Mississippi Supreme Court Reverses Summary Judgment in Contractual Indemnity Dispute
In Progressive Gulf Insurance Company v. Dickerson and Bowen, Inc., and Travelers Indemnity Company of Illinois, 2006-CA-01250-SCT (Oct. 4, 2007), The Mississippi Supreme Court reversed and rendered a trial court’s grant of Summary Judgment in a dispute between two liability insurance companies. In the underlying matter, which arose out of a motor vehicle accident, the injured party sued both an individual commercial driver (“Driver”) and the company that had contracted for the driver’s services (“Company”). Progressive insured the Driver and Travelers insured the Company. Before trial, Progressive settled the claim against the Driver, leaving the Company as the sole defendant at trial. At trial, the jury found the Company vicariously liable for the negligent acts of the Driver and awarded $2.5 million in damages. Later, Travelers settled on behalf of the Company for $250,000.
After funding the settlement, Travelers filed a separate action for indemnity pursuant to a provision in Progressive’s policy that extended coverage to any party vicariously liable for the acts of Progressive’s insured. The trial Court in the indemnity action granted Travelers’ Motion for Summary Judgment.
The Supreme Court reversed and rendered because Travelers had not strictly complied with the notice and assumption of liability provisions in Progressive’s policy. Additionally, the court found that Progressive relied on Traveler’s decision to defend the Company itself without tendering the defense to Progressive and on the Company’s argument throughout the underlying lawsuit that it was not subject to vicarious liability for the Driver’s acts because the Driver was an independent contractor.
The Court suggested that Progressive would have been obligated under the policy to indemnify Travelers for the Company’s vicarious liability had the claim been properly preserved.
For more information, contact David Pharr.