Opinion ID: 32180
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Heading: Were President and Genesis's Payments Voluntary or Compelled?

Text: 27 An involuntary payment is one not proceeding from choice. 66 Am.Jur. § 112 (2001). Payments that are made by virtue of legal obligation or by accident or mistake are inherently involuntary. 2 Id. Payments made under compulsion are also not considered voluntary, and are thus not barred from recovery by the volunteer doctrine. McDaniel Bros. Const. Co., Inc. v. Burk-Hallman Co., 253 Miss. 417, 175 So.2d 603 (1965); McLean v. Love, 172 Miss. 168, 157 So. 361, 362 (1934). 28 President and Genesis contend that their contributions to the Baker settlement were the product of compelling circumstances created by Wausau, and thus were not voluntary. Specifically, the appellants argue that Wausau, in notifying President of its intention to deny coverage with respect to a premises liability claim less than a month and a half before trial deprived it and Genesis of the ability to mount an adequate defense, thus forcing them to participate in a settlement. 3 The district court disagreed, holding that, as a matter of law, a lack of timely notice does not sufficiently compel to enable an otherwise voluntary payment to achieve immunity from the voluntary payment doctrine. While Wausau's handling of the Baker claim appears to have been less than admirable, we agree that its conduct did not compel President and Genesis to throw their hats into the settlement ring. 29 The meaning of compulsion with respect to the voluntary payment doctrine is not well-defined in Mississippi. There are only a handful of Mississippi state cases that discuss the voluntary payment doctrine at any length, and neither the parties nor or independent research have revealed any that have been decided within the past twenty years. 4 There has been a trend toward expanding the range of situations that are considered compelling, 66 Am. Jur.2d § 109; Halstead Terrace Nursing Cntr., Inc. v. Scottsdale Ins. Co., 1997 WL 124263  (N.D.Ill.1997), that Mississippi has not yet had the opportunity to pass upon. As in many other areas of the law, whether a payment was compelled or made voluntarily is a highly factual determination, Glantz Contracting Co. v. General Electric Co., 379 So.2d 912, 917-18 (Miss. 1980), and none of the Mississippi cases address the issue of compulsion issue apart from its particular factual context. Accordingly, we enlist the assistance of cases from other jurisdictions and the legal literature in an attempt to surmise whether the Mississippi Supreme Court, as a matter of law, would apply the voluntary payment doctrine in the undisputed factual circumstances surrounding the settlement. See, e.g., American Indemnity Lloyds v. Travelers Property & Casualty Ins. Co., 335 F.3d 429, 2003 WL 21437012 (5th Cir. 2003); 66 Am.Jur.2d §§ 108-09 (2001). 30 Not all pressure for payment amounts to compulsion. 16 Lee R. Russ, Couch on Insurance § 223.28 (3d. ed.2003). The general rule guiding the determination of whether a payment was made voluntarily or not can be stated as follows: 31 where a person pays an illegal demand, with full knowledge of all the facts which render the demand illegal, without an immediate and urgent necessity to pay, unless it is to release his or her person or property from detention or to prevent an immediate seizure of his or her person or property, the payment is voluntary. It is only when, in an emergency for which a person is not responsible, the person is compelled to meet an illegal exaction to protect his or her business interest that he or she may recover the payment, but if, with knowledge of the facts, that person voluntarily takes the risk of encountering the emergency, the payment is voluntary and may not be recovered. 32 66 Am.Jur.2d § 109 (emphasis added). President and Genesis's claim of compulsion falls short in two respects. 33 President and Genesis were faced with one of two options: (1) contributing $200,000 immediately to a settlement; or (2) allowing the Baker case to go to trial, and waiting for a ruling in the declaratory judgment action, at which point they would be held responsible for a certain percentage (estimated from 0%-50%) of the damages (that Genesis feared could reach $1 million) as determined by a jury for whom they had little time to prepare. 34 First, this dilemma lacks the sense of immediacy often accompanied by compelled payments. See, e.g., Glantz, 379 So.2d at 917-18 (finding that appellee who could either make payments or face an immediate work stoppage threatening an important contract was compelled to make payments); Mobile Telecomm. Tech. Corp. v. Aetna Casualty & Surety Co., 962 F.Supp. 952, 955 (S.D.Miss.1997)(It is well-established that it is not duress to institute or threaten to institute civil suits...). Litigation, particularly where two separate cases, in two separate courts, are involved, often takes years to resolve. 35 Second, the stakes, in the event that President and Genesis refused to participate in the settlement, were of an insufficiently dire magnitude to justify finding that their settlement contributions were compelled. [A] payment is considered coerced only where it is made to avoid the loss of a necessity, or to prevent an injury to a person, business or property which is different and disproportionately greater than the unlawful demand. Dreyfus v. Ameritech Mobile Comm., Inc., 298 Ill. App.3d 933, 233 Ill.Dec. 61, 700 N.E.2d 162, 165-66 (1998). See, e.g., Mobile Telecomm., 962 F.Supp. 952 (finding no compulsion when insurer had choice between making payments on its insured's $2 million legal bill or awaiting coverage determination and possibly paying additional amount for insured's interim financing); Alcoa Steamship Co. v. Velez, 285 F.Supp. 123, 125 (D.Puerto Rico 1968) (holding that employer's payment of workmen's compensation insurance premium, when faced with alternative of losing all coverage, was compelled). 36 Surely, the prospect of paying a maximum, as estimated by President and Genesis, of $1,000,000 between them after the jury returned its verdict, and all appeals (of both the state case and this action) had been exhausted, did not threaten to have such a disastrous effect to business that President and Genesis, two national corporations, one of whose business was to insure against precisely these kinds of judgments, felt compelled to contribute to the Baker settlement. Randazzo v. Harris Bank Palatine, N.A., 262 F.3d 663, 669 n. 1 (7th Cir.2001). This is particularly true when we take appellants' contention (which is well supported) that the Genesis policy did not cover the Baker accident (meaning that they would ultimately not be required to pay any portion of a jury verdict) at face value. Compare Halstead Terrace Nursing Cntr., Inc. v. Scottsdale Ins. Co., 1997 WL 124263 (finding that where insured nursing home was faced with `enormous potential liability' in excess of the policy limits, treble damages, and disruption to personnel by continued litigation of a wrongful death suit against it, $175,000 payment in order to enable settlement was compelled). 37 While Wausau's questionable conduct placed Genesis in an unenviable position, the law does not permit us to grant Genesis and President immunity from the volunteer doctrine on the grounds that their settlement payments were compelled. Wausau, President, and Genesis recognized that there was little chance that a jury would not find in favor of Baker after viewing a videotape that showed President's shuttle bus hitting Baker as she walked onto the crosswalk. The liability stipulation, and subsequent settlement, were borne not so much of Wausau's compulsion, but of strategy (albeit influenced by Wausau's actions). 38