*Chief District Judge of the Southern District of Texas,

sitting by designation.

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United States Court of Appeals

Fifth Circuit

FILED

August 21, 2003

Charles R. Fulbruge III

Clerk

IN THE UNITED STATES COURT OF APPEALS 

FOR THE FIFTH CIRCUIT

 

No. 02-60807

 

GENESIS INSURANCE COMPANY;PRESIDENT 

RIVERBOAT CASINO-MISSISSIPPI, INC.,

Plaintiffs-Appellants,

v.

WAUSAU INSURANCE COMPANIES,

Defendant-Appellee.

 

Appeal from the United States District Court

for the Southern District of Mississippi

 

Before JONES and BENAVIDES, Circuit Judges, and KAZEN,* District

Judge.

BENAVIDES, Circuit Judge:

I. BACKGROUND

On April 25, 1996, Edith Baker, a guest at The President

Casino (“President”), in Biloxi, Mississippi, was struck by a

casino-owned shuttle bus driven by a casino employee as she

attempted to cross a drop-off area in front of the casino

entrance. Baker had emerged from a walkway to the driver’s left. 
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The driver, whose view of the walkway was partially blocked by a

six-foot chain link fence that was covered intermittently by

banners or flags, did not see Baker as she stepped onto the

drive. Baker was thrown 10 to 15 feet and suffered a variety of

injuries, including a fractured skull, broken ribs, damage to a

nerve that resulted in the permanent loss of smell and taste, and

temporomandibular joint disfunction associated with damage to her

jaw.

At the time of the accident, President was insured under a

business automobile policy from Wausau Insurance Companies

(“Wausau”). The casino immediately reported the accident to a

Wausau representative and shortly thereafter Wausau retained a

local independent adjuster to investigate. The adjuster

completed his investigation and closed the Baker file on

September 11, 1996. Baker had retained an attorney, but no

settlement offer was extended. 

On April 22, 1999, Baker filed a complaint in the Circuit

Court of the Second Judicial District of Harrison County,

Mississippi, against President and its shuttle driver, alleging

negligence in the operation of President’s shuttle bus as the

proximate cause of her injuries. Pursuant to its policy, Wausau

hired an attorney to defend President. Mediation was

unsuccessful. On January 30, 2001, the trial court approved

Baker’s motion, unopposed by Wausau counsel, to amend her
1Genesis initially sought a declaratory judgment as to

coverage in the Baker litigation against President as well as

Wausau. Following the settlement of the Baker litigation,

Genesis amended its complaint and President was realigned as a

plaintiff in this action.

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complaint to include an additional count for premises liability

based upon the placement of the fence, the walkway, and the

absence of warning signs and indicators in the vicinity of the

crosswalk. The following day, Wausau sent President a letter

reserving its right to deny coverage with respect to the premises

liability claim. President then notified its comprehensive

general liability (“CGL”) insurer, Genesis Insurance Company

(“Genesis”). Genesis promptly hired an attorney. 

Trial was scheduled for March 5, 2001, and all motions for 

continuance were denied. On February 28, 2001, Genesis filed

this action in the United States District Court for the Southern

District of Mississippi, seeking a declaration that the Wausau

policy covers the allegations in the state court Baker litigation

in their entirety, with the Genesis policy providing only excess

insurance over and above the $1,000,000 primary coverage afforded

by the Wausau policy.

Negotiations between the parties with respect to the Baker

litigation ensued. Defendants had concluded that they would

stipulate to liability, leaving only the issue of damages for the

jury. On March 2, 2001, a settlement of $400,000 was reached.1

$200,000 was paid by Wausau, and $200,000 by Genesis and
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President (the Genesis policy contained a self-insured retention

endorsement of $100,000). Genesis and President (“appellants”)

contend that their $200,000 payment was made with the specific

understanding that all parties reserved their right to seek

reimbursement from one another, as evidenced by a letter from

Genesis to Wausau and the e-mails of Wausau employees.

Genesis and President filed a joint Motion for Summary

Judgment, asserting that the unambiguous language of the Wausau

policy provides coverage for the entirety of the Baker claim. 

The motion also alleged that Wausau was estopped from denying

coverage because it undertook the claim and handled it

exclusively from April 1996, until the end of January 2001,

without issuing a non-waiver notice or a reservation of rights

letter. Alleging “bad faith” on the part of Wausau, President

and Genesis seek contractual and punitive damages. Wausau filed

its own Motion for Summary Judgment on the grounds that President

and Genesis voluntarily proferred payment for the Baker

settlement, and are therefore barred from seeking reimbursement

under the voluntary payment doctrine.

The district court granted summary judgment in favor of

Wausau. In a Memorandum Opinion dated June 18, 2001, it

concluded that under the voluntary payment doctrine, President

and Genesis gave up their claims against Wausau when they

voluntarily settled the Baker litigation. The court dismissed
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President and Genesis’s summary judgment motion as moot. 

President and Genesis appealed to this court.

II. STANDARD OF REVIEW

A district court’s grant of summary judgment is reviewed de

novo. Rivers v. Central and S. W. Corporation, 186 F.3d 681, 682

(5th Cir. 1999). Summary judgment is appropriate, when, viewing

the evidence in the light most favorable to the nonmoving party,

the record reflects that no genuine issue of any material fact

exists. Celotex Corp. v. Catrett, 477 U.S. 317, 322-324 (1986). 

See also Transitional Learning Comty. at Galveston, Inc. v. U.S.

Office of Pers. Mgmt., 220 F.3d 427, 429 (5th Cir. 2000). A

material fact is one that “might affect the outcome of the suit

under the governing law,” and a “dispute about a material fact is

‘genuine’...if the evidence is such that a reasonable jury could

return a verdict for the nonmoving party.” Sulzer Carbomedics,

Inc. v. Oregon Cardio-Devices, Inc., 257 F.3d 449, 456 (5th Cir.

2001) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986)). The record before the court must be considered in the

light most favorable to the nonmovants, President & Genesis. 

Sulzer Carbomedics, Inc., 257 F.3d at 456.

In a diversity action such as this one, federal courts are 

bound to apply the choice of law rules of the forum state in

which the court sits. Klaxon Co. v. Stentor Elec. Mfg. Co., 313
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U.S. 487, 496 (1941). The outcome of diversity litigation in a

district court should be the same as if the case had been tried

in the forum state's court. Siciliano v. Hudson, 1996 WL 407562,

*2 (N.D. Miss. 1996). See also Guaranty Trust Co. v. York, 326

U.S. 99, 109-110 (1945). The parties agree, and Mississippi

choice of law dictates that the laws of the state of Mississippi

apply. See Boardman v. United Services Auto Ass’n, 470 So. 2d

1024, 1032 (Miss. 1985); Guaranty Nat. Ins. Co. v. Azrock

Industries Inc., 211 F.3d 239, 243 (5th Cir. 2000). We therefore

attempt to ascertain what Mississippi’s highest court would

decide if faced with the issues presented in this case. See

United Nat’l Ins. Co. v. SST Fitness Corp., 309 F.3d 914, 917

(6th Cir. 2002).

III. DISCUSSION

A. The Volunteer Doctrine

Genesis and President ask us to determine (1) whether the

volunteer doctrine bars them from recovering the monies they

contributed to the Baker settlement, (2) whether Wausau breached

its contract of insurance with President by denying coverage for

the premises liability claim, and (3) whether Wausau breached the 

contract in bad faith.

The district court held that Genesis and President had

waived their right to recover the payments they made in the Baker
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settlement on the basis of the volunteer doctrine, a common-law

construct that has been consistently followed in Mississippi. 

The rule establishes that:

[A] voluntary payment can not be recovered back, and a

voluntary payment within the meaning of this rule is a

payment made without compulsion, fraud, mistake of

fact, or agreement to repay a demand which the payor

does not owe, and which is not enforceable against him,

instead of invoking the remedy or defense which the law

affords against such demand.

McDaniel Bros. Constr. Co., Inc. v. Burk-Hallman Co., 175 So.2d

603, 605 (Miss. 1965). Accord Presley v. American Guarantee &

Liability Ins. Co., 116 So.2d 410, 416 (Miss. 1959); McLean v.

Love, 157 So. 361, 362 (Miss. 1934). Finding that President and

Genesis were not compelled to contribute to the Baker litigation,

laboring under a mistake of fact, or had entered into an

agreement with Wausau to reserve their rights to dispute

coverage, the district court concluded that President and Genesis

were barred from seeking reimbursement by the volunteer doctrine. 

Because we are convinced that an issue of fact remains as to

whether there was an agreement between the parties to

subsequently litigate the coverage issue, we reverse the district

court’s grant of summary judgment.

1. Was there an agreement to litigate coverage following

settlement?

A mutual agreement between President, Wausau, and Genesis to

litigate their respective liabilities among themselves after
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settling the Baker litigation would preclude the application of

the volunteer doctrine. See McLean, 157 So. At 362. Accord

McDaniel Bros. Constr. Co., 175 So.2d at 605; Presley, 116 So.2d

at 416. Genesis contends that its reservation of rights letter,

combined with Wausau’s internal e-mails, indicate the presence of

an agreement. 

The district court concluded that the settlement with Baker

took place “in lieu” of a legal determination of the parties’

respective obligations under their policies. The court premised

its decision upon the legal rule that a payment under “protest”

or accompanied by a unilateral reservation of rights will not

escape the application of the volunteer doctrine. See Rowe v.

Union Central Life Ins. Co., 12 So. 2d 431, 433 (Miss. 1943);

Horne v. Time Warner Operations, Inc., 119 F. Supp. 2d 624, 629

(S.D. Miss. 1999). 

A review of the record, however, reveals that the appellants

have raised a fact issue as to whether Genesis’s reservation of

rights was indeed unilateral or whether Wausau had agreed with

President and Genesis to preserve the coverage issue for

resolution at a later date. On March 5, 2001, before money

changed hands in the Baker settlement, Genesis’s attorney sent

counsel for Wausau a letter which states:

In furtherance of our telephone conversation last week,

all parties to the discussions on settlement (Bob

Sheriff on behalf of Wausau, Maria Johnson on behalf of
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the President, and me on behalf of Genesis) agreed that

amounts contributed toward settlement of the Edith

Baker suit against the President and its driver would

be contributed without prejudice to the rights of any

party to deny coverage and obligation to pay, and to

seek recovery from other contributing parties. Our

Complaint for Declaratory Judgment filed in federal

court is consistent with this agreement.

As you know, an agreement of settlement has now been

reached at $400,000.... As noted above, all payments

are without prejudice to the rights, claims and

defenses of the respective payors.

Wausau did not respond to the letter. Thus the letter itself

does not constitute conclusory evidence of an agreement between

the parties. See Sweet Home Water & Sewer Assoc. v. Lexington

Estates, Ltd., 613 So.2d 864, 871 (Miss. 1993)(holding that a

valid contract requires acceptance by the offeree); Palmer v.

Security Life Ins. Co. of Am., 189 F. Supp. 2d 584, 589 (S.D.

Miss. 1999)(listing the six requirements of a valid contract,

including mutual assent). The letter does, however, relate the

existence of an oral agreement. Oral agreements are recognized

and enforceable in Mississippi. Murphree v. W.W. Transportation,

797 So.2d 268, 273 (Miss. Ct. App. 2001). 

President and Genesis supplied additional evidence of an

oral agreement in the form of an email exchange on March 2, 2001,

between Robert Sheriff (referred to in the letter from Genesis as

Bob Sheriff), and fellow Wausau colleague, William Carroll. 

Carroll: If they [Genesis] make an agreement to settle, are

they not stuck with a voluntary agreement? What gives them

the right to come back after the fact, wouldn’t they have to
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do it up front unless we agreed to some kind of funding

agreement?

Sheriff: We have Reserved our Rights as to coverage and

Genesis has Reserved their Rights as to coverage. 

Sheriff’s response to Carroll indicates that an agreement

with Genesis that each party would reserve their rights to

subsequently litigate the coverage question had occurred or was a

fait accompli. The email exchange and letter from Genesis to

Wausau constitute probative evidence in support of the contention

that the parties were of one mind regarding the preservation of

the coverage issue in the face of the Baker settlement. See In

re Estate of Davis, 832 So.2d 534, 537 (Miss. Ct. App.

2001)(holding that meeting of the minds and consideration between

competent parties are the requisite ingredients of a valid and

binding agreement). Sheriff’s denial of such an agreement in his

deposition is insufficient to justify the district court’s

conclusion on summary judgment that one did not exist.

The presence or absence of an agreement is a question of

fact to be resolved by the fact-finder. Ham Marine, Inc. V.

Dresser Indus., Inc., 72 F.3d 454, 458 (5th Cir. 1995); Hunt v.

Coker, 741 So.2d 1011, 1015 (Miss. Ct. App. 1999). Thus, we

decline to determine on appeal whether the parties had an oral

agreement to litigate the coverage issue following settlement and

remand the issue to the district court for trial. But see Nat’l

Surety Corp. v. Western Fire & Indemnity Co., 318 F.2d 379, 385-
2Genesis contends that it (and thereby President, through

the self-insured retention addendum) was legally obligated to

contribute to the settlement, citing Keys v. Rehabilitation

Cntr., Inc., 574 So.2d 579 (Miss. 1990). The argument is

untenable. At a minimum, the fact that the appellants beseach

this court, in the same petition, to make a legal determination

that Genesis’s policy did not obligate them to contribute to the

settlement certainly puts their claim to the contrary with

respect to the volunteer doctrine in doubt. At the time of the

settlement, no determination had been made regarding the legal

liability of Genesis in the Baker litigation. All that had been

voluntarily stipulated to was the liability of Wausau and/or

Genesis. Genesis filed this declaratory judgment action

expressly for the purpose of determining its uncertain legal

liability. Genesis was accordingly no more legally obligated to

contribute to a settlement than the parties in Armco v. Southern

Rock, Inc. and Rowe v. Union Cent. Life Ins. Co., which were

found to have made their payments voluntarily. See Armco, 696

F.2d 410 (5th Cir. 1983); Rowe, 12 So.2d 431 (Miss. 1942).

Genesis and President do not contend that were laboring

under a mistake of fact when they made their settlement payments,

nor do they claim to have been fraudulently induced to do so.

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86 (5th Cir. 1963)(applying Texas law, but citing no cases, and

holding that where two insurance companies, in their mutual best

interest, split the cost of settling a case, they had implicitly

agreed to subsequently determine their respective obligations,

thus barring the application of the volunteer doctrine).

2. Were President and Genesis’s Payments Voluntary or

Compelled?

An involuntary payment is one “not proceeding from choice.”

66 Am. Jur. § 112 (2001). Payments that are made by virtue of

legal obligation or by accident or mistake are inherently

involuntary.2 Id. Payments made under compulsion are also not
3President and Genesis also contend that they were compelled

to contribute to the Baker settlement by Wausau’s refusal to

settle the litigation in the absence of their contribution. The

evidence presented, however, is indicative merely of “hard

bargaining,” not compulsion. See 66 Am. Jur. 2d § 123.

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considered voluntary, and are thus not barred from recovery by

the volunteer doctrine. McDaniel Bros. Const. Co., Inc. v. BurkHallman Co., 175 So.2d 603 (Miss. 1965); McLean v. Love, 157 So.

361, 362 (1934). 

President and Genesis contend that their contributions to

the Baker settlement were the product of compelling circumstances

created by Wausau, and thus were not voluntary. Specifically,

the appellants argue that Wausau, in notifying President of its

intention to deny coverage with respect to a premises liability

claim less than a month and a half before trial deprived it and

Genesis of the ability to mount an adequate defense, thus forcing

them to participate in a settlement.3 The district court

disagreed, holding that, as a matter of law, a “lack of timely

notice” does not sufficiently compel to enable an otherwise

voluntary payment to achieve immunity from the voluntary payment

doctrine. While Wausau’s handling of the Baker claim appears to

have been less than admirable, we agree that its conduct did not

compel President and Genesis to throw their hats into the

settlement ring. 

The meaning of compulsion with respect to the voluntary
4See, e.g., Town of Wesson v. Collins, 18 So. 360 (Miss.

1895); Schmittler v. Sunflower County, 125 So. 534 (Miss. 1930);

McLean v. Love, 157 So. 361 (Miss. 1934); Rowe v. Union Central

Life Ins. Co., 12 So.2d 431 (Miss. 1943); Presley v. Am.

Guarantee & Liability Ins. Co., 116 So.2d 410 (Miss. 1959);

McDaniel Bros. Const. Co. v. Burk-Hallman Co., 175 So.2d 603

(Miss. 1965); State Farm Mutual Automobile Ins. Co. V. Allstate

Ins. Co., 255 So.2d 667 (Miss. 1971); Glantz Contracting Co. V.

General Electric Co., 379 So.2d 912 (Miss. 1980).

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payment doctrine is not well-defined in Mississippi. There are

only a handful of Mississippi state cases that discuss the

voluntary payment doctrine at any length, and neither the parties

nor or independent research have revealed any that have been

decided within the past twenty years.4 There has been a trend

toward expanding the range of situations that are considered

compelling, 66 Am. Jur. 2d § 109; Halstead Terrace Nursing Cntr.,

Inc. V. Scottsdale Ins. Co., 1997 WL 124263 *3 (N.D. Ill. 1997),

that Mississippi has not yet had the opportunity to pass upon. 

As in many other areas of the law, whether a payment was

compelled or made voluntarily is a highly factual determination,

Glantz Contracting Co. v. General Electric Co., 379 So.2d 912,

917-18 (Miss. 1980), and none of the Mississippi cases address

the issue of compulsion issue apart from its particular factual

context. Accordingly, we enlist the assistance of cases from

other jurisdictions and the legal literature in an attempt to

surmise whether the Mississippi Supreme Court, as a matter of

law, would apply the voluntary payment doctrine in the undisputed

factual circumstances surrounding the settlement. See, e.g.,
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American Indemnity Lloyds v. Travelers Property & Casualty Ins.

Co., 2003 WL 21437012 (5th Cir. 2003); 66 Am. Jur. 2d §§ 108-09

(2001).

Not all pressure for payment amounts to compulsion. 16 Lee

R. Russ, Couch on Insurance § 223.28 (3d. ed. 2003). The general

rule guiding the determination of whether a payment was made

voluntarily or not can be stated as follows:

where a person pays an illegal demand, with full

knowledge of all the facts which render the demand

illegal, without an immediate and urgent necessity to

pay, unless it is to release his or her person or

property from detention or to prevent an immediate

seizure of his or her person or property, the payment

is voluntary. It is only when, in an emergency for

which a person is not responsible, the person is

compelled to meet an illegal exaction to protect his or

her business interest that he or she may recover the

payment, but if, with knowledge of the facts, that

person voluntarily takes the risk of encountering the

emergency, the payment is voluntary and may not be

recovered.

66 Am. Jur. 2d § 109 (emphasis added). President and Genesis’s

claim of compulsion falls short in two respects.

President and Genesis were faced with one of two options:

(1) contributing $200,000 immediately to a settlement; or (2)

allowing the Baker case to go to trial, and waiting for a ruling

in the declaratory judgment action, at which point they would be

held responsible for a certain percentage (estimated from 0%-50%)

of the damages (that Genesis feared could reach $1 million) as

determined by a jury for whom they had little time to prepare. 
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First, this dilemma lacks the sense of immediacy often

accompanied by compelled payments. See, e.g., Glantz, 379 So.2d

at 917-18 (finding that appellee who could either make payments

or face an immediate work stoppage threatening an important

contract was compelled to make payments); Mobile Telecomm. Tech.

Corp. V. Aetna Casualty & Surety Co., 962 F. Supp. 952, 955 (S.D.

Miss. 1997)(“It is well-established that it is not duress to

institute or threaten to institute civil suits...”). Litigation,

particularly where two separate cases, in two separate courts,

are involved, often takes years to resolve.

Second, the stakes, in the event that President and Genesis

refused to participate in the settlement, were of an

insufficiently dire magnitude to justify finding that their

settlement contributions were compelled. “[A] payment is

considered coerced only where it is made to avoid the loss of a

necessity, or to prevent an injury to a person, business or

property which is different and disproportionately greater than 

the unlawful demand. Dreyfus v. Ameritech Mobile Comm., Inc.,

700 N.E.2d 162, 165-66 (1998). See, e.g., Mobile Telecomm., 962

F. Supp. 952 (finding no compulsion when insurer had choice

between making payments on its insured’s $2 million legal bill or

awaiting coverage determination and possibly paying additional

amount for insured’s interim financing); Alcoa Steamship Co. V.

Velez, 285 F. Supp. 123, 125 (D. P. R., 1968) (holding that
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employer’s payment of workmen’s compensation insurance premium,

when faced with alternative of losing all coverage, was

compelled). 

Surely, the prospect of paying a maximum, as estimated by

President and Genesis, of $1,000,000 between them after the jury

returned its verdict, and all appeals (of both the state case and

this action) had been exhausted, did not threaten to have such “a

disastrous effect to business” that President and Genesis, two

national corporations, one of whose business was to insure

against precisely these kinds of judgments, felt compelled to

contribute to the Baker settlement. Randazzo v. Harris Bank

Palatine, N.A., 262 F.3d 663, 669 n.1 (7th Cir. 2001). This is

particularly true when we take appellants’ contention (which is

well supported) that the Genesis policy did not cover the Baker

accident (meaning that they would ultimately not be required to

pay any portion of a jury verdict) at face value. Compare

Halstead Terrace Nursing Cntr., Inc. v. Scottsdale Ins. Co., 1997

WL 124263 (finding that where insured nursing home was faced with

“‘enormous potential liability’ in excess of the policy limits,”

treble damages, and disruption to personnel by continued

litigation of a wrongful death suit against it, $175,000 payment

in order to enable settlement was compelled).

While Wausau’s questionable conduct placed Genesis in an

unenviable position, the law does not permit us to grant Genesis
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and President immunity from the volunteer doctrine on the grounds

that their settlement payments were compelled. Wausau,

President, and Genesis recognized that there was little chance

that a jury would not find in favor of Baker after viewing a

videotape that showed President’s shuttle bus hitting Baker as

she walked onto the crosswalk. The liability stipulation, and

subsequent settlement, were borne not so much of Wausau’s

compulsion, but of strategy (albeit influenced by Wausau’s

actions).

3. Justice Denied?

President and Genesis, claiming that Wausau’s demand for

payment was unjust, urge us to create a new exception to the

Mississippi volunteer doctrine premised upon the inadequacy of

the legal remedy that they sought (a declaratory judgment) and

the societal interest in encouraging settlements over protracted

litigation. The heart of their argument is that policy

considerations require such an exception.

It is not policy, however, but law that guides our 

determinations. Particularly when our jurisdiction exists

through diversity, we feel compelled to tread lightly and allow

the state court to take the first step in developing new

doctrines. We therefore decline to make a predictive statement

on Mississippi’s behalf approving of and applying an exception

for those who pursue their available legal remedies and yet in
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good faith make what is alleged to be an unjustly demanded

payment in their best interest.

B. Breach of Contract & Bad Faith

The district court dismissed President’s breach of contract

and bad faith claims summarily as derivative of the reimbursement

issue. There were therefore no findings or conclusions of law

regarding these claims. Naturally, the district court will

revisit its ruling following its determination on remand as to

whether Wausau, President, and Genesis agreed to litigate the

coverage issue following settlement. It would be premature for

us to rule on them at this time, as well as an unjustifiable

extension of our appellate function.

IV. Conclusion

President and Genesis have created an issue of fact as to

whether they agreed with Wausau to litigate the coverage issue

following settlement. We thus VACATE and REMAND the district

court’s grant of summary judgment on the ground that the

volunteer doctrine bars the appellants from recovering their

payments. 

VACATED and REMANDED.