Opinion ID: 1867758
Heading Depth: 2
Heading Rank: 1

Heading: Whether the trial court erred in granting summary judgment for Gulf Guaranty because it cancelled rather than declined Anglin's credit life insurance coverage.

Text: ¶ 15. The interpretation of an insurance policy is a question of law, not one of fact. United National, 883 So.2d at 1165. Questions of law are reviewed de novo by this Court. See Spears v. State, 942 So.2d 772 (Miss.2006). ¶ 16. Insurance policies are contracts, and as such, they are to be enforced according to their provisions. . . . When parties to a contract make mutual promises (barring some defense or condition which excuses performance), they are entitled to the benefit of their bargain. United National, 883 So.2d at 1166. This Court has stated that: [g]enerally, under Mississippi law, when the words of an insurance policy are plain and unambiguous, the court will afford them their plain, ordinary meaning and will apply them as written. Paul Revere Life Ins. Co. v. Prince, 375 So.2d 417, 418 (Miss.1979). Under Mississippi law, ambiguous and unclear policy language must be resolved in favor of the non-drafting party  the insured. Harrison v. Allstate Ins. Co., 662 So.2d 1092, 1094 (Miss.1995).[ [15] ] Further, provisions that limit or exclude coverage are to be construed liberally in favor of the insured and most strongly against the insurer. Nationwide Mut. Ins. Co. v. Garriga, 636 So.2d 658, 662 (Miss. 1994). United National, 883 So.2d at 1165. This Court is bound to enforce contract language as written and give it its plain and ordinary meaning if it is clear and unambiguous. [Citations omitted]. Mississippi Farm Bureau Cas. Ins. Co. v. Britt, 826 So.2d 1261, 1266 (Miss.2002). ¶ 17. This Court relies upon the express language of the certificates of insurance. In so doing, we shall not accord either party greater or different rights than they agreed upon at the time of contract formation. In the case sub judice, the express language in each certificate of insurance is plain and unambiguous. It explicitly provides that [i]f [Gulf Guaranty] finds the Insured Debtor is not an insurable risk, it reserves the right to decline the Insurance within 90 days of the Date of Loan by mailing notice of declination directly to the Creditor Beneficiary and returning all premiums collected for this Certificate. (Emphasis added). The controversy here arises because, within ninety days of the date of the loan, Gulf Guaranty mailed notice of cancellation directly to People's Bank regarding the credit life insurance coverage and returned all premiums. As cancellation and declination are clearly not synonymous terms, focusing upon the clarity of the contractual provision is a red herring. See State Farm Mut. Auto. Ins. Co. v. Scitzs, 394 So.2d 1371, 1372 (Miss.1981) (this Court will not create ambiguities where they do not exist). Instead, the plain and unambiguous term decline must be afforded its plain, ordinary meaning and be applied as written. United National, 883 So.2d at 1165. ¶ 18. Anglin maintains that the provision at issue merely gave Gulf Guaranty the right to `decline' coverage under certain circumstances. It did not give Gulf Guaranty the right to `cancel' insurance. Nevertheless and contrary to policy terms, Gulf Guaranty cancelled all three credit life insurance policies which it issued to [Anglin,] but never declined within the ninety day window provided. In reply, Gulf Guaranty asserts that Anglin is elevating form over substance. In its estimation, [t]o the extent that there is a difference in meaning between the terms `cancelled' and `declined,' the focus should center on the substance of Gulf Guaranty's action in terminating the coverage in question. [16] Gulf Guaranty argues that the terms of coverage in the certificates of insurance reserved the right to pursue underwriting for a period of ninety (90) days. In the interim, coverage was conditionally provided until such time, if any, as it was determined that the insured risk was not acceptable. As such, Gulf Guaranty maintains that the substance of what Gulf Guaranty did with regard to the July 31, 1998[c]ertificates was to decline to finalize its conditional acceptance[ [17] ] of [Anglin] as an insurable risk. ¶ 19. [W]here the insurance policy does not provide the definition for a term or phrase, those words are afforded their ordinary and popular meaning. United National, 883 So.2d at 1165 (citing Blackledge v. Omega Ins. Co., 740 So.2d 295, 298 (Miss.1999)). In determining the ordinary meaning, this Court will often consult leading dictionaries. See Merrimack Mut. Fire Ins. Co. v. McDill, 674 So.2d 4, 8-9 (Miss.1996); American Guarantee and Liab. Ins. Co. v. The 1906 Co., 273 F.3d 605, 618-19 (5th Cir.2001). In so doing, this Court finds that the terms cancel and decline are distinguishable. To cancel means 2. [t]o annul or invalidate. Webster's II New College Dictionary 161 (2001). [18] By contrast, to decline means 1. [t]o refuse to do, consider, or accept something. Webster's II New College Dictionary at 293. [19] Clearly, to cancel presumes prior validation or acceptance, whereas to decline does not. See Malta Life Ins. Co. v. Washington, 552 So.2d 827, 829 (Miss.1989) ([i]t should also be noted that the master policy provides not that the Company may reject the excess coverage, but that it may cancel the excess coverage within thirty days after receipt of notice of the granting of the insurance. The use of the word ` cancel ' clearly contemplates a policy that has already become effective. ) (emphasis added). While Gulf Guaranty asserts that the distinction elevates form over substance, with respect to this contractual provision, the form and the substance are inextricably connected. As summary judgment was granted for Gulf Guaranty, this Court must view the evidence in the light most favorable to Anglin. United National, 883 So.2d at 1163. The plain language of the provision gave Gulf Guaranty the right to decline coverage within ninety days of the loan, not accept then cancel, or accept and reinsure, then cancel. Gulf Guaranty failed to decline credit life insurance coverage within ninety days of each loan. [20] Therefore, this Court concludes that the trial court erred in granting summary judgment for Gulf Guaranty because under the plain and unambiguous language of the certificate of insurance it improperly sought to cancel, rather than decline, Anglin's credit life insurance coverage on Certificates Number 1746754 0 and 1746755 0. ¶ 20. Moreover, even assuming arguendo that the policy language is ambiguous, such provisions are to be resolved in favor of the non-drafting partythe insured, id. at 1165 (citing Harrison, 662 So.2d at 1094), and if they limit or exclude coverage [they] are to be construed liberally in favor of the insured and most strongly against the insurer. Id. (citing Garriga, 636 So.2d at 662). The monthly disability insurance coverage on Certificate Number 1746755 7 was declined by Gulf Guaranty. [21] The credit life insurance coverage in Certificates 1746754 0, 1746755 0, and 1746759 0, however, were cancelled. Gulf Guaranty has no explanation for the linguistic form difference in the monthly disability insurance coverage letter and the credit life insurance coverage letter. Additionally, Gulf Guaranty admits that it reinsured the credit life insurance coverage of Certificate Number 1746754 0. To reinsure means 1. [t]o insure again. 2. To insure by contracting to transfer in whole or in part a risk or contingent liability already covered under an existing contract. Webster's II New College Dictionary at 934 (emphasis added). In order to contract to transfer all or part of Anglin's certificate of insurance, Gulf Guaranty had accepted and then contracted to transfer a portion of the risk to another insurer, thus nullifying its right to decline. After such an obvious act of acceptance, only cancellation, not declination, would be permissible. However, Gulf Guaranty, the drafter of the provisions, contractually reserved for itself only the right to decline. Therefore, this provision ought to be construed liberally in favor of Anglin and most strongly against Gulf Guaranty. United National, 883 So.2d at 1165. Gulf Guaranty had only the contractual right to decline Anglin's credit life insurance coverage, not cancel it. Therefore, even if the policy language is ambiguous, this Court concludes that the trial court erred in granting summary judgment because Gulf Guaranty improperly acted to cancel, rather than decline, Anglin's credit life insurance coverage on Certificates Number 1746754 0 and 1746755 0 . II. Whether Mississippi law prohibited Gulf Guaranty from cancelling credit life insurance coverage on the ground that Anglin was uninsurable, where it initially issued the coverage without asking health questions. ¶ 21. The July 31, 1998, certificates of insurance (Certificates Number 1746754 0 and 1746755 0 ) were issued without any health questions by Porter or the requirement for a health questionnaire. Thus, Anglin argues that Gulf Guaranty manifested its intent, under Mississippi law, to `insure the world.' For this reason, Gulf Guaranty could not legally cancel [Anglin's] insurance on the basis of a health condition. See Southern United Life Ins. Co. v. Caves, 481 So.2d 764, 768 (Miss. 1985) ([w]here an insurance company makes no effort to establish clear and meaningful guidelines to assist its agents in discerning persons eligible for coverage, but merely relies on the agents' judgment to select those persons appearing to be healthy, that company by its actions manifests an intention to `insure the world.'). ¶ 22. Caves, however, is distinguishable from the case sub judice. There, Caves's loan officer issued him a certificate of insurance for credit life insurance coverage in conjunction with an automobile loan. See id. at 765-66. The certificate of insurance contained a condition that Caves must be in insurable health at the time of issuance and that the insurer had 31 days from the receipt of their copy in the home office to investigate and accept or reject the insurance. Id. at 766. Twenty-two days after the certificate of insurance was issued, and before the first loan payment was made, Caves died of a heart attack associated with his pre-existing heart condition. Id. After receiving Caves's claim, the insurer postponed payment pending investigation and [a]fter obtaining medical records and reports of [Caves] . . . rejected the claim, finding that [Caves] was not in insurable health at the issuance of the policy. The company then refunded the . . . premium. . . . Id. Here, however, Anglin had not yet filed any claims before People's Bank's receipt of the cancellation letters from Gulf Guaranty. That fact is significant because even Gulf Guaranty admitted that had there been a claim, we would be here talking about an entirely different case . . . [Gulf Guaranty] probably would have just paid him. . . . ¶ 23. Gulf Guaranty contractually had the right to decline the insurance coverage within ninety days regardless of whether health questions were asked by Porter or answered on the application for insurance form. The problem is that Gulf Guaranty asserts that it conditionally accepted Anglin, with the right to cancel insurance coverage within ninety days. That assertion is implicit in its statement at the summary judgment hearing that had Anglin filed a claim, the case would be entirely different. [22] However, the plain language of the provision permits Gulf Guaranty only to decline insurance coverage. That which is conditionally accepted may not be declined, but only cancelled, because only cancellation presupposes an acceptance (conditional or otherwise). Therefore, prior to a claim being filed, [23] an insurer may conditionally accept an insured, reserving the right to cancel credit life insurance coverage on the ground that the insured is uninsurable, regardless of whether or not health questions were posed. See Gulf Guaranty v. Kelley, 389 So.2d 920, 922 (Miss.1980) (in a suit asserting failure to fulfill an obligation to provide insurance coverage, a recognizable defense is the non-absolute right of the insurance company, under the terms of its policy, to cancel the certificate of insurance issued within the number of days specified in the policy for the exercise of such right). Here, however, Gulf Guaranty reserved only the right to decline, not cancel, coverage. See Issue I. supra.