Case Name: Theresa M. NECAISE and Larry J. Necaise v. U.S.A.A. CASUALTY COMPANY and Pamela Necaise Nuccio; Theresa M. NECAISE and Larry J. Necaise v. Pamela Necaise NUCCIO
Court: Mississippi Supreme Court
Jurisdiction: Mississippi
Decision Date: 1992-12-31
Citations: 644 So. 2d 253
Docket Number: Nos. 90-CA-0141, 91-CA-0043
Parties: Theresa M. NECAISE and Larry J. Necaise v. U.S.A.A. CASUALTY COMPANY and Pamela Necaise Nuccio. Theresa M. NECAISE and Larry J. Necaise v. Pamela Necaise NUCCIO.
Judges: HAWKINS, P.J., PRATHER, SULLIVAN and McRAE, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 644
Pages: 253–263

Head Matter:
Theresa M. NECAISE and Larry J. Necaise v. U.S.A.A. CASUALTY COMPANY and Pamela Necaise Nuccio. Theresa M. NECAISE and Larry J. Necaise v. Pamela Necaise NUCCIO.
Nos. 90-CA-0141, 91-CA-0043.
Supreme Court of Mississippi.
Dec. 31, 1992.
Opinion Denying Rehearing Oct. 27, 1994.
Jack Parsons, Rebecca C. Taylor, Parsons & Taylor, Wiggins, for appellants.
Patrick H. Zachary, Aultman Tyner McNeese & Ruffin, Hattiesburg, for appel-lees in No. 90-CA-0141.
Albert L. Necaise, Guliport, for appellees in No. 91-CA-0043.

Opinion:
ROY NOBLE LEE, Chief Justice,
for the Court:
Theresa M. and Larry J. Necaise filed their complaint to begin this suit on October 3, 1988, seeking contractual and punitive damages arising out of an insurance contract entered into with United States Automotive Association Casualty Co. (U.S.A.A.). More specifically, the complaint alleged that U.S.A.A. had breached its duty of good faith and fair dealing in: (1) refusing to pay benefits under a policy of insurance; (2) withholding payment willfully and in bad faith and (3) contrary to the express provisions of the policy. U.S.A.A.'s answer, filed February 23, 1989, stated a counterclaim in interpleader against Pamela Necaise Nuccio and U.S.A.A. deposited $41,033.40, the amount of insurance proceeds in dispute, with the court clerk.
Thereafter, on May 1, 1989, an agreed order was entered joining Pamela Necaise Nuccio as a party to the suit. Nuccio filed a "Motion for Claim and Entry" on July 2, 1989, requesting that she be awarded one-half of the interpled proceeds, since she was record owner of a one-half interest in the destroyed property. U.S.A.A. filed a motion for summary judgment on September 15, 1989, which the court granted as to the portion of the policy dealing with dwelling loss and punitive damages, leaving only the claim for further living expenses. The order also severed the portion of the case dealing with the proper distribution of the proceeds inter-pled to the court (the claim in interpleader) and dismissed that portion, with leave to file in the Chancery Court, which it found to be the proper forum for adjudication of that issue.
The circuit court tried the portion of the case dealing with the claim for additional living expenses on January 12, 1990, whereupon the jury returned a verdict for U.S.A.A. From that verdict and judgment entered, Theresa and Larry Necaise have appealed and present eleven issues for consideration by the Court.
Theresa and Larry Necaise filed a complaint in the Chancery Court of Pearl Riyer County on December 7, 1989, and sought a declaratory judgment pursuant to M.R.Cj.P. 57 that they alone were entitled to the insurance proceeds. Pamela Necaise Nuccio never filed a formal answer. The parties entered into a stipulation of facts on August 24, 1990, in accordance with the undisputed facts brought out at the prior trial and set out below.
Theresa and Larry filed a motion for summary judgment on October 5, 1990, which was opposed by Pamela and briefed by both parties. On December 19, 1990, the chancery court entered an "ORDER OVERRULING SUMMARY JUDGMENT" and holding that Pamela Necaise Nuccio was entitled to one-half of the proceeds of the policy for dwelling loss. Larry and Theresa also appealed this judgment and present three issues for consideration by the Court.
The issues on this consolidated appeal are condensed and reformed into two issues for discussion. Any issue not discussed is rejected as being without merit. i
FACTS
At the time of their divorce on May 27, 1982, Larry J. Necaise and Pamela Necaise Nuccio were the owners in joint tenancy of a home in Pearl River County, Mississippi. The decree granted the divorce to Pamela Necaise on the ground of habitual cruel and inhuman treatment, gave her custody of the couple's two minor children and awarded her $200 per month for support and maintenance of the children. No provision was made concerning the marital home.
Larry continued to live in the house and Pamela and the children moved elsewhere. Larry remarried in February, 1986, to Theresa M. Necaise, and they resided together in the house, which was still owned by Larry and Pamela. In February of 1988, Theresa applied for, and was issued, a homeowners insurance policy by U.S.A.A. Insurance Company. Larry and Theresa claimed, and U.S.A.A. did not dispute, that Theresa alone paid the $679 premium to obtain the policy. Theresa testified that she bought the policy because her husband could not get insurance on the property and to protect herself. The "policy declarations" listed Larry J. Necaise as the "named insured." The policy provided $60,000 coverage for dwelling loss, $5,000 for loss of other structures, $25,-000 for personal property loss, $10,000 for loss of use, $100,000 for personal liability and $1,000 medical payments loss.
Fire totally destroyed the house on September 9, 1988, during the policy period. U.S.A.A. hired Phillips and Associates, an independent adjusting firm, to adjust the loss. Phillips sent H.C. Booth to do the job. The company issued its first payment, a $5,000 advance, to Larry J. Necaise on September 23, 1988. The check listed Theresa Necaise as the "insured."
On September 29, 1988, U.S.A.A. issued a second check in the amount of $10,804.60, payable to the order of Larry J. Necaise and the Farmer's Home Administration, to pay off the deed of trust on the property. Theresa M. Necaise was shown on the cheek as the "policy holder." Another payment of $24,019 was made on October 17, 1988, this time payable to the order of Larry J. and Theresa Necaise. This check, purportedly, was in payment for loss of contents (personal property) and additional living expenses. The amount was arrived at after deducting the $5,000 advance payment.
On ' October 10, 1988, Theresa filed a "Proof of Loss" on the dwelling portion of the coverage. She listed the actual cash value of the house at $80,508.60 and claimed she was entitled to the full $50,000 limit for dwelling loss. U.S.A.A. issued a second cheek dated October 17, 1988, in the amount of $41,033.40, for dwelling loss and debris removal costs less prior payments. However, this check was marked "pay to the order of' Theresa M. Necaise, Larry J. Necaise and Pamela Necaise. Booth, the company's designated representative, testified that the company had no choice about how to issue the check; since Pamela owned an interest in the property she had to be listed on the check.
Theresa and Larry rejected the cheek and returned it to Booth. Theresa testified that they never attempted to secure Pamela's endorsement on the check or even told her that they had a check.
The policy provision concerning payment of the proceeds reads:
10. Loss Payment. We will adjust all losses with you. We will pay you unless some other person is named in the policy or is legally entitled to receive payment. Loss will be payable 60 days after we receive your proof of loss and:
a. reach agreement with you; or
b. there is an entry of a final judgment; or
c. there is a filing of an appraisal award with us.
Even though Larry and Theresa received $4,019 from U.S.A.A. in settlement of their-living expenses, once U.S.A.A. refused to issue a check in their names only, they claimed they were entitled to additional living expenses, since this action by the company kept them from building a new house where they would be permanently established. This was the sole issue tried in the circuit court and decided by the jury.
Theresa testified that she and Larry were unable to obtain financing to build a new home immediately after U.S.A.A. refused to pay them. They finally began building a new home at a different location in November of 1988. However, they ran out of money and had to postpone their efforts for some time. At the time of the trial on January 12, 1990, Theresa testified, they were again in the process of building and contemplated finishing their new house in about two more months. They were able to finish the house by obtaining a temporary loan of $25,000 in September of 1989.
Theresa and Larry submitted a list of the additional living expenses they claimed under the policy. The principal item of expense was rent on a house, which totalled $6,400 at $400 per month. Also included as additional living expenses were such items as "blueprints to rebuild" ($130), "electric service to building site" ($537.44), "renters insurance" ($255.80), gasoline ($1,825.80), water ($37.50), "P.O. Box charge ($28), "Bldg Permit" ($47.10), "Phone calls to Wiggins" ($20.25) and meals for the months of September and October of 1988 ($1,500). Booth testified that the blueprints and electricity charges were not "additional living expense" under the policy, but instead were part of the costs of rebuilding. The renters insurance, mailbox charge and gasoline were likewise not covered under the additional living expense portion of the policy, according to Booth. The expense for meals would seem to be included as part of the payment of $4,019 given to Theresa and Larry.
DISCUSSION
I. WHETHER THE LOWER COURT ERRED IN GRANTING THE MOTION FOR SUMMARY JUDGMENT ON THE GROUNDS THAT U.S.A.A. ACTED PROPERLY IN PLACING PAMELA NECAISE NUCCIO'S NAME ON THE CHECK.
This issue is the crux of this entire appeal. Theresa and Larry's claim for punitive damages and the additional living expenses they claimed arose from the alleged wrongful failure to pay them alone the dwelling loss claim. The circuit court granted U.S.A,A.'s motion for summary judgment, and found U.S.A.A.'s actions in this regard proper. It then severed and dismissed the portion of the suit dealing with the proper disposition of the interpled funds. •
As purely a matter of law, this Court's review of this issue is de novo. Stevenson v. Stevenson, 579 So.2d 550, 552-53 (Miss.1991); Planters Bank and Trust Co. v. Sklar, 555 So.2d 1024, 1028 (Miss.1990).
. The question at issue has never been considered in Mississippi in the context of a suit between the insured and the insurer. However, this Court has considered the question of the division of proceeds of an insurance contract taken out by one co-tenant in a suit among the co-tenants. In Sullivan v. Estate of Eason, 558 So.2d 830 (Miss.1990), the Court dealt with five children who had inherited their parent's house by intestate succession. One of the children insured her interest for the full value of the house before it burned down, then sought to keep the entire proceeds of the policy. Notably, the company in that case also placed all five heirs' names on the check. Testimony indicated that some money from one of the parent's estate had been used to purchase the insurance and that the insuring co-tenant had represented to the others that the insurance was for the benefit of all the co-tenants. The chancellor held that the insurance had been procured for the benefit of all and ordered the proceeds so divided. Id. at 832.
On appeal, this Court considered two distinct bodies of thought on the question of whether the other co-tenants were entitled to share in the proceeds of the policy. One line of cases "holds that insurance is a personal contract of indemnity to protect the insured," and that the co-tenants are not entitled to share in the proceeds of the policy. Id. at 833. The other line of cases holds that "one securing insurance for the benefit of the other insurable interests in property holds the proceeds in trust for those interests." Id. at 833. The Court then adopted the following analysis from an Alabama case, to be applied to the facts of each case:
Among the inquiries the supreme court considered relevant to a determination of whether the circumstances warranted a holding that the insurance proceeds be shared are: (1) whether the insurance was obtained for the sole benefit of the person who procured it; (2) whether by express or implied agreement the person who took out the insurance did'so for the benefit of the owners of the other interests in the property; and (3) whether the owners of the other interests contributed to the cost of the insurance. The supreme court con- eluded by stating that these questions were to be determined from the evidence presented at trial and the circumstances of the parties.
Summerlin v. Bowden, 353 So.2d 1175, 1179 (Ala.Civ.App.1978) (quoted in Sullivan, 558 So.2d at 844).
Application of the three factors adopted by this Court in Sullivan compels us to hold that the lower court erred in finding that U.S.A.A. properly placed Pamela Nuccio's name on the check for the dwelling loss. None of the factors favor Pamela's and U.S.A.A.'s position. First, the insurance was taken out by Theresa for her own and Larry's benefit, not for Pamela's. By taking insurance in the amount of $50,000 on a house worth approximately $80,000, Theresa seemingly attempted to insure only her own and Larry's interest in the home, not the entire value. Secondly, the record is absolutely devoid of evidence that any express or implied agreement existed between Theresa and/or Larry and Pamela. Indeed, it would be absurd to assume or imply such an agreement among a husband, his present wife and his ex-wife. Thirdly, Theresa purchased the insurance with her own funds. Pamela did not pay any of the costs of the insurance. To allow her to collect on this policy would be to grant her an absolute windfall.
Further, whether Theresa and Larry had a duty to share the proceeds with Pamela is of no consequence to U.S.A.A. If such a duty existed, it would be a matter among those three parties, not between U.S.A.A. and its policy holder(s). Theresa contracted for the insurance for her own and Larry's benefit, and it is only to those two parties that U.S.A.A. owes the obligation to pay benefits. If Pamela Nuccio, or any other stranger to an insurance contract, wishes to claim a portion of the benefits under a policy issued to another, it is incumbent upon her to stake her claim, not on the insurance company. The company's duty is to pay benefits to the party with whom it contracted. Although the case dealt with the relationship between a life tenant and remaindermen, we think that Estate of Murrell v. Quin, 454 So.2d 437 (Miss.1984) states the correct rule. "This Court is committed to the doctrine that fire insurance is an indemnity to the insured and the proceeds thereof do not run with the land." Id. at 439 (quoting King v. King, 163 Miss. 584, 595, 143 So. 422, 424 (1932). Instruction D-4, stating the contrary, was therefore granted in error.
From the foregoing analysis, we are of the opinion that both lower courts erred in their judgments.
The chancery court ruled that:
Pamela Necaise Nuccio was also a co-owner of the property whose interest was being held in trust for her by Larry, by virtue of his occupancy thereof, as a result of their prior divorce and her subsequent acquiescence in that continued use and occupancy by him. Therefore, the Court finds that the proceeds of $41,033.40 which has been interpled into the Court by the insurance company should belong one-half (½) to Larry and Theresa Necaise, and one-half (½) to Pamela Necaise Nuccio, with all previously paid sums for loss of content coverage to be retained in full by Larry and Theresa Necaise.
Pamela Necaise Nuccio, appellee in case number 91-CA-43, states in her brief that Shepherd v. Shepherd, 336 So.2d 497 (Miss.1976) is, " [dispositive of the issue concerning the state of the title," as if that is at issue in the case. All parties agree that the title to the property at issue in the case sub judice is held by Larry Necaise and Pamela Necaise Nuccio as joint tenants with full rights of survivorship. Nuccio then argues that "[u]n-der Mississippi law, the purchaser of an insurance policy must have an insurable interest in the property or life insured for the purchaser to be entitled to proceeds from the policy. Aetna Casualty & Surety Co. v. Davidson, 715 F.Supp. 775, 776 (N.D.Miss.1989)." Theresa, Pamela argues, had no insurable interest and therefore no right to the proceeds. She then concludes that she is entitled to share the proceeds with Larry merely because she is a joint tenant with him, adding no citation of authority to support her claim.
"[A]n insurable interest must exist in an insured when the contract is entered for it to be effective." Mississippi Farm Bureau Mut. Ins. Co. v. Todd, 492 So.2d 919, 931 (Miss.1986) (citing Southeastern Fidelity Ins. Co. v. Gann, 340 So.2d 429 (Miss.1976). All that is required for one to have an insurable interest in property is that the insured will suffer an economic loss if the property is destroyed. Gann, 340 So.2d at 433-34, (Miss.1976); Liverpool & London & Globe Ins. Co. v. Delaney, 190 Miss. 404, 200 So. 440 (1941). Further, once the insurable interest requirement is met, "the insurer is liable under the valued policy law for the amount named in the policy, regardless of the extent of the insurable interest." Todd, 492 So.2d at 932 (citing Hartford Fire Ins. Co. v. Clark, 154 Miss. 418, 429-31, 122 So. 551, 553-54 (1929)); Miss.Code Ann. § 83-13-5 (1972).
Insurers in this state do not seem to understand this concept. The policy of this state, embodied in the above case law, frowns upon insurers who sell insurance and then claim, upon a loss, that the insured has no insurable interest or less than that reflected by the policy limits. Clearly, Theresa had an insurable interest in the property by virtue of her homestead rights. The destruction of the property unquestionably caused her economic loss, e.g., moving expenses and the expense of finding other housing. Quite simply, she had a place to live before the fire, afterwards she had none. Had she chosen to, she could have named herself as the "named insured" and collected all of the proceeds herself. Under the law, she and Larry are entitled to all of the proceeds of the policy. The chancellor erred in ruling that Pamela was entitled to any of the proceeds.
II. WHETHER THE CIRCUIT COURT ERRED IN SEVERING THE PORTION OF THE SUIT DEALING WITH DWELLING LOSS?
After the circuit court's erroneous ruling on the propriety of U.S.A.A.'s actions, the case proceeded to trial on the only remaining claim, i.e., that the company had not paid all of the benefits due under the portion of the policy providing benefits for added living expenses arising from the destruction of the property.
The court may order severance of separate claims, and may do so upon its own motion. Miss.R.Civ.P. 42(b). The decision to sever rests within the sound discretion of the trial judge. Id.
However, the circuit court's decision to sever the claims in this case rests upon its erroneous decision on a matter of law, i.e., the propriety of U.S.A.A.'s decision to place Pamela Nuccio's name on the proceeds check. The lower court abused its discretion in this case. The claims for the proceeds of the policy under the dwelling loss and living expenses clauses were highly intertwined. In fact, the living expenses claim actually depended on the jury first finding that the expenses claimed resulted from U.S.A.A.'s failure to tender payment to Theresa and Larry, thus causing them to incur the extra expenses. This is borne out by the record, which shows that the circumstances surrounding the tender of the check in all three names was brought out in spite of the severance.
The circuit court erred both in its determination that the company acted properly in placing Pamela Nuccio's name on the proceeds check and in severing the portion of the claim dealing with the additional living expenses. The chancellor then erred on the same question concerning Nuceio's entitlement to the proceeds. Cause number 90-CA-0141 is remanded to the circuit court for a new trial in which the circumstances surrounding the the erroneous decision to place Nuccio's name on the check may be fully developed before the jury. Chancery Court cause number 91-CA-0043 is reversed and judgment is rendered here in favor of Theresa and Larry Necaise.
CASE NO. 90-CA-0141: REVERSED AND REMANDED TO THE CIRCUIT COURT.
CASE NO. 91-CA-0043: REVERSED AND RENDERED.
HAWKINS, P.J., PRATHER, SULLIVAN and McRAE, JJ., concur.
DAN M. LEE, P.J., dissents with separate written opinion joined by PITTMAN, BANKS and JAMES L. ROBERTS, Jr., JJ.