Opinion ID: 1864367
Heading Depth: 1
Heading Rank: 4

Heading: the trial court erred in denying kitchens' motion to add the executive director and board members of the mississippi insurance guaranty association as defendants.

Text: Miss. Code Ann. § 83-23-133 (1972) states: There shall be no liability on the part of and no cause of action of any nature shall arise against any member insurer, the association, its agents or employees, the board of directors, or the commissioner or his representatives for any good faith, affirmative action taken by them in the performance of their powers and duties under this article. Said immunity shall not extend to any acts of negligence by any such agents, employees, member of the board of directors, commissioner, or his representative committed in the performance of their duties hereunder. It appears that a potential suit against individual agents of MIGA is clearly acknowledged or allowed by statute and not prohibited, if the action in question involves negligence or bad faith. MIGA relies principally on Griffin v. Ware, 457 So.2d 936 (Miss. 1984), arguing that its agents were acting on behalf of a disclosed principal, MIGA, and could not be liable for an alleged tort arising out of a contractual relationship. Kitchens, Inc., relies on Leathers v. Aetna Cas. & Sur. Co., 500 So.2d 451 (Miss. 1986), which holds that, in a case where an insurance agent's actions may result in liability for the principal, [the] general rule in tort is that the agent or servant, the one whose conduct has rendered his principal liable, has individual liability to the plaintiff. In many contexts the principal thereafter has indemnity rights against the agent. Leathers, 500 So.2d at 453. One later case attempting to clarify the distinction between Griffin and Leathers is Schoonover v. West American Ins. Co., 665 F. Supp. 511 (S.D.Miss. 1987). Schoonover explained the difference as follows: In Leathers, the Mississippi Supreme Court declines to decide whether Leathers states a claim against Johanna Rice; it does not overrule Griffin v. Ware . The general rule in tort to which the Court refers is not inconsistent with the holding of Griffin v. Ware . An individual generally may be held liable jointly with a corporation for a tort he commits as an agent of the corporation. Griffin v. Ware establishes only that the tort of breach of an implied duty of good faith and fair dealing, being a hybrid of contract, is not a tort in the general sense. Schoonover, 665 F. Supp. at 516 (citations omitted). Schoonover goes on to say that to claim punitive damages against agents, when such an award would be calculated based on the net worth of the insurer, would be unjustifiable and abusive. Considering that punitive damages are not available here such a rationale would be inapplicable. Kitchens, Inc., moved for permissive joinder under Miss.R.Civ.P. 20. The rule appears to be applicable to this situation, as the relief sought by Kitchens, Inc., against MIGA and its agents arises out of the same transaction, occurrence, or series of transactions or occurrences, and there is a question of law or fact common to the proposed defendants. Federal appellate courts identify the appropriate standard of review as whether the trial judge abused his discretion when allowing or denying joinder. See Fenton v. Freedman, 748 F.2d 1358, 1361 (9th Cir.1984); Saval v. BL Ltd., 710 F.2d 1027, 1031 (4th Cir.1983). The better choice would have been to allow joinder, but we find, considering the uncertain state of the law, that the trial court's denial of joinder was not an abuse of discretion. This Court, on the controverted and substantial evidence presented by the parties in the court below, finds that the verdict of the jury against Kitchens, Inc. should be affirmed. It does appear that MIGA received protection from the statutory limitations and restrictions (and from a lack of case law construing the statute). This protection is not unintended by the legislative enactment. Miss. Code Ann. §§ 83-23-101 to -137 direct that MIGA step into the shoes of Excalibur insofar as assuming Excalibur's liability, while not exceeding the statutory limitation of liability of $300,000. MIGA's responsibility in acting in the place of Excalibur Insurance toward Kitchens, Inc., was presented to the jury, along with attempts to prove bad faith and entitlement to punitive damages. This was allowed despite the protection of Miss. Code Ann. § 83-23-133, which grants immunity to the Association itself so that its involuntary members might be protected. The sole purpose of the statute is to protect the insured from insolvent insurance companies and to require the financially healthy insurance companies to involuntarily contribute to protect the public. The statutes are of good purpose. Because of MIGA's involuntary nature the Legislature rightfully placed limitations on the liabilities of Association members. Even so restricted, however, we are to achieve the purpose of protecting the public or claimants against financial loss because of insolvency of insurers. To achieve this desirable result we must liberally construe the statute creating MIGA by the express terms of the statute. Mississippi Insurance Guaranty Ass'n v. Gandy, 289 So.2d 677 (Miss. 1973). Miss. Code Ann. § 83-23-115(1)(b) declares that the Association is deemed the insurer to the extent of its obligation on the covered claims and to such extent shall have all rights, duties and obligations of the insolvent insurer as if the insurer had not become insolvent. While the Association is protected by the statutory limitation of $300,000, it is also required by statute to assume the insurer's duties and obligations, which included Excalibur's duty to defend the insured. In Mississippi Insurance Guaranty Ass'n v. Vaughn, 529 So.2d 540, 542 (Miss. 1988), this Court said, We seek the best statement of policies and principles ... and afford the statute that reading most coherent in principle, given the entire statutory scheme... . Excalibur's duty to defend the insured is detailed by the following provision found in Kitchens Inc.'s policy with Excalibur: We have the right and duty to defend, with attorneys of our choice, any suit asking for these damages, but this does not include our defending any suit for damages not covered by the policy. We may make any investigation, negotiation and settlement of a claim or suit that we consider necessary. Our payment of the limit of liability provided by this policy ends our duty to defend or settle. This duty was completed when and only when MIGA complied with the statute and the Excalibur contract to its fullest extent, and paid into the court $300,000. Until the full payment was made, MIGA stood as Excalibur in relation to Kitchens, Inc. MIGA is also protected by the failure of Kitchens, Inc., to defend itself as to the claim by the estate of Mulloy, and further by Kitchens Inc.'s failure to appeal the jury verdict in favor of the estate of Mulloy. MIGA has done that which it is finally required to do by statute  pay in its $300,000. Until such payment it had a statutory and contractual responsibility to pay or defend. All of the pertinent facts and allegations of failure to timely pay or defend were presented to the jury, and the jury found that MIGA had evaluated the Mulloy claim and concluded that a reasonable settlement offer had been made and that nothing was owing from MIGA to Kitchens, Inc. The other points raised on appeal have been considered by this Court and need not be discussed. The judgment of the Madison County Circuit Court is affirmed. AFFIRMED. ROY NOBLE LEE, C.J., HAWKINS, P.J., and PRATHER, ROBERTSON, SULLIVAN, ANDERSON, and BLASS, JJ., concur. DAN M. LEE, P.J., not participating.