A federal court in Mississippi applied the “voluntary payment” doctrine based on recent guidance from the Fifth Circuit. Colony Insurance Co. v. First Specialty Insurance Co., Case No. 16-191, 2017 WL 470902 (S.D. Miss. Feb. 3, 2017), appeal filed (17-60094 5th Cir. Feb. 14, 2017).
An explosion at a plant resulted in the death of a contractor’s employee. The decedent’s estate brought a wrongful death claim against the plant owner. The plant owner was insured under a primary liability policy and an excess policy, but the plant owner made a demand against the contractor’s insurer as an “additional insured” under the contractor’s policy. That insurer defended the plant owner under a reservation of rights. Early in the litigation, the wrongful death plaintiff made a policy limits settlement demand on the contractor’s insurer, which agreed to pay. Prior to settlement, however, it made a demand on the plant owner’s excess insurer, contending that the plant owner’s excess liability insurer was obligated to defend and indemnify the plant for those amounts in excess of the primary policy limits provided by the plant’s primary insurer. The excess insurer declined to do so and refused to contribute to the settlement. The contractor’s insurer sued. The excess insurer moved for summary judgment, arguing that the voluntary payment doctrine precludes equitable subrogation and implied indemnity.
The district court relied on S. Ins. Co. v. Affiliated FM Ins. Co., 830 F.3d 337, 347 (5th Cir. 2016), which explained that a contractually-obligated payment is not voluntary, and on the Mississippi Supreme Court’s decision in Indemnity Insurance Co. of North America v. Guidant Mutual Insurance Co., 99 So.3d 142 (Miss. 2012), and held that an insurer that settles a claim and/or pays legal expenses of an insured may seek contribution from another insurer that also owed those expenses, as long as the insurer seeking contribution was under a legal duty to pay expenses. The court noted that the contractor’s insurer had argued that the plant owner was not an insured under its policy, and concluded that, if that argument were accepted, there would have been no obligation for the contractor’s insurer to pay the claim. It therefore held that payment was a voluntary, not contractual, obligation.