Court Opinion

ID: 865021
Source: CourtListenerOpinion
Date Created: 2013-04-27 00:24:16.233899+00
Date Added: 2024-06-11T09:57:07.560407
License: Public Domain

IN THE SUPREME COURT OF MISSISSIPPI

                             NO. 2005-CA-01158-SCT

MISSISSIPPI        INSURANCE         GUARANTY
ASSOCIATION

v.

MS CASUALTY INSURANCE COMPANY AND
AMERICAN RELIABLE INSURANCE COMPANY,
INC.

DATE OF JUDGMENT:                      06/08/2005
TRIAL JUDGE:                           HON. WILLIAM JOSEPH LUTZ
COURT FROM WHICH APPEALED:             MADISON COUNTY CHANCERY COURT
ATTORNEYS FOR APPELLANT:               JAMES D. HOLLAND
                                       LOUIS GLAZIER BAINE, JR.
                                       ROBERT S. ADDISON
                                       TERRY R. LEVY
                                       JASON HOOD STRONG
ATTORNEYS FOR APPELLEES:               KELLY D. SIMPKINS
                                       WALTER D. WILLSON
                                       ROSEMARY G. DURFEY
NATURE OF THE CASE:                    CIVIL - CONTRACT
DISPOSITION:                           AFFIRMED - 10/26/2006
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

      BEFORE WALLER, P.J., EASLEY AND CARLSON, JJ.

      CARLSON, JUSTICE, FOR THE COURT:

¶1.   Aggrieved by the Madison County Chancery Court’s grant of summary judgment in

favor of MS Casualty Insurance Company and American Reliable Insurance Company, Inc.,
the Mississippi Insurance Guaranty Association appeals to us. Finding no reversible error,

we affirm.

              FACTS AND PROCEEDINGS IN THE TRIAL COURT

¶2.   MS Casualty Insurance Company (MS Casualty) is a Mississippi-based insurance

company. It began issuing workers’ compensation insurance policies in 1993. American

Reliable Insurance Company, Inc. (American Reliable) is an Arizona-based insurance

company which also formerly issued workers’ compensation insurance policies. General

Reinsurance Corporation (Gen Re) was the reinsurer of MS Casualty’s workers’

compensation policies from January 1, 1993, to December 31, 1995. American Reinsurance

Company (Am Re) was the reinsurer of MS Casualty’s workers’ compensation policies

effective January 1, 1996. Gen Re was the reinsurer of American Reliable’s workers’

compensation policies.

¶3.   On September 28, 2000, American Reliable exited the workers’ compensation

business by entering an “Assumption Reinsurance Agreement” (ARA) with Legion Insurance

Company (Legion), a Pennsylvania insurance company. MS Casualty followed suit on

September 29, 2000. The ARAs were approved by the Mississippi Department of Insurance.

The ARA between MS Casualty and Legion retroactively transferred MS Casualty’s

obligations under the policies to Legion as of January 1, 1993, through December 31, 2000.

Also, the ARA between American Reliable and Legion retroactively transferred American

Reliable’s obligations to Legion as of October 1, 1999, through December 31, 2000. MS

Casualty and American Reliable ceded all outstanding net loss and voluntary unearned

                                            2
premium reserves to Legion. Gen Re and Am Re, the reinsurers, entered into assignment

agreements which transferred to Legion all obligations they owed MS Casualty and

American Reliable. As of January 1, 2001, Legion had sole responsibility to the

policyholders and claimants.

¶4.    Legion sent policyholders “Certificates of Assumption” stating that Legion would be

responsible for any claims under the policies. Legion requested that all future claim requests

be directed to AmFed Companies, its claims administrator, and directed that all future

premiums be paid to Legion. The certificates also stated that Legion would be responsible

for any future claims. Legion did not contact the claimants who were already receiving

benefits under the MS Casualty and American Reliable policies.

¶5.    Subsequently, Legion entered rehabilitation due to cash flow problems. The

Pennsylvania Insurance Commissioner petitioned for liquidation of Legion, and on July 25,

2003, liquidation was ordered by the Commonwealth Court of Pennsylvania. The insurance

commissioner was appointed as the statutory liquidator (Liquidator) and was responsible for

making arrangements for continued payment of claims under Legion’s policies.

¶6.    The Liquidator ordered that policyholders asserting a right to proceeds of a

reinsurance agreement to which Legion was a party should file a petition to intervene with

the court. Subsequently, the Liquidator filed an emergency application for stay pending

appeal or confirmation of automatic stay with respect to the portion of the court’s Order of

Liquidation allowing direct access to reinsurance. Gen Re and Am Re were ordered to pay

any monies they would have owed to Legion as reinsurance to the Liquidator.

                                              3
¶7.    Following the court’s entry of the Order of Liquidation, the Mississippi Insurance

Guaranty Association (MIGA), by statutory authority, stepped into the shoes of Legion to

protect the interests of Legion’s Mississippi policyholders and claimants. MIGA was

statutorily created by the Mississippi Legislature to pay “covered claims under direct

insurance” when an insurer becomes insolvent.

¶8.    After reviewing the claims made to Legion, MIGA decided that the claims were not

“covered claims under direct insurance” within the meaning of the statute. MIGA requested

MS Casualty and American Reliable to pay any claims made under the policies to avoid

numerous multiparty lawsuits filed by the claimants. There were 181 claims at issue. Rather

than having to deal with all of these potential lawsuits, MIGA requested MS Casualty and

American Reliable to try one suit before a chancellor to decide if the claims were “covered

claims under direct insurance.” MIGA agreed to reimburse MS Casualty and American

Reliable for any claims the companies wrongly paid if a chancellor ordered MIGA to do so.

¶9.    MS Casualty and American Reliable thereafter commenced suit against MIGA in the

Madison County Chancery Court demanding (1) reimbursement of claims paid by MS

Casualty and American Reliable, and (2) MIGA’s assumption of liability for future claims.

The reinsurers, Gen Re and Am Re, were original parties to the suit, but they were dismissed

by MS Casualty and American Reliable because Gen Re and Am Re were ordered to pay

their monies to the Liquidator.

                                             4
¶10.   Chancellor William J. Lutz conducted a hearing on May 3, 2005, on the motion for

summary judgment filed by MS Casualty and American Reliable.1 The chancellor concluded

that (1) the ARAs constituted a novation between MS Casualty and American Reliable and

Legion, which ceded to Legion all responsibilities previously assumed by MS Casualty and

American Reliable; (2) the claims constituted covered claims according to the statute; (3) the

policies assumed by Legion were direct insurance according to the statute; and, (4) the

policyholders, and not the claimants themselves, were the only ones to whom notice had to

be given concerning the ARA. The chancellor granted summary judgment in favor of MS

Casualty and American Reliable and ordered MIGA to reimburse past claims and to assume

payments of future claims.2

¶11.   Further, the chancellor recognized that the reinsurers, Gen Re and Am Re, were the

insurance companies that should be liable for the claims. The reinsurers were obligated to

pay the claims according to the reinsurance contracts; however, Gen Re and Am Re had

already been ordered to pay that sum to the Liquidator. Gen Re and Am Re had refused

MIGA’s demand that they pay MIGA directly inasmuch as this action would have resulted

in double payment by Gen Re and Am Re. The chancellor denied MIGA’s motion to rejoin

the reinsurers since it was the opinion of the chancellor that MS Casualty and American

Reliable should never have been parties to the suit. The chancellor urged MIGA to sue Gen

       1
           The chancellor held a total of three hearings on this matter.
       2
      MIGA was ordered to reimburse MS Casualty the sum of $3,371,562.30 and
American Reliable the sum of $213,426.89.

                                                5
Re and Am Re if MIGA felt that the Liquidator would not cover the claims of the Mississippi

claimants.3 The chancellor also denied MIGA’s motion to stay the grant of summary

judgment for further discovery. The chancellor further ordered MIGA to immediately review

the claims files to determine the specific dollar amount of reimbursement owed to MS

Casualty and American Reliable.

¶12.   MIGA did not immediately start paying the claims as the chancellor ordered. In a

subsequent hearing on May 26, 2005, MIGA argued before the chancellor that some of the

claims were from claimants who did not live in Mississippi and, thus, MIGA was not liable

for those claims. The chancellor allowed MIGA extra time to review seven claims files and

ordered MIGA to file a brief report concerning its opinion on liability as to those seven

claims.4

¶13.   At the final hearing on June 8, 2005, the chancellor ruled that MIGA was liable for

six of the seven contested nonresident claims. The chancellor made a detailed finding on the

record as to why MIGA was or was not liable for each claim. The chancellor also denied

MIGA’s motion for a full accounting of the funds of MS Casualty and American Reliable.

       3
        Throughout the first hearing on this matter, the chancellor repeatedly stressed that
the reinsurers, Gen Re and Am Re, had responsibility for paying the claims. When the
chancellor granted summary judgment, he offered to assist MIGA in bringing Gen Re and
Am Re before the court if Mississippi policyholders and claimants did not receive
appropriate relief from the Liquidator.
       4
        Instead of a brief report, MIGA filed a report that was nearly 400 pages long. This
report concerned issues beyond whether MIGA was liable for the claims of the seven
nonresidents.

                                             6
Finally, the chancellor granted the motion to strike portions of the record considered

redundant, as filed by MS Casualty and American Reliable.5

¶14.   It is from the chancellor’s grant of summary judgment in favor of MS Casualty and

American Reliable that MIGA appeals to us.

                                       DISCUSSION

¶15.   This Court reviews a grant of summary judgment de novo. Richardson v. Norfolk

Southern Ry., 923 So. 2d 1002, 1007 (Miss. 2006) (citing Leffler v. Sharp, 891 So. 2d 152,

156 (Miss. 2004)); Pitts v. Watkins, 905 So. 2d 553, 555 (Miss. 2005) (citing Aetna Cas. &

Sur. Co. v. Berry, 669 So. 2d 56, 70 (Miss. 1996)). This Court shall consider “all the

evidentiary matters before it–admissions in pleadings, answers to interrogatories, depositions,

affidavits, etc. The evidence must be viewed in the light most favorable to the party against

whom the motion has been made.” McDaniel v. Shaklee U.S., Inc., 807 So. 2d 393, 395

(Miss. 2001) (citing Lumberman’s Underwriting Alliance v. City of Rosedale, 727 So. 2d
710, 712-13 (Miss. 1998)). “If any triable issues of material fact exist, the lower court’s

decision to grant summary judgment will be reversed.” Id. (citing Brown v. Credit Ctr., Inc.,

444 So. 2d 358, 362 (Miss. 1983)).

¶16.   Turning to the issues with which we are confronted today, this Court must decide (1)

whether the Assumption Reinsurance Agreements (ARA’s) constituted a novation; (2)

whether the claims are “covered claims under direct insurance;” (3) whether MIGA is liable

       5
       The chancellor struck pages 2-10 of the nearly 400 page report submitted by MIGA
that went beyond the scope of the subject of the claims of the nonresidents.

                                              7
for claims from nonresidents; and, (4) whether the chancellor abused his discretion in (a)

denying MIGA’s motion to stay summary judgment to allow further discovery, (b) denying

MIGA’s motion for a full accounting, and (c) granting MS Casualty’s and American

Reliable’s motion to strike portions of the record.

       I.     WHETHER    THE   ASSUMPTION   REINSURANCE
              AGREEMENTS BETWEEN MS CASUALTY AND AMERICAN
              RELIABLE AND LEGION CONSTITUTED A NOVATION
              WHICH RELEASED MS CASUALTY AND AMERICAN
              RELIABLE FROM LIABILITY UNDER THE WORKERS’
              COMPENSATION POLICIES.

¶17.   We first address the issue of whether novation was accomplished by substituting

Legion for MS Casualty and American Reliable in the insurance policies. “[A] novation may

occur where the debt remains the same, but a new debtor is substituted. In such event, the

original debtor is acquitted, his obligation is extinguished, and the creditor contends himself

with the obligation of the second debtor.” Greenwood Leflore Hospital Com. v. Turner, 213
Miss. 200, 56 So. 2d 496, 497 (1952); Adams v. Power, 48 Miss. 450 (1873). The parties

must intend novation for novation to be accomplished. Morgan v. Jackson Ready-Mix

Concrete, 247 Miss. 863, 157 So. 2d 772, 780 (1963).

¶18.   Also, the creditor must assent to the novation. Greenwood Leflore Hospital, 56 So. 2d

at 498. In First American National Bank of Iuka v. Alcorn, Inc., 361 So. 2d 481, 487-88

(Miss. 1978), this Court held that assent may be implied. We stated:

       The rule is also established that the release of one debtor and the substitution
       of another may be implied from the circumstances absent an express
       substitution. American Blakeslee Mfg. Co. v. Martin & Son, 128 Miss. 302,
       91 So. 6 (Miss. 1922). However, this requires substantial proof that the

                                              8
       creditor impliedly accepted the new debtor in the place of the old and it must
       not appear that the creditor intended to hold both new and old debtor for the
       obligation. This determination is factual and necessary to an implied novation
       and release of the old debtor. American Blakeslee, supra.

Id.

¶19.   Since no parties signed novation agreements, there is not express agreement.

However, we agree with the chancellor and believe that novation was accomplished through

implied assent. Legion agreed to be liable for any claims under the policies. MS Casualty

and American Reliable transferred all of their reserves set aside to pay claims under the

policies to Legion. All premiums were thereafter paid to Legion instead of MS Casualty and

American Reliable. Therefore, in accordance with Greenwood Leflore Hospital, the debt

remained the same, but Legion was substituted for MS Casualty and American Reliable.

Additionally, in accordance with Morgan, the parties obviously intended novation. The

policyholders began paying their premiums to Legion after Legion sent the policyholders

notice in the form of assumption certificates. None of the policyholders protested; but

instead, they paid their premiums to Legion, which continued to pay all current claims that

MS Casualty and American Reliable had previously been paying. Through their actions, the

parties no doubt intended for Legion to be liable for any claims.

¶20.   However, MIGA contends that, in accordance with First American National Bank,

the policyholders did not impliedly accept novation because the language of the assumption

certificates is vague. Further, MIGA argues that the injured claimants also had vested rights

according to Mississippi’s workers’ compensation laws. MIGA therefore argues that not

                                             9
only did the policyholders not impliedly assent to novation, but the claimants’ assent was

required as well. The chancellor disagreed. In his final judgment entered on June 8, 2005,

the chancellor stated, inter alia:

       5.      The assumption reinsurance agreements, whether a novation is required
               or not, were a novation. The certificates of assumption sent by Legion
               to the policyholders specifically stated:

               The effect of this agreement on you is that Legion Insurance Company
               is now the insurer of your policy and is responsible for paying all
               claims due under your policy.

       In the Court’s opinion, the above language was clear as this transaction does
       not deal with claimants who may be very ignorant of what these things mean,
       but instead with businessmen who are the actual insureds. The actual claimants
       have absolutely nothing to do with who provides these insurance policies. The
       Court finds that the insured (sic) accepted by not canceling the insurance or
       voicing any concerns after they received the notices. The insureds made
       payments directly to Legion and filed claims with Legion.

We agree with the chancellor. The language of the certificates was clear; therefore, implied

consent from the policyholders can be assumed. Additionally, MIGA contends that the

claimants have vested workers’ compensation rights, but there is no citation to statutory

authority or case law to prove its point. We have previously addressed a party’s failure to

support argument with citation to authority:

       This Court routinely holds an appellants's failure to cite to any legal authority
       to support [an] argument will procedurally bar that issue from being
       considered on appeal. Carter v. Miss. Dep't of Corr., 860 So. 2d 1187, 1193
       (Miss. 2003) (citing McClain v. State, 625 So. 2d 774, 781 (Miss. 1993)).
       Because [the appellant] failed to support this allegation of error with any legal
       authority, we find [the appellant] is procedurally barred from having this Court
       consider this issue on appeal.

                                               10
In re Adoption of a Minor Child, 931 So. 2d 566, 578 (Miss. 2006). We find that the

policyholders are the only parties who needed to assent to novation. Thus, assent can be

implied and novation occurred.

       II.    WHETHER         THE    A SSU M PT IO N     REINSURANCE
              AGREEMENTS BETWEEN MS CASUALTY AND AMERICAN
              R E L IA B L E A N D L E G IO N C O N S T IT U T E D IR E C T
              INSURANCE.

¶21.   We next address whether the assumption reinsurance agreements constitute direct

insurance. According to Miss. Code Ann. Section 83-23-105, MIGA is only responsible for

claims stemming from direct insurance and not reinsurance.

¶22.   The contracts between Legion and MS Casualty and American Reliable were titled

“assumption reinsurance agreements.” However, this phrase is misleading. There is no

precedent from this Court that defines direct insurance. However, the United States Supreme

Court has stated that:

       Reinsurance comes in two basic types, assumption reinsurance and indemnity
       reinsurance. In the case of assumption reinsurance, the reinsurer steps into the
       shoes of the ceding company with respect to the reinsured policy, assuming all
       its liabilities and its responsibility to maintain required reserves against
       potential claims. The assumption reinsurer thereafter receives all premiums
       directly and becomes directly liable to the holders of the policies it has
       reinsured.

       In indemnity reinsurance, which is at issue in this case, it is the ceding
       company that remains directly liable to its policy-holders, and that continues
       to pay claims and collect premiums. The indemnity reinsurer assumes no direct
       liability to the policyholders. Instead, it agrees to indemnify, or reimburse, the
       ceding company for a specified percentage of the claims and expenses
       attributable to the risks that have been reinsured, and the ceding company turns
       over to it a like percentage of the premiums generated by the insurance of
       those risks.

                                              11
Colonial Am. Life Ins. Co. v. Commissioner, 491 U.S. 244, 247, 109 S. Ct. 2408, 2411, 105
L. Ed. 2d 199, 207 (1989).

¶23.   The agreements are clearly direct insurance. Legion stepped into the shoes of MS

Casualty and American Reliable. None of the terms and conditions of the contracts changed;

but instead, the names of the parties were simply substituted. The reserves were transferred

to Legion, and the policyholders began paying premiums to Legion. The risk was entirely

upon Legion; therefore Legion was directly liable. Thus, we find that the agreements

constituted direct insurance rather than reinsurance.

       III.   WHETHER THE CLAIMS ARE COVERED CLAIMS.

¶24.   Next, we must decide whether the claims at issue are “covered claims.” A covered

claim is defined as:

       “Covered claim” means an unpaid claim, including one of unearned premiums,
       which arises out of and is within the coverage and not in excess of the
       applicable limits of an insurance policy to which this article applies issued by
       an insurer, if such insurer becomes an insolvent insurer and (1) the claimant
       or insured is a resident of this state at the time of the insured event, provided
       that for entities other than an individual, the residence of a claimant or insured
       is the state in which its principal place of business is located at the time of the
       insured event; or (2) the property from which the claim arises is permanently
       located in this state. “Covered claim” shall not include any amount awarded
       as punitive or exemplary damages; or sought as a return of premium under any
       retrospective rating plan; or due any reinsurer, insurer, insurance pool, or
       underwriting association, as subrogation recoveries or otherwise and shall
       preclude recovery thereof from the insured of any insolvent carrier to the
       extent of the policy limits.

Miss. Code Ann. § 83-23-109(f) (emphasis added). MIGA, by statute, is only permitted to

pay “covered claims.” Miss. Ins. Guar. Ass’n v. Byars, 614 So. 2d 959, 963 (Miss. 1993).

                                               12
MIGA argues that novation never occurred, which rendered MS Casualty and American

Reliable reinsurers to Legion based upon the plain language of the title of the Assumption

Reinsurance Agreements. MIGA argues that because MS Casualty and American Reliable

are still solvent, they are responsible for paying the claims under the policies. Further,

MIGA argues that it cannot pay an insurance company based upon the plain language of

Miss. Code Ann. § 83-23-109(f); but instead, it can only pay policyholders or claimants.

¶25.   MIGA’s argument is misplaced. The chancellor correctly perceived the issue as being

whether the claims made to Legion were covered claims stemming from direct insurance.

The claims were made to Legion at the time of insolvency, and Legion is the direct insurer

because novation occurred. This has nothing to do with MS Casualty and American Reliable

– the claims were not made to those insurance companies, and they are not reinsurers.

¶26.   MIGA is attempting to avoid reimbursing MS Casualty and American Reliable based

on a misinterpretation of the applicable statute. MIGA agreed to allow the chancellor to

decide whether the claims made to Legion were “covered claims” stemming from “direct

insurance.” MIGA requested MS Casualty and American Reliable to pay the claims to avoid

multiple lawsuits, and if the chancellor ruled in the insurance companies’ favor, they would

be reimbursed by MIGA. However, MIGA now claims that, according to statute, it cannot

make any payments to insurance companies. However, the chancellor ruled that MIGA was

responsible for reimbursing MS Casualty and American Reliable for the claims it would have

owed under the statute because it was liable for the claims to Legion. Thus, the chancellor

did not err inasmuch as his decision does not conflict with the statute.

                                             13
       IV.    WHETHER MIGA               IS    LIABLE      FOR      CLAIMS       FROM
              NONRESIDENTS.

¶27.   We now address whether the claims of non-residents may be covered by statute.

MIGA argues that it is not liable for any claim where the claimant is not a resident of

Mississippi, while MS Casualty and American Reliable argue that the plain language of the

statute states in part that either the claimant or the policyholder must be a resident.

       “Covered claim” means an unpaid claim, including one of unearned premiums,
       which arises out of and is within the coverage and not in excess of the
       applicable limits of an insurance policy to which this article applies issued by
       an insurer, if such insurer becomes an insolvent insurer and (1) the claimant
       or insured is a resident of this state at the time of the insured event, provided
       that for entities other than an individual, the residence of a claimant or insured
       is the state in which its principal place of business is located at the time of the
       insured event; or (2) the property from which the claim arises is permanently
       located in this state.

Miss. Code Ann. § 83-23-109(f) (emphasis added); see also Miss. Ins. Guar. Ass’n. v.

Byars, 614 So. 2d 959 (Miss. 1993). The statute clearly states that either the claimant or the

policyholder must be a resident of Mississippi. There is one more step nonresident claimants

must make. Miss. Code Ann. § 83-23-123(2) (Rev. 1999) provides:

       (2) Any person having a claim which may be recovered under more than one
       (1) insurance guaranty association or its equivalent shall seek recovery first
       from the association of the place of residence of the insured, except that if it
       is a first party claim for damage to property with a permanent location, he shall
       seek recovery first from the association of the location of the property, and if
       it is a workmen’s compensation claim, he shall seek recovery first from the
       association of the residence of the claimant. Any recovery under this article
       shall be reduced by the amount of recovery from any other insurance guaranty
       association or its equivalent.

                                               14
(emphasis added). Thus, MIGA is liable for claims to Legion from nonresident claimants

whose policyholders were located in Mississippi at the time of the insured event if those

claimants first tried to seek recovery in their home states and were denied. The chancellor

made a detailed finding on the record of each of the seven nonresident claims in dispute.

       I have reviewed these. And let me give you my analysis per case.

       Miguel Olivares. ... He is a resident of Chamblee, Georgia. His employer is
       All Points Construction of Caldonia, Mississippi. There was an application to
       the Georgia Guaranty Fund and it was denied. And, as per the statute, since
       the company, the policy holder of the insured, is in Mississippi, then that is a
       claim that MIGA must pay. They have followed the statutory scheme.

       Terry Pellegrin, resident of Theodore, Alabama. His employer, A & B Electric
       Company, is in Pascagoula, Mississippi. They applied to the Alabama
       Insurance Guaranty Association and were denied. Once again, following the
       statutory scheme since A & B Electric is in Mississippi, then that is MIGA’s
       responsibility.

       Cathy Ryner. Now a resident of Tennessee, we’re convinced. We just
       couldn’t determine which town in Tennessee. Jackie’s International, a
       Madison, Mississippi business. Applied to Tennessee Insurance Guaranty
       Association and denied. So, they come under the statutory scheme and MIGA
       is liable.

       Phillip Stockman. Residence, Vernon, Alabama. Master Craft Builders, Inc.
       of Booneville, Mississippi. The policyholder applied to Alabama Insurance
       Guaranty Association and was denied. Once again, coming within the
       statutory scheme. MIGA is liable.

       Anthony Wallace. Residence, Eufala, Alabama. Employer, Wallace
       Amusement Company, Columbus, Mississippi. Applied to Alabama Insurance
       Guaranty and denied. Once again, coming within Mississippi statutory
       scheme. MIGA is liable. Now, there is a comment here about a possible
       girlfriend in West, Mississippi, but I don’t think it really matters. The fact is
       he was treated as though he was an Alabama resident. And that is what
       seemed to be the case and statutory scheme took care of it.

                                              15
       Now, Marvin Gonzales. Residence, Grand Bay, Alabama. Employer, New
       Palace Casino, Biloxi, Mississippi. Applied to the Alabama Insurance
       Guaranty Association and was denied. Therefore, comes within the statutory
       scheme and MIGA is liable.

       Now, on Louis Curtis Matthews. The vast majority of information that we had
       on this was that this guy was – Mr. Matthews was a resident, in fact of 1896
       Dean, Memphis, Tennessee. A & B Electric is a Meridian, Mississippi
       Company, but there was never an application to Tennessee for relief. So, the
       Court holds that the Louis Curtis Matthews claim is not a liability of MIGA.

It is clear from the record that the chancellor did not err in that he unquestionably adhered

to the statutory scheme of recovery.

       V.     WHETHER THE CHANCELLOR ABUSED HIS DISCRETION
              IN DENYING MIGA’S MOTION TO STAY CONSIDERATION
              OF SUMMARY JUDGMENT FOR ADDITIONAL DISCOVERY.

¶28.   This Court will review a trial judge’s decisions concerning motions related to

discovery for abuse of discretion. “[T]he decision to ... order further discovery rests within

the sound discretion of the trial judge and will not be reversed unless his decision can be

characterized as an abuse of discretion.” Marx v. Truck Renting & Leasing Assocs., 520
So. 2d 1333, 1344 (Miss. 1987) (citing Fontenot v. Upjohn Co., 780 F.2d 1190, 1193 (5 th Cir.

1986)). The issue before us is whether the chancellor abused his discretion in denying

MIGA’s Rule 56(f) motion to stay the ruling of summary judgment for additional discovery.

Rule 56(f) states:

       Should it appear from the affidavits of a party opposing the motion that he
       cannot for reasons stated present by affidavit facts essential to justify his
       opposition, the court may refuse the application for judgment or may order a
       continuance to permit affidavits to be obtained or depositions to be taken or
       discovery to be had or may make such order as is just.

                                             16
Miss. R. Civ. P. 56(f). MS Casualty and American Reliable argue that MIGA filed its Rule

56(f) motion merely to delay payment of the judgment, while MIGA argues that the

chancellor abused his discretion in granting the motion because there were material issues

of fact in dispute. Specifically, MIGA claims that various facts relating to the issues of

whether there was a novation, whether the claims were “covered claims,” and whether the

policies held by Legion constituted “direct insurance” were not present in the record.

Further, MIGA claims that more facts are needed concerning dates of claims, dates of

contract terminations, and amounts of reinsurance payments paid from Legion, Gen Re, and

Am Re to MS Casualty and American Reliable. MIGA’s Interrogatory responses answer the

payment question:

¶29.   MS Casualty and American Reliable clearly stated that they had not received any

money from Legion or the reinsurers, Gen Re and Am Re. The amounts of premiums paid

to Legion by policyholders and the claim dates are stated in the record. The contracts

between MS Casualty and American Reliable ended with the assumption of the policies by

Legion and with Gen Re and Am Re entering into new reinsurance agreements with Legion.

¶30.   The record clearly demonstrates that MS Casualty and American Reliable had not

received payment from any source, and all relevant dates are present in the record. The

chancellor did not abuse his discretion in denying the motion.

       VI.   WHETHER THE CHANCELLOR ABUSED HIS DISCRETION
             IN DENYING MIGA’S MOTION FOR A FULL ACCOUNTING.

                                            17
¶31.   MIGA file a motion for an accounting of the funds of MS Casualty and American

Reliable. MIGA presented no evidence that MS Casualty or American Reliable ever

received funds that rightfully belonged to Legion, as revealed in the answers to Interrogatory

Nos. 4, 12, and 13. Furthermore, MIGA has not produced any evidence that either MS

Casualty or American Reliable were dishonest in presenting their figures. The record is

complete, and the chancellor did not abuse his discretion in denying MIGA’s motion for a

full accounting.

       VII.   WHETHER THE CHANCELLOR ABUSED HIS DISCRETION
              IN GRANTING THE MOTION OF MS CASUALTY AND
              AMERICAN RELIABLE TO STRIKE PORTIONS OF THE
              RECORD.

¶32.   Finally, we must decide whether the chancellor erred in granting the motion of MS

Casualty and American Reliable to strike portions of MIGA’s claim review. We review a

trial judge’s decision on whether to strike portions of the record for abuse of discretion. See

Bowie v. Montforth Jones Mem’l Hosp., 861 So. 2d 1037, 1042 (Miss. 2003); see also

Kilpatrick v. Miss. Baptist Med. Ctr., 461 So. 2d 765, 767-68 (Miss. 1989).

¶33.   The chancellor conducted three hearings in this case. During the second hearing, the

chancellor allowed MIGA to inspect the files of seven claimants whose residency was in

dispute. The chancellor asked MIGA to file a brief report detailing the residency of those

seven claimants. At the third hearing, the chancellor made a detailed finding on the record

stating that MIGA was liable for six of those seven claimants based upon the report.

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¶34.   The chancellor granted the motion of MS Casualty and American Reliable to strike

portions of the report. MS Casualty and American Reliable argue that those portions were

redundant or brought up new issues not raised before summary judgment was granted.

MIGA ignored the chancellor’s instructions. The chancellor stated in no uncertain terms:

       [W]e’re not going to come back here and reargue anything....Get your bean
       counters to look at these files.

       Well, the hearing is going to be–all the hearing is going to be, and that’s going
       to be it, is each one of these files, that you say should be exempted, you just
       come in and show me why. And I want some prior notice on it. I want
       something written, very brief.

Instead of following the chancellor’s instructions, MIGA filed a report that was nearly 400

pages long. The report contained information that, as MIGA admits in its brief to this Court,

concerned issues other than determining whether MIGA was liable for the claims of the

seven nonresidents. “Our trial judges ... have a right to expect compliance with their orders,

and when parties and/or attorneys fail to adhere to the provisions of these orders, they do so

at their own peril.” Bowie, 861 So. 2d at 1042. MIGA disobeyed the chancellor. MIGA

gave redundant answers and more information than the chancellor said would be allowed.

Therefore, MIGA acted at its own peril, and the chancellor did not abuse his discretion in

striking the record.

                                      CONCLUSION

¶35.   The chancellor did not err in finding that the Assumption Reinsurance Agreements

clearly constituted a novation, thereby transferring all risk from MS Casualty and American

Reliable to Legion. The chancellor likewise did not err in finding that the claims at issue

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were “covered claims under direct insurance,” and that, therefore, MIGA was responsible for

paying those claims and was required to reimburse MS Casualty and American Reliable.

Additionally the chancellor did not err in finding that MIGA was responsible for the claims

of six of the seven nonresidents. Finally, the chancellor did not abuse his discretion in

denying MIGA’s motion to stay summary judgment for additional discovery, denying

MIGA’s motion for a full accounting, or granting the motion of MS Casualty and American

Reliable to strike portions of the record.

¶36.   For the reasons stated, we affirm the final judgment of the Chancery Court of Madison

County.

¶37.   AFFIRMED.

    SMITH, C.J., WALLER, P.J., DIAZ, EASLEY, GRAVES, DICKINSON AND
RANDOLPH, JJ., CONCUR. COBB, P.J., NOT PARTICIPATING.

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