Miss. Supreme Court Reverses Ruling, Limits Insurance Liability

The Mississippi Supreme Court has reversed a judge’s ruling that could have left Zurich American Insurance Co. liable for as much as $8 million in claims related to a multi-vehicle accident.

The accident occurred on June 20, 2002, in Lauderdale County. According to the court record, traffic was backed up on I-20/59 because of road work. A tractor-trailer rig, driven by an employee of West Side Transport Inc., was unable to stop, collided with eight other vehicles, causing two fatalities, numerous injuries and property damage.

Zurich insured drivers for Iowa-based West Side. The policy, written under Iowa law, provided for a liability limit of $1 million for any one accident.

Zurich, based in Illinois, was sued in Covington County by three sets of plaintiffs. The central issue to the lawsuits was whether Zurich’s liability is limited to $1 million for a single accident, or $1 million for each vehicle involved in the collision.

Circuit Judge Robert Evans ruled in 2003 that under Mississippi law there were eight accidents rather than one, and that the “per accident” limit of $1 million would apply to each vehicle.

The Supreme Court, in a 5-2 decision Thursday, overturned Evans’ ruling, saying the policy written by Zurich fell under Iowa law and the entire series of collisions consisted of one accident.

Presiding Justice Kay Cobb, writing for the court, said the actions of the driver created a chain reaction, which resulted in injuries from the same cause. Under the definition in West Side’s policy, Cobb said that meant the separate collisions were part of one “accident.”

“Therefore, the limit of Zurich’s liability is $1 million,” Cobb wrote.

Plaintiffs had argued the insurance policy should be interpreted under Mississippi law, which would allow for the possibly higher liability. Cobb said that might be true if West Side was located in Mississippi and negotiated a policy written in Mississippi.

“All the relevant activities between the parties take place in Iowa. They conduct business with each other in Iowa. All payments of premiums are made in Iowa. Any action taken on the insurance contract likely will be settled between the parties in Iowa,” Cobb wrote.

Cobb said West Side has a big fleet of trucks that travel nationwide, but there was nothing to show that its activities take place with any frequency in Mississippi.

“The interest of Iowa in the regulation of its businesses and contracts is superior to that of Mississippi even if it means that Mississippians receive less compensation for their injuries.

“This court recognizes that the laws of other states sometimes conflict with Mississippi law,” Cobb wrote.

Topics Mississippi Iowa