whole by their settlement. 

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Instead, TransGuard moves for summary judgment that the made whole doctrine does not apply 

for two reasons. First, TransGuard argues that Mr. and Mrs. Chandler cannot assert application 

of the Arkansas made whole doctrine because they entered into an enforceable settlement 

agreement with respect to TransGuard’s right to be reimbursed upon any settlement of judgment. 

Next, TransGuard argues that its subrogation provision is enforceable, despite the fact that Mr. 

and Mrs. Chandler were not made whole, because the Court should apply Illinois law. If 

TransGuard prevails on either of these arguments, TransGuard is entitled to recover the 

$157,449.83 paid to Mr. Chandler in conformity with the Policy. The Court will address the 

conflict of laws issue first, as the Court’s finding on this issue has bearing on the question of 

whether the parties entered into an enforceable settlement agreement. 

1. Conflict Of Law

The subrogation provision in Mr. Chandler’s Policy provides that TransGuard is “entitled 

to a first priority right of reimbursement and subrogation regardless of whether ‘you’ recover all 

of ‘your’ damages or whether ‘you’ are made whole” (Dkt. No. 15-5, at 25). Under Arkansas 

and Mississippi law, this provision is unenforceable, as the made-whole doctrine may not be 

eliminated by contract. Franklin, 942 S.W.2d at 840; Hare, 733 So. 2d at 284. Under Illinois 

law, the provision would be upheld and enforceable. Eddy v. Sybert, 783 N.E.2d 106, 110 (Ill. 

App. Ct. 2003). TransGuard offers two arguments for why the Court should apply Illinois law.

i. Express Choice Of Law In The Policy

TransGuard first claims that the Policy includes an express choice of law provision that 

dictates the use of Illinois law (Dkt. No. 18, at 12-13). The policy TransGuard identifies as an 

express choice of law provision states: “Conformity with State Statutes: Any provision of this 

‘coverage part’ which, on the date it takes effect, is in conflict with the laws of the state where it 

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is issued is amended to conform to the minimum requirements of said law” (Dkt. No. 18, at 13). 

TransGuard also directs the Court’s attention to several Illinois amendatory endorsements 

contained in the Policy (Dkt. No. 18, at 13).

TransGuard correctly argues that Arkansas courts recognize and enforce valid express 

choice of law provisions contained in contracts (Dkt. No. 18, at 12). However, the case cited by 

TransGuard in support of this proposition, Crisler v. Unum Ins. Co. of Am., 233 S.W.3d 658 

(Ark. 2006), undermines its argument that the “Conformity with State Statutes” provision 

included in the Policy was an express choice of law provision. In Crisler, the Arkansas Supreme 

Court found that an essentially identical contractual provision did not constitute an express 

choice of law, as the language was ambiguous and “a reasonable construction of this provision is 

simply that any illegal provisions are void to the extent that they deviate from the law of the state 

in which the policy is delivered.” Id. at 660-61. For the same reasons, the Court finds that the 

“Conformity with State Statutes” provision in the Policy in this case does not qualify as an 

express choice of law provision mandating the use of Illinois law. TransGuard cites this Court to 

Simmons v. Continental Casualty Company, 258 F.Supp. 997, 1001 ̶ 02 (D. Neb. 1968), aff’d, 

410 F.2d 881 (8th Cir. 1969). In that case, the district court determined that, under Nebraska 

conflicts law and prior Nebraska precedent, the district court should apply Illinois law to the 

case. The Eighth Circuit determined that, regardless if Illinois or Nebraska law applied, the 

result would not differ. The choice of law analysis in this case is not helped or controlled by 

Simmons, especially in the light of Crisler. 

ii. Arkansas Choice Of Law Rules

As the Policy does not contain an express choice of law provision, the Court must 

conduct a conflict of laws analysis. “District courts sitting in diversity apply the choice-of-law 

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rules of the state where they sit.” Winter v. Novartis Pharm. Corp., 739 F.3d 405, 410 (8th Cir. 

2014). Arkansas courts use different choice of law methods depending upon the type of claim at 

issue in the case. TransGuard argues that, under Arkansas’s choice of law rules, this Court 

should use the “most significant relationship” test to determine this choice of law question (Dkt. 

No. 18, at 14). Mr. and Mrs. Chandler disagree, arguing that Arkansas courts would use Dr. 

Robert Leflar’s “better rule of law approach” (Dkt. No. 26, at 20-22).

The Court finds that Arkansas courts would employ the “most significant relationship” 

test to resolve this issue. While this case was not cited by either party, the Arkansas Supreme 

Court has held that, absent an express choice of law provision, the “most significant relationship” 

test should be used to determine questions regarding insurance policies. Hoosier v. 

Interinsurance Exch. of the Auto. Club, 451 S.W.3d 206, 209 (Ark. 2014). Even without this 

clear holding, the Court determines that use of the “most significant relationship” test is 

appropriate for this case. Arkansas courts limit the use of Dr. Leflar’s “better rule of law” 

approach to tort actions, while employing the “most significant relationship” test to contracts 

cases. See The Hon. David Newbern, John J. Watkins, The Hon. D. Price Marshall & Brandon J. 

Harrison, Arkansas Civil Practice and Procedure § 6:1 (5th ed. 2015). This case is more fairly 

characterized as a contract dispute: the Policy provides that TransGuard has a right to 

subrogation even if Mr. Chandler was not made-whole, and Mr. Chandler argues that the 

provision is unenforceable under Arkansas law. 

Under Arkansas’s “most significant relationship” test as applied to automobile insurance, 

“unless some other state has a more significant relationship to the transaction and the parties, the 

law of the state which the parties understood to be the principal location of the insured risk 

during the term of policy controls.” Hoosier, 451 S.W. 3d at 209 (paraphrasing the Restatement 

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(Second) of Conflict of Laws § 193 (1971)). Therefore, the Court must first determine which 

state TransGuard and Mr. and Mrs. Chandler understood to be the principal location of the 

insured risk during the term of policy. Then, the Court must determine whether another state has 

a more significant relationship to this transaction and the parties. 

The principal location of the risk is the state where the “insured risk, namely the object or 

activity which is the subject matter of the insurance, has its principal location,” meaning “the 

state where it will be during at least the major portion of the insurance period.” Restatement 

(Second) of Conflict of Laws § 193 cmt. b (1971). In the case of an automobile liability policy, 

the principal location of the risk generally is the state where the vehicle is garaged. Id. (“In the 

great majority of instances . . . it will usually be possible to predict with fair accuracy where the 

risk will be located, or at least principally located, during the life of the policy. . . . [I]n the case 

of an automobile liability policy, the parties will usually know beforehand where the automobile 

will be garaged at least during most of the period in question.”). The record before the Court in 

this case is insufficient to support a determination of the principal location of the risk. Neither 

party properly addresses this issue in their filings. The Court notes that Mr. Chandler listed his 

home address in New Albany, Mississippi, on his insurance application (Dkt. No. 15-4, at 1). 

However, there is no indication that his vehicle was garaged in Mississippi. Therefore, based on 

the record evidence before the Court, the Court cannot find as a matter of law that Illinois, 

Mississippi, Arkansas, or any other state was the principal location of the risk.

If the Court was able to determine the principal location of the risk, the Court would then

evaluate whether another state has a more significant relationship to this case. TransGuard 

contends that Illinois has the most significant relationship to the insurance policy at issue 

because Mr. Chandler’s policy was part of a group insurance policy that was issued and 

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delivered in Illinois and because “in cases involving group insurance policies, the law of the state 

where the master group policy is delivered controls its choice of law questions” (Dkt. No 18, at 

16). Transguard also claims that Arkansas’s only contact to this matter is the fact that Mr. 

Chandler’s accident occurred in Arkansas and contends that this contact is not significant enough 

to warrant the application of Arkansas law (Dkt. No. 18, at 15). 

TransGuard correctly argues that, in a majority of jurisdictions, “[r]ights against the 

insurer under a group policy are generally governed by the law of the state where the master 

policy was delivered.” Karpenski v. Am. Gen. Life Companies, LLC, 999 F. Supp. 2d 1218, 1229 

(W.D. Wash.) reconsideration denied, 999 F. Supp. 2d 1235 (W.D. Wash. 2014); see also F. D. 

Puckett, Conflict of Laws as to Group Insurance, 72 A.L.R.2d 695 (originally published in 1960) 

(“[T]he large majority of the cases have concluded that the laws of that state should apply in 

which the master policy was delivered.”). However, Arkansas is in the minority of states that 

have rejected this rule, finding that “[w]hen a master policy of group insurance is issued, there 

are at least two contracts. The group policy is one contract, and is usually said to be governed by 

the law of the place where it was delivered. The contract as to each individual within the group 

is separate.” Crisler, 233 S.W.3d at 660 (quoting Robert A. Leflar et al., American Conflicts 

Law § 153 (4th ed.1986)). Therefore, the Court finds that the law of the state where the group 

policy was issued does not necessarily govern in this case.

To determine which state has the most significant relationship to the transaction, courts 

consider five factors: “1) the place of contracting; 2) the place of negotiation of the contract; 3) 

the place of performance; 4) the location of the subject matter of the contract; [and] 5) the 

domicile, residence, nationality, place of incorporation and place of business of the parties.” 

Crisler, 233 S.W.3d at 660 (citing Restatement (Second) of Conflict of Laws § 188 (1971)). 

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Again, the existing record evidence before the Court is insufficient to support a determination of 

which state has the most significant relationship to this matter at this stage of the proceedings. 

For example, in Crisler, the Arkansas Supreme Court found that a life insurance policy 

was negotiated and made partially in Arkansas and partially in Minnesota, where the insurance 

application was mailed from Minnesota to the insured in Arkansas, the insured completed the 

application and mailed it back to Minnesota, the insurer notified the insured that the application 

was approved and sent the certificate evidencing the insurance policy to Arkansas, and the 

insured began to pay for the insurance. Crisler, 233 S.W. 3d at 659, 661. On the record 

evidence before it, the Court cannot definitively determine where the contract was made and 

negotiated, because the record does not include facts establishing where Mr. Chandler received 

the insurance application and how he submitted it.3

 While it is undisputed that Mr. Chandler 

listed New Albany, Mississippi, as his home town on the application and that the certificate of 

insurance was mailed to his home address, these facts alone do not conclusively establish where 

the contract was made and negotiated (Dkt. No. 15-4, at 1; No. 27, ¶ 54). Similar issues arise 

with the third and fourth factors, pertaining to the place of performance and the location of the 

subject matter of the contract. Mr. Chandler applied for membership and occupational accident 

insurance coverage through the NAIT after he signed a contract to operate a trucking route 

between Dallas and Memphis (Dkt. No. 27, ¶ 1). However, the record is sparse as to where the 

place of performance and the subject matter of the contract were in this case. The only factor 

with sufficient evidentiary support is the fifth, as it is undisputed that the NAIT is located in 

Illinois and Mr. and Mrs. Chandler live in Mississippi. 

 3

 The insurance application directs applicants to mail the application to a post office box 

in Kansas City, Missouri (Dkt. No. 15-4, at 1). However, it is not clear whether Mr. Chandler 

actually mailed his application to Missouri or submitted it by other means.

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The Court finds that the existing record is insufficient to determine as a matter of law at 

this stage which state’s law governs the subrogation issues in this case. Accordingly, 

TransGuard’s motion for summary judgment that the Court should apply Illinois law is denied. 

2. Enforceable Settlement Agreement

TransGuard also argues that, even if the made whole doctrine applies, that Mr. and Mrs. 

Chandler “cannot assert application of the . . . made whole doctrine because they entered into an 

enforceable settlement agreement with respect to TransGuard’s right to be reimbursed upon any 

settlement of judgment” (Dkt. No. 18, at 9). TransGuard claims that the terms of the “settlement 

agreement” were that it would not intervene in Mr. and Mrs. Chandler’s personal injury suit, 

“where it would have sought recovery of 100% of its property damage and occupational accident 

benefits,” and in return, it agreed to reduce both its occupational accident and property damage 

claims by one-third (Dkt. No. 18, at 9). TransGuard, which avoided the cost of hiring its own 

attorney by virtue of this arrangement, argues that this agreement also benefited Mr. and Mrs. 

Chandler because it reduced TransGuard’s subrogation claim by $60,959.48 and “eliminated any 

prospect that the jury would be negatively affected by the knowledge that the Plaintiffs would be 

making a double-recovery” (Dkt. No. 18, at 9).

The five essential elements of a contract claim under Arkansas law are:

4

 “competent 

parties, subject matter, legal consideration, mutual agreement, and mutual obligation.” Finch v. 

Carroll Cty., 445 S.W.3d 535, 537 (Ark. App. 2014). Arkansas courts also are guided by two 

legal principals in determining the validity of a contract: “(1) a court cannot make a contract for 

the parties but can only construe and enforce the contract that they have made; and if there is no 

 4

 While the parties disagree over whether Arkansas law should be used in determining 

whether the made whole doctrine applies to the terms of the Policy, both cite to Arkansas cases 

in regard to this issue, which pertains to a separate “agreement” purportedly entered into by 

TransGuard and Mr. Ogles allegedly on behalf of Mr. and Mrs. Chandler. 

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meeting of the minds, there is no contract; and (2) it is well settled that in order to make a 

contract there must be a meeting of the minds as to all terms, using objective indicators.” 

DaimlerChrysler Corp. v. Smelser, 289 S.W.3d 466, 470 (Ark. 2008). TransGuard argues that 

all of the essential elements of contract formation are present in this case and that this Court 

“must ‘construe and enforce the contract [the parties] have made’” (Dkt. No. 18, at 11) (quoting 

Smelser, 289 S.W.3d at 470). Mr. and Mrs. Chandler argue that TransGuard is not entitled to

judgment as a matter of law that a settlement contract was formed between them and TransGuard 

because it is not clear that there was a meeting of the minds as to the terms of any such 

agreement (Dkt. No. 26, at 7-8). Specifically, in response to the summary judgment motion, Mr. 

and Mrs. Chandler argue that TransGuard put Mr. Ogles:

on notice of a subrogation lien claim and their attorney acknowledged the 

existence of the subrogation lien claim and offered to include [TransGuard’s] 

claim in the litigation if [TransGuard] recognized his right to a one-third 

attorney’s fee for doing so. . . . At no time did [Mr. Ogles] ever agree to do 

anything other than acknowledge the existence of the subrogation lien claims and 

to include those claims in his pursuit of the lawsuit on behalf of the Chandlers. 

No attorney/client relationship was ever formed between the Chandlers’ lawyer 

and [TransGuard] and, in fact, [TransGuard] retained separate counsel to 

‘monitor’ the lawsuit.

(Dkt. No. 26, at 2 ̶ 3). 

The terms of a settlement agreement, like any other contract, “must be definitely agreed 

upon and reasonably certain.” Roberts v. Green Bay Packaging, Inc., 272 S.W.3d 125, 128 (Ark. 

App. 2008). This “meeting of the minds” on all material contract terms is necessary for a 

contract to be valid. Ward v. Williams, 118 S.W.3d 513, 521 (Ark. 2003) (citing Williamson v. 

Sanofi Winthrop Pharm., Inc., 60 S.W.3d 428, 434 (Ark. 2001)). “Whether or not a meeting of 

the minds has occurred is an issue of fact.” Rubber & Gasket Co. of Am. v. Zimmerman, 2011 

Ark. App. 273, 5 (2011). More specifically to the issue presented in this case, “[w]hen there are 

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genuine questions of material fact with regard to a party’s intent, summary judgment is 

improper.” Grayson & Grayson, P.A. v. Couch, 388 S.W.3d 96, 104-05 (Ark. App. 2012).

Mr. Ogles, who was representing Mr. and Mrs. Chandler in their personal injury suit, 

corresponded with representatives from TransGuard regarding the suit and TransGuard’s 

contractual subrogation interest. TransGuard argues that this correspondence with Mr. Ogles 

constitutes a binding arrangement with Mr. and Mrs. Chandler. There is no indication in the 

record before the Court that Mr. and Mrs. Chandler were aware of these communications, 

condoned them, or agreed to any arrangement between their lawyer and their insurance 

company. Reasonable minds may differ as to who the parties were to this arrangement based on 

the existing record. 

For example, one could determine that there may have been an arrangement between Mr. 

Ogles and TransGuard regarding the collection of any subrogation proceeds. Mr. Woody wrote 

to Mr. Ogles on June 19, 2012, a letter that states, in part:

Please let this follow on our prior email correspondence whereby you agreed to 

represent the subrogation interest of TransGuard Insurance Company relative to 

the property damage claim and protect the subrogation interest for medical and 

temporary total disability benefits paid. In exchange, my client has agreed to a 

1/3 reduction for your attorneys’ fees. Please let me know immediately if there is 

any misunderstanding. . . . I would ask that you provide me with periodic updates 

as the case moves on and notify me of any settlement discussions or mediation. 

In addition, I will be your point of contact for TransGuard should you need 

anything. . . .

(Dkt. No. 15-2, at 5). There is no indication in the record before the Court that Mr. Ogles 

responded to, or confirmed, any statements included in this letter. 

Further, Mr. Ogles did write on November 14, 2012, in correspondence to Mr. Woody, 

referring to TransGuard: “We represent your company in this case.” (Dkt. No. 15-1, at 13). 

Although Mr. Ogles in his response to the summary judgment motion now attempts to dispute 

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his intent in sending this November 2012 correspondence, he does not dispute the words he used. 

Instead, he argues that nothing in the record discloses an attorney-client relationship between Mr. 

Ogles and TransGuard.5

 Mr. Ogles contends that, through this correspondence, TransGuard was 

an entity claiming a potential interest in a future settlement or verdict and that Mr. Ogles was 

agreeing to recognize such a claim in the course of his representation of the Chandlers (Dkt. No. 

27, ¶ 33). Mr. and Mrs. Chandler also cite this Court to non-controlling case law, Gray Law LLP 

v. Transcontinental Ins. Co., 560 F.3d 361 (5th Cir. 2009). From that case, it appears that Texas 

law has specific provisions governing such a situation; no party cites this Court to comparable 

controlling law that would dictate the outcome here. 

TransGuard does argue that their “arrangement” benefited Mr. and Mrs. Chandler in the 

amount of $60,954.48 because TransGuard agreed to reduce its subrogation claim by one-third

from approximately $182,878.056 to $121,918.57.7

 The Court is unsure how this “reduction”

was of any benefit to Mr. and Mrs. Chandler, as it appears that under the terms of the 

arrangement, the full $182,878.05 would still be removed from their tort settlement, with the 

only difference being that TransGuard would receive $121,918.57 and Mr. Ogles would receive 

$60,954.48.

Even if Mr. and Mrs. Chandler were parties to the contract, summary judgment is also 

inappropriate because there are genuine questions of material fact with regard to their intent. 

 5

 It is unclear whether an attorney-client relationship between Mr. Ogles and TransGuard 

would even be permissible under Rule 1.7 of the Arkansas Rules of Professional Conduct under 

these circumstances. 

6

 This figure represents the combined total of the occupational accident and property 

damage benefits.

7

 TransGuard also claims that Mr. and Mrs. Chandler were benefited because the 

arrangement “eliminated any prospect that the jury would be negatively affected by the 

knowledge that the Plaintiffs would be making a double recovery” (Dkt. No. 18, at 9). 

TransGuard points to nothing in the record indicating that such a benefit was contemplated by 

Mr. and Mrs. Chandler or Mr. Ogles. 

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While it is clear that Mr. Ogles recognized that Mr. Chandler’s policy included a subrogation 

provision, his communications with TransGuard do not indicate whether he intended, on Mr. and 

Mrs. Chandler’s behalf, to waive their rights under the made whole doctrine. It remains unclear 

what state’s law applies in this case, for the reasons already stated. This ambiguity is important. 

For example, should Arkansas law apply to this case, TransGuard’s contractual subrogation 

rights would arise only if Mr. and Mrs. Chandler were made whole by their recovery in their 

personal injury action. Franklin, 942 S.W.2d at 840. The communications between Mr. Ogles 

and TransGuard fail to address the possibility that, while TransGuard had a subrogation interest 

in Mr. and Mrs. Chandler’s suit, it may not have any subrogation rights. The Court finds that a 

genuine question of fact remains as to whether Mr. and Mrs. Chandler intended to waive the 

made whole doctrine in their agreement, if one existed, with TransGuard. 

Because there are genuine issues of material fact in dispute, this Court will not grant 

summary judgment to TransGuard on this basis.

B. Subrogation For Property Damage

TransGuard argues that even if the made whole doctrine under Arkansas law applies to 

this case and limits its recovery of the medical and disability benefits paid to Mr. Chandler, that 

it is entitled to complete reimbursement for its property damage subrogation claim. TransGuard 

claims that Ark. Code. Ann. § 23-79-146 limits the made whole doctrine under Arkansas law to 

not include reimbursement for property damages (Dkt. No. 18, at 19). In response, Mr. and Mrs. 

Chandler note that Ark. Code. Ann. § 23-79-146 “does not say anything about recoveries for 

property damage” (Dkt. No. 26, at 23). Mr. and Mrs. Chandler also argue that Ark. Code. Ann. § 

23-79-146 could be construed to apply to property damage claims.

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Considering the number of unresolved issues in this case, chiefly the question of which 

state’s law governs the subrogation issues in this case, the Court finds that summary judgment on 

this issue would be premature. Accordingly, TransGuard’s motion for summary judgment on the 

property damage subrogation claim is denied. 

C. Satisfaction And No Further Obligation To Pay Outstanding Medical 

Provider Liens Or Bills

Mr. and Mrs. Chandler claim that TransGuard failed to pay all of Mr. Chandler’s medical 

bills, and attached allegedly unpaid bills from the North Mississippi Medical Center, the Shelby 

County Health Care Corporation, and the U.T. Medical Group to their complaint (Dkt. No. 1, at 

8-13). In its motion for summary judgment, TransGuard argues that it has paid the bills 

submitted to it for processing, adjusting, and payment from the North Mississippi Medical 

Center and the Shelby County Health Care Corporation. Kathleen M. Maish, a subrogation 

analyst for TransGuard, states in a declaration that TransGuard paid all bills submitted by the 

North Mississippi Medical Center and the Shelby County Health Care Corporation, and “has 

issued no bill denials to North Mississippi Medical Center, Shelby County Health Care 

Corporation, or U.T. Medical Group” (Dkt. No. 16, ¶¶ 32, 37). According to Ms. Maish, 

TransGuard “adjusted such bills based on the usual, customary and reasonable (“UCR”) charge 

for the area,” and issued payment to both the North Mississippi Medical Center and the Shelby 

County Health Care Corporation as satisfaction in full of its charges (Dkt. No. 16, ¶¶ 33-36). In 

both cases, the payment was lower than the amount stated on the bill. TransGuard argues that 

there is no genuine dispute of fact regarding Mr. Chandler’s medical bills, and that this Court 

should rule as a matter of law that TransGuard “has satisfied and has no further obligation to pay 

any outstanding medical provider liens or bills pursuant to the express policy language” (Dkt. 

No. 18, at 20). 

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Mr. and Mrs. Chandler respond by arguing that TransGuard “asks this court to accept it at 

its word that it has applied its own internal payment processing policies and has paid all that it is 

required to pay for the medical liens and bills which were submitted to it” despite the fact that it 

is “pretty clear they paid far less than what the medical providers submitted in the way of 

invoices” (Dkt. No. 26, at 23). They claim that “summary judgment on this issue would not be 

appropriate” because “the only way this court can make a determination if medical bills remain 

unpaid, or improperly paid, is to either require an audit to me [sic] made or to have an 

evidentiary hearing on this issue” (Dkt. No. 26, at 23). 

The Court finds that there is not sufficient record evidence to permit the Court to rule as a 

matter of law that TransGuard has no further obligation to pay outstanding medical provider 

liens or bills. The exact scope of what the Chandlers are claiming from TransGuard is unclear. 

Considering the state of the existing record, the Court denies TransGuard’s motion for summary 

judgment on this issue as well. 

IV. Conclusion

TransGuard’s motion for summary judgment is denied (Dkt. No. 14). 

So ordered this the 31st day of March, 2016.

 _______________________________

 Kristine G. Baker

 United States District Judge

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