kuehn sf memo support motion summary judgement
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IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
SOUTHERN DIVISION
HENRY KUEHN and JUNE P. KUEHN PLAINTIFFS
VERSUS No. 1:08-cv-577-LTS-RHW
STATE FARM FIRE & CASUALTY COMPANY, et al. DEFENDANTS
STATE FARMS REPLY MEMORANDUM IN FURTHER SUPPORT OF ITS
MOTION FOR SUMMARY JUDGMENT RE: APPRAISAL [63] [64]
BRYAN, NELSON, SCHROEDER,CASTIGLIOLA & BANAHAN
John A. Banahan (MSB #1761)H. Benjamin Mullen (MSB #9077)
4105 Hospital Road, Suite 102-BPascagoula, Mississippi 39567
(228) 762-6631
HICKMAN, GOZA & SPRAGINS, PLLCH. Scot Spragins (MSB # 7748)
Post Office Drawer 668Oxford, Mississippi 38655-0668
(662) 234-4000
Attorneys for Defendant
State Farm Fire and Casualty Company
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TABLE OF CONTENTS
I. Preliminary Statement ............................................................................................................ 1
II. Plaintiffs Admit That Mr. OLeary Was Their Zealous and Diligent Advocate ....................... 2
III. As a Matter of Law, the Appraisal Clause Precludes Causation Determinations ..................... 4
IV. Plaintiffs Cannot Show That the Scope and Conduct of the Appraisal Was Proper ................. 6
V. None of Plaintiffs Misdirected and Belated Estoppel Theories Applies ................................. 9
A. Judicial Estoppel Does Not and Cannot Apply ................................................................ 9
B. Collateral Estoppel Does Not Apply Because No Court Has Scrutinized the Appraisal.. 11
C. Plaintiffs Cannot Obtain the Extraordinary Remedy of Equitable Estoppel.................... 13
VI. Plaintiffs Vague Assertions Fail To Satisfy Rule 56(f) ........................................................ 15
VII. Conclusion........................................................................................................................... 16
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I. PRELIMINARY STATEMENT
Unable to refute the rank bias and partisanship of Lewis OLeary, Plaintiffs double-down and
embrace it, but fatally undermine the declaratory and injunctive relief they seek. Plaintiffs freely admit
that Mr. OLeary zealously represented Plaintiffs interests and undertook passionate efforts on
[Plaintiffs] behalf during the appraisal. [68] at 21-22. These admissions confirm that Mr. OLeary
was not a disinterested appraiser as required by the policy, [63-2] at 100019, by Fifth Circuit case law,
Phoenix Assur. Co., Ltd. of London v. Davis, 67 F.2d 824, 825 (5th Cir. 1933), and as corroborated by
leading commentators. 15 Lee R. Russ & Thomas F. Segalla, Couch on Insurance 211:33 & n.17
(2008) (citing Davis as primary authority). This Court need go no further to grant summary judgment.
Nor does Plaintiffs effort to manufacture an ambiguity in the policy withstand scrutiny. The
appraisal language at issue here is substantively and judicially indistinguishable from the appraisal
clause construed by the Mississippi Supreme Court in Hartford Fire Ins. Co. v. Jones, 108 So. 2d 571,
571 (Miss. 1959), which was wholly adopted by that court in Munn v. Natl Fire Ins. Co. of Hartford,
115 So. 2d 54, 56 (Miss. 1959). To show ambiguity, Plaintiffs must show that a term or provision is
susceptible to more than one reasonable meaning without resort to any extrinsic evidence. Leonard v.
Nationwide Mut. Ins. Co., 499 F.3d 419, 429 (5th Cir. 2007). Plaintiffs make no effort to satisfy that
legal test. Thus, not only do Plaintiffs fall far short of their burden to show an ambiguity in the appraisal
language, but the Mississippi Supreme Courts cases on the issue also preclude any such showing.
Nor can Plaintiffs show that the scope and conduct of the appraisal comported with the policy
and Mississippi law. It did not. In addition to the uniform testimony that the appraisers made causation
and coverage determinations, even under Plaintiffs depiction of the record, the appraisal went awry.
Despite their claim that the appraisal assessed wind damage above the flood line only, even that
approach is riddled with impermissible causation determinations. Summary judgment is thus warranted.
Bereft of any bona fide grounds to avert summary judgment, Plaintiffs desperately and belatedly
resort to equitable arguments in a scattershot discussion of estoppel theories. None avails Plaintiffs.
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Ironically, the excerpt from Couch on Insurance that Plaintiffs attach as an exhibit, [68-29], goes
on to squarely refute the assertions that they are making here and to squarely support State Farm s.
Where loss, in case of disagreement, is to be ascertained by disinterested
appraisers appointed by the parties, the word disinterested does not mean merely a lackof pecuniary interest, but is used in a broader sense, as meaning not only withoutpecuniary interest, but impartial, fair, open-minded, and without partisanship, prejudice,
or bias. Conversely, an interested appraiser is one who is partial, unfair, arbitrary, anddominated by bias and prejudice for or against the parties or the property in controversy,
or both, or has some pecuniary interest in the result or performance of the duties ofappraiser.
Id. (Couch on Insurance, 50:137, Interest or disinterest defined) (citing Davis as primary authority).
Mr. OLeary is a textbook example of an appraiser who is not disinterested. From the
beginning, Mr. OLeary plotted with Plaintiffs to prevail, to never pass a chance to create even more
ofan edge wherever possible, to go full bore, and to attack the credibility of State Farms appraiser
(whomever he or she would be) in order to hurt him in the umpires eyes, all as part of the
premeditated ticket we need for success. [63-3] at 1. Plaintiffs counsel later joined strategies with
Mr. OLeary and assigned him to protect Plaintiffs litigation interests during the appraisal. [63-4.]
Confronted with these smoking gun emails, Plaintiffs lamely attempt to spin them away as puffing,
for his client. [68] at 21. But they cannot. Mr. OLeary engaged in such conduct during the appraisal
and Plaintiffs have admitted that Mr. OLeary was acting as an appraiser to zealously advocate [his]
clients position, who diligently and zealously represented Plaintiffs interests in the appraisal
process, and undertook passionate efforts on [Plaintiffs] behalf during the appraisal. Id. at 21-22.
These facts, and these admissions, establish that Mr. OLeary was not disinterested and not by
State Farms definition of this term, id. at 21, but by the definition embraced by the Fifth Circuit in
Davis more than seventy-five years ago and still cited as the leading case by Couch on Insurance today.
Regardless of any other matters raised by Plaintiffs, the admitted zealotry of Mr. OLeary is
dispositive of Plaintiffs claims for declaratory and injunctive relief. Summary judgment in favor of
State Farm is warranted on that ground alone.
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III. AS A MATTER OF LAW, THE APPRAISAL CLAUSE PRECLUDES CAUSATION DETERMINATIONS
In Hartford Fire, the Mississippi Supreme Court judicially construed the identical policy
language at issue i.e., appraisal as to the amount of loss as precluding causation or coverage
determinations. See 108 So. 2d at 571. In Hartford Fire, the insurance policy contained the standard
appraisal clause as to how the amount of loss was to be determined, and specifically, the clause applied
If the insured and the company fail to agree as to the amount of loss . Id. (emphasis added). So,
too, here. Using virtually identical language, the appraisal clause in Plaintiffs policy applies If you
and we fail to agree on the amount of loss . [63-2] at 100019 (emphasis added).
Construing this substantively and judicially indistinguishable policy language, the Hartford Fire
court noted that appraisement is an agreed method of ascertaining value or amount of damage,
stipulated in advance, ... with the object of preventing future disputes, rather than settling present ones.
Liability is not fixed by means of an appraisal; there is only a finding of value, price, or amount of loss
or damage. 108 So. 2d at 572 (emphasis added) (quoting 3 Am. Jur., Arbitration and Award, 3, at pp.
830-31); accord Munn, 115 So. 2d at 56-57 (same). The Mississippi Supreme Courts judicial
interpretation of the effectively identical appraisal clause in Hartford Fire applies with equal force here.
In Munn, the Mississippi Supreme Court adopted Hartford Fire as a splendid discussion of the
effect of an appraisal in Mississippi. Id. at 56. While Plaintiffs wholly ignore the policy language in
Hartford Fire, and mistakenly believe that the policy language in Munn was meaningfully different
based on there being no mention of any other definitions within the policy, [68] at 23, the appraisal
clause in Munn only allowed the appraisers to appraise the loss. Munn, 115 So. 2d at 55. So does the
appraisal clause here. [N]owhere in the standard form for submission to appraisal is any power vested
in or conferred upon the appraisers to determine the cause of the loss. Id. at 56. Nor is there here.
Instead, the cause of damage must first be stipulated in advance, id. at 56 (quoting Hartford Fire, 108
So. 2d at 572), or judicially determined, Jefferson Davis, 2009 WL 367688, at *2, but in no case can
cause be determined by appraisal. Hartford Fire, 108 So. 2d at 572; Munn, 115 So. 2d at 55.
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The Mississippi Supreme Courts holdings in Hartford Fire and Munn readily dispose of
Plaintiffs so-called ambiguity claim. See [68] at 22-24. [T]he interpretation of a contract is a
question of law, including the question whether the contract is ambiguous, Gladney v. Paul Revere
Life Ins. Co., 895 F.2d 238, 241 (5th Cir. 1990), and Mississippi law acknowledges that the standard
insurance policy is a contract, and its terms are a matter of usual contract interpretation unless some
statutory imperative controls. Lynch v. Miss. Farm Bureau Cas. Ins. Co., 880 So. 2d 1065, 1070 (Miss.
Ct. App. 2004). Moreover, [t]he most basic principle of contract law is that contracts must be
interpreted by objective, not substantive standards. Cherry v. Anthony, 501 So. 2d 416, 419 (Miss.
1987). There is perhaps no more objective standard for the interpretation of the appraisal clause than
the Mississippi Supreme Courts judicial construction of such language in its leading cases on the issue.
To be sure, the mere fact that lawyers may disagree on the meaning of a contractual provision is
not enough to constitute ambiguity, Stinnett v. Colo. Interstate Gas Co., 227 F.3d 247, 254 (5th Cir.
2000), just as [t]he mere fact that the parties disagree about the meaning of a provision of a contract
does not make the contract ambiguous as a matter of law. Leonard, 499 F.3d at 429. Whether, in an
effort to stave off summary judgment, Plaintiffs claim to misunderstand the appraisal clause is of no
legal moment. Their subjective and extrinsic interpretation does not affect this Courts analysis. Id.
[A] court must refrain from altering or changing a policy where terms are unambiguous, despite
resulting hardship on the insured. Titan Indem. Co. v. Estes, 825 So. 2d 651, 656 (Miss. 2002); accord
Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d 714, 717 (Miss. 2004). No rule of construction requires
or permits [Mississippi courts] to make a contract differing from that made by the parties themselves, or
to enlarge an insurance companys obligations where the provisions of its policy are clear. Leonard,
499 F.3d at 429 (alteration in original). Plaintiffs satisfy none of the legal requirements of showing an
ambiguity in the policy.
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IV. PLAINTIFFS CANNOT SHOW THAT THE SCOPE AND CONDUCT OF THE APPRAISAL WAS PROPER
Under Mississippi law, appraisers are powerless to determine the cause of damage for any loss,
see, e.g., Hartford Fire, 108 So. 2d 571; Munn, 115 So. 2d 54, as this Court has repeatedly recognized.
See Kuehn v. State Farm Fire & Cas. Co., No. 1:06-cv-723-LTS-RHW, 2007 WL 184647, at *1 (S.D.
Miss. Jan. 19, 2007) (Senter, J.) (Kuehn I); accord Mar. 31, 2009 Order [62] at 1. Indeed, as recently
applied in a Hurricane Katrina case that Plaintiffs fail to distinguish, [i]t is clear that under Mississippi
law that the purpose of an appraisal is not to determine the cause of loss or coverage under an insurance
policy; rather, it is limited to the function of determining the money value of the property at issue.
Jefferson Davis County Sch. Dist. v. RSUI Indemn. Co., 2009 WL 367688, at *2 (S.D. Miss. Feb. 11,
2009) (emphasis added) (quoting Munn, 115 So. 2d at 55; citing Kuehn I, 2007 WL 184647, at *1).
Plaintiffs pay lip service to these fundamental principles but fatally misapprehend them.
Plaintiffs labor under the misimpression that by appraising all damage above the flood line, the appraisal
panel limited its inquiry to the value of covered damage. [68] at 18-19. Plaintiffs are wrong on multiple
levels, any one of which renders the appraisal award unsound as a matter of law.
First, to conclude that all damage above a flood line is caused by wind only, as opposed to any
other force, is itself a causation determination. The same is true for apprais[ing] wind only anywhere
in the house, [68] at 18, which requires determining what parts of the house were damaged by wind and
not by any other force. Even Plaintiffs suggested rubric of valuing only damage above a flood line
requires causation and coverage determinations. Under any of these methods, the appraisers determined
the cause and coverage of the damage, which is forbidden by the policy and Mississippi law.
[A]ppraisers have no power to determine the cause of the damage. Munn, 115 So. 2d at 55. By
determining the cause of damage, the appraisal panel deprived State Farm of its constitutional rights to
have determined in a court of justice the liability of an insurer. Id. The appraisal award cannot stand.
Second, Plaintiffs argument is divorced from reality because the appraisal panel did not limit its
inquiry to damage above a flood line. Mr. OLeary planned from the beginning to argue causation, [63-
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3] at 1, knowing that he would definitely be addressing causation. [63-5] at 84:20-86:1. Mr. Minor
testified that was precisely what took place when Mr. OLeary would want to argue the windows on the
first floor and say that wind got there before the flood. [63-6] at 120:13-121:1. Mr. Voelpel also
confirmed that the panel did not limit their inquiry to damage above a flood line. [63-7] at 36:13-18.
Further, the panels appraisal approach also commingled any alleged wind and flood damage to
the second floor in one computation. The appraisal panel did not independently compute the so-called
wind damage. Instead, it computed the damage to the entire second floor and decided that 75% ofall
the second-floor damage was from wind, id. at 25:16-26:11; 29:10-21; 33:6-13; 93:15-94:1 a
simplistic methodology that Mr. Voelpel could not recall using in any other appraisals. Id. at 103:10-16.
Nor, as Plaintiffs assert, did State Farm agree during the 30(b)(6) deposition of Rick Moore
that damage above the waterline from Hurricane Katrina was due to wind. [68] at 3, 18. Mr. Moore
said no such thing. In fact, he only testified that damage above the water line was not done by water.
Q. And do you take the position that the damage done above the water line in the Kuehnhouse was done by water as opposed to wind?
A. No.
[68-25] at 101:6-9. Yet the appraisal panel improperly concluded that damage above the flood line was
caused by wind and awarded damage to heavy structural framing of the home, which was not affected
by the wind. Id. at 15:19-16:13; accord id. at 16:21-17:3. In any event, whether there was actual wind
damage to any of Plaintiffs property was not a topic for the 30(b)(6) deposition. See [44]. Issues
related to Plaintiffs actual damages or State Farms adjustment of the claim are outside this phase of the
bifurcated discovery, which is exclusively directed to the validity of appraisal. Jan. 5, 2009 Order [15]
at 2, affd, Mar. 31, 2009 Order [62].
Third, Plaintiffs completely ignore that the appraisal award even went beyond structural damage
to Plaintiffs house. The appraisal panel also made determinations and awards for personal property,
law and ordinance, and ALE coverages. [63-18.] Going beyond any adherence to a flood line, the panel
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purportedly computed damage to items that were submerged in flood water. [63-6] at 83:4-84:9. The
appraisal panel also independently decided which personal property items were moved to the second
floor before the storm, ignored and went beyond the parties list of damaged items, and independently
determined the cause to be wind. See [63-5] at 41:16-25; 54:19-22; 61:24-62:16; [63-7] at 45:22-46:3.
As a matter of law, none of those causation or coverage determinations is permissible.
Plaintiffs also ignore the fact that the appraisal panel made causation determinations for the law
and ordinance and ALE awards, despite any flood line and Plaintiffs reliance on one. The panel
decided that 31% of the law and ordinance coverage and the ALE expenses were due to wind damage.
[63-7] at 40:25-12; [63-19]at 5. Mr. Voelpel cannot explain how the appraisers attributed this 31% to
wind damage, [63-7] at 40:25-41:16, but he confirmed that 31% was intended to be the [p]ercentage of
damage caused by wind for the [i]ncrease[d] cost of construction due to code caused by wind. [63-
20] (emphasis added). To be sure, no award for law and ordinance or ALE would be possible without
specific findings of causation and coverage, as reflected in the policy itself. [63-2] at 100009, 100029.
Forth, Plaintiffs completely ignore the deposition testimony from both appraisers and the umpire,
all showing that the appraisal panel sought to determine the cause of damage on their own. All members
of the appraisal panel uniformly testified that they independently determined the cause of damage to
Plaintiffs property in their appraisal award. [64] at 13-18. Indeed, Plaintiffs advocate, Mr. OLeary,
freely admitted that he would definitely be addressing causation in my consideration, absolutely, [63-
5] at 84:20-86:1, which, he testified, is exactly what was done in this case but in a grander scale for
Plaintiffs entire claim. Id. at 86:2-4. So, too, Mr. Voelpel recognized that the appraisal was improperly
wading in deeper into making coverage determinations, [63-17], and that the appraisal panel took a
proportion of the square footage and attributed it to wind and a portion of the square footage and
attributed it to water. [63-7] at 25:16-26:11. To determine which parts of the house were damaged by
wind is to determine the cause of damagea function that rests in a court, not an appraisal panel.
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Beyond any genuine dispute, time and again, the record establishes that the appraisal panel
determined the cause of damage to Plaintiffs property and assigned coverage liability for the structure,
contents, law and ordinance, and ALE provisions, all of which is prohibited by Mississippi law and the
policy. Under the policy and Mississippi law, the appraisers were without authority to make those
determinations. Munn, 115 So. 2d at 58. Plaintiffs cannot meet their burden to show otherwise. State
Farm is thus entitled to summary judgment on Plaintiffs claim for declaratory and injunctive relief.
V. NONE OF PLAINTIFFS MISDIRECTED AND BELATED ESTOPPEL THEORIES APPLIES
Seeking to divert attention away from the fatal flaws in the appraisal process, Plaintiffs engage in
a campaign of misdirection by belatedly attempting to raise several estoppel doctrines. None applies.
Nor have Plaintiffs sought any affirmative relief under any of their estoppel theories, and Plaintiffs have
waived the right to do so by allowing the deadline to lapse on April 14, 2009. Feb. 13, 2009 Text Order.
Plaintiffs estoppel arguments ask this Court to turn a blind eye to the dispositive information
revealed in discoveryi.e., Mr. OLeary is an admittedly biased and partisan zealot who advocated on
Plaintiffs behalf during the appraisal, and the appraisal panel impermissibly made causation and
coverage determinations. By invoking estoppel, Plaintiffs seek to enforce an appraisal award that
violates the policy and Mississippi law. None of Plaintiffs contrived estoppel theories survives review,
and none of them can cure Plaintiffs inability to carry their burden to obtain the relief they seek.
A. Judicial Estoppel Does Not and Cannot Apply
Plaintiffs assert that State Farm is judicially estopped from contesting the legal validity of the
appraisal based on statements in remand-related discovery and in an email during settlement
negotiations between the parties. [68] at 17-18, Pls. Ex. 17 [68-18]. Plaintiffs bear the burden of
satisfying the requirements of judicial estoppel, see McBride v. Bilberry Family Ltd. Pship, 2008 WL
4286532, at *3 (S.D. Miss. Sept. 16, 2008); LOL Fin. Co. v. Delta Pride Catfish, Inc., 2006 WL
3469619, at *2 (N.D. Miss. Nov. 30, 2006), but they neither acknowledge nor satisfy such requirements.
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The only support Plaintiffs cite for their argument is Edwards v. Aetna Life Ins. Co., 690 F.2d
595 (6th Cir. 1982), which held that judicial estoppel was not applicable. See [68] at 18. In Edwards,
the Sixth Circuit held that a district court improperly applied judicial estoppel because the partys
previous position was never adopted by a judicial tribunal. 690 F.2d at 599-600. In light of the
policies underpinning judicial estoppel, the rule can not be applied in a subsequent proceeding unless a
party has successfully asserted an inconsistent position in a prior proceeding, and the party must have
been successful in getting the first court to accept the position. Id. at 599. Since the parties resolved
their dispute without the need for a judicial tribunal accepting any position, judicial estoppel did not
apply in Edwards. Id. at 599-600. Nor does it here.
The Fifth Circuit imposes the same requirement. To invoke judicial estoppel, a previous court
must have accepted the partys earlier position. Hopkins v. Cornerstone Am., 545 F.3d 338, 349 (5th
Cir. 2008) (citation omitted); accord GP Plastics Corp. v. Interboro Packaging Corp., 108 F. Appx
832, 835 (5th Cir. 2004). The doctrine requires that a court has necessarily accepted and relied on a
partys position in making a determination, which Plaintiffs must show to invoke judicial estoppel. GP
Plastics Corp., 108 F. Appx at 835. Indeed, judicial estoppel is designed to protect the judicial
system, not the litigants. In re Superior Crewboats, Inc., 374 F.3d 330, 334 (5th Cir. 2004).
Plaintiffs make no such showing here, nor can they. The Mississippi Chancery Court had no
opportunity to adjudicate the validity of the appraisal, if any, because the appraisal had not yet occurred.
See [23-5] at 1-2. As reflected in its order, the sole issue before the Chancery Court was whether to
conduct an appraisal at all, not whether the appraisal was properly conducted. Id. No court has yet
addressed the propriety of the scope and conduct of the appraisal (though State Farm asks this Court to
do so now). Thus, any contention that the appraisal was legally unsound could never have been
accepted by any court, which precludes judicial estoppel. Hopkins, 545 F.3d at 349. Plaintiffs cannot
backfill the Chancery Courts order with new and unaddressed issues. And while Plaintiffs breathlessly
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and repeatedly state that State Farms appraisal provision applies only to covered losses, [68] at 13 &
n.4, 16, 18-19, 22-24, recognizing the obvious does not invoke estoppel or avert summary judgment.
Further, beyond inappropriately distorting comments made by counsel by taking them out of
context and by disingenuously mixing and matching them with other statements in a contrived fashion,
none of which are admissions by State Farm, as Plaintiffs posit, see, e.g., [68] at 12, any statements
made during settlement negotiations are inadmissible. Rule 56 states that a court may consider only
admissible evidence in ruling on a summary judgment motion. Mersch v. City of Dallas, 207 F.3d 732,
734-35 (5th Cir. 2000). So, too, statements made in compromise negotiations regarding the claim are
not admissible on behalf of any party, when, offered to prove liability for a claim that was
disputed. Fed. R. Evid. 408(a)(2). The purpose of this rule is to encourage settlements which would
be discouraged if such evidence were admissions. Fed. R. Evid. 408 advisory committees note. The
broad exclusions contained in Rule 408 are designed to encourage settlements by fostering free and full
discussion of the issues. Ramada Develop. Corp. v. Rauch, 644 F.2d 1097, 1106 (5th Cir. 1981). Here,
Plaintiffs improperly rely on statements made during settlement negotiations between the parties, Pls.
Ex. 17 [68-18], which are inadmissible for these purposes.
B. Collateral Estoppel Does Not Apply Because No Court Has Scrutinized the Appraisal
Plaintiffs contend that State Farm is collaterally estopped from contesting the legal validity of the
appraisal. [68] at 15-16. Collateral estoppel applies only to questions actually litigated in a prior suit,
and not to question which might have been litigated. Lange v. City of Batesville, 92 So. 2d 11, 22
(Miss. Ct. App. 2008) (emphasis added; quoting Dunaway v. W.H. Hopper & Assoc., 422 So. 2d 749,
751 (Miss. 1982)). Though not even an implied holding in a prior suit between the parties is enough to
collaterally estop subsequent litigation, id. at 22-23, here, there was no prior holding by a court
implied or expressas to the propriety or effect of appraisal. Collateral estoppel does not apply.
The Mississippi Chancery Court did not address the propriety of the scope or conduct of the
appraisal because the appraisal had not yet happened. See [23-5] at 1-2. The propriety of the scope or
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conduct of the appraisal has not been actually litigated and determined by the Chancery Court, and its
order cannot now be utilized upon the basis of collateral estoppel. Johnson v. Bagby, 171 So. 2d 327,
331 (Miss. 1965). Any resolution of disputes over the propriety of the scope or conduct of the appraisal
was left for another day. [23-5] at 2. Only now, after the appraisal, Plaintiffs seek declaratory and
injunctive relief to enforce the appraisal [a]ward as a binding amount to be paid. Am. Compl. [67]
44. This is the first time that the scope, conduct, and validity of the appraisal has been at issue.
Plaintiffs cite no authority from Mississippi or anywhere else that would deprive State Farm the
right to raise defenses to the appraisal where the legal validity of the appraisal has not been judicially
scrutinized. The only collateral estoppel case cited by Plaintiffs, Hollis v. Hollis, 650 So. 2d 1371
(Miss. 1995), is inapposite. See [68] at 15 n.5. In Hollis, the parties to a divorce previously litigated the
division of property set forth in an antenuptual agreement. 650 So. 2d at 1377-78. Though the plaintiff
ostensibly moved to modify the original judgment, only a small part of it could truly be characterized
as an actual request for modification. The rest is a plea to retry matters which were effectively settled
in the original divorce proceeding and its appeal. Id. at 1377. In the previous case, the parties asked
that their property and contract rights be adjudicated and the Final Judgment shows that they were so
adjudicated. Id. Not so here. Unlike Hollis, the Chancery Court was not asked to adjudicate the merits
or enter judgment on an appraisal because it had not yet happened. Instead, those issues are raised for
the first time in this Court.
Plaintiffs other casesLouis Gardens of Encino Homeowners Assn v. Truck Ins. Exchange, 82
Cal. App. 4th 648 (Cal. Ct. App. 2000) (California law), and FDL, Inc. v. Cincinnati Ins. Co., 135 F.3d
503 (7th Cir. 1998) (Indiana law) do not discuss collateral estoppel and are grossly inapposite. See
[68] at 16 & n.6. As explained in Louis Gardens, California law equates arbitration and appraisal, 82
Cal. App. 4th at 658, but Mississippi law strictly distinguishes them. Hartford Fire, 108 So. 2d at 572.
Further, California has a statutory scheme under which the court must confirm the [appraisal] award,
unless it either vacates or corrects it within 100 days. Louis Gardens, 82 Cal. App. 4th at 658-59
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(emphasis in original; applying Cal. Ins. Code 1286). None of those California statutes applies here.
In the second case, FDL, the insured disputed whether the appraisers should measure the replacement
value of its inventory using market value or manufacturing costs. 135 F.3d at 503-04. There was no
dispute over the bias and partisanship of the appraisers or over determinations as to cause of loss. Such
a basis for setting aside the appraisal award was not even alleged. Id. at 505. Here, such a basis has
not only been raised, but it has also been robustly demonstrated by the record developed in discovery.
C. Plaintiffs Cannot Obtain the Extraordinary Remedy of Equitable Estoppel
Plaintiffs claim that State Farm is equitably estopped from challenging the validity of the
appraisal. [68] at 16-17. Plaintiffs assert that because State Farm did not actually complain or allege
any impropriety in the process until Plaintiffs filed suit, State Farm should be estopped from defending
against Plaintiffs suit. Id. at 17. Plaintiffs demonstrate no entitlement to equitable estoppel.
To the extent Plaintiffs invoke equitable estoppel to obtain coverage contrary to the policy
language, estoppel can have a field of operation only when the subject matter is within the terms of the
policy. [E]stoppel cannot operate so as to bring within the coverage of the policy property, or a loss,
or a risk, which by the terms of the policy is expressly excepted or otherwise excluded. Employers Fire
Ins. Co. v. Speed, 133 So. 2d 627, 629 (Miss. 1961). This is the long-settled rule of law in
Mississippi. Provident Life & Accident Ins. Co. v. Goel, 274 F.3d 984, 996 (5th Cir. 2001) (citation
omitted); accord Pongetti v. First Contl Life & Accident Co., 688 F. Supp. 245, 248 (N.D. Miss. 1988)
(Senter, J.). Thus, Plaintiffs cannot invoke equitable estoppel to side step State Farms policy defenses.
No matter how Plaintiffs frame their request, [e]quitable estoppel is an extraordinary remedy
and should only be invoked to prevent unconscionable results. Harrison Enters., Inc. v. Trilogy
Comms. Inc., 818 So. 2d 1088, 1095 (Miss. 2002). As [t]he law does not regard estoppels with favor,
the doctrine is applied cautiously and only when equity clearly requires it. Id. (citations omitted);
accord Turner v. Terry, 799 So. 2d 25, 37-38 (Miss. 2001). To invoke this extraordinary remedy,
Plaintiffs must show that they reasonably and detrimentally relied on an alleged representation. Miss.
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Even the sole authority Plaintiffs cite for their equitable estoppel theory, Thomas v. Bailey, 375
So. 2d 1049 (Miss. 1979), undermines their position. See [68] at 16. In order to establish equitable
estoppel, a party must show a change of position in reliance upon the conduct of another and detriment
caused thereby. In the case sub judice, there was no change in position by the appellant in reliance upon
appellees conduct nor has the appellant suffered any detriment or injury, which precludes any
equitable estoppel claim. Thomas, 375 So. 2d at 1052 (citation omitted). So, too, here.
VI. PLAINTIFFS VAGUE ASSERTIONS FAIL TO SATISFY RULE 56(F)
Plaintiffs wish to delay the resolution of the instant motion to attempt to take another 30(b)(6)
deposition and to file papers related to the 30(b)(6) deposition that was taken on March 26, 2009. Seven
weeks have passed since that deposition, and a month has passed since State Farm and Plaintiffs
received the transcript on April 15, 2009. Yet Plaintiffs have filed nothing, the time in which to do so
having long since expired. See Local R. 7.2(B)(2) (Discovery motions must be filed sufficiently in
advance of the discovery deadline so as to not affect the deadline.); Feb. 13, 2009 Text Order
(discovery deadline for the appraisal issue expired on March 31, 2009). Nor have Plaintiffs identified
anything they may obtain in a second 30(b)(6) deposition that would raise a genuine question of material
fact, as they must under Fed. R. Civ. P. 56(f). The record already establishes that Mr. OLeary was not a
disinterested appraiser and that the appraisal panel improperly made causation and coverage
determinations. Nothing from any follow-up 30(b)(6) depositionhowever unwarranted can or will
change those immutable facts. Plaintiffs request for a delay should be denied.
Since Rule 56(b) permits a defendant to seek summary judgment at any time, Rule 56 does
not require that any discovery take place before summary judgment can be granted; if a party cannot
adequately defend such a motion, Rule 56(f) is his remedy. Washington v. Allstate Ins. Co., 901 F.2d
1281, 1285 (5th Cir. 1990) (emphasis added). [U]nder Rule 56(f), the appropriate way to raise [a claim
of inadequate discovery] is for the party opposing the motion for summary judgment to file a motion for
a continuance with an attached affidavit stating why the party cannot present by affidavit facts essential
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to justify the partys opposition. Access Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 720
(5th Cir. 1999). Plaintiffs response woefully fails to satisfy the requirements of Rule 56(f).
By its express terms, Rule 56(f) requires a party seeking a continuance for discovery to show
for specified reasons, [that] it cannot present facts essential to justify its opposition. Fed. R. Civ. P.
56(f) (emphasis added).1
Thus, a party may not invoke Rule 56(f) by the mere assertion that discovery
is not yet complete, but must show how the additional discovery will establish a genuine issue of
material fact. Mauldin v. Fiesta Mart, 114 F.3d 1184, 1997 WL 255640, *2 (5th Cir. 1997) (table).
That is, the nonmovant must show specific facts explaining his inability to make a substantive
response by specifically demonstrating how postponement of a ruling on the motion will enable him,
by discovery or other means, to rebut the movants showing of the absence of a genuine issue of fact.
Washington, 901 F.2d at 1285 (citations omitted). Rule 56(f) cannot be used as a fishing expedition
calculated to uncover something upon which to rest the otherwise unsupported allegations in
[nonmovants] complaint, Mauldin, 1997 WL 255640, at *2, and vague assertions that additional
discovery will produce needed, but unspecified, facts are wholly inadequate. Access Telecom, 197 F.3d
at 719. Plaintiffs request, which raises no areas of supposedly necessary discovery, utterly fails to
satisfy the requirements of Rule 56(f). Plaintiffs request for delay should be denied.
VII. CONCLUSION
For the foregoing reasons, this Court should grant State Farm summary judgment [63] [64]
dismissing Plaintiffs claims for declaratory and injunctive relief as to the validity and enforceability of
the appraisal in their entirety. Am. Compl. [67] 36-46, 112-13.
1 Under Fifth Circuit authority, an affidavit is not necessary to support a Rule 56(f) application, nor is the invocation of
the Rule itself. See, e.g., Perkins v. Nationsbank of Tex., N.A., 116 F.3d 1476, 1997 WL 304131, at *2 (5th Cir. 1997)
(table); Enplanar, Inc. v. Marsh, 11 F.3d 1284, 1291-92 (5th Cir. 1994); see also Washington, 901 F.2d at 1285-86.Thus, State Farm is not opposing Plaintiffs request due to those omissions in form. Rather, State Farm is opposing therequest due to its substantive deficiencies.
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Dated: May 14, 2009
Respectfully submitted,
/s/ J ohn A . B anahan
John A. Banahan (MSB #1761)H. Benjamin Mullen (MSB #9077)BRYAN, NELSON, SCHROEDER,
CASTIGLIOLA & BANAHAN4105 Hospital Road, Suite 102-B
Pascagoula, Mississippi 39567(228) 762-6631
H. Scot Spragins (MSB # 7748)
HICKMAN, GOZA & SPRAGINS, PLLCPost Office Drawer 668
Oxford, Mississippi 38655-0668(662) 234-4000
Attorneys for Defendant
State Farm Fire and Casualty Company
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CERTIFICATE OF SERVICE
I, JOHN A. BANAHAN, one of the attorneys for the Defendant, STATE FARM FIRE &
CASUALTY COMPANY, do hereby certify that I have on this date electronically filed the foregoing
document with the Clerk of Court using the ECF system which sent notification of such filing to all
counsel of record.
DATED, May 14, 2009.
/s/ J ohn A . B anahan
JOHN A. BANAHAN
John A. Banahan (MSB #1761)H. Benjamin Mullen (MSB #9077)
BRYAN, NELSON, SCHROEDER,CASTIGLIOLA & BANAHAN
4105 Hospital Road, Suite 102-BPascagoula, Mississippi 39567
(228) 762-6631
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