IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-60650

THE ESTATE OF MABLE DEAN BRADLEY, by and through Gloria Sample,

Administratrix of the Estate of Mable Dean Bradley, as Assignee of claims held

by Grancare, Incorporated, Mariner Health Care, Incorporated, Boyd P. Gentry,

George Morgan, M. Scott Athans, Robin C. Skelton and Eleta Jo Grimmett, 

Plaintiff–Appellant 

v.

ROYAL SURPLUS LINES INSURANCE COMPANY, INCORPORATED;

LUMBERMEN’S MUTUAL CASUALTY COMPANY,

Defendants–Appellees

Appeal from the United States District Court

for the Northern District of Mississippi

Before REAVLEY, GARZA, and SOUTHWICK, Circuit Judges.

EMILIO M. GARZA, Circuit Judge:

In this insurance coverage dispute, the Estate of Mable Dean Bradley (“the

Estate”) appeals the district court’s grant of summary judgment to the

Defendants–Appellees Royal Surplus Lines Insurance Co. (“Royal”) and

Lumbermens Mutual Casualty Co. (“Lumbermens”). The district court found 1

that, as a matter of law, Royal and Lumbermens were not required to defend or

United States Court of Appeals

Fifth Circuit

F I L E D

July 19, 2011

Lyle W. Cayce

Clerk

The Estate erroneously identified Lumbermens as “Lumbermen’s” in the complaint 1

and in the proceedings below. The district court accepted this nomenclature, but we will refer

to Lumbermens by its proper corporate name.

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No. 10-60650

indemnify a policyholder/defendant in a separate lawsuit brought by the Estate

in a Mississippi state court. For the reasons that follow, we AFFIRM. 

I

Mable Dean Bradley was a resident at the Indianola Health and

Rehabilitation Center from February 7, 2000, to May 17, 2002, when she was

transferred to the South Sunflower County Hospital in Sunflower County,

Mississippi. Bradley died within 24 hours of her admission to the hospital. The

immediate causes of death included acute dehydration and an untreated urinary

tract infection. 

Bradley’s estate brought suit in Mississippi state court against the

Indianola Health and Rehabilitation Center’s corporate parent, Mariner Health

Care, Inc., and several other defendants (“the Mariner defendants”). The Estate

sought recovery based on claims of negligence, mistreatment, malice and/or gross

negligence, fraud, breach of fiduciary duty, statutory survival, and wrongful

death arising out of Bradley’s residency at the Indianola nursing home. The

Estate’s complaint further alleged that the wrongs Bradley suffered “were of a

continuing nature, and occurred throughout Mable Dean Bradley’s stay at the

Defendant’s facility.”

After a ten-day jury trial in the Circuit Court of Sunflower County, the

jury awarded $1.5 million in compensatory damages and $10.5 million in

punitive damages to Bradley’s estate, and the trial court entered final judgment

accordingly. No appeal was taken from the trial court’s order. The Mariner

defendants wanted to pursue an appeal, and Mariner’s first layer excess insurer,

Lexington Insurance Company (“Lexington”), agreed to post a portion of the

appellate bond. Mariner’s second and third layer excess insurers—Royal and

Lumbermens, respectively—would not, however. Royal maintained that the

applicable portion of its excess policy had not been triggered at that point, and

thus, it owed no duty to participate in bonding the jury’s award on appeal. 

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Lumbermens insisted that its excess policy was limited to indemnification, and

therefore, it owed no duty to participate in defending the Mariner action or in

posting an appellate bond. 

The Mariner defendants and Lexington then entered into a settlement

agreement with the Estate that extinguished “any and all claims relating to”

Bradley’s care and treatment at the Indianola nursing home,“including claims

for damages, costs, or attorney’s fees . . . in exchange for $10.5 million.” 

Together, Lexington and Mariner paid a total of $2.3 million to the Estate as

part of the settlement; Royal and Lumbermens paid nothing. Mariner assigned

its interest in any claims against Royal and Lumbermens to the Bradley estate.

In February 2008, the Estate filed suit against Royal and Lumbermens in

federal district court, based on the parties’ diversity of citizenship, seeking

recovery for Royal’s and Lumbermens’ alleged bad faith failure to defend or

indemnify Mariner in the underlying state lawsuit and settlement. The Estate

moved for summary judgment, asking the district court to find that the Royal

policy in effect from March 1999 to March 2000, and the Lumbermens policy in

effect from March 1998 to March 2001, provided excess coverage to Lexington’s

first layer excess policy in effect from July 1999 to July 2000. The Estate also 2

asked the court to find that the policies described above required the excess

insurers collectively to defend and indemnify Mariner for the final judgment in

the underlying state suit. Royal and Lumbermens filed cross-motions for

summary judgment, asking the court to find to the contrary. 

In December 2010, the district court denied the Estate’s motion and

granted summary judgment for both insurers, finding as a matter of law that

Royal issued two second layer excess policies that were in effect at different times 2

during Bradley’s February 2000 to May 2002 stay at the Indianola nursing home. There were

three Lexington policies in effect at different times during this same 27-month span. The

Estate’s decision to seek summary judgment under the specific policies described above is

discussed in Section III.A.2, infra.

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Royal’s and Lumbermens’ respective policies did not require them to defend or

indemnify Mariner in the state lawsuit. Because Royal and Lumbermens were

not obligated to provide coverage in the underlying suit, the Estate’s bad faith

action could not lie, and the district court dismissed the Estate’s claim with

prejudice. This appeal followed. 

II

We review a district court’s grant of summary judgment de novo, applying

the same standards as the district court. See Floyd v. Amite Cnty. Sch. Dist., 581

F.3d 244, 247 (5th Cir. 2009). We view all facts in the light most favorable to the

nonmoving party, and affirm only if the evidence shows that “there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” FED. R. CIV. P. 56(a); see also Floyd, 581 F.3d at 247–48. 

Where federal jurisdiction is based on diversity of citizenship, as it is here,

we apply the substantive law of the forum state. See Erie R.R. v. Tompkins, 304

U.S. 64, 78 (1938). To determine Mississippi law, we look to the final decisions

of Mississippi’s highest court. See Am. Int’l Specialty Lines Ins. Co. v. Canal

Indem. Co., 352 F.3d 254, 260 (5th Cir. 2003). Because the Mississippi Supreme

Court has not addressed the issues presented here, the district court had to

make an “Erie guess” as to how that court would have resolved the issues if

presented with them. Id.; see also Holt v. State Farm Fire & Cas. Co., 627 F.3d

188, 191–92 (5th Cir. 2010); Batts v. Tow-Motor Forklift Co., 66 F.3d 743, 749–50

(5th Cir. 1995). We do the same, de novo, on appeal. 

III

The Estate argues that the district court erred in finding that Royal and

Lumbermens were not required to insure Mariner in the underlying state action. 

Specifically, the Estate contends that Royal’s excess policy unambiguously

required Royal to defend and indemnify Mariner for the state court judgment

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and resulting settlement, and that the Lumbermens policy required it to

indemnify Mariner for the same.3

A

Under Mississippi law, an insurer’s duties to defend and indemnify its

insured are distinct and separate duties requiring the use of different standards. 

See Titan Indem. Co. v. Pope, 876 So. 2d 1096, 1101–02 (Miss. Ct. App. 2004); see

generally 14 Lee R. Russ & Thomas F. Segala, COUCH ON INSURANCE § 200:3 (3d

ed. 2007); 3 Jeffrey E. Thomas et al., NEW APPLEMAN ON INSURANCE LAW

LIBRARY EDITION §§ 16.06[3][a], 17.01[1][b][ii] (2010). When an insured is sued,

an insurer’s duty to defend is determined solely by comparing the facts alleged

in the complaint with the terms of the policy. See United States Fid. & Guar. Co.

v. OmniBank, 812 So. 2d 196, 200 (Miss. 2002); Delta Pride Catfish, Inc. v. Home

Ins. Co., 697 So. 2d 400, 403 (Miss. 1997). An insurer “has an absolute duty to

defend a complaint which contains allegations covered by the language of the

policy, but . . . no duty to defend those claims which fall outside the coverage of

the policy.” Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d 714, 719 (Miss. 2004). 

Because whether Royal had a duty to defend Mariner in the underlying state

suit rests on the factual allegations in the complaint and the language of its

policy, we address this issue as a matter of law. See Noxubee Cnty. Sch. Dist. v.

United Nat’l Ins. Co., 883 So. 2d 1159, 1165 (Miss. 2004) (“The interpretation of

an insurance policy is a question of law, not one of fact.”).

1

Here, the district court looked to the terms of the Royal excess policy and

observed that Royal’s duty to defend arose only after the actual payment of

The Estate’s motion for summary judgment argued that Lumbermens owed a duty to 3

indemnify and defend the Mariner defendants, and the district court’s opinion addressed both

arguments accordingly. On appeal, the Estate’s opening brief only presses the first argument;

the second is waived. See Valle v. City of Houston, 613 F.3d 536, 544 n.5 (5th Cir. 2010). 

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judgments or settlements had exhausted any underlying insurance, and because

that condition precedent was never satisfied, Royal’s defense obligation never

matured. We agree.

The Royal second layer excess policy at issue—the Big Shield Commercial

Catastrophe Liability Policy—was a general liability policy that provided $10

million in coverage excess of Lexington’s $2 million first layer excess policy,

which itself followed Mariner’s $1 million self-insured retention. With respect

to Royal’s duty to defend, the Big Shield policy provided:

1. INSURING AGREEMENT 

1. . . .

2. We will have the right and duty to defend any “suit”

seeking those damages [that the insured becomes

legally obligated to pay] when:

(a) The applicable limits of insurance of the

“underlying insurance” and other insurance have

been used up in the payment of judgments or

settlements . . . .

The parties agree that Lexington’s $2 million first layer excess policy and

Mariner’s $1 million self-insured retention make up the “underlying insurance”

referred to in this section of the Royal policy.

Royal’s Big Shield policy also included an endorsement that modified the

policy’s default terms and limited coverage for professional liability:

PROFESSIONAL LIABILITY LIMITATION

This endorsement modifies insurance provided under the following:

Commercial CatastropheLiability Insurance (“Big Shield” 

Policy)

With respect to “Professional liability” arising out of any Insured’s

activities as a(n) Nursing Facilit[y] this policy is limited to the

coverage provided in the “Underlying Insurance”.

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If coverage is not provided by “Underlying Insurance”, coverage is

excluded from this policy. . . .

Lexington’s first layer excess policy is the “underlying insurance” contemplated

here.

The gravamen of the Estate’s claim is that Royal’s policy “followed form”

to the Lexington policy in all respects, and because Lexington had a broad duty

to defend under its own policy and was obligated to pay all premiums on appeal

bonds, that Royal likewise was obligated to defend and participate in bonding

the jury’s award on appeal. This is mistaken. 4

As the district court correctly observed, nothing in the Royal policy

suggests that it follows form as to all terms and conditions in the Lexington

policy. Rather, the Professional Liability Limitation endorsement is the only

term that contains a follow form provision, and it specifies that the Royal policy

will follow form to the Lexington policy “[w]ith respect to ‘professional liability’”

arising out of Mariner’s operations at the Indianola nursing home. A review of

the Lexington policy’s corresponding Medical Professional Liability Coverage

endorsement reveals no reference to a defense obligation. Thus, in the absence

of a duty to defend under the Lexington policy’s relevant endorsement, Royal’s

defense obligation, if any, must be determined by reference to the default terms

of the Big Shield policy. And, as that policy provided, Royal’s duty to defend only

arose after “[t]he applicable limits of the ‘underlying insurance’ and other

insurance have been used up in the payment of judgments or settlements . . . .” 

See Insituform Techs., Inc. v. Am. Home Assur. Co., 566 F.3d 274, 278 (1st Cir. 2009) 4

(“The phrase ‘follow form’ refers to the practice, common in excess policies, of having the

second-layer coverage follow substantively the primary layer provided by the main insurer.”);

see also id. at 278 n.3 (“[B]ut is a mistake to assume precision in such terminology; and even

where a policy is described as ‘follow form,’ it does not necessarily provide coverage that is

substantively identical to the underlying one.”) (emphasis in original) (citing Barry R.

Ostrager & Thomas R. Newman, 2 HANDBOOK ON INSURANCE COVERAGE DISPUTES § 13.01

(11th ed. 2002)).

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(emphasis added). Contrary to the Estate’s claim, the mere entry of a judgment

that exceeded the limits of the underlying insurance was insufficient to trigger

Royal’s defense duty. Instead, Royal’s policy required actual payment that

exhausted Mariner’s self-insured retention and Lexington’s policy limits. That

condition never occurred prior to Mariner’s settlement with the Bradley estate. 

As such, Royal did not have a duty to post an appellate bond or otherwise defend

its insured in the underlying state lawsuit.

2

Unlike the duty to defend, which can be determined at the beginning of a

lawsuit, an insurer’s duty to indemnify generally cannot be ascertained until the

completion of litigation, when liability is established, if at all. See Barden Miss.

Gaming LLC v. Great N. Ins. Co., 576 F.3d 235, 239–40 (5th Cir. 2009); see also

VRV Dev. L.P. v. Mid-Continent Cas. Co., 630 F.3d 451, 459 (5th Cir. 2011)

(“[A]n insurer’s duty to indemnify typically can be resolved only after the

conclusion of the underlying action.”) (applying Texas law). This is because,

unlike the duty to defend, which turns on the pleadings and the policy, the duty

to indemnify turns on the actual facts giving rise to liability in the underlying

suit, and whether any damages caused by the insured and later proven at trial

are covered by the policy. See Columbia Cas. Co. v. Ga. & Fla. Railnet Inc., 542

F.3d 106, 111 (5th Cir. 2008) (applying Texas law); see generally 14 COUCH ON

INSURANCE § 200:3; 3 NEW APPLEMAN ON INSURANCE LAW LIBRARY EDITION

§ 17.01[1][b][ii]. Thus, in determining whether Royal or Lumbermens had any

duty to indemnify Mariner, we look to the actual facts put forward at trial that

established Mariner’s liability in the state lawsuit. 

5

 We note that the Mississippi case law addressing liability insurers’ separate duties

5

to defend and indemnify is limited, and that the duty to defend is discussed almost exclusively

in those Mississippi cases identifying the two duties. The lone exception appears to be Titan

Indemnity Co. v. Pope, 876 So. 2d 1096 (Miss. Ct. App. 2004). In making an Erie guess as to

Royal’s and Lumbermens’ indemnification obligations here, we rely on Circuit precedent and

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At the outset, we note that there were two Royal policies in effect, and

three Lexington policies in effect, at different times during Bradley’s February

2000 to May 2002 stay at the Indianola nursing home. The Estate sought 6

summary judgment based on the Royal policy in effect from March 1999 to

March 2000, and the Lumbermens policy in effect from March 1998 to March

2001. Obviously, a significant portion of Bradley’s 27-month residency fell

outside the coverage periods for these specific policies. The Estate argued below,

as it does here, that Bradley’s injuries “were of a continuing nature” and that

under the terms of the Lexington policy’s professional liability endorsement, the

entire 27-month span of Bradley’s stay was to be considered a single “medical

incident.” The Estate elected, its argument goes, to submit its claim under that

combination of policies that offered the greatest coverage limits at any single

point during Bradley’s residency. 

7

Unsurprisingly, Royal and Lumbermens take issue with the claim that

Bradley’s injuries should be characterized as one continuous “medical incident.” 

Both excess insurers note that the injuries that immediately preceded Bradley’s

death—acute dehydration, a broken femur, and an untreated urinary tract

infection—occurred in April and May 2002, well outside either of Royal’s or

Lumbermens’ policy periods. And, the insurers argue, the jury’s compensatory

leading secondary sources accordingly. We have found nothing in our research that suggests

that the Mississippi Supreme Court would deviate from the accepted definition of indemnity

if that court were called upon to decide the question before us. 

 There is only one Lumbermens policy at issue in this case.

6

The Texas Supreme Court authorized this type of election in cases where a single, 7

indivisible injury triggers more than one policy, covering different policy periods. See Am.

Physicians Ins. Exch. v. Garcia, 876 S.W.2d 842, 855 (Tex. 1994). The Mississippi Supreme

Court has not passed on the issue decided in Garcia and we do not reach it either.

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and punitive damages awards were based on these three injuries specifically; not

a finding of continuing negligence.

The Lexington medical professional liability endorsement is indeed the

correct benchmark for assessing Royal’s duty to indemnify Mariner. This is

because, as all parties agree, Royal’s excess policy follows form to the Lexington

policy with respect to professional liability. The Lexington policy provides:

I. COVERAGE – MEDICAL PROFESSIONAL LIABILITY

1. The Company [Lexington] will pay on behalf of the Insured

[Mariner] that portion of ultimate net loss in excess of the

Self-Insured Retention which the Insured shall become

legally obligated to pay as Damages which occur during

the policy period, resulting from a medical incident

arising out of the following professional services provided

by the Insured to any person at any pharmacy or facility

owned, managed or operated by the Named Insured in Item

# 1 of the Declarations:

a) medical, surgical, dental or nursing treatment to a

patient, including the furnishing of food or beverage

in connection therewith;

b) furnishing or dispensing of drugs or medical, dental or

surgical supplies or appliances if the personal injury

occurs after the Insured has relinquished possession

thereof to others;

. . .

Any such rendering of or failure to render the above

described professional services, together with all related

acts or omissions in the furnishing of such services to any

one patient resulting in a claim shall be considered as

arising out of one medical incident.

(emphasis in original). The Estate relies on this provision, coupled with its

assertion that it put on evidence at trial demonstrating Mariner’s negligence

throughout Bradley’s 27-month stay, for the proposition that the jury’s verdict

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included the specific Royal and Lumbermens policy periods in issue. The record

suggests otherwise.

The state trial record shows that the claims submitted to the jury related

exclusively to the injuries that Bradley suffered in the weeks before her death

(i.e., dehydration, a broken femur, and a severe urinary tract infection). The 8

trial court restricted expert testimony to the April–May 2002 time frame, and

the Estate’s medical expert on causation, as well as Bradley’s attending nurse

practitioner, limited their testimony to this time frame accordingly. While the

Estate did present some evidence of Mariner’s general negligence that occurred

throughout the term of Bradley’s stay, in the form of insufficient staffing and

charting irregularities, this evidence could not have supported the jury’s liability

findings or damages awards. This is because the trial court charged the jury

with finding that for medical liability to attach, there had to be a causal

relationship between Mariner’s wrongful conduct and Bradley’s injuries. And

the only evidence providing a nexus between Mariner’s wrongful conduct and

actual harm to Bradley related to conduct that occurred in April and May 2002. 

Lexington’s first layer excess policy unambiguously limits indemnity to

those damages resulting from medical incidents “which occur during the policy

period.” And because the Royal and Lumbermens policies follow form to the

Lexington policy with respect to medical professional liability, Royal and

Lumbermens only had a duty to indemnify Mariner for those damages that

occurred within their respective policy periods. Here, those policy periods ran

from March 1999 to March 2000, and March 1998 to March 2001, for Royal and

The Estate argues that it was error for the district court to refer to the state trial 8

record, and it contends that we are likewise precluded from doing so on appeal. There is no

support for this assertion. See N. Am. Specialty Ins. Co. v. Royal Surplus Lines Ins. Co., 541

F.3d 552, 558 n.12 (5th Cir. 2008) (applying Texas law). The state trial record was properly

before the district court and, in determining the facts underlying the Estate’s indemnity claim,

the court was free to look to the record from the underlying suit. See FED. R. CIV. P. 56(c).

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Lumbermens, respectively. Because the actual facts giving rise to liability in the

underlying suit occurred outside of Royal’s and Lumbermens’ policies, neither

excess insurer had a duty to indemnify Mariner for the judgment or settlement

in the underlying state suit. There being no duty to indemnify, there could no

breach in denying coverage. See A & S Trucking Co. v. First General Ins. Co.,

578 So. 2d 1212, 1218 (Miss. 1991). The Estate’s bad faith action fails as a

matter of law.

IV 

The district court’s summary judgment is AFFIRMED.

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