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 consented 

to the settlement. 

AFFIRMED.

United States Court of Appeals

Fifth Circuit

FILED

July 2, 2019

Lyle W. Cayce

Clerk

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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 two 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 Gary Netto, involved in an automobile 

accident in Pearl River County, Mississippi 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 claims adjuster Barbara McConnell that same day. 

McConnell’s claim-file notes from June 3-4 confirm 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 county’s 

insurer, she was negotiating a settlement with the at-fault driver and the 

Mississippi Workers’ 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 

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requesting a return call. There is no evidence that Netto’s counsel returned 

the call, or of any additional attempts by Atlantic to contact Netto. 

Nearly two months later, Netto’s counsel, having learned that Atlantic 

was Pearl River County’s insurer through an unrelated suit, sent a second 

letter directly to Atlantic through its website. That 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 issued 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 provisions 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 motion 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). Summary 

judgment is appropriate when “the pleadings, depositions, answers to 

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interrogatories, 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 FED. R. CIV. 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 determinations of 

state law, just as we do to its determinations of federal law. See 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 

decisions of the Mississippi Supreme Court. See American Int’l Specialty 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 decisions unless convinced that the highest court would 

disagree. 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. See MISS. CODE ANN. § 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 explained 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] consistently 

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 explained that “in order to limit this coverage it must be done 

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in such clear and unambiguous language that it may be readily seen and 

understood by the insured that the coverage is limited.” Hartford Accident & 

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 were a named insured. See U.S. Fid. & Guar. Co. v. Hillman, 

367 So. 2d 914, 919-22 (Miss. 1979). More recently, the Mississippi Supreme 

Court stated that “where the uninsured motorist statutes grant an insurer the 

right of subrogation and a provision in the policy 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, 92-93 (Miss. 2004) (quoting Hillman, 367 So. 2d at 921); accord Smith v. 

Safeco Ins. Co. of Am., 704 F. Supp. 111, 113 (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 insureds

with respect to a variety of policy exclusions, including notice-of-suit 

exclusions, see Rampy v. State Farm Mut. Auto. Ins. Co., 278 So. 2d 428, 433

(Miss. 1973). The Mississippi Supreme Court justified these 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 insurance 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. Co., 914 So. 2d 669, 674-75 (Miss. 2005).

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Also significant is that Mississippi courts routinely place the burden 

upon insurance companies to show that any exclusion to an 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 has 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 coverage 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 (Miss. 1992). 

Consistent with these holdings, we conclude that another exception 

would apply to our facts. An 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 provision. An insurer could make such 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 may 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.

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