# United States Court of Appeals **for the Fifth Circuit**

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No. 22-60579

____________ American Compensation Insurance Company,
Plaintiff—Appellant ,

versus
Hector Ruiz, doing business as Los Primoz Construction; Raul Aparacio; Jesco, In corporated; Appalachian Underwriters, Incorporated,
Defendants—Appellees

.

______________________________ Appeal from the United States District Court for the Northern District of Mississippi USDC No. 1:18-CV-213

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Before Stewart, Dennis, and Wilson, Circuit Judges

. Per Curiam: * This workers’ compensation case ar ises from an accident suffered by Raul Aparacio during the course and sc ope of his work for Hector Ruiz d/b/a Los Primoz Construction (“Ruiz”). At the time of the accident, Ruiz had a workers’ compensation policy with American Co mpensation Insurance Company (“ACIC”) governed by Mi ssissippi law. Despite providing

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* This opinion is not designated for publication. See 5th Cir. R. 47.5. United States Court of Appeals Fifth Circuit 

### FILED October 12, 2023

Lyle W. Cayce Clerk Case: 22-60579 Document: 00516929686 Page: 1 Date Filed: 10/12/2023No. 22-60579

2 benefits to Aparacio under the policy, ACIC initiated this lawsuit to declare the policy void ab initiobased on a material misrepresentation in Ruiz’s application for the policy. ACIC also sou ght damages from Appalachian Underwriters (“Appalachian”), an insurance wholesale ou tlet, based on Appalachian’s failure to alert ACIC of the resu lts of a phone survey indicating that ACIC had used the incorrect classifica tion rating when issuing the policy. The district court dismissed all ACIC’s claims on summary judgment. ACIC now appeals. Because we cannot make a reliable Erie guess as to whether the Mississippi Workers’ Compensation Ac t (“MWCA”) allows ACIC to void Ruiz’s policy ab initio based on the material misr epresentation in the policy application, we CERTIFY that question to the Mississippi Supreme Court. I. Factual Background In January 2017, Ruiz entered in to a subcontractor agreement with JESCO, Inc. (“JESCO”) to provide temporary labor for a construction project in Starkville, Mississippi. As pa rt of the subcontractor agreement, Ruiz was required to cover his empl oyees under a workers’ compensation policy. In 2018, Ruiz enlisted the Va n Wallace Agency—with whom he had previously worked—to help him procur e a workers’ compensation policy for his work on the JESCO project. Jona than Wallace, who prepared Ruiz’s insurance application, relied on Ruiz’s past applications with the agency to complete Ruiz’s 2018 application. In response to a question asking whether Ruiz performed work above two stor ies in height, Jonathan Wallace responded “no.” Wallace testified that he did not ask Ruiz whether he worked at heights and did not review th is insurance application question with Ruiz. Ruiz confirmed that Wallace neve r reviewed the insurance application with him but testified that he had told Wallace that his company “[a]lways” performed work above the ground. Case: 22-60579 Document: 00516929686 Page: 2 Date Filed: 10/12/2023No. 22-60579

3 Wallace submitted the application to Appalachian, an insurance wholesale outlet for whom Van Wallace acted as an agent under a written agreement. Appalachian, in turn, acte d as an intermediary between retail agents and ACIC pursuant to a Mark eting Services and Agency Agreement (“MSAA”). Under the MSAA, Appalach ian served as an “independent contractor” for ACIC and its authority was limited to the provision of “marketing responsibilities and duti es.” Under a provision of the MSAA titled “Quality of Services,” ACIC and Appalachian agreed to “serve each other faithfully” and “perform all acts necessary for the proper conduct of the business on behalf of both parties.” Ruiz’s insurance application contai ned only a 5221 code, which is applicable to construction and concrete work that does not anticipate work at heights. During the process of binding the policy, however, questions arose as to whether Ruiz performed work at heights due to his prior workers’ compensation policies. Before submitti ng Ruiz’s application to ACIC, for example, an Appalachian underwrite r, Andrew Cook, solicited written confirmation from Wallace that the 5221 code indicating that Ruiz did not perform work at heights was correct. Maureen Carter, an underwriter for ACIC, also expressed skepticism about the inclusion of the 5221 code in Ruiz’s application af ter noting that four of Ruiz’s prior policies—available to ACIC through the National Council on Compensation Insurance database— contained a 5022 code, which contempla ted work at heights. At ACIC’s request, Appalachian asked Wallace for confirmation that Ruiz did not perform work at heights. Wallace prep ared a document stating the Ruiz did not perform work at heights and signed Ruiz’s signature on the document; Ruiz disputes that Wallace was authoriz ed to use his signature. After Wallace submitted the statement, Ruiz told Wallace he did in fact perform work at heights, but Wallace never correcte d the information he provided to Appalachian. Case: 22-60579 Document: 00516929686 Page: 3 Date Filed: 10/12/2023No. 22-60579

4 ACIC ultimately issued Ruiz a workers’ compensation policy governed by Mississippi law. ACIC’s po licy for Ruiz included both the 5221 (no work at heights) and 5022 (work at heights) codes in the policy, though Ruiz was not charged a premium under the 5022 code since it was marked “[if] any” under the policy. Carter included the 5022 code in the policy, based on the discrepancy between the information in the 2018 application and Ruiz’s prior policies, so ACIC could later re -classify the policy and premiums if Ruiz were at any point fou nd to work at heights. Under the policy, ACIC had the right to inspec t Ruiz’s workplace to confirm the “insurability of the workpl ace[s] and the premium to be charged,” though ACIC did not perform an inspection. After the policy issued, Risk Control Group (“RSG”), a loss control survey company hired by Appalachian to perform phone verification surveys for its clients, contacted Ruiz to per form a survey at Appalachian’s request. During the phone survey—for which Ruiz was charged $100—Ruiz disclosed to an RSG representative that his company performs work at heights of twenty to thirty feet above the ground. On or about May 10, 2020, RSG uploaded the results of the survey to a system shared with Appalachian. Appalachian did not share the results of the survey with ACIC, though the survey was available to ACIC upon request. Appalachia n’s underwriting expert testified that under “gener ally accepted industry standards,” underwriters typically reviewed the re sults of phone surveys “within 30 to 45 days” after receiving them. A repr esentative of Appalachian further testified that generally it did not au tomatically forward survey results to insurance carriers, but ra ther referred to them if questions arose from carriers. On June 25, 2018, Aparacio fell and was injured while working at least fifteen feet above ground on the JESCO construction project. ACIC provided workers’ compensation benefits to Aparacio pursuant to the policy and Case: 22-60579 Document: 00516929686 Page: 4 Date Filed: 10/12/2023No. 22-60579

5 Mississippi law because, as ACIC’s co rporate representative testified, “[r]egardless of that code being there, any injury that happened would have been covered. It had nothing to do with the class code.” After learning that Aparacio was injured while working above ground, ACIC adjusted the class codes and premiums on Ruiz’s policy to account for work at heights. ACIC’s corporate representative testified that ACIC decided to seek to void Ruiz’s policy because it wanted to avoid further losses incurred in providing benefits to Aparacio under the policy. II. Procedural History ACIC initiated this lawsuit ag ainst JESCO and Ruiz seeking a declaration that under Mississippi law Ruiz’s workers’ compensation insurance polic y is void ab initio and that ACIC has no duties under the policy. After some initial discovery, ACIC added RSG, Jonathan Wallace, and the Van Wallace Agency as defendants. 1 ACIC further amended its complaint to seek damages against Appalachian based on Appalachian’s alleged breach of the MSAA, breach of its fiduciary duties to ACIC, and negligence. After completing discovery, the parties filed cross-motions for summary judgment. The district court granted Appalachian’s, Ruiz’s, and JESCO’s motions for summary judgment, denied as moot ACIC’s motion for summary judgment on its declaratory judgment claims, and entered final judgment in favor of Appalachian, Ru iz, and JESCO. ACIC timely appealed the district court’s entry of summary judgment dismissing its claims.

III. Standard of Review We review a district court’s grant of summary judgment de novo, applying the same standard on appeal as was applied below. Tiblier v. Dlabal ,

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1 RSG was dismissed from this lawsuit by agreement of the parties, and ACIC later reached a settlement agreemen t with Jonathan Wallace and the Van Wallace Agency. Case: 22-60579 Document: 00516929686 Page: 5 Date Filed: 10/12/2023No. 22-60579

6 743 F.3d 1004, 1007 (5th Cir. 2014). Summary judgment is proper “if the movant shows that there is no genuine di spute as to any material fact and the movant is entitled to ju dgment as a matter of law.” Fed. R. Civ. P. 56(a). The summary judgment mova nt bears the burden of proving that no genuine issue of material fact exists. Latimer v. SmithKline & French Labs ., 919 F.2d 301, 303 (5th Cir. 1990). However, if the non-movant ultimately bears the burden of proof at trial, the summary judgment movant need not support its motion with evidence negati ng the non-movant’s case. Celotex Corp. v. Catrett , 477 U.S. 317, 323–24 (1986). Ra ther, the summary judgment movant may satisfy its burden by pointing to the mere absence of evidence supporting the non-movant’s case. Id.

IV. Discussion The district court granted the summary judgment motions of Ruiz, JESCO, and Appalachian, making an Erie guess that Missi ssippi law does not allow ACIC to void the workers’ compensation policy ab initio based on the material misrepresentation in Ruiz’s ap plication for the policy. The district court further determined that ACIC fa iled to demonstrate that Appalachian breached any portion of the MSAA, ow ed ACIC any fiduciary duty, or proximately caused ACIC’s alleged injuri es—based in part on its finding that ACIC could not rescind the policy unde r Mississippi law. The district court further denied ACIC’s motion for summary judgment on its declaratory judgment claims as moot in light of it s conclusion that ACIC could not void the policy as a matter of law. On appeal , ACIC asks this court to reverse the district court, render judgment in favor of ACIC on its requests for declaratory judgment, and remand ACIC’s damages claims against Appalachian so they may proceed to trial. In evaluating whether Mississippi law allows ACIC to deem Ruiz’s policy void ab initio , the district court acknowledged that the issue presents a Case: 22-60579 Document: 00516929686 Page: 6 Date Filed: 10/12/2023No. 22-60579

7 question of first impression under Mississippi law. The Mississippi Supreme Court has found coverage to extend to employees performing work outside that contemplated by work ers’ compensation policie s at the time of their injuries. Nat’l Sur. Corp. v. Kemp , 64 So. 2d 723, 731, suggestion of error overruled , 65 So. 2d 840 (Miss. 1953) (c arrier obligated to compensate employee injured while hanging po litical banners where workers’ compensation policy only contemplated coverage for “gin operations”); Donald v. Whatley , 346 So. 2d 898, 900 (Miss. 1977) (carrier must cover injuries arising from injury related to construction of home where policy only contemplated work for pulpwood business operations). In Kemp , the Mississippi Supreme Court instructed th at “the Workmen’s Compensation Law should be given a broa d and liberal construction and that doubtful cases should be resolved in favor of compensation.” Kemp , 64 So. 2d at 725. Yet in 2012 the Mississippi legislature amended the MWCA to remove any liberal interpretations favoring beneficiaries. M ISS

. C ODE

. A NN . § 71-3-1 (West 2012) (“[N]otwithstanding any common law or case law to the contrary, this chapter shall not be presumed to favo r one party over another and shall not be liberally construed in order to fulfill any beneficent purposes.”). Moreover, Kemp and Donald addressed the issue of coverage—not recission—and the state’s highest court has never addressed the specific question of whether the MW CA allows an insurer to void a policy based on a material misrepresentation. Because this appeal raises a questi on of first impression under state law, we must consider whether the approp riate course of action is to certify the issue for resolution by the Mississippi Supreme Court. See Accident Ins. Co. Inc. v. Kettley Trucking, Inc. , No. 3:19-cv-730 at Doc. #95 at 13 (S.D. Miss. Sept. 2, 2020) (rescission of a worker’s compensation insurance policy under the MWCA is “an open question of Mississippi law”). The rules of the Mississippi Supreme Court allow for the ce rtification of dispositive questions Case: 22-60579 Document: 00516929686 Page: 7 Date Filed: 10/12/2023No. 22-60579

8 of Mississippi law from federal courts of appeals. M ISS

. R. A PP

. P. 20 . The issue presented here satisfies that condition. The issue presented also satisfies the three factors used by this court in deciding whether to certify: 1) the closeness of the question and the existence of sufficient sources of state law; 2) the degree to which considerations of comity are relevant in light of the particular issue an d case to be decided; and 3) practical limitations on the certification process: significant delay and possible inability to fr ame the issue so as to produce a helpful response on the part of the state court.
In re Gabriel Inv. Grp. , 24 F.4th 503, 507 (5th Cir. 2022); see also Austin v. Kroger Tex. LP , 746 F.3d 191, 196 (5th Cir. 2014). Here, Mississippi law is unsettled on this issue, and “any Erie guess would involve more divining than discerning,” especially considering the 2012 amendments to the MWCA. See M ISS

. C ODE

. A NN . § 71-3-1 ; McMillan v. Amazon.com, Inc. , 983 F.3d 194, 202 (5th Cir. 2020). The district co urt in this case concluded that the MWCA does not allow for recission ba sed on a material misrepresentation but indicated that it was “inclined” to certify the question if the Mississippi statute so allowed. Miss. R. App. P. 20 (indicating that only “the Supreme Court of the United States or [] any United States Court of Appeals” may certify “questions or propositions of law” to the Mississippi Supreme Court). Comity interests also favor certificat ion. The question of whether the revised MWCA allows recission based on a material misrepresentation presents a novel issue “peculiarly callin g for the exercise of judgment by the [Mississippi] courts.” McKesson v. Doe , 141 S. Ct. 48, 51 (2020). “Speculation by a federal court” ab out how the 2012 amendments to the Case: 22-60579 Document: 00516929686 Page: 8 Date Filed: 10/12/2023No. 22-60579

9 MWCA affect an insurer’s ability to void a policy ab initio based on a material misrepresentation is inappropriate “whe n . . . the state courts stand willing to address questions of st ate law on certification.” Arizonans for Official Eng. v. Arizona , 520 U.S. 43, 79 (1997) (alteration in original) (internal quotation marks and alteration omitted). Fina lly, we are unaware of any practical impediments to certification.

IV. Conclusion For the foregoing reasons, we CERTIFY the following determinative question of law to the Mississippi Supreme Court: 1) Does the Mississippi Wo rkers’ Compensation Act (“MWCA”) allow an insurer to void ab initio a workers’ compensation policy based on a material misrepresentation? We disclaim any intention or desire that the Mississippi Supreme Court confine its reply to the precise for m or scope of the question certified. We will then resolve this case in accordance with any opinion provided on this question by the Mississippi Supreme Court. The Clerk of this Court is directed to transmit this certificat ion and request to the Mississippi Supreme Court in conformity with the usual practice. QUESTION CERTIFIED. Case: 22-60579 Document: 00516929686 Page: 9 Date Filed: 10/12/2023