978-1285770178 Case Printout Case CPC-30-09 Part 3

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Leonards to recovery for their flood-induced damages. See In re Katrina Canal

Breaches Litig., 495 F.3d 191, 2007 WL 2200004, at *27 (5th Cir. Aug.2, 2007)

on Ins. § 101:39.

F. Weather-Conditions Exclusion

[27] Link to KeyCite Notes Neither party briefed or argued the applicability of the

weather-conditions exclusionFN16 in the district court, nor has Nationwide

alleged that the exclusion bars recovery. The district court raised the issue sua

sponte in its Memorandum Opinion, finding the provision ambiguous and

following if another excluded peril contributes to the loss:

(…)

c. Weather conditions, if contributing in any way with an exclusion listed in

paragraph 1. of this Section.

G. Negligent Misrepresentation Claim

that Paul Leonard drew from the conversations were inconsistent with the policy

exclusion for water damage. Leonard, 438 F.Supp.2d at 692.

policy regarding coverage available in a hurricane and does not entitle the

1. Background Principles

[28] Link to KeyCite Notes[29] Link to KeyCite Notes[30] Link to KeyCite

Notes[31] Link to KeyCite Notes Under Mississippi law, a party’s reliance on

F.3d at 464 (quoting Godfrey, Bassett & Kuykendall Architects, Ltd. v. Huntington

Lumber & Supply Co., Inc., 584 So.2d 1254, 1257 (Miss.1991)). An agent’s oral

representations can modify the policy only if it is ambiguous; when the

contractual language is plain, there can be no modification. Am. States Ins. Co.

v. Natchez Steam Laundry, 131 F.3d 551, 555 (5th Cir.1998).

orally modify contracts, only apparent authority is pertinent here.

[34] Link to KeyCite Notes[35] Link to KeyCite Notes Somewhat tautologically,

the Mississippi Supreme Court has explained that “[a]pparent authority exists

when a reasonably prudent person, having knowledge of the nature and usages

of the business involved, would be justified in supposing, based on the character

(citing Andrew Jackson Life Ins. Co. v. Williams, 566 So.2d 1172, 1181

(Miss.1990)). The insured is bound by policy language that would put a

reasonable person on notice of limitations to the agent’s authority. See Union

Nat’l, 286 F.Supp.2d at 788.

2. Fletcher’s Conversations with Paul Leonard

Leonards are proceeding under a tort or a contract theory. They contend in their

opening brief that the district court failed to adjudicate their contractual “oral

modification” claim. The Leonards pled, however, only “equitable fraud” FN17

(Count Eight) and fraud claims sounding in tort (Counts Nine and Ten). The

complaint contains no contract claims at all.

statements, when coupled with their equitable estoppel claim (Count Two),

amount to “what may more broadly be termed a claim based on ‘oral

modification’ of an insurance contract.” They argue this without ever intoning the

word “oral” or “modification” in their pleadings. Even were we to credit this

explanation, the Leonards’ further allegation that the district court failed to

in the first place. Nonetheless, whether they proceed under a misrepresentation

theory or a contract-modification theory, the Leonards lose on both scores. The

district court should never have considered the argument because Fletcher’s

statements are irrelevant to interpreting this policy as a matter of Mississippi

insurance law.

HOW YOUR POLICY MAY BE CHANGED

(…)

valid. Our request for an appraisal or examination does not waive our rights.

Paul Leonard admits to having read the policy. Even had he not, knowledge of

923 F.2d 1158, 1163 (5th Cir.1991), the policy contained no express statement

that the insurer disclaimed any representations made by an agent that were

contrary to the written policy. Moreover, both Nichols and Scott v. Transport

Indemnity Co., 513 So.2d 889 (Miss.1987), involve fraudulent inducement to sign

new policies, not oral modifications of existing policies. Nichols, 923 So.2d at

and discover that the agents’ offers wrongfully contravened unrevealed policy

conditions.” (emphasis in original) (internal quotation marks omitted). And in

American Income Life Insurance Co. v. Hollins, 830 So.2d 1230, 1238

(Miss.2002), the insured “was not given notice of the exclusion at the time of

relying on the agent’s misrepresentation.” None of these cases supports the

of apparent authority-detrimental change in position-their misrepresentation claim

is stale. The most recent statements the Leonards cite were uttered six years

ago in 1999. The statute of limitations for negligent misrepresentation in

Mississippi is three years. See Miss.Code Ann. § 15-1-49. Because the policy

terms are unambiguous, the Leonards’ claim accrued at the time the

4. Oral Modification Theory

[39] Link to KeyCite Notes[40] Link to KeyCite Notes[41] Link to KeyCite Notes

There are at least two reasons why the Leonards’ contract-based claim fails as

well. First, the policy’s integration clause pretermits the claim as a matter of

law.FN19 See Stephens v. Equitable Life Assurance Soc’y, 850 So.2d 78, 83

modifications be in writing”).FN20 Instead, they argue that their pleading of

equitable estoppel obviates entirely the need to resort to the integration clause.

That claim ignores the rule that doctrines like equitable estoppel that allow

insureds to procure rights at variance with a written insurance policy cannot be

used to extend coverage not otherwise provided by the policy. See Kubow v.

FN19. Although the parol evidence rule is not a bar to evidence of a subsequent

contract modification, see Dixie S. Indus. Coating, Inc. v. Miss. Power Co., 872

So.2d 769, 772 (Miss.Ct.App.2004), the rule is activated only upon the discovery

of ambiguity in a contract and is thus inapplicable here. Smith v. Smith, 872

So.2d 74, 78 (Miss.Ct.App.2004) (“Parol evidence of the intention of the parties

dealing [between the parties] which repeatedly disregards such stipulation” may

amount to waiver. Id. (citation omitted). That situation is not present here.

[42] Link to KeyCite Notes Second, Mississippi law requires that oral

modification correspond to general rules of contract formation, like the meeting-

of-the–minds requirement. See, e.g., Rotenberry v. Hooker, 864 So.2d 266, 270

The Leonards’ additional claim that equitable estoppel does not require mutual

assent is irrelevant because estoppel cannot operate to create hurricane

coverage that does not exist under the policy.

Whether the Leonards proceed under a contract or tort claim, their allegation that

Fletcher’s comments entitle them to additional coverage is incorrect as a matter

court admitted statements Fletcher made to five Nationwide policyholders as

“habit” evidence under Federal Rule of Evidence 406 because “there was

enough evidence … as a matter of habit and routine, [that Fletcher] expressed his

opinion, when he was asked, that customers should not purchase flood

insurance unless they lived in a flood prone area ….” Leonard, 438 F.Supp.2d at

specific set of stimuli that is reflexive, repeated, and invariable in nature.”).

Fletcher has about fifteen hundred customers. Comments he purportedly made

to five of them over the course of a decade about the need for additional flood

coverage do not remotely qualify or quantify as a habit within the meaning the

Rule 406. The record demonstrates that Fletcher sold nearly two hundred NFIP

III. CONCLUSION

Subject to the foregoing explanation of the trial court’s errors, we

AFFIRM.