A federal court in Mississippi denied an insurer’s summary judgment motion based on a default judgment against its insured that it likewise terminated duties to a third party injured by the insured. Progressive Gulf Ins. Co. v. Reed, 2015 WL 3504827 (S.D. Miss. June 3, 2015).
A default judgment in a declaratory judgment action by an insurer expressly stated that the insurer had no obligation to indemnify and defend the insured and that it was not obligated to perform under the insurance contract. However, the court held that, under Mississippi law, the default judgment resulting from the insured’s failure to answer the insurer’s complaint does not relieve the insurer of its duties toward third parties for several reasons. In Mississippi, a motor vehicle liability policy may not be cancelled or annulled as to third-party liability by any agreement between the insurance company and the insured after the occurrence of the injury or damage; no statement by the insured or violation of the policy shall defeat or void the policy. Also, it is no longer Mississippi law that a benefit to third parties contemplated by policies is contingent upon a judgment being awarded for which an insurer may be liable. Finally, an insurer may be named as a party to an action for the purpose of seeking declaratory judgment on the question of coverage.