IN THE SUPREME COURT OF MISSISSIPPI
NO. 2018-FC-00574-SCT
COLONY INSURANCE COMPANY

v. FIRST SPECIALTY

INSURANCE CORPORATION
ATTORNEYS FOR APPELLANT: RICHARD EDW ARD KING OLIVIA YEN TRUONG ATTORNEYS FOR APPELLEE: DAVID A. BARFIELD DALE T. MILLER NATURE OF THE CASE: CIVIL - FEDERALLY CERTIFIED QUESTION DISPOSITION: CERTIFIED QUESTION NO. 1: ANSW ERED. CERTIFIED QUESTION NO. 2: DECLINED - 01/31/2019 MOTION FOR REHEARING FILED: MANDATE ISSUED:
EN BANC. KING, JUSTICE, FOR THE COURT: ¶1. Under the p rovisions o f R ule 20 o f t he Mississippi Rules of Appellate Procedure, the
United States Court of A ppeals f or the Fif th Circuit has certif

ied questions to t his Court. 1 An

1 Mississippi Rule of

Appellate Procedure 20 provides, [ W ] h e n i t s h a ll ap p ear to th e S u p rem e C o u rt o f th e U n ited S tates o r t o an y U n ited S tates C o u rt o f A p p eals t h at t h e re m ay b e in v o lv ed in an y p ro ceed in g b ef o re it q u estio n s o r p ro p o sitio n s o f law o f th is state w h i ch are d eterm in ativ e o f all o r p art o f th at cau se an d t h ere are n o clear c o n tro llin g p reced en ts in th e d ecisio n s o f t h e M ississip p i S u p rem e C o u rt, th e f ed eral co u rt m ay certif

y su ch q u estio n s o r p ro p o sitio n s o f law o f th is s tate to th e M ississip p i S u p rem e C o u rt f o r ren d itio n o f

a w ritten o p in io n co n cern in g su ch q u estio n s o r p ro p o s itio n s o f M ississip p i law

. T h e S u p rem e C o u rt m ay , in i ts d iscretio n , d e clin e to an sw er th e q u estio n s certif ied to it.incident at Om e ga Protein Corporation’s (Ome g a ) f acility resulted in the d eath of an

em ploy e e of Accu-Fab & Construction, Inc. (Accu-Fab). Alth o u g h C olony I nsurance Com pany (Colony ) continually m aintained that it did not insure Om ega, Colony negotiated
and paid a settlem ent claim under a reservation of rights on Om ega’s b ehalf

. Because Colony
took the position that it had no duty to def end O m ega at all, the district court concluded that Mississippi’s voluntary

- p a y ment d octrine precluded Colony ’s claim s f or equitable subrogation and im

p lied indem nity

. ¶2. Pursuant to this C ourt’s precedent, an insurer is b arred f r om s e eking indem nity f

or a voluntary pay

m ent. Keys v. Rehab. C t r s . , I n c . , 574 So. 2d 579, 584 (Miss. 1990); see McDaniel Bros. Const. C o. v. Burk-Hallm an Co. , 175 So. 2d 603, 605 (Miss. 1965) (“[ A] voluntary pay

m ent can not be recovered back.

. . .”). In order to recover, the i ndem nitee m ust
prove that it both paid u nder com pulsion and that it was legally liable to the p erson injured.
Id. The Fif

th Circuit certif

ied the f ollowing questions to this Court: 1) Does an insurer a ct under “com pulsion” if it t akes the legal position that an entity purporting t o be i ts insured is n ot covered by its policy , but nonetheless pay s a s ettlem ent dem and in good f aith to avoid potentially greater liability t hat could arise f

rom a f uture coverage determ ination? 2) Does a n insurer satisf

y the “ leg a l duty ” s tandard i f i t m akes a settlem ent pay m ent on b ehalf of a p urported insured whose def e nse it has assum e d in good f aith, but whose coverage under the policy has not been d e f i n i t ively resolved, even if t he insurer m aintains that the purported insured is not actually insured under the policy ?

M .R .A .P . 2 0 (a). 2Colony 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 Om ega’s f acility in M oss Point, Mississippi, killed

an em ploy ee of Accu-Fab, Jerry Lee Tay lor I I. A t t he tim e o f the incident, Om ega was the

nam ed p o l i c y

holder of two third-party insurance policies. ACE Am erican I nsurance Com pany ( AAIC) provided a $1,000,000 prim ary c om m ercial general liability policy to
O m e g a , s u

b j e c t t o a $ 2 50,000 deductible. First Specialty Insurance Corporatio n a l s o p r o v i d e d

a $10,000,000 e xcess liability policy , which p rovided lim its in excess of the underly ing
AAIC policy

. I n addition, Accu-Fab w as the nam ed p olicy holder of a third-party insurance
p o l i cy issued by Colony

. Colony issued to Accu-Fab a prim ary liability policy w i t h a $1,000,000 liability lim it. The Colony Policy contained an “Additional I nsured” provision,
which d esignated “[ a]ll persons or organizations a s required by written contract with the
Nam ed Insured” as being insureds under the Colony Policy as well, s ubject to certain
lim itations and exclusions. ¶4. The Fif

th Circuit sum m arized the subsequent events as f ollows:
On March 4, 2015, Om e ga inf orm ed Colony that it e xpected to r eceive “claim s f or personal injury and/or wron g f u l d e a t h” arising out of the July 2014 e x p losion. Asserting that it qualif ied as an “additional insured” under t h e Colony Policy , Om ega dem anded that Accu-Fab and Colony “def end and f ully indem nif y [ it] f rom any [ such] claim s.”
On M arch 13, 2015, Colony n otif ied Om e g a that it was conducting an investigation into the e xplosion “under a f ull a n d c o m

p lete reservation of rights

. . . i ncluding the right to disclaim coverage in whole or in part should it c onsider such denial warranted.” Colony contended that the Colony Policy ’s
3“Total Pollution Exclusion m ay apply to preclude coverage in t his m atter” and

expressed doubt that Om ega qualif i ed as an “additional insured.”
On April 17, 2015, Colony f iled a com

plaint f or declaratory judgm ent in the Circuit Court o f Jackson Co u n t y , Mississippi. T he com plaint, which nam ed Accu-Fab and Om ega a s def endants, sought a court order “declaring that the [ C o l o n y Policy ] does not provide any coverage f or any and all dam ag e s o r injuries sustained as a result of the [ J uly 2014] explosion.”
On Septem

ber 2 , 2 0 1 5 , Tay lor’s estate and survivors f iled a wrongf

ul death action against Om ega in f ederal district court. 2 Colony subsequently agreed to f und Om ega’s def

ense, subject to a “f

ull and c om

plete” r eservation of rights, “including the right to seek recovery o f all def ense costs it incurs on behalf of Om ega should a court determ ine that C olony does not in f act owe a def

ense to [ Om ega].” In a letter d ated D ecem ber 9, 2 015, Colony i nf

orm ed Om ega’s attorney that:
C o l o n y ’s position is that it does not believe the policy o f insurance it issued t o A c cu-Fab provides any coverage what s oever f

or t he unf ortunate incident w hich occurred at the Om ega Protein f

acility on July 2 8, 2014. Nevertheless, at y o ur r e q u e s t Colony has agreed to f und the def

ense of Om ega Protein, and is pursuing a declaratory judgm ent action in order to have the court determ ine whether its coverage position is or is not c orrect. Col ony is providing a good-f aith def ense to Om ega through t he services of y our law f irm a nd y ourself

. I f the court ultim ately determ ines that the policy issued b y Colony to Accu-Fab does not require that it f und Om ega’s def

e nse, Om ega will have been unjustly enriche d t o the extent Colony paid its def e nse costs when it had no obligation to do so. Colony also wrote that, “[ w]ith regard to Tay lor’s s ettlem ent dem a n d, Colony will of course consider any

reasonable dem and sent to it,” but “any d em ands f or settlem ent m ade o n behalf of the estate and s u rvivors of Mr. Tay lor will be reviewed i n light o f the insurance coverage issue which is c urrently the subject of Colony ’s declaratory

judgm ent action.”

2 T ay lo r ’s estate d i d n o t n am e A ccu -F ab as a p arty

. 4Colony Ins. Co. , 726 F. App’x at 992-93.

¶5. The court scheduled a s e t t l e me n t conf erence in the Tay lor lawsuit f or J anuary

14,
2016. Two day s bef

o re the settlem ent conf

erence, Fi r s t S p e cialty wrote to Colony and requested that Colony

settle the lawsuit. The letter stated in relevant part,
The Colony A dditional Insured endorsem ent a m ends its O t h e r I nsurance clause, stating that the Colony coverage “ is p rim ary insurance and [ Colony ] will n ot seek contribution f rom any o t her insurance available to [ Colony ] additional insured.” Colony , theref o re, is prim ary t o [ AAIC]. The Tay lor claim will certainly

not settle f

or $1 m illion. As noted, f a ilure to take advantage of the opportunity o n January 14 to s ettle the Tay l or claim f o r $2 m illion or l ess m ay not com e again a nd m ay result i n substantial unnecessa r y l o sses f or Om ega and its excess i nsurers, potentially i n c l uding [ First S pecialty ]. Accordingly , [ First Specialty ] respectf ully requests Colony to be prepared to tender i t s l i mits to settle the Tay lor claim during the January 14 settlem ent conf erence. . . . At the settlem ent conf

e rence, Colon y e x c l u ded First Specialty ’s representative f rom the
conf erence and a greed to pay its $1,000,000 policy lim it in exchange f or Om ega’s “f

ull and

com plete release” f

rom the lawsuit. Colony subsequently dism issed i ts declaratory -judgm ent action against Om ega. ¶6. Col o n y t h e n d e ma n d e d t h a t F i r s t S p ecialty reim b urse the f

u ll am ount Colony
contributed t o t h e T a y l or settlem ent. W h en First S pecialty ref used, Colony f

iled an action against it seeking reim

bursem ent of t he am ount it had contributed t o t h e s ettlem ent of
T a y lor’s wrongf

u l-death lawsuit against O m ega. Colony asserted claim s of equita b l e subrogation and im

p lied indem nity

. ¶7. In r esponse, First Specialty f iled a Motion f

or Sum m a r

y Judgm ent, and C olony f iled

5a Cross M otion f or Sum m ary Ju d g m e n t

. T h e d i s trict court f ound that Mississippi’s voluntary

pay m ent doctrine precluded Colony f rom recovery f

or p ay m ents m ade o n behalf of a def endant that it did not insure a nd granted First Specialty ’s m otion. The d istrict court then
entered a f

inal judgm ent dism issing Colony ’s su i t w i t h p rejudice. Colony appealed to the
Fif th Circuit. The Fif

th Circuit then certif

ied the above-stated questions to this Court.
ANALYSIS ¶8. Mississippi law provides that a voluntary pay m ent c a n not be recovered back. McLean

v. L ove , 172 Miss. 168, 157 So. 3 6 1, 362 (1934). A voluntary pay m ent is one which is m ade

“ [ w]ithout com

p ulsion or f

r aud, and without any m i stake of f act, of a dem and w hic h t h e
pay or does not owe, a nd which is not enf orceable against him

. . . .” Id. A “ voluntary pay or”
is a “stranger or interm eddler who has no interest to protect and is under no legal or m oral obligation to pay .” I

ndem
. Ins. C

o. of N. Am
. v. Guidant Mut. Ins. Co. , 99 S o. 3d 142, 150 (Miss. 2012) (“ Guidant II ” ). ¶9. A p ay

m ent m ay not be considered voluntary unless the pay or had “f ull knowledge of
all the f acts which would render the pay m ent voluntary

. ” Glantz Contracting Co. v. Gen.
Elec. Co. , 379 So. 2d 912, 917 (Miss. 1980). To determ ine whether pay m ents a re m ade on a voluntary

basis, this Court looks at the f acts of each particular case. Id. at 917-18.
I. Com pulsion ¶10. I n M ississippi, “ [ t]o recover indem nity it is n ecessary f or t he p laintif

f to alleg e a n d
prove t hat he was l egally liable to t h e p e r s on i njured, and consequently , paid under

6com

pulsion. Otherwise, the p ay m ent is a voluntary one f

or w hich there can be no recovery .”
Sw. Miss. Elec. Power Ass’n v. Harragill , 254 Miss. 460, 182 So. 2d 220, 223 (1966). The
f irst question c ertif

ied to this Court asks whether an i nsurer acts under “com pulsion” if it
takes the legal position that an entity purporting to b e its insured is not covered by its policy , but nonetheless p a y s a settlem ent dem and in good f aith to avoid potentially greater liability
that could arise f

rom a f uture coverage determ ination. ¶11. Colony a rgues that, because it had an interest to protect when it m ade the settlem ent
pay m ent, it paid under com

pulsion no m atter the extent or q uantity of its interest. In contrast, First S pecialty contends that “com pulsion” requires m ore t han a potential lawsuit against the
pay or or the pay or’s perception of potential liability i f it d oes not m ake the subject pay m ent.
I t a r g u e s t hat com

pulsion requires “ urgent and im m ediate circum stances” in which the f ailur e to pay r isks severe consequences to the pay or or threatens the pay or’s f inancial viability

. ¶12. W e answer the f

irst certif ied q u e s t i o n i n t h e n egative. As F irst Specialty argued, Colony m aintained f

r om the beginning that it did not insure O m ega. Colony a rgued that its policy did not cover Om ega f or two reasons. Fir s t , Colony a rgued that a provision in its policy excluded the injuries suf f ered by Tay l or f rom coverage. Colony ’s policy i ncluded a “Total Pollution Exclusion” which stated, This insurance does not apply to:
f. Pollution (1) ‘Bodily injury ’ o r ‘property d ama g e ’ w h ich would not have occurred in whole or in part but f

or t he actual, alleged or threatened discharge, d ispersal,

7seepage, m igration, release or escape of ‘pollutants’ at any

tim e . . . Its policy def

ined “pollutant s ” a s “ any solid, liquid, gaseous o r t herm al i rritant or
contam inant[ .]” Colony a rgued that it was not obligated to def end Om ega because Tay lor’s
death was caused by “the ignition of several com bustible gases” contained within a tank that
had a n a p p r o xim ately twenty thousand p ound lid. Colony argued that f or the l id to have
blown of f the tank, seepage or release of the contained gasses, w hich constituted pollutants
had to have occurred. ¶13. Second, C olony argued that Om ega was not considered an “additional insured” under its policy . Pursuant to the policy , an “additional insured” was def ined as
the person(s) o r organization(s) shown in the Schedule, but only w i th respect to l iability f

or ‘bodily injury ’, ‘property dam age’ or ‘personal a nd advertising injury ’ caused, in whole or in part, by : 1. Your acts or om issions; or
2. The acts or om i ssions of those acting on y our behalf in t he perf orm ance of y our ongoing operations f or the additional insured(s) a t the l ocation(s) designated above. Accordingly , Colony contended that a person or entity m a y only be an additional insured f or bodily injury caused in whole o r in part by Accu-Fab’s acts or om issions o r b y a c t s o r

om issions of som eone acting on behalf of Accu-Fab. Colony argued that because the policy specif ically stat e d “ l iability

. . . caused, in whole or in part, b y ,” it r equired that the underly ing c om

p laint allege that the n am ed insured (Accu-Fab) o r som eone acting on behalf
of Accu-Fab w as negligent and p r o x im ately caused t he injury

. Because T ay lor did not

8include Accu-Fab a s a party or allege any negligence or f ault on its part, Colony argued that
Om ega w as not an additional i n s ured. Theref ore, when Colony negotiated the settlem ent
pay m ent, Colony did not m erely disp u t e t h a t its policy excluded coverage f o r the injuries
T a y l o r s uf

f e red, but it m aintained that it did not insure Om ega at all. C olony ’s f ear that
Om ega m ight be an additional insured under its policy does not am ount to com

p ulsion. ¶14. Black’s Law Dictionary provides two def initions of the word “com pel”: 1) “to cause

or b ring about by f

orce, threats, or overwhelm ing pressure” o r 2) “to convince (a court) that
there is only one p o ssible resolution of a legal dispute.” Compel , Bl a c k ’ s L a w Dictionary (10th e d

. 2014). Previously , this Court has f ound that a threat to s ue is not considered

com pulsion. McLean , 157 So. at 362. I n M c L e a n , a m illing com

p any was indebted t o a bank in the total a m ount of $79,540.40. Ten stockholders g uaranteed the notes and secured
the notes with collateral. Id. at 361. W hen the m illing com pany was thrown into bankruptcy , the bank dem anded t hat the ten guarantor s p ay the entire balance without apply ing the
col l ateral to the reduction of t he stated balance. I d. The ten stockholders paid the f ull
balance. W hen the collateral w as sold, the s tockholders sought to be reim bursed. Id. at 362.
This Court f

ound that pay

m ent of the f

ull balance had been voluntary , holding that “the only

com pulsion suggested was a threat to sue, which is not com pulsion.” Id. T h e Court r easoned,
It is axiom atic in equity jurisprudence that a court of equity m akes n o exertion t o e x t e n d relief to t hose who, being able to take care of their i nterests, have neglected to do so, a nd thereupon f i n d t hem s elves in predicam ents which ordinary care would have avoided. And f or t he stronger reason, where an unjust d em and has b een m ade upon a party , a dem and f o r a debt which he does not owe, or f

o r m ore than he owes, he m ust, when he k

nows or ought to know
9the f acts, avail of

the m eans which t he l aw af f ords him to resist the dem and, and if h e do not, and m a ke the pay m ent dem anded, he has not t aken d ue care. Id. ¶15. Even the possibility of f oreclosure on a deed of t rust f or land has b een f

ound to lack

com pulsion f or purposes of t he voluntary -pay m ent doctrine. Rowe v. Union Cent. Life Ins.
Co. , 194 Miss. 3 28, 12 So. 2d 431, 434 (1943). In Rowe , the appellant sought recovery f or

a portion of the purchase price pai d f o r f arm l and. Id. at 4 32. Af

ter executing a special warranty deed f

or m ore than one thousand a cres of f arm l and, the appellant discovered that
the appellee did not own all of the land specif ically described in the deed of convey ance. Id.
The appellee declined to adjust the purchase price, a n d t h e a ppellant continued to pay the

m onthly sum agreed upon in the deed of convey ance, eventually pay ing of f t he f ull purchase price. Id. at 433. The appellant wrote t hat t he pay m ents were “ b eing paid under protest and
without waiving any

rights that the grantee m ay have to recover the sam e
. . . .” This Court
f ound that
The m ere f

act, however, that she m ay have been c om pelled to resort to equity to obtain a surrender of the notes and a cancellation of the lien of the deed of trust securing the sam e , upon a tender of the correct am oun t adm itted to be due, does not render her pay m ent of the f

ull am ount a n involuntary pay m ent, and this is esp e cially true w here it was m ade at a tim e when pay m ent of the f ull balance was not being dem anded under p enalty of im m ediate f oreclosure, and at a tim e w hen no coercion, duress or com pulsion w as being em

ploy e d to exact such pay

m ent, and where no f

raud or concealm e nt was being practiced by the pay ee in connection with the receipt, a cceptance, a nd collection of any part of the sum so paid.
Id. at 434–35.

1 0¶16. W e decline to adopt C olony ’s argum ent that a pay m ent is not voluntary i f

the pay or is acting under com

pulsion to protect its own interests. The a bove cases e ach contain
pay m ents that the pay ors m ade t o protect their o wn interests; and y et were not considered to be m ade u nder c om

pulsion. Additionally , Colony was not u n d er an i m m ediate a nd urgent necessity to pay the settlem ent d em and. The explosion o ccurred on J u ly 28, 2014. On April 17, 2015, Colony f

iled its declaratory judgm ent action, seeking a court o rder “declaring that
the [ Colony Policy ] does not provi d e any coverage f or any and all d am ages or injuries
sustained as a r esult of the [ July 2014] explosion.” Tay lor’s estate did not f ile its wrongf

uldeath a ction until Septem b er 2, 2015. Colony then settled the action on January 14, 2016. Thus, at the tim e Colony negotiated the settlem ent, the Tay lor action had been f iled only f

or approxim a tely f

our m onths, and Colony ’s declaratory -judg me n t a ction against Om ega

rem ained pending. In civil cases, the purpose of courts is to “extend aid to those who have

not been able by lawf

u l m eans to aid them selves, a n d r elief is n ot available to those who have neglected to take c are of their interests.” Harragill , 182 So. 2d at 223. Here, Colony had the option to pursue its declaratory -judgm ent action bef ore it p aid the Tay lor settlem ent. Instead, approxim a tely f

o u r m onths af

ter the Tay lor actions was f iled, Colony n egotiated and agreed

to pay the settlem ent. Thus, pursuant to t his Court’s precedent, t he Colony s ettlem e nt lacked

com pulsion. ¶17. Colony argues that it m ade “an uncom m on decision i n our m odern litigious society ”

to protect and def

end Om ega under a reservation of rights, quoting the Court of Appeals in

1 1Gray Properties, LLC v. Utility Constructors, Inc. , 168 S o. 3d 1164 (Miss. Ct. App. 2014).

In Gray Properties , however, the issue of com pu l s i o n w a s not discussed. And although Colony argues t hat it was under a “ s o l e mn o b ligation to def end its i nsured,” as discussed above, C olony continu ally m aintained that Om ega was not its insured. “An insurance

com pany ’s duty t o def

end its insured is t r i g g e r e d when it becom es a ware t hat a com plaint
ha s b e e n f

i led which contains reasonable, plausible allegations of c onduct covered by the policy

. However, n o d

u t y t o defend arises when the c l aims f all outside the policy’s
coverage .” M

inn. Life Ins. Co. v. C

o l u m b i a C

as. Co. , 164 So. 3d 9 54, 970 (Miss. 2014) (em phasis added) (quoting Baker Donelson Bearm a n & Caldwell, P.C. v. M uirhead , 920 So. 2d 440, 450-51 (Miss. 2006)). ¶18. The critical distinction in this case is that if Colony continually m a intained that it was
not Om ega’s insured, Colony did n ot act out of c om pulsion when it n egotiated the settlem ent.
Because Colony f

ailed to p ursue i ts legal rem edies, we answer the f irst c e rtif ied question in the negative.
II. Legally Liable ¶19. Becaus e t h e f

i r s t q u e s t i o n i s d i s positive f or purposes of the voluntary -pay m ent doctrine, we f

ind it unnecessary

to answer the second certif ied question.
CONCLUSION ¶20. W e f

ind that an insurer does not act under com pulsion if it takes the l egal position that

an entity purporting to be its insured is n o t c o vered by its policy but n onetheless pay s a

1 2settlem ent dem a nd in g ood f aith to avoid potentially greater liability that could arise f rom a f uture coverage d e term ination. Because t he f irst certif ied question is d ispositive, w e decline
to address the second certif i ed question. ¶21. CERTIFIED QUESTION NO. 1: A NSWERED. CERTIFIED QUESTION NO. 2: DECLINED.
RANDOLPH AND KITCHENS, P.JJ., COLEMAN, M AX WELL, B E AM, C H A M B E R L I N A N D I S H E E , J J . , C O N C U R . W A L L E R , C
. J . , N O T PARTICIPATING.

1 3