### IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

No. 18

- 60588

GARY W. NETTO; DEJUANA L. NETTO,
Plaintiffs

- Appellees

v. ATLANTIC SPECIALTY INSURANCE COMPANY,
Defendant

- Appellant

Appeal from the United States District Court for the Southern District of Mississippi

Before OWEN, SOUTHWICK and HIGGINSON, Circuit Judges

. LESLIE H. SOUTHWICK, Circuit Judge: This case presents a question of first impression under Mississippi insurance law: may an insurer rely on a consent

- to

- settle exclusion in an insurance policy to deny coverage of a claim made by an unnamed additional insured under that policy ? We conclude that absent evidence that the unnamed insured knew or should have known of the exclusion , the insurer may not enforce its contractual right to deny coverage because it had not co nsented to the settlement. AFFIRM ED

. United States Court of Appeals Fifth Circuit 

### FILED July 2, 2019 Lyle W. Cayce Clerk Case: 18-60588 Document: 00515020160 Page: 1 Date Filed: 07/02/2019No. 18

- 60588

2 FACTUAL AND PROCEDURAL BACKGROUND Gary Netto was involved in an automobile accident while acting in the scope of his employment for Pearl River County, Mississippi. The automobile in which Netto was a passenger was owned by Pearl River County and insured by Atlantic Specialty Insurance

. Netto was not a party to the policy between the county and Atlantic, but was an unnamed additional insured under its terms. The at

- fault vehicle was allegedly uninsured. Nearly t wo years after the accident , Netto’s attorney sent a letter to the Pearl River County Board of Supervisors advising the Board that she had been “retained to represent the interest of G ary Netto, involved in an automobile accident in Pearl River County, Mis sissippi on August 14, 2013.” The letter requested that the Board “forward this correspondence to the insurance carrier in force at the time of [ the ] accident and request that they make contact with our office immediately.” Atlantic received the forwarded letter on June 2, 2015 and assigned the case to claim s adjuster Barbara McConnell that same day. McConnell’s claim

- file notes from June 3

- 4 confir m that Atlantic considered Netto’s claim to be a possible uninsured motorist (“UM”) claim. The notes indicate that Atlantic contacted a representative of Pearl River County to discuss Netto’s potential claim. McConnell admitted in her deposition that

no one from Atlantic gave Netto any information regarding the applicable policy. While Netto ’s counsel sought unsuccessfully to contact the c ounty’s insurer , s he was negotiating a settlement with the at

- fault driver and the Mississippi Worker s ’ Compensation Trust. Netto reached a settlement with both, and the Mississippi Workers’ Compensation Commission approved the settlement. Atlantic did not attempt to contact Netto until the day the Commission approved the settlement , when McConnell left a message with Netto’s attorney Case: 18-60588 Document: 00515020160 Page: 2 Date Filed: 07/02/2019No. 18

- 60588

3 requesting a return call. There is no evidence that Netto’s counsel returned the call , or of any additional attempt s by Atlantic to contact Netto

. Nearly two months later, Netto’s counsel , having learned th at Atlantic was Pearl River County’s insurer through an unrelated suit, sent a second letter directly to Atlantic through its website . Th at letter informed Atlantic of the settlement and raised a possible claim : The policy limits have been collected from the at

- fault driver, and we intend to make a UM claim. Currently there are two (2) possible UM policies at issue

– the county’s and Mr. Netto ’ s GEICO policy. I believe the first step is to determine whether Mr. Netto is eligible to make a claim under the county UM policy, pending the policy language, since he was a passenger in a county owned truck and has a worker’s compensation claim. Considering the foregoing, I ask that you assign an adjuster to this claim and provide the relevant policy documents so that we can determine which UM carrier is primary. More than a year passed without a response from Atlantic before Netto and his wife filed suit , seeking damages under the uninsured motorist policy Atlantic is sued to Pearl River County . Atlantic moved for summary judgment, arguing that Netto was excluded from coverage due to his failure to obtain Atlantic’s consent before settling

. The district court denied the motion , holding that Atlantic had “not provided summary judgment evidence demonstrating Plaintiffs possessed actual knowledge of the provision s of the subject insurance policy or the identity of Pearl River County’s insurer prior to the July 21, 2015 settlement.” DISCUSSION We review the denial of a m otion for summary judgment de novo , applying the same standard as the district court. First Am. Bank v. First Am. Transp. Title Ins. Co. , 585 F.3d 833, 836

- 37 (5th Cir. 2009). S ummary judgment is appropriate when “ the pleadings, depositions, answers to Case: 18-60588 Document: 00515020160 Page: 3 Date Filed: 07/02/2019No. 18

- 60588

4 i nterrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact.” Celotex Corp. v. Catrett , 477 U.S. 317, 322 (1986) ( quoting F ED

. R. C IV

. P. 56(c))

. Our review of the evidence is in the light most favorable to the opponent of summary judgment

. Murray v. Earle , 405 F.3d 278, 284 (5th Cir. 2005)

. We similarly give de novo review to a district court’s determination s of state law , just as we do to its determinations of federal law

. S ee American Reliable Ins. Co. v. Navratil , 445 F.3d 402, 404 (5th Cir. 2006). In this diversity action, we apply the substantive law of Mississippi. Erie R.R. v. Tompkins , 304 U.S. 64, 78 (1938). In determining Mississippi law, we look to the final deci sions of the Mississippi Supreme Court. See American Int’l S pecialty Lines Ins. Co. v. Canal Indem. Co. , 352 F.3d 254, 260 (5th Cir. 2003). Where the state’s highest court has not spoken to an issue, we defer to intermediate state appellate court decisio ns unless convinced that the highest court would dis agree
. See Coastal Agric. Supply, Inc. v. JP Morgan Chase Bank, N.A. , 759 F.3d 498, 509

- 10 (5th Cir. 2014). Mississippi has an uninsured motorist statute that protects insurers’ subrogation rights. Se e M ISS

. C ODE A NN

. § 83

- 11

- 101. Nevertheless, the “Mississippi Supreme Court has applied a relatively thick coat of judicial gloss to the [Uninsured Motorist] Act.” Boatner v. Atlanta Specialty Ins. Co. , 115 F.3d 1248, 1253 (5th Cir. 1997). That court ex plained that it “must enforce [the Uninsured Motorist] Coverage Act as a valid expression of [the] legislature’s interest in protecting innocent victims at the hands of financially irresponsible drivers. In recognizing this valid expression [it has] consi stently construed the Act to provide, not limit, protection.” Lawler v. Gov’t Emps. Ins. Co. , 569 So. 2d 1151, 1154 (Miss. 1990). For example, in holding that uninsured motorist coverage in a policy could be “stacked,” the Mississippi Supreme Court expla ined that “ in order to limit this coverage it must be done Case: 18-60588 Document: 00515020160 Page: 4 Date Filed: 07/02/2019No. 18

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5 in such clear and unambiguous language that it may be readily seen and understood by the insured that the coverage is limited. ” Hartford Acc ident & Indem

. Co. v. Bridges , 350 So. 2d 1379 , 1381 (Miss. 1977)

. The Mississippi Supreme Court has never considered the enforceability of a consent

- to

- settle exclusion in an uninsured motorist policy against an unnamed additional insured. We do know the exclusion here would bar recovery if Netto w ere a n amed insured

. See U.S. Fid. & Guar. Co. v. Hillman , 3 67 So. 2d 914, 919

- 22 (Miss. 1979). More recently, the Mississippi Supreme C ourt stated that “where the uninsured motorist statu t es grant an insurer the right of subrogation and a provision in the poli cy precludes settlement with an uninsured motorist without the consent of the insurer, the provision of the policy is valid and will be upheld.” U.S. Fid

. & Guar. Co. v. Knight , 882 So. 2d 85, 9 2

- 93 (Miss. 2004) (quoting Hillman , 3 67 So. 2d at 921) ; accor d Smith v. Safeco Ins

. Co

. of Am

. , 704 F. Supp. 111 , 11 3 (S.D. Miss. 1988). These decisions are not dispositive , though, because Netto was an unnamed additional insured

. That has some significance, first, because the state’s high court has distinguished between named and unnamed insured s with respect to a variety of policy exclusions , including notice

- of

- suit exclusion s , s ee Rampy v. State Farm Mut. Auto. Ins. Co. , 278 So. 2d 428 , 433 (Miss. 1973)

. T he Mississippi Supreme Court justified t he se distinctions by concluding that enforcing a notice provision against an unnamed insured would place “an impossible burden on persons who were not contracting parties and who did not have possession of the insurance policy, and could not notify an insu rance company of which they had no knowledge.” Id

. The Mississippi Supreme Court has also drawn distinctions between the rights of named and unnamed insureds with respect to “stacking” of uninsured motorist coverage. See Meyers v. American States Ins. C o. , 914 So. 2d 669, 674

- 75 (Miss. 2005). Case: 18-60588 Document: 00515020160 Page: 5 Date Filed: 07/02/2019No. 18

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6 Also significant is that Mississippi courts routinely place the burden upon insurance companies to show that any exclusion to a n uninsured motorist policy applies. In holding that only a named insured is required to give the insurer notice of an action against an uninsured motorist, the Mississippi Supreme Court held that “ [t]he burden of proof is upon the insurer to show not only that the insured h as failed to perform the terms and conditions invoked upon him by the policy contract but in addition that it was substantially prejudiced thereby.” Rampy , 278 So. 2d at 434 (citation omitted). When determining whether a waiver of uninsured motorist cove rage was valid, that court also placed “the burden of proof on the insurer to show that such an exclusion or any other quasi

- rejection of uninsured motorist insurance was a knowing and informed decision .” Atlanta Cas. Co. v. Payne , 603 So. 2d 343, 348 (Mi ss. 1992)

. Consistent with these holdings , we conclude that another exception would apply to our facts. A n insurer must show that the unnamed additional insured knew or should have known of the insurance policy at issue and of the consent

- to

- settle prov ision

. An insurer could make s uch a showing by introducing evidence that it made reasonable efforts to inform the unnamed additional insured of the policy terms, or that the unnamed additional insured had access to a copy of the policy. There certainly m ay be other forms of evidence. Here, there is no evidence that Atlantic attempted to inform Netto of the policy terms, and indeed there was testimony that policy was not released to Pearl River County Employees as a matter of county policy

. AFFIRMED. Case: 18-60588 Document: 00515020160 Page: 6 Date Filed: 07/02/2019