IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 15-60774

Cons w/ No. 15-60876

FEDERAL INSURANCE COMPANY, 

 Plaintiff - Appellant

v.

SINGING RIVER HEALTH SYSTEM, 

 Defendant – Appellee

Consolidated with 15-60876

 

FEDERAL INSURANCE COMPANY, 

 Plaintiff-Counter Defendant - Appellee

v.

SINGING RIVER HEALTH SYSTEM, 

 Defendant – Appellant

&

SINGING RIVER HEALTH SYSTEM FOUNDATION, 

 Counter Claimant – Appellant

Appeals from the United States District Court

for the Southern District of Mississippi

United States Court of Appeals

Fifth Circuit

FILED

March 1, 2017

Lyle W. Cayce

Clerk

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Before HIGGINBOTHAM, JONES, and HAYNES, Circuit Judges.

HAYNES, Circuit Judge:

In this insurance coverage dispute, the district court granted partial 

summary judgment in favor of Singing River Health System and Singing River 

Health System Foundation and partial summary judgment in favor of Federal 

Insurance Company. The parties appeal, and we affirm in part, and reverse 

and render in part.

I.

Federal Insurance Company (“Federal”) provided insurance to Singing 

River Heath System (“SRHS”) (collectively with Singing River Health System 

Foundation, “Medical Insureds”). This coverage dispute between Federal and 

Medical Insureds relates to various underlying lawsuits arising from SRHS’s 

alleged underfunding of its Retirement Plan and Trust (“SRHS Lawsuits”). 

The SRHS Lawsuits involve various claims, such as breach of fiduciary duty, 

breach of contract, violations of the United States Constitution and the

Mississippi constitution, and violations of 42 U.S.C. § 1983.

As relevant to this appeal, Federal issued to SRHS a Health Care 

Portfolio, Policy No. 8211-9592, which had a policy period of March 1, 2014 to 

March 1, 2015 (the “2014-2015 Policy”). The 2014-2015 Policy contains two 

parts, both of which are written on a claims-made basis1: (1) a Fiduciary 

Coverage Section (“Fiduciary Coverage”), and (2) an Executive Liability, Entity 

Liability, and Employment Practices Liability Section (“ELI/EPL Coverage”).

The policy limit for Fiduciary Coverage is $1 million for each claim, and the 

 

1 “A ‘claims made’ policy protects the holder only against claims made during the life

of the policy, while an ‘occurrence’ policy protects the policyholder from liability for any act 

done while the policy is in effect.” Jones v. Baptist Mem’l Hosp.-Golden Triangle, Inc., 735 

So. 2d 993, 999–1000 (Miss. 1999) (citation omitted).

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policy limit for ELI/EPL Coverage is $5 million for each claim. Under the 

Fiduciary Coverage, “[Federal] shall pay, on behalf of the Insureds, Loss for 

which the Insureds become legally obligated to pay on account of any Fiduciary 

Claim [under certain conditions].” The ELI/EPL Coverage contains a similar 

obligation to pay for loss. 

The 2014-2015 Policy contains the following language relevant to this 

appeal:

The applicable limit(s) of liability to pay “loss” will be 

reduced, and may be exhausted, by “defense costs”

unless otherwise specified herein. 

. . . .

The limit of liability to pay “loss” will be reduced and 

may be exhausted by “defense costs”, unless otherwise 

specified herein, and “defense costs” will be applied 

against the retention. In no event will the company 

be liable for “defense costs” or other “loss” in excess of 

the applicable limit(s) of liability. 

. . . . 

If the Optional Separate Defense Costs Coverage is 

not purchased, Defense Costs shall be part of, and not 

in addition to, the Limits of Liability set forth . . . for 

this coverage section, and the payment by the 

Company of Defense Costs shall reduce and may 

exhaust such applicable Limits of Liability. 

(emphasis omitted). SRHS did not purchase the Optional Separate Defense 

Costs Coverage. The application for the 2014-2015 Policy states:

The limit of liability to pay damages or settlements 

will be reduced and may be exhausted by “defense 

costs,” and “defense costs” will be applied against the 

retention amount. In no event will the company be 

liable for “defense costs” or other “loss” in excess of the

applicable limit of liability. 

(emphasis omitted). In this application, SRHS did not check the box for 

Optional Separate Defense Costs Coverage. 

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The 2014-2015 Policy defines Defense Costs as “that part of Loss 

consisting of reasonable costs, charges, fees (including but not limited to 

attorneys’ fees and experts’ fees) and expenses . . . incurred in defending any 

Claim.” “Loss,” in turn, is defined as “the amount that any Insured . . . becomes 

legally obligated to pay on account of any covered [Claim], including but not 

limited to . . . Defense Costs.” Finally, the ELI/EPL Coverage contains 

Exclusion 7(e), which provides that: 

The Company shall not be liable for Loss on account of 

any Claim . . . for any actual or alleged violation of the 

responsibilities, obligations or duties imposed by any 

federal, state, or local statutory law or common law 

anywhere in the world (including but not limited to the 

Employee Retirement Income Security Act of 1974 

(except section 510 thereof) and the Consolidated 

Omnibus Budget Reconciliation Act of 1985), . . . that 

governs any employee benefit arrangement program, 

policy, plan or scheme of any type . . . (“Employee 

Benefits Program Laws”), including but not limited to 

any . . . retirement income or pension benefit program 

. . . [or] similar arrangement, program, plan or scheme.

SRHS and various individual insureds tendered defense of the SRHS 

Lawsuits to Federal, and Federal defended SRHS and the individual insureds 

under a reservation of rights.2 In its reservation of rights letter, Federal stated 

that, pursuant to the policy, Defense Costs deplete the policy limits. Federal 

also denied ELI/EPL Coverage on the grounds that Exclusion 7(e) covered the 

subject matter of the SRHS Lawsuits. 

 

2 “When an insurer provides a defense for an insured under a reservation of rights, 

the insurer defends the insured ‘while at the same time reserving the right to deny coverage 

in [the] event a judgment is rendered against the insured.’” Hartford Underwriters Ins. Co. 

v. Found. Health Servs. Inc., 524 F.3d 588, 592 n.2 (5th Cir. 2008) (alteration in original) 

(quoting Moeller v. Am. Guar. & Liab. Ins. Co., 707 So. 2d 1062, 1069 (Miss. 1996)).

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In its subsequent declaratory action, Federal sought a declaration that, 

inter alia, “the Limit of Liability under the Fiduciary Coverage Section is $1 

million, subject to a $1 million aggregate limit, and a $10,000.00 Retention, 

with Defense Costs eroding or depleting those limits.” It also sought a 

declaration that no coverage exists under the ELI/EPL Coverage section. 

SRHS filed a counterclaim, which named as a party Singing River Health 

System Foundation, formerly known as Coastal Medical Healthcare 

Foundation Inc. (the “Foundation”). The counterclaim alleged “causes of 

action” for waiver, estoppel, civil conspiracy, breach of contract, tortious breach 

of contract, breach of fiduciary duty, breach of the duty of good faith and fair 

dealing, bad faith, interference with contract and business relations, and 

conversion, and sought declaratory relief.

Medical Insureds moved for partial summary judgment and injunctive 

relief, or in the alternative for a preliminary injunction. By this motion, 

Medical Insureds requested the court order Federal to continue to pay all 

Defense Costs in the SRHS Lawsuits without regard to the policy limits. The 

district court granted the motion, entering judgment that “defense costs paid 

in the underlying pension plan litigation . . . should not be deducted from the 

policy limits.”

While Medical Insureds’ motion was pending, Federal moved for 

summary judgment, requesting the district court issue a declaratory judgment 

that Federal’s defense and indemnity obligations for the SRHS Lawsuits are 

limited to the policy’s $1 million Limits of Liability for Fiduciary Liability 

Coverage and that Defense Costs erode this limit. Medical Insureds then 

moved to join necessary parties and for the court to continue its ruling on 

Federal’s motion so Medical Insureds could conduct discovery pursuant to 

Federal Rules of Civil Procedure 56(d). The district court denied Medical 

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Insureds’ motion and granted Federal’s motion in part. After determining that 

there was no just reason for delay, the court entered a partial final judgment. 

II.

The district court exercised diversity jurisdiction under 28 U.S.C. § 1332. 

Both parties appealed from the district court’s Rule 54(b) partial final 

judgment. Because the district court properly entered a partial final judgment 

under Rule 54(b), see Eldredge v. Martin Marietta Corp., 207 F.3d 737, 740 (5th 

Cir. 2000), we have jurisdiction.3 

We review a grant of summary judgment de novo, applying the same 

standard as the district court. United States v. Lawrence, 276 F.3d 193, 195 

(5th Cir. 2001). Summary judgment is proper where there is no genuine 

dispute of material fact, and a party is entitled to judgment as a matter of law. 

FED. R. CIV. P. 56(a). 

We review a district court’s interpretation of a contract de novo, Gonzalez 

v. Denning, 394 F.3d 388, 392 (5th Cir. 2004), and a denial of a Federal Rule of 

Civil Procedure 56(d) motion for discovery for an abuse of discretion, Stearns 

Airport Equip. Co. v. FMC Corp., 170 F.3d 518, 534 (5th Cir. 1999). Finally, 

we review the denial of a motion to join under Federal Rules of Procedure 19(a) 

and 20 for an abuse of discretion. Acevedo v. Allsup’s Convenience Stores, Inc., 

600 F.3d 516, 520 (5th Cir. 2010); Bank One Tex. N.A. v. Arcadia Fin. Ltd., 219 

F.3d 494, 497 (5th Cir. 2000).

 

3 Having determined the district court correctly entered its Rule 54(b) partial final 

judgment, we deny Medical Insureds’ motion to dismiss filed on February 12, 2016. It is 

therefore administratively unnecessary to consider Federal’s first notice of appeal, as it is 

duplicative of its second notice of appeal. The Clerk of Court is directed to administratively 

close No. 15-60774, deny Medical Insureds’ motion to dismiss filed November 13, 2015, as 

moot, and ensure that all documents related to Federal’s second notice of appeal are docketed 

in No. 15-60876. Federal’s appeal and Medical Insureds’ cross-appeal are considered jointly

under No. 15-60876.

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III.

A.

We first address the issue raised in Federal’s appeal: whether the district 

court erred in determining that “Defense costs paid in the underlying pension 

plan litigation pursuant to Moeller v. American Guarantee & Liability 

Insurance Co., 707 So. 2d 1062 (Miss. 1996), should not be deducted from the 

limits applicable to the March 1, 2014 through March 1, 2015 policy.” The 

2014-2015 Policy states in multiple places that Defense Costs erode policy 

limits and that Federal will not pay Defense Costs over and above policy limits. 

On appeal, Medical Insureds argue that (1) the policy terms and Moeller

mandate the payment of Defense Costs separate and apart from the policy 

limit and (2) alternatively, public policy prevents Defense Costs from eroding 

policy limits. 

Under Mississippi law, insurance policies are to be enforced according to 

their provisions. Noxubee Cty. Sch. Dist. v. United Nat’l Ins. Co., 883 So. 2d 

1159, 1166 (Miss. 2004). The Mississippi Supreme Court has noted that

[w]hen parties to a contract make mutual promises 

(barring some defense or condition which excuses 

performance), they are entitled to the benefit of their 

bargain. Thus, insurance companies must be able to 

rely on their statements of coverage, exclusions, 

disclaimers, definitions, and other provisions, in order 

to receive the benefit of their bargain and to ensure 

that rates have been properly calculated. 

Id. “[I]n interpreting an insurance policy, this Court should look at the policy 

as a whole, consider all relevant portions together and, whenever possible, give 

operative effect to every provision in order to reach a reasonable overall result.” 

Corban v. United Servs. Auto. Ass’n, 20 So. 3d 601, 609 (Miss. 2009) (alteration 

in original) (quoting J & W Foods Corp. v. State Farm Mut. Auto. Ins. Co., 723 

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So. 2d 550, 552 (Miss. 1998)). Furthermore, where a contract is clear and 

unambiguous, it must be interpreted as written. Id. (citation omitted).

1.

With this framework in mind, we begin with Moeller, which, Medical 

Insureds maintain, requires Federal to pay their Defense Costs without regard 

to policy limits. In Moeller, the insurer defended the insureds, a law firm, in a 

business dispute under a reservation of rights. 707 So. 2d at 1064, 1066. In 

addition to being represented by the insurer’s choice of counsel, the law firm 

retained separate counsel in the business dispute. Id. The law firm later 

sought to be reimbursed by the insurer for the cost of its separate counsel. Id. 

at 1067. In holding that the insurer was responsible for this cost, the 

Mississippi Supreme Court discussed the ethical obligations of counsel and 

noted that “other jurisdictions have generally held that in such a situation, not 

only must the insured be given the opportunity to select his own counsel to 

defend the claim, the carrier must also pay the legal fees reasonably incurred 

in the defense.” Id. at 1069–71 (citing cases).

Moeller does not stand alone, but rather reflects the commonly accepted 

rule that where a conflict of interest exists, the insurer must pay for the 

insured’s separate counsel. See 12 NEW APPLEMAN ON INSURANCE LAW 

LIBRARY EDITION § 148.04 (2016). Moeller did not speak to the ability of an 

insured to include Defense Costs as eroding the policy limit. 

Indeed, Southern Healthcare Services, Inc. v. Lloyd’s of London, 110 So. 

3d 735 (Miss. 2013), establishes that Moeller does not create an absolute right 

to reimbursement of all defense costs. There, the Mississippi Supreme Court 

enforced a provision in an insurance contract that required the insureds to pay 

a deductible of $250,000 towards any liability, which included defense costs. 

S. Healthcare Servs., 110 So. 3d at 747. In so determining, the court noted that 

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Moeller “cannot be read in a vacuum.” Id. at 748. Rather, there was no 

indication that the policy in Moeller included a deductible, and “the principles 

therein cannot be strictly applied without taking into account the terms of the 

specific policies at issue.” Id. Accordingly, “where the policy specifies that 

defense costs are included in the deductible, the insurer is not responsible for 

defense costs until the deductible has been paid.” Id. At bottom, the 

Mississippi Supreme Court in Southern Healthcare determined that the 

general duty to provide independent counsel set forth in Moeller is subject to 

the terms of the applicable policy. Applying this rationale, Federal’s duty to 

pay Defense Costs is subject to the terms of the 2014-2015 Policy, which states

in multiple locations that Defense Costs erode policy limits. Indeed, SRHS 

specifically declined to purchase separate coverage for Defense Costs. 

Medical Insureds’ contention that Federal cannot subtract Defense Costs 

from the policy limits is based on Moeller and the language of the policy, 

specifically the phrase “becomes legally obligated to pay.” According to their 

argument, Defense Costs is defined by reference to Loss, which is “the amount 

that any Insured . . . becomes legally obligated to pay.” Medical Insureds 

maintain that, because of this language, the only Defense Costs that can be 

eroded are those that Medical Insureds are legally obligated to pay and, under 

Moeller, they are not “legally obligated to pay” the Defense Costs because those 

costs are to be borne by the insurer, Federal. This argument rests on a 

misunderstanding of Moeller, which says nothing about an insured’s separate 

obligation to pay for its counsel. In support of their contention that they had 

no obligation to pay for their counsel, Medical Insureds point to various 

affidavits that merely restate this same misunderstanding of Moeller. These 

affidavits do not undercut the basic premise that, without the insurance policy, 

the attorneys’ fees incurred in defending a case would be borne by the client

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either under contract law, a theory of unjust enrichment, or otherwise. Cf. Gon 

v. First State Ins. Co., 871 F.2d 863, 868 (9th Cir. 1989) (where the insurer 

agreed to pay defense costs that the insured is “legally obligated to pay,” the 

insurer “must pay legal expenses as they are incurred, because an insured 

becomes legally obligated to pay legal expenses as soon as the services are 

rendered”). The fact that the insurance policy places some burden to pay the 

fees on the insurance company does not undermine this principle. 

Moreover, Medical Insureds’ argument reads the several eroding policy 

provisions out of the policy. They have identified no circumstance under their 

reasoning where attorney’s fees would be both covered by the policy and fees 

that the insured would be “legally obligated to pay.” In other words, Medical 

Insureds argue that Federal must defend all covered or potentially covered 

claims and that such sums are ones that they are not “legally obligated to pay.” 

Under this reasoning, there would never be any “Defense Costs” as defined in 

the policy. Reading several clauses out of the policy, including ones that make 

clear that a non-eroding policy will cost extra, is inconsistent with the 

requirement to consider the language of the policy as a whole. See Corban, 20 

So. 3d at 609. The only reasonable construction of the policy is that the 

insurance company assumes the burden of fees and losses that, but for the 

insurance policy, would be the insured’s legal obligation. Accordingly, we 

reject Medical Insureds’ argument that Moeller and the policy language 

require Federal to pay Defense Costs without regard to policy limits.

2.

We next turn to Medical Insureds’ public policy arguments. “[C]ourts 

must enforce contracts as they are written, unless such enforcement is contrary 

to law or public policy.” Allstate Ins. Co. v. Chi. Ins. Co., 676 So. 2d 271, 275 

(Miss. 1996) (citation omitted). “In determining whether contracts should be 

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invalidated on the ground that they violate public policy, [the Mississippi 

Supreme Court] ha[s] held that this should not be done unless the contract is 

prohibited by the Constitution, a statute, or condemned by some decision of the 

courts construing the subject matter.” Cappaert v. Junker, 413 So. 2d 378, 380 

(Miss. 1982).

Medical Insureds’ first public policy argument is based on Moeller, but, 

as already explained, Moeller does not create an absolute duty to defend. 

Accordingly, Moeller does not create a prohibition on a defense-within-limits 

policy as a matter of public policy.

We also reject Medical Insureds’ public policy arguments based on 

Mississippi statutory law,4 specifically Mississippi Code sections 41-13-11 and 

11-46-17(3). Mississippi Code section 41-13-11 authorizes the board of trustees 

of any community hospital to purchase liability insurance. Under the statute, 

“[s]uch insurance shall be for such amounts of coverage . . . as the board of 

trustees, in its discretion, shall determine.” MISS. CODE ANN. § 41-13-11(4). 

According to Medical Insureds, section 41-13-11 prohibits an eroding policy 

because the insurance “shall” be for the amount of coverage specified. This is 

an improper interpretation of section 41-13-11. This section simply provides 

that the board of trustees determines the amount of coverage. See Sw. Miss. 

Reg’l Med. Ctr. v. Lawrence, 684 So. 2d 1257, 1265 (Miss. 1996) (noting that, 

under Section 41-13-11, “[a] community hospital, in its discretion, may obtain 

 

4 Medical Insureds also make public policy arguments that are not based on statutes 

or cases. For example, although discussing the Mississippi Insurance Department’s “official 

position” on defense-within-limits policies, Medical Insureds provide no authority that a 

violation of this position is a violation of public policy. Rather, “contracts are not in violation 

of the public policy of the government unless either prohibited by express terms or the fair 

implication of a statute, or condemned by some decision of the courts construing the subjectmatter.” Cappaert, 413 So. 2d at 380 (emphasis added) (quoting State ex rel. Knox v. Hines 

Lumber Co., 115 So. 598, 605 (Miss. 1928)).

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liability insurance coverage out of its operating funds”). Section 41-13-11 does 

not require that Defense Costs be excluded from calculation of the amount of 

coverage. 

Medical Insureds’ interpretation of section 11-46-17 is similarly 

misplaced. In its relevant part, this section provides:

The policy or policies of insurance or self-insurance 

may contain any reasonable limitations or exclusions 

not contrary to Mississippi state statutes or case law 

as are normally included in commercial liability 

insurance policies generally available to political 

subdivisions. All the plans of insurance or reserves or 

combination of insurance and reserves shall be 

submitted for approval to the board. . . . Whenever any 

political subdivision fails to obtain the board’s 

approval of its plan, the political subdivision shall act 

in accordance with the rules and regulations of the 

board and obtain a satisfactory plan of insurance or 

reserves or combination of insurance and reserves to 

be approved by the board.

MISS. CODE ANN. § 11-46-17(3). By its clear terms, section 11-46-17(3) places 

any obligation to obtain board approval on SRHS, not on Federal. Moreover, 

the statute does not indicate that any failure to obtain board approval 

somehow invalidates the policy. See also Imperial Premium Fin., Inc. v. 

Khoury, 129 F.3d 347, 350–51 (5th Cir. 1997) (analyzing a Texas Insurance 

Code provision). Rather, it states that, in the event of any such failure, the 

political subdivision “shall act in accordance with the rules and regulations of 

the board and obtain a satisfactory plan of insurance or reserves or 

combination of insurance and reserves to be approved by the board.” MISS.

CODE ANN. § 11-46-17(3). Indeed, if the effect of any such failure were the 

invalidation of the policy, the entire policy would have to be invalidated, not 

just the defense-within-limits policy. Moreover, there is proof that the policy 

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was agreed to after a full and fair negotiation of all limitations and exclusions. 

As the district court noted, the application for the policy was signed by the CEO 

and CFO of SRHS. 

In their final public policy argument, Medical Insureds maintain the 

defense-within-limits clause is unenforceable because it was not placed on the 

board’s minutes. Mississippi law requires that contracts between a public 

board and a contracting entity be “spread upon the minutes” of the board and 

places the responsibility of complying with the “minutes rule” on the 

contracting entity. Wellness, Inc. v. Pearl River Cty. Hosp., 178 So. 3d 1287, 

1291 (Miss. 2015). “[B]y enforcing the minutes rule, the [Mississippi Supreme] 

Court has recognized the importance of recorded, express consent by all board 

members to board actions, as board members are elected officials charged with 

the protection of the public’s funds.” Id. at 1292 (citation omitted). Despite 

the existence of this general legal proposition, however, Mississippi law 

specifically authorizes the board of trustees of a community hospital to obtain 

insurance in a statute that does not incorporate the “minutes rule.” See MISS.

CODE ANN. § 41-13-11(4). In light of this clear statutory dictate, we cannot say 

that the defense-within-limits provision is unenforceable for failure to place it 

on the minutes.5

 

5 We therefore do not address the potentially troubling premise of Medical Insureds’ 

argument—that, where a private party to a contract fails to spread a contract on the public 

entity’s board’s minutes, the public entity can pick and choose which provisions of a contract 

it would like to enforce against the private party as opposed to invalidating the entire 

contract. See Wellness, 178 So. 3d at 1291 (“[T]he minutes from the Board of Trustees’ 

meetings do not set forth sufficient terms to establish the liabilities and obligations of the 

parties, and thus the court cannot enforce the contract, much less the mediation or arbitration 

clauses therein.” (emphasis added)). Taken to its logical extreme, this would allow SHRS to 

enforce the requirement to pay the loss while disavowing the policy limits, an absurd result.

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Ultimately, “insurance companies must be able to rely on their 

statements of coverage, exclusions, disclaimers, definitions, and other 

provisions, in order to receive the benefit of their bargain, and to ensure that 

rates have been properly calculated.” United States Fid. & Guar. Co. v. Knight, 

882 So. 2d 85, 92 (Miss. 2004). Mississippi law does not allow the courts to use 

rules of construction to defeat the parties’ own agreement as expressed in the 

policy. See State Auto. Mut. Ins. Co. of Columbus v. Glover, 176 So. 2d 256, 258 

(Miss. 1965)). Furthermore, “if the insured wanted a policy that had an 

unlimited defense obligation, rather than an eroding one, it should have 

contracted for such a policy.” N. Am. Specialty Ins. Co. v. Royal Surplus Lines 

Ins. Co., 541 F.3d 552, 559 (5th Cir. 2008). Here, the policy states that Defense 

Costs erode policy limits, and public policy does not bar such a provision. 

Accordingly, the district court erred in determining that Defense Costs did not 

erode the policy limit, and Federal is entitled to judgment on this issue.

B.

1.

We now turn to Medical Insureds’ cross-appeal. The district court 

granted partial summary judgment in favor of Federal, determining that,

[a]ll of the claims asserted in Almond, Jones, et al., 

Thompson, Aguilar, Drury, Bosarge, Cobb, et al., 

Broun, et al., Eiland, Lay, and Lowe, et al., and Counts 

5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 19, 20, 21, 

and 22 of the Beasley Complaint are excluded by the 

plain language of the Employee Benefits Program 

Laws exclusion [Exclusion 7(e)] in the ELI/EPL section 

of the policy.

We have previously explained that, under Mississippi law, exclusionary 

provisions are construed against the insurance company such that if there are 

two reasonable constructions of such a clause, the one favoring the insured 

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must be applied. Liberty Mut. Fire Ins. Co. v. Canal Ins. Co., 177 F.3d 326, 331 

(5th Cir. 1999). To determine whether Federal has a duty to defend, this court 

looks to the allegations in the underlying complaints. Am. Guarantee & Liab. 

Ins. Co. v. 1906 Co., 273 F.3d 605, 610 (5th Cir. 2001).6

We start by noting that the language in the exclusion is broad, 

encompassing “any Claim . . . for any actual or alleged violation of the 

responsibilities, obligations or duties imposed by any federal, state, or local 

statutory law or common law anywhere in the world . . . that governs any 

 

6 As an initial matter, we must consider whether it was proper for the district court to 

consider coverage before the SRHS Lawsuits are resolved. We have previously noted that, 

“[u]nlike 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.” Estate of Bradley ex rel. Sample v. Royal Surplus Lines 

Ins. Co., Inc., 647 F.3d 524, 531 (5th Cir. 2011) (citation omitted) (applying Mississippi law). 

“[U]nlike 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.” Id.; 

see also D.R. Horton-Tex., Ltd. v. Markel Int’l Ins. Co., 300 S.W.3d 740, 743–45 (Tex. 2009) 

(applying Texas law); Martco Ltd. P’ship v. Wellons, Inc., 588 F.3d 864, 877 (5th Cir. 2009) 

(applying Louisiana law). 

While the duty to indemnify generally cannot be resolved solely on the pleadings, 

there is an exception to this rule. In Farmers Texas County Mutual Insurance Co. v. Griffin,

955 S.W.2d 81, 82, 84 (Tex. 1997), the Supreme Court of Texas announced that the duty to 

indemnify could be resolved at the summary judgment stage when “the insurer has no duty

to defend and the same reasons that negate the duty to defend likewise negate any possibility 

the insurer will ever have a duty to indemnify.” Thus, the duty to indemnify may be nonjusticiable at the summary judgment stage if “facts can be developed in the underlying . . . 

suit” that negate “any possibility the insurer will ever have a duty to indemnify.” Griffin, 

955 S.W.2d at 84 (emphasis omitted); see also Hartford Cas. Ins. Co. v. DP Eng’g, L.L.C., 827 

F.3d 423, 430 (5th Cir. 2016) (discussing the “no set of facts” exception in Griffin); see also 

Solstice Oil & Gas I, L.L.C. v. Seneca Ins. Co., 655 F. App’x 221, 224–25 (5th Cir. 2016) 

(similar). We have applied the general rule of non-justiciability in a case governed by 

Mississippi law, noting that “nothing in our research [] 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.” Royal Surplus, 647 F.3d at 531 n.5. Because 

we ultimately conclude that all of the district court’s identified claims fall within Exclusion 

7(e) and there are no set of facts that could be developed in the SRHS Lawsuits that would 

create a duty to indemnify, judgment as to indemnity is not premature.

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employee benefit arrangement program, policy, plan or scheme of any 

type . . . .” We disagree with the Medical Insureds’ argument that the district 

court read “govern” too broadly in determining the identified claims fell under 

Exclusion 7(e). Laws such as ERISA, the Mississippi Uniform Trust Code, the 

Civil Rights Act, the United States Constitution, the Mississippi constitution, 

and general common law create obligations with which employee benefit plans 

must comply. Accordingly, they “govern” employee benefit plans because the 

obligations they create control the pension plans. Indeed, the plaintiffs in the 

SRHS Lawsuits only bring claims under the identified common law and 

statutes because they create obligations with which pension plans must 

comply. Moreover, the language of the exclusion indicates that the exclusion 

cannot be limited to laws that “solely governs” employee benefit plans, such as 

ERISA or COBRA. The exclusion states that the law provided includes but is

not limited to ERISA and COBRA, meaning the realm of covered law is larger 

than those two statutes alone.

We also reject Medical Insureds’ argument that the constitutional 

violations alleged in the Jones, Cobb, and Beasley complaints fall outside of the

exclusion because, by its terms, Exclusion 7(e) only applies to a “violation of 

the responsibilities, obligations or duties imposed by any federal, state, or local 

statutory law or common law.” Put another way, Medical Insureds maintain 

the exclusion does not encompass constitutional claims. Assuming that 

“statutory law” and “common law” modify both “federal” and “state,” Medical 

Insureds have not identified a constitutional provision that gives them the 

right to sue and receive a remedy. Rather, the “constitutional claims” are 

based on statutory or common law, albeit based on an underlying violation of 

the constitution. See, e.g., 42 U.S.C. § 1983; Bivens v. Six Unknown Named 

Agents of Fed. Bureau of Narcotics, 403 U.S. 388 (1971)). Accordingly, the 

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“constitutional claims” fall within Exclusion 7(e) and the district court did not 

err in determining there was no ELI/EPL Coverage as to the identified claims.

2.

We likewise reject Medical Insureds’ remaining arguments on appeal. 

Medical Insureds maintain that “issues raised in [their] Verified Counterclaim, 

asserting multiple other bases requiring Federal to defend and indemnify 

under multiple policies issued from 2009 through 2016, independently 

preclude any judgment for Federal on direct or cross-appeal.”7 To the extent 

this argument refers to their waiver and estoppel arguments, the district court 

explicitly addressed and rejected these claims, and Medical Insureds do not 

challenge these determinations on appeal.8 To the extent this argument refers 

 

7 The district court determined that “all claims related to the pension plan are treated 

pursuant to the plain language of the policy as having been first made during the March 1, 

2014, through March 1, 2015 policy issued to Singing River.” Medical Insureds do not appeal 

this determination.

8 Instead, they maintain that the district court abused its discretion in denying their 

motion to conduct discovery on these claims prior to ruling on Federal’s motion for summary 

judgment. Rule 56(d) allows the district court to provide additional time for discovery before 

ruling on a motion if the nonmovant shows an inability to factually support its opposition. 

FED. R. CIV. P. 56(d). While “Rule 56(d) motions for additional discovery are broadly favored 

and should be liberally granted,” Am. Family Life Assurance Co. v. Biles, 714 F.3d 887, 894 

(5th Cir. 2013) (quoting Raby v. Livingston, 600 F.3d 552, 561 (5th Cir. 2010)), the party filing 

the motion must demonstrate “how additional discovery will create a genuine issue of 

material fact,” Canady v. Bossier Par. Sch. Bd., 240 F.3d 437, 445 (5th Cir. 2001) (quoting 

Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 28 F.3d 1388, 1396 

(5th Cir. 1994)). In evaluating a district court’s ruling on Rule 56(d) motions, we generally 

assess whether the evidence presented would affect the outcome of a summary judgment 

motion. See Biles, 714 F.3d at 894.

Medical Insureds have failed to explain how additional discovery would have affected 

the outcome of the summary judgment motion. See Prospect Capital Corp. v. Mut. of Omaha 

Bank, 819 F.3d 754, 758 (5th Cir. 2016) (affirming the denial of a Rule 56(d) motion where 

the party failed to “explain how such facts would influence the outcome of the summary 

judgment motion”); Biles, 714 F.3d at 894 (facts must “influence the outcome of the pending 

summary judgment motion”). The district court specifically addressed the issue of waiver, 

estoppel, and duty to defend and found the claims failed. Medical Insureds do not explain 

what other conduct, if proven, would have given rise to a claim for waiver or estoppel that 

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to additional policies, as the district court noted, the existence of a separate 

policy between Foundation and Federal was irrelevant because that policy was 

not at issue in the motion for summary judgment. Indeed, the district court 

only entered partial final judgment. 

In its final argument, Medical Insureds maintain that the district court 

erred in denying their request for joinder of all insureds and plaintiffs in the 

underlying SRHS Lawsuits under both Federal Rules of Civil Procedure 19(a) 

and 20. Under Rule 19, a party must be joined if:

(A) in that person’s absence, the court cannot accord 

complete relief among existing parties; or

(B) that person claims an interest relating to the 

subject of the action and is so situated that disposing 

of the action in the person’s absence may:

(i) as a practical matter impair or impede the 

person’s ability to protect the interest; or

(ii) leave an existing party subject to a 

substantial risk of incurring double, multiple, 

or otherwise inconsistent obligations because of 

the interest. 

FED. R. CIV. P. 19(a)(1). 

Medical Insureds maintain that all insureds needed to be joined under 

19(a)(1)(A) because their presence was necessary to afford complete relief. But 

the partial final judgment neither mentions any insureds other than SRHS, 

nor does it make Federal’s requested declaration as to the judgment being 

binding on the other insureds. The district court was therefore able to afford 

complete relief among the parties without joining the additional insureds, and 

thus Rule 19(a)(1)(A) did not require their joinder. Medical Insureds also argue 

the additional insureds needed to be joined under 19(a)(1)(B) because (1) the 

 

was not already addressed and rejected by the district court. Accordingly, we reject their 

argument that the district court abused its discretion in denying their Rule 56(d) motion.

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additional insureds have an interest in establishing the amount of available 

funds and preserving those funds to cover judgments against them and (2) 

Federal was exposed to a risk of incurring multiple or inconsistent obligations. 

But because Medical Insureds and the additional insureds had the same 

interest—maximizing coverage—their interests were protected. See Bacardi 

Int’l Ltd. v. Suarez & Co., 719 F.3d 1, 10–12 (1st Cir. 2013). As to the risk of 

multiple or inconsistent obligations, this risk is borne by Federal, who opposed 

the motion to join the additional insureds. The district court determined that 

the likelihood was not substantial as required by the statute, and on appeal, 

Medical Insureds make no attempt to explain how that determination was in 

error. 

Turning to the joinder of the plaintiffs in the SRHS Lawsuits, Medical 

Insureds maintain their financial interest in the outcome of coverage dispute 

makes them required parties under Rule 19(a)(1)(B)(i). Although we have 

determined that insurance plaintiffs may fall under that subsection, see 

Ranger Ins. Co. v. United Hous. of N.M., Inc., 488 F.2d 682, 683 & n.3 (5th Cir. 

1974), that case is distinguishable. There, the plaintiffs could not intervene in 

the federal action because their presence would divest the court of diversity 

jurisdiction. Id. at 682–83. By contrast, here, the plaintiffs can intervene 

because they are diverse. Accordingly, plaintiffs have means to protect their 

interest. See Smith v. State Farm Fire & Cas. Co., 633 F.2d 401, 405 (5th Cir. 

1980) (noting that an absent trustee’s ability to protect his interest was not 

significantly impaired where “[i]t is clear from the record that the trustee was 

aware of this litigation yet did not attempt to be made a party”); see also Am. 

Safety Cas. Ins. Co. v. Condor Assocs., Ltd., 129 F. App’x 540, 542 (11th Cir. 

2005) (discussing the relationship between required Rule 19(b) and the 

possibility of intervention). Moreover, as the district court noted, the plaintiffs 

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have the same interest as Medical Insureds—maximizing coverage—so, like 

the additional insureds, their interests are protected by Medical Insureds’

vigorous litigation in the coverage dispute. See Bacardi Int’l, 719 F.3d at 12 

(“Where an existing party has ‘vigorously addressed’ the interests of absent 

parties, we have no need to protect a possible required party from a threat of 

serious injury.”). Furthermore, as the district court noted, both the additional 

insureds and plaintiffs in the underlying SRHS Lawsuits had not moved to 

intervene. See United States v. San Juan Bay Marina, 239 F.3d 400, 407 (1st 

Cir. 2001) (noting that an alleged required party’s “decision to forgo 

intervention indicates that [it] d[id] not deem its own interests substantially 

threatened by the litigation, [and thus] the court should not second-guess [the 

district court’s determination it was not a required party], at least absent 

special circumstances”).

Under Rule 20, joinder of plaintiffs is permissive “when (1) their claims 

arise out of the ‘same transaction, occurrence, or series of transactions or 

occurrences’ and when (2) there is at least one common question of law or fact 

linking all claims.” Acevedo, 600 F.3d at 521. But “even if this test is satisfied, 

district courts have the discretion to refuse joinder in the interest of avoiding 

prejudice and delay, ensuring judicial economy, or safeguarding principles of 

fundamental fairness.” Id. (citations omitted). The district court noted that 

the logistics in joining all of the requested parties would create substantial 

delay, whereas it was in the best interest of all parties to have coverage 

determined as soon as possible. We have previously approved of the exercise 

of discretion to deny a motion under Rule 20 due to concerns of delay and 

judicial economy, see Acevedo, 600 F.3d at 522, and do so here. At bottom, the 

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district court did not err in denying Medical Insureds’ motion to join additional 

parties. 9 

IV.

As to the district court’s decision regarding Defense Costs, we REVERSE 

the grant of summary judgment in favor of Medical Insureds and RENDER 

judgment in favor of Federal. We AFFIRM the district court’s grant of partial 

summary judgment in favor of Federal regarding ELI/EPL Coverage. 

 

9 We do not address Medical Insureds’ argument, made for the first time in their reply, 

that this court should “revisit” the district court’s decisions regarding whether the claims in 

Beasley constitute “related claims.” 

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