IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 12-60762

c/w No. 12-60777

LIBERTY MUTUAL INSURANCE COMPANY; EMPLOYERS INSURANCE 

OF WAUSAU, a Mutual Company,

Plaintiffs-Appellants,

v.

JERROLL LAVON HOLLOWAY, also known as J.L. Holloway,

Defendant-Appellee.

________________________________________________________________________

LIBERTY MUTUAL INSURANCE COMPANY, and EMPLOYERS 

INSURANCE OF WAUSAU, a Mutual Company,

Plaintiffs-Appellants,

v.

J. L. HOLLOWAY, RON W. SCHNOOR, CARL M. CRAWFORD, KIM 

ADKINS, W. EDWARD TREHERN,

Defendants-Appellees.

United States Court of Appeals

Fifth Circuit

FILED

February 4, 2014

Lyle W. Cayce

Clerk

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Appeals from the United States District Court 

for the Southern District of Mississippi

U.S.D.C. No. 3:98-CV-611

U.S.D.C. No. 3:01-CV-935

Before REAVLEY, DAVIS, and HIGGINSON, Circuit Judges.

PER CURIAM:* 

These consolidated appeals include two separate, but related lawsuits. 

The first involves a fraud action by an insurer to recover workers’

compensation premiums and a subsequent settlement to that suit which went 

awry. The second concerns a suit to enforce a personal guaranty made by a 

defendant in the fraud settlement agreement. We consider two primary issues. 

First, whether the defendant, J.L. Holloway, as a personal guarantor to the 

principal obligor on the settlement agreement, was entitled to a credit on his 

guaranty obligation as a result of payments made by other parties to the 

settlement. Second, whether the district court erred when it dismissed the 

workers’ compensation fraud litigation. For the reasons that follow, we reverse 

the district court.

I.

This litigation began in 1998, when the plaintiffs, Liberty Mutual 

Insurance Company and Employers Insurance of Wausau (“the insurers,” 

collectively), brought suit against Holloway, his companies, including Friede 

* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not 

be published and is not precedent except under the limited circumstances set forth in 5TH 

CIR. R. 47.5.4.

 

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Goldman International, Inc. (“Friede Goldman”) and Ham Marine, Inc., and 

several other parties, including Stewart Sneed Hewes, Inc.,1 for fraud, RICO, 

conspiracy, and common law claims related to the defendants’ 

misrepresentation of their risk in order to pay Liberty lower premiums for 

workers’ compensation insurance. That lawsuit (the “Fraud Litigation”) was 

settled in 2001 pursuant to a Settlement Agreement (the “Settlement 

Agreement”). The Settlement Agreement required the defendants, through 

Friede Goldman,2 to pay $4.5 million to the insurers in three payments of $2 

million, $1.25 million, and $1.25 million. Holloway personally guaranteed the 

third payment of $1.25 million in the event that Friede Goldman was unable 

to make the payment. The Settlement Agreement provided for dismissal of the 

action upon full and final payment of $4.5 million. If, for any reason, full and 

final payment was not made, the insurers were entitled to retain settlement 

proceeds already paid and return the case to the active docket. The district 

court issued an administrative stay in the Fraud Litigation pending successful 

completion of the Settlement Agreement.

Friede Goldman made the first two payments and soon after filed for 

Chapter 11 bankruptcy in April 2001.3 Friede Goldman sought permission 

1 Stewart Sneed Hewes, Inc. was later replaced as a defendant by BancorpSouth Bank as

successor by way of a merger between the two companies. BancorpSouth’s role in this case is 

limited to a $500,000 settlement agreement it reached with the insurers.

2 Friede Goldman was the parent company of many of the defendant companies in the Fraud 

Litigation. The payments were due as follows: $2 million on January 3, 2001; $1.25 million 

on April 2, 2001; and $1.25 million on July 2, 2001.

3 See 11 U.S.C. § 1101 et seq. Chapter 11 bankruptcy proceedings ordinarily are brought by 

a debtor in possession and culminate in the confirmation of a plan of debt reorganization 

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from the bankruptcy court to make the third and final payment to the insurers, 

but the bankruptcy judge denied the request. Instead, the bankruptcy judge

encouraged the Chapter 11 Trustee to file a lawsuit against the insurers to 

reclaim the first two settlement payments, totaling $3.25 million, on the 

grounds that they were “preference” payments under 11 U.S.C. § 547(b).4 The 

Trustee proceeded to file that suit to recover the payments.

While the bankruptcy proceedings were ongoing, the insurers requested 

the third and final payment of $1.25 million from Holloway in accordance with 

his personal guaranty. After first refusing to pay, Holloway eventually agreed 

to pay the $1.25 million, but only in exchange for the full and final release of 

all defendants in the Fraud Litigation. The insurers refused to grant the

release because the bankruptcy preference litigation was still pending, and 

they did not yet know whether they would retain the entire $3.25 million paid 

in the first two payments. Holloway declined to pay the remaining $1.25 

million without the releases. 

As a result, the insurers filed a lawsuit against Holloway to enforce his 

personal guaranty (the “Guaranty Litigation”), claiming Holloway had 

rather than liquidation. See Florida Dept. of Revenue v. Piccadilly Cafeterias, Inc., 554 U.S. 

33, 36 (2008). 

4 A “preference” is a transfer of a debtor’s assets, during a specified pre-bankruptcy period, 

that unjustifiably favors the transferee over other creditors. Under § 547(b), a bankruptcy 

trustee can “avoid” any transfer of property if: a) the transfer was to a creditor on account of 

a pre-existing debt, b) the debtor was insolvent at the time of the transfer, c) the transfer 

occurred within 90 days before the bankruptcy filing, and d) the transfer enabled the creditor 

to receive a larger share of the estate than if the transfer had not been made. See 11 U.S.C. 

§ 547(b). The two payments to the insurers likely satisfied these requirements.

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breached the agreement by refusing to honor his agreement to pay. The 

Complaint in the Guaranty Litigation contained multiple counts: counts I and 

II sought the $1.25 million payment for the insurers under the terms of the 

contract, and counts III and IV alleged tort claims. The insurers filed a motion 

for partial summary judgment as to counts I and II, which the district court 

denied based on the pending bankruptcy preference litigation.

Meanwhile, the insurers settled the preference suit with the Chapter 11 

Trustee. The insurers agreed to return $1.9 million of the $3.25 million they 

had been paid by Friede Goldman, keeping only $1.35 million. After settling

the preference litigation, the insurers contacted other defendants in the Fraud 

Litigation in an effort to recoup their lost funds. Ultimately, the insurers

received a $500,000 payment from BancorpSouth, who succeeded Stewart 

Sneed Hughes, Inc. as a defendant, in exchange for a full release of liability 

and dismissal of all claims against it.

Then, in the Guaranty Litigation, the insurers offered Holloway a full 

release and dismissal of claims against him in exchange for the third and final

$1.25 million payment he had personally guaranteed. Holloway again refused 

to pay, contending that in light of the $500,000 payment the insurers received 

from BancorpSouth, his personal obligation was reduced by the amount of that 

payment to $750,000. The insurers, on the other hand, denied that any such 

credit should be applied to Holloway’s obligation. Holloway filed a motion for 

summary judgment arguing his right to the $500,000 credit, and the insurers 

re-urged their original partial motion for summary judgment seeking the full 

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$1.25 million from Holloway, which the district court had previously denied

while the preference litigation was still pending. 

While these motions were pending in the Guaranty Litigation, the 

district court entered an order in the Fraud Litigation directing that

Holloway’s motion to enforce settlement be “subsumed” in the district court’s 

disposition of the cross motions for summary judgment pending in the 

Guaranty Litigation.5

On September 20, 2010, the district court granted Holloway’s Motion for 

Summary Judgment in the Guaranty Litigation, deciding that Holloway owed 

the insurers the reduced total of $750,000. The district court also ruled that 

the insurers could not establish the elements necessary to recover any of the 

money they lost on account of the $1.9 million they returned to the Trustee in 

the preference litigation, despite the fact that the insurers would not receive 

the full $4.5 million agreed to in the original Settlement Agreement. The 

district court did not assess prejudgment interest on this award, and entered 

a subsequent Final Judgment in which it assessed costs against the insurers. 

On August 21, 2012, the district court issued an Order dismissing the 

Fraud Litigation, incorporating by reference its September 2010 Memorandum 

Opinion and Order in the Guaranty Litigation. The insurers timely appealed 

the district court’s order on summary judgment and its subsequent Final 

Judgment in the Guaranty Litigation. The insurers also appeal the district 

5 By this ruling, the court apparently agreed with Holloway that the other defendants in the 

Fraud Litigation were entitled to full releases from the insurers in exchange for a $750,000 

payment to the insurers.

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court’s decision to “subsume” the Fraud Litigation into the Guaranty 

Litigation, and the court’s dismissal of the insurers’ insurance fraud suit.

II.

This Court reviews de novo determinations of motions for judgment on 

the pleadings and for summary judgment. 6 In addressing a motion for 

summary judgment, we “view[] all evidence in the light most favorable to the 

nonmoving party and draw[] all reasonable inferences in that party’s favor.”7

“The court shall grant summary judgment if the movant shows that there is no 

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

as a matter of law.”8

One of the issues raised by the insurers on appeal is the enforcement of 

Holloway’s personal guaranty. A guaranty is a contract, the interpretation of 

which this Court reviews de novo.9

We review a determination of prejudgment interest10 and costs11 for an 

abuse of discretion.

III.

We first address whether the district court erred in the Guaranty 

Litigation when it applied the $500,000 paid by BancorpSouth in its settlement

6 In re Katrina Canal Breaches Litig., 495 F.3d 191, 205–06 (5th Cir. 2007).

7 Id.

8 FED. R. CIV. P. 56(c).

9 Westlake Petrochem., L.L.C. v. United Polychems., Inc., 688 F.3d 232, 245 (5th Cir. 2012)

10 Carpenters Dist. Council v. Dillard Dep’t Stores, 15 F.3d 1275, 1288 (5th Cir. 1994).

11 Louisiana Power & Light Co. v. Kellstrom, 50 F.3d 319, 334 (5th Cir. 1995).

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agreement as a credit to Holloway’s personal guaranty obligation. Our decision 

on this issue turns upon whether Holloway’s personal guaranty is separate and 

distinct from the initial Settlement Agreement and BancorpSouth’s settlement 

agreement. For the reasons set out below, we find Holloway’s personal 

guaranty is independent of the two other agreements. Each of the three 

agreements is a separate contract, the interpretation of which is governed by 

state law. Under Mississippi law, our interpretation of the contracts begins by 

looking first to the four corners of the documents in question. 12 “‘An 

instrument that is clear, definite, explicit, harmonious in all its provisions, and 

is free from ambiguity’ will be enforced.”13 “[I]f . . . a contract is clear and 

unambiguous, then it must be interpreted as written.”14

The initial Settlement Agreement and Holloway’s personal guaranty are, 

by their terms, separate and distinct contracts. The parties to the Settlement 

Agreement are the insurers on the one hand, and each of the defendants to the 

Fraud Litigation on the other. Holloway’s personal guaranty of the third and 

final payment expressly provides that “This [Personal Guaranty] is separately 

accepted by the undersigned, J.L. Holloway.” Holloway was thus the only 

defendant subject to personal liability in the event that Friede Goldman was 

unable to make the payment.

The terms of BancorpSouth’s settlement agreement also plainly show 

12 Zumwalt v. Jones County Bd. of Sup’rs, 19 So. 3d 672, 685 (Miss. 2009) (citation omitted).

13 Id. (quoting Pursue Energy Corp. v. Perkins, 558 So. 2d 349, 352 (Miss. 1990)).

14 United States Fidelity and Guar. Co. of Mississippi v. Martin, 998 So. 2d 956, 963 (Miss. 

2008); see also Time Ins. Co. v. Estate of White, 447 F.App’x 561, 564 (5th Cir. 2011).

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that it is distinct from Holloway’s personal guaranty. BancorpSouth, as a 

defendant in the Fraud Litigation, agreed to settle with the insurers in light of 

the likelihood that the insurers’ fraud suit would be returned to the docket.

BancorpSouth’s settlement agreement provides that the $500,000 paid by 

BancorpSouth “is not intended to be nor is it in fact a partial payment of the 

$1.25 million which J.L Holloway guaranteed to pay and for which he has been 

sued.” Instead, the payment was meant “to compromise, in light of the 

uncertainties of litigation, any potential larger judgment, if any, which might 

be rendered against [defendants] should the [Fraud] Litigation continue and 

be pursued to judgment before a trier of fact.” BancorpSouth and the insurers 

plainly intended for their settlement agreement to be separate and distinct 

from Holloway’s personal guaranty of the third and final settlement payment.

We find nothing in the record which indicates BancorpSouth agreed to 

contribute to the fulfillment of Holloway’s duty to pay on his personal 

guaranty.

Therefore, the district court erred when it credited BancorpSouth’s 

$500,000 settlement payment against the $1.25 million Holloway owed 

pursuant to his personal guaranty. The credit should not have been applied 

because Holloway’s personal guaranty was an independent agreement, not 

connected with either the original Settlement Agreement or BancorpSouth’s 

settlement agreement. We therefore reverse the district court’s grant of 

summary judgment in favor of Holloway, and grant summary judgment in 

favor of the insurers, who are entitled to recover from Holloway the full $1.25 

million. The insurers moved for summary judgment on only two of the counts 

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in their Complaint against Holloway. We therefore remand this case back to 

the district court for further proceedings on the remaining counts.

Next, we must determine whether the district court erred when it 

dismissed the Fraud Litigation based upon its grant of summary judgment in 

the Guaranty Litigation. The insurers argue the Fraud Litigation should not 

have been dismissed because they maintained their right to re-open the action 

if they did not receive the full payment provided for in the Settlement 

Agreement. If the insurers do not receive full payment, the Settlement 

Agreement gives them the right to “have the claims as set out in the Amended 

Complaint and Counterclaim [of the Fraud Litigation] returned to the active 

docket . . . and to have any Order staying the proceedings thereupon 

immediately dissolved . . . .” Although the insurers originally received payment 

of the first two installments from Friede Goldman, totaling $3.25 million, they 

returned more than half that amount, $1.9 million, to the Chapter 11 Trustee 

in the preference litigation. Therefore, even if the insurers receive full payment 

from Holloway on his personal guaranty, they will collect only $2.6 million out 

of the $4.5 million the defendants to the Fraud Litigation agreed to pay in the 

Settlement Agreement. Thus, full and final payment has not been made to the 

insurers and they have the right to return the Fraud Litigation to the active 

docket.15 Accordingly, we reverse the district court’s dismissal of the Fraud 

15 The district court classified the $1.9 million returned via settlement by the insurers to the 

Chapter 11 trustee as a voluntary payment, and therefore the insurers could not recover it 

back. Under Mississippi law, the volunteer rule prevents an individual or entity from 

recovering back a voluntary payment, defined as a “payment made without compulsion, 

fraud, mistake of fact, or agreement to repay a demand which the payor does not owe, and 

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Litigation.

IV.

For the foregoing reasons, we REVERSE the district court’s grant of 

summary judgment in favor of Holloway in the Guaranty Litigation, and grant

partial summary judgment in favor of the insurers on their claim. In addition, 

we REVERSE the district court’s dismissal of the insurers’ fraud suit. These 

cases are REMANDED to the district court for entry of judgment consistent 

with this opinion and for further proceedings on the tort counts of the insurers’

action against Holloway, and for reconsideration of assessment of costs and 

interests in light of this opinion.

REVERSED and REMANDED.

which is not enforceable against [it], instead of invoking the remedy or defense which the law 

affords against such a demand.” Genesis Ins. Co. v. Wasau Ins. Cos., 343 F.3d 733, 736 (5th 

Cir. 2003) (quoting McDaniel Bros. Constr. Co., Inc. v. Burk-Hallman Co., 175 So. 2d 603, 

605 (Miss. 1965)). We disagree with the district court’s characterization; the insurers agreed 

to the settlement because they faced the likelihood of a judgment requiring them to return

the entire $3.25 million in settlement payments from Friede Goldman back to the bankrupt 

estate in the preference litigation. In order to avoid returning the full amount, the insurers 

agreed to a compromise: they would return $1.9 million in exchange for dismissal of the 

preference suit. The volunteer rule does not apply to this payment because the insurers’

payment was in settlement of a hotly contested litigation. The payment was compelled by the 

desire to limit their liability, and no one argues that the amount paid was unreasonable. See

Certain Underwriters at Lloyd’s of London v. Knostman, 783 So. 2d 694, 698 (Miss. 2001)

(citation omitted); see also Canal Ins. Co. v. First General Ins. Co., 889 F.2d 604 (5th Cir. 

1989).

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