Opinion ID: 1875795
Heading Depth: 3
Heading Rank: 2

Heading: employers mutual had a sound basis for offering $20,000.00.

Text: In reliance upon the advice of local counsel Tompkins' claim in excess of $20,000.00 was denied. It is contended the soundness of this advice is not the issue, but rather the insurer's reliance upon the legal opinion of an experienced insurance attorney when the offer was made. We are urged to hold the insurer had the right to this defense, and although conceding an erroneous interpretation of the policy, that such mistake did not justify punitive damages. Lincoln National Life Ins. Co. v. Crews, 341 So.2d 1321, 1322 (Miss. 1977), does hold, The mere fact that Lincoln rejected the claims under the provisions of its policy and defended this suit and lost does not justify the imposition of punitive damages. Gulf Guaranty Life Ins. Co. v. Kelley, 389 So.2d 920 (Miss. 1980), and Aetna Cas. & Sur. Co. v. Steele, 373 So.2d 797 (Miss. 1979), are cited as supporting authority. From this it is contended the legal opinion constituted a legitimate or arguable reason for the insurer to limit its offer to $20,000.00 and consequently the trial court erred in submitting the issue of punitive damages to the jury. This contention overlooks, however, the time interval from the first denial of the claim on September 3, 1981, based upon the exclusion and the offer of $20,000.00 shortly after February 1, 1982. Unquestionably during this interval Employers Mutual was not relying on the advice of counsel but upon the void clause in the policy as stated by Wilson to the Tompkins. It is true that subsequent to the attorney's opinion an offer of $20,000.00 was tendered to Tompkins but this also must be reviewed in context with the policy exclusion in the Lowery decision and other cases mentioned in assignment (b) below.
It is argued that the uninsured motorists coverage in excess of the minimum stacked amount of $20,000.00 required by statute is not subject to the exclusion and arguably is legally correct because it is supported in law, particularly Miss. Code Ann. § 83-11-101, § 83-11-111 (1972), and Talbot v. State Farm Mutual Automobile Ins. Co., 291 So.2d 699, 701 (Miss. 1974), wherein we stated: There is no requirement that the coverage shall be more than the minimum thus stated. As to any policy which grants the coverage required by the aforesaid Act, any excess or additional coverage shall not be subject to the provisions of this article. Miss. Code Ann. § 83-11-111 (1972). The coverage Insured contends for in this case is excess or additional to that required by the statute and by the express terms of the statute is not subject to its provisions. It follows that the parties to this suit were free to contract as to uninsured motorist coverage in any respect so long as the required coverage is not cut down by the policy provisions. See Harthcock v. State Farm Mutual Automobile Insurance Co., 248 So.2d 456 (Miss. 1971). If State Farm and Insured could contract free of statutory restraint as to excess coverage, they could also contract to limit the coverage to that required by statute. They did this by the Limits of Liability provision. Thus the limitation clause is consistent with the statute. If our consideration went no further and overlooked the interval from the first denial, September 3, 1981, until the first offer, February 1982, it would appear the insurer had a justifiable reason for denying the claim. In our opinion, however, we should not so narrowly limit our review. When we broaden our evaluation, the exclusion is again doggedly before us. As we read it we note there is no mention of restricting the exclusion to the minimum sums of the Uninsured Motorists Act. Neither do we find the Tompkins were advised the exclusion was fragmented so that a portion of the uninsured motorists benefits was retained in the policy but that a greater portion was excluded because it exceeded the minimal amount leaving the parties free to contract as to it. Stated differently, the argument overlooks the fact that the minimal amount and the excess amount are considered as one under the exclusion without informing the insured of the legal nuances now signaled from Talbot, supra . In our opinion the exclusion could only mean there was no coverage arising from any vehicle not listed in the policy. The same argument now urged upon us was rejected in Richards v. Allstate Ins. Co., 693 F.2d 502 (1982), by the United States Court of Appeals for the Fifth Circuit. There the insurer contended a similar exclusion should be retained as applying to the coverage in excess of the mandatorily required minimal amount. After noting the policyholders were not informed of the undisclosed coverage, the court stated: Allstate contends that retaining Exclusion 2 was justified in spite of Lowery and makes two arguments in support of this claim. Both are wholly without merit. First, Allstate asserts that Exclusion 2 was valid insofar as coverage in excess of that required by law was concerned. But this does not explain the fact that Exclusion 2 eliminated all coverage, not just that above the statutory minimum. In this case, for example, Richards' claim was within the statutory minimum, but it was denied based on the language of Exclusion 2. Second, Allstate contends that Exclusion 2 was in effect erased by provision 5 of the policy which stated: [S]uch terms of this policy as are in conflict with statutes of the state in which this policy is issued are hereby amended to conform. In Allstate's view, this provision corrected any deficiency in the policy. Therefore, it contends that deletion of Exclusion 2 was not required. This argument strains credibility. If it were accepted, Allstate could include in its policies any sort of invalid exclusion and then rely on change provision 5 when challenged. This would mean that policyholders, not insurance companies, would bear the burden of keeping abreast of changes in the law. Clearly this is not the intent of Mississippi's insurance code. Exclusion 2 as written and as retained in Allstate's policies from 1973 until well after 1977 was invalid under Lowery. Under the court's instructions the jury necessarily found that Allstate's failure to remove Exclusion 2 from its standard automobile policy until after this suit was filed was grossly negligent. This finding is supported by the proof. 693 F.2d at 505. The present situation and its exclusion are nearly identical, therefore, we are of the opinion that local counsel's advice was not altogether reasonable because it relied upon Talbot's broad terms while overlooking the great probability the insured would read the exclusion as written oblivious to any legal implications imposed upon it by Talbot. We find this assignment to be without merit. Although the appellant contends that Richards v. Allstate Ins. Co., supra , is not controlling, we find it persuasive to support the result reached by the trial court in this case and therefore adopt it as precedent.