Opinion ID: 1901355
Heading Depth: 2
Heading Rank: 1

Heading: whether the trial court erred in failing to dismiss wells's and oliver's claims as barred by the applicable statute of limitations.

Text: ¶ 9. Fidelity and American Bankers first argue on appeal that Wells's and Oliver's claims for breach of the implied covenant of good faith and fair dealing, breach of fiduciary duties, fraud, conspiracy, and punitive damages are barred by the statute of limitations. Wells and Oliver do not dispute that the three-year statute of limitations in Miss.Code Ann. § 15-1-49 (1995) is applicable to all of these causes of action. Levens v. Campbell, 733 So.2d 753, 758 (Miss.1999); Trammell v. State, 622 So.2d 1257, 1261 (Miss.1993) (tort actions arising from contractual obligations controlled by § 15-1-49). Both of the complaints were filed on July 15, 1998. Therefore, barring some applicable exception to the three-year statute of limitations, Wells and Oliver must demonstrate that their causes of action accrued on or after July 15, 1995. ¶ 10. Wells and Oliver advance a number of arguments for the tolling of the statute of limitations, the most persuasive of which involves tortious conduct in the force-placement of insurance reported in the case of Wells v. First Am. Bank West, 598 N.W.2d 834 (N.D.1999), in which the North Dakota Supreme Court, in reversing a dismissal by a lower court, held that the discovery rule tolled the running of the statute of limitations in a claim involving allegations of tortious conduct in the force-placement of CPI, as follows: The district court ruled very narrowly. Applying the discovery rule, the placement of the policy could trigger the statute of limitations if Wells knew, or should have known, of the excess coverage that is the basis of his breach of contract and fraud claims. The court did not apply the discovery rule, and notwithstanding Wells's admission that the claim would be barred if the placement of the policy were dispositive, the placement of the policy is not dispositive in this case. There is no mention in the memorandum opinion regarding discovery or what Wells actually knew or should have known regarding when the insurance was force placed. We believe reasonable minds could disagree upon when Wells knew or should have known about his claims for breach of contract and fraud. Therefore, without findings regarding what Wells knew or should have known, designating the time of placement of the policy as the trigger for the statute of limitations was in error. Id. at 839-40. ¶ 11. The North Dakota Supreme Court did not consider dispositive the fact that the plaintiff in that case had learned that insurance had been force-placed in 1990. The court instead noted that the plaintiff's contention was that the lender had force-placed insurance in excess of that permitted under the loan contract. Id. It concluded that the plaintiff did not learn of that excess force-placement until 1997 and held this date to be controlling for purposes of the discovery rule: The relevant question is when did Wells discover he had a potential cause of action against the insurance company. When Wells purchased the vehicle, the agreement called for force placed insurance to protect the bank's interest in the property. When Wells failed to insure the vehicle, he received a letter informing him insurance was being purchased and the cost added to his loan. Wells, however, argues the force placed insurance exceeded his obligation under the terms of his loan agreement. He argues he was never told of the excess insurance, and the November 16, 1990, letter from First American stated the excess coverage was for collision and comprehensive coverage only. Id. at 838-39. ¶ 12. In the present case, allegations similar to those made by the plaintiff in the North Dakota case have been made: that (a) Fidelity backdated its policies; (b) the vehicles would have to be repossessed in order for the force-placed policy to pay any amount whatsoever or before a claim could be made; and (c) the insurance that was force-placed was based upon a gross over time balance of the loan as opposed to the net payoff of the loan. The issue thus becomes whether a reasonable person similarly situated to Wells or Oliver would have discovered these potential claims.

¶ 13. Under the Security Agreements, Fidelity may not have had the right to backdate the force-placement of coverage. Wells's Promissory Note stated: I [Wells] will keep the security insured against loss by fire, theft and collision in case of motor vehicles, and against loss by fire for other security. If I do not I am in default, or at your [Fidelity] option, you may advance the premium on required or authorized insurance. The advance will become a part of the Note, and will be secured by the Security Agreement, and will bear interest at the Agreed Rate of Charge provided for in the Note. Wells signed the Promissory Note on the date she acquired her vehicle, and presumably she was given a copy of the same. ¶ 14. Oliver's Promissory Note stated as follows: The Collateral shall be at my [Oliver's] risk. I agree that I will keep the Collateral insured at my expense against the theft and accidental physical damages until such time as my obligations secured by this Security Agreement are fully paid.... In the event I fail to keep the Collateral insured, you [Fidelity] may purchase insurance, although you do not have a duty to do so. ¶ 15. Nowhere in these documents is Fidelity given the right to backdate the force-placement of insurance coverage. Fidelity was given the right or option to force-place insurance under the Security Agreements, but since Fidelity documents are silent as to what the effective date of force-placed coverage should be, a reasonable person could logically assume that the force-placed coverage would start from the date of the force-placement, as opposed to the date of the lapse of insurance. As Fidelity controlled the language of the Security Agreements, we necessarily interpret them to benefit Wells and Oliver and against Fidelity. State Farm Mut. Auto. Ins. Co. v. Latham, 249 So.2d 375, 378 (Miss.1971); Griffin v. Maryland Cas. Co., 213 Miss. 624, 57 So.2d 486 (1952); Claxton v. Fidelity & Guar. Fire Corp., 179 Miss. 556, 175 So. 210 (1937).
¶ 16. While Wells was testifying, defense counsel asked her to read from Exhibit D1-16. Unfortunately, this exhibit is not included in the record. However, Wells agreed that the exhibit was dated August 21, 1992, and that it stated that the force-placed coverage was effective from June 9, 1992, to June 9, 1993. If Wells received this document from Fidelity, it would have constituted reasonable notice to her that the coverage had been backdated. However, Wells never stated on the record whether she received it. In fact, she denied ever receiving any documentation from Fidelity. We can only conclude that Wells never received any notice of the backdating of the force-placement. ¶ 17. We therefore find that the trial court did not err in denying the motion to dismiss Wells's claim for backdating because she never received reasonable notice of the backdating and the statute of limitations never began to run until, presumably, documents were produced during discovery.
¶ 18. As stated previously, Fidelity force-placed insurance on Oliver's automobile on two occasions, one from November 1993, to November, 1994, and one from December, 1994, to March, 1995. Each time coverage was force-placed, within weeks thereof, Oliver received Certificates of Insurance from Fidelity. Each of the certificates clearly specifies the term of the coverage. We find that the Certificates of Insurance gave adequate notice of the backdating and that a reasonable person would have known of the backdating at the time of the receipt of the Certificates. We find that the trial court should have granted the motion to dismiss Oliver's claim for backdating because he received reasonable notice of the backdating and the statute of limitations began to run as early as December, 1993, when he received the Certificate of Insurance for the first force-placement, and as late as February, 1995, when he received the Certificate of Insurance for the second force-placement.
¶ 19. Wells and Oliver claim that they were injured by the force-placement of insurance because, before a claim could be made or before any payment of a claim could issue, the vehicle would have had to have been repossessed by Fidelity. Neither Wells nor Oliver has standing to make this claim because their vehicles were not damaged in any way during the period the force-placed coverage was in effect. Oliver's vehicle was damaged when no insurance, obtained personally or from Fidelity, was in effect, and he admitted that he had never filed a claim for that accident with Fidelity. The trial court therefore erred by denying Fidelity's motion for directed verdict on these claims.
¶ 20. We find that no notice was given to either Wells or Oliver that the force-placed insurance premiums were added to the balance of the loan using the gross over time method vs. net payoff method. Therefore, the statute of limitations never began to run until, presumably, documents were produced during discovery.
¶ 21. There was no proof at trial of which accounting method was used for the imposition of premiums on Wells's loan. There is practically no documentation from Wells's Fidelity account file, and there was no testimony concerning which accounting method was used for Wells's account. As the burden was on the plaintiffs to prove this allegation by a preponderance of the evidence, the trial court erred in denying Fidelity's motion for directed verdict insofar as Wells's accounting method claim is concerned. Fayard v. Louisville & N.R. Co., 48 So.2d 133, 135 (1950).
¶ 22. The only proof as to the accounting method used was during the plaintiffs' cross-examination of Jim McCrory, a Fidelity executive, when he was asked about Oliver's Fidelity account: Q. Okay. '95. Now, what is the gross balance [on Oliver's account] as of that date? A. As of April 8th of 1995, the gross balance on his account is $15,177.77. Q. Okay. So from looking at this, isn't it true, sir, that the insurance that would cover Mr. Oliver at that time was on the gross balance and not his payoff, right? A. It states there the outstanding balance at the time of inception was $15,132, yes, sir. Q. And according to your ledger, that is the gross balance and not the payoff, right? A. That was the balance at the time, right. Plaintiffs therefore met their burden of proof that the gross over time method was used for Oliver's account. Therefore, the trial court did not err in denying the motions to dismiss Oliver's claim because Oliver never received reasonable notice of the accounting method used and the statute of limitations never began to run until, presumably, documents were produced during discovery.