             IN THE SUPREME COURT OF MISSISSIPPI

                      NO. 2010-IA-00149-SCT

THE AUTOMOBILE INSURANCE COMPANY OF
HARTFORD

v.

WILLIAM LIPSCOMB, WESTBROOK COOPER,
AND HAROLD E. WHITTINGTON


DATE OF JUDGMENT:             01/06/2010
TRIAL JUDGE:                  HON. WINSTON L. KIDD
COURT FROM WHICH APPEALED:    HINDS COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT:      JESSIE WAYNE DOSS, JR.
                              DAN W. WEBB
ATTORNEYS FOR APPELLEES:      PHILIP W. THOMAS
                              BILL WALLER, SR.
NATURE OF THE CASE:           CIVIL - INSURANCE
DISPOSITION:                  REVERSED AND REMANDED - 12/08/2011
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

                     CONSOLIDATED WITH

                      NO. 2010-IA-00153-SCT

THE AUTOMOBILE INSURANCE COMPANY OF
HARTFORD

v.

WILLIAM LIPSCOMB, WESTBROOK COOPER,
AND HAROLD E. WHITTINGTON

DATE OF JUDGMENT:             01/06/2010
TRIAL JUDGE:                  HON. WINSTON L. KIDD
COURT FROM WHICH APPEALED:    HINDS COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANT:      JESSIE WAYNE DOSS, JR.
                              DAN W. WEBB
ATTORNEYS FOR APPELLEES:                    PHILIP W. THOMAS
                                            BILL WALLER, SR.
NATURE OF THE CASE:                         CIVIL - INSURANCE
DISPOSITION:                                REVERSED AND REMANDED - 12/08/2011
MOTION FOR REHEARING FILED:
MANDATE ISSUED:


       BEFORE CARLSON, P.J., PIERCE AND KING, JJ.

       PIERCE, JUSTICE, FOR THE COURT:

¶1.    On July 7, 2006, a fire occurred at the apartment building rented by Paul Booker

Whittington, Jr., and Westbrook Cooper (Plaintiffs). Whittington died from injuries he

sustained in the fire, while Cooper was injured but survived. The building was owned by

William Lipscomb, and it was located on the same property as Lipscomb’s residence.

Plaintiffs sued Lipscomb in tort and amended their complaint to seek declaratory judgment

against Lipscomb’s insurer, the Automobile Insurance Company of Hartford, Connecticut

(AIC), on the issue of coverage. AIC filed a motion to sever and a motion for summary

judgment, which the trial court denied. AIC filed two separate petitions for interlocutory

appeal and requested that the Court consolidate the two issues raised in the separate petitions.

After reviewing the complaint, together with the insurance policy and the relevant deposition

testimony, we have determined there is no genuine issue of material fact as to the issue of

coverage, and that AIC’s motion for summary judgment should have been granted.

                                           FACTS

¶2.    William Lipscomb owned and maintained his personal residence and rental property

in Jackson, Mississippi. This property included a two-story building, set apart from the main




                                               2
house, that Lipscomb rented out as apartments. The first-floor apartment was rented by

Whittington, the decedent, and the second floor was occupied by Cooper.

¶3.    On July 7, 2006, the fire started in the garage of the apartment building and spread to

both the first and second floors. Cooper was forced to jump from his apartment out of a

second-floor window and incurred several injuries. Whittington was unable to escape the

fire, as the only door for ingress and egress was engulfed in flames. Whittington later died

at a hospital from injuries he sustained in the fire.

¶4.    AIC insured the dwelling house owned by Lipscomb. The homeowners policy

included personal liability coverage for bodily injury and property damage. After the fire,

AIC denied coverage, citing two provisions: the first prevented coverage for bodily injury

or property damage “arising out of or in connection with a business engaged in by any

insured;” and the second prevented coverage for bodily injury or property damage “arising

out of the rental . . . of any premises by any insured.” Plaintiffs filed suit against Lipscomb

for negligence, wrongful death, breach of building fire codes, breach of contract and implied

warranty, and punitive damages. Later, Plaintiffs amended their complaint to include a claim

for declaratory judgment against AIC. Lipscomb filed a third-party complaint against his

insurance agent, Buddy Oliver, and The Insurance Mart, Inc., for failure to procure insurance

coverage that would have protected Lipscomb against the claims asserted by Plaintiffs. The

Plaintiffs claim that Oliver bound AIC with statements he made to Lipscomb before and after

the fire. Lipscomb denies ever receiving a copy of his policy with AIC prior to the fire.1



       1
     Approximately eight months passed between the time Lipscomb purchased the
homeowners policy and the fire.

                                               3
Oliver’s business records show that he mailed a copy of the policy to Lipscomb on

November 17, 2005. Oliver further claims that his company, The Insurance Mart, Inc., had

procured an estimate for a general liability policy in January of 2006, after Lipscomb had

attained his homeowners policy, but that Lipscomb had chosen not to purchase it.

¶5.    On July 31, 2009, AIC filed a motion for summary judgment denying coverage and

a motion to sever the tort claim and the claim for declaratory judgment. The Honorable

Winston Kidd denied AIC’s motions. AIC appeals. Because the first issue is dispositive, we

decline to address whether the trial court erred in denying AIC’s motion to sever.

                                        DISCUSSION

       Motion for summary judgment

¶6.    This Court reviews a trial court’s grant or denial of a motion for summary judgment

under a de novo standard.2 Pursuant to Rule 56(c) of the Mississippi Rules of Civil

Procedure, summary judgment “shall be rendered forthwith if the pleadings, depositions,

answers to interrogatories and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that the moving party is entitled to

a judgment as a matter of law.” However, to withstand a motion for summary judgment, the

nonmoving party must put forth facts sufficient to show that a genuine issue of material fact

exists.3

       Whether AIC has a duty to defend.



       2
       Price v. Clark, 21 So. 3d 509, 517 (Miss. 2009) (citing Arceo v. Tolliver, 949 So.
2d 691, 694 (Miss. 2006) (citation omitted)).
       3
           Newell v. Hinton, 556 So. 2d 1037, 1041 (Miss. 1990) (citations omitted).

                                              4
¶7.    The threshold issue presented in this appeal is whether AIC has a duty to defend

Lipscomb. To answer this question, we must look at the facts alleged in the complaint,

together with the policy.4 An insurance company’s duty to defend is not triggered until it has

knowledge that a complaint has been filed that contains allegations of conduct covered by

the policy.5 These allegations, and particularly the conduct alleged in the complaint,

determine whether an insurer is required to defend an action.6 No such duty arises when the

alleged conduct falls outside the policy’s coverage.7 But where, through independent

investigation, an insurer becomes aware that the true facts, if established, present a claim

against the insured which potentially would be covered under the policy, the insurer must

provide a defense until it appears that the facts upon which liability is predicated fall outside

the policy’s coverage.8

¶8.    Plaintiffs’ complaint included claims against Lipscomb for negligence, breach of

building and fire codes, breach of contract and implied warranty, wrongful death, and

punitive damages. Plaintiffs also sought a declaratory judgment against AIC.




       4
        Baker Donelson Bearman & Caldwell, P.C. v. Muirhead, 920 So. 2d 440, 450
(Miss. 2006).
       5
           Id. at 451.
       6
           See Delta Pride Catfish, Inc. v. Home Ins. Co., 697 So. 2d 400, 403 (Miss. 1997).
       7
       See Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d 714, 719 (Miss. 2004); Delta
Pride Catfish, Inc., 697 So. 2d at 403; and Moeller v. Am. Guar. & Liab. Ins. Co., 707 So.
2d 1062, 1069 (Miss. 1996).
       8
      See Mavar Shrimp & Oyster Co., Ltd. v. U. S. Fid. & Guar. Co., 187 So. 2d 871,
875 (Miss. 1966).

                                               5
¶9.    When AIC learned of Plaintiffs’ claim against Lipscomb, it sent a letter to Lipscomb

denying coverage under the following two exclusions:

       Coverage E - Personal Liability and Coverage F - Medical Payments to Others
       do not apply to bodily injury or property damage:

       ....

       b. Arising out of or in connection with a business engaged in by any
       insured. This exclusion applies but is not limited to an act or omission,
       regardless of its nature or circumstances involving a service or duty rendered,
       promised, owed or implied to be provided because of the nature of the
       business;

       c. Arising out of the rental or holding for rental of any premises by any
       insured. This exclusion does not apply to the rental or holding for rental of an
       insured location:

              a. on an occasional basis if used only as a residence.

              b. in part for use only as a residence, unless a single family unit is
              intended for use by the occupying family to lodge more than two
              roomers or boarders; or

              c. in part, as an office, school, studio or private garage . . . .

¶10.   In its investigation, AIC deposed Lipscomb. Lipscomb’s deposition testimony

revealed the following: that he had built the apartment building for the purpose of renting it,

and that it had been rented since its construction; that he had advertised the apartment for rent

by placing an “apartment-for-rent” sign in the front yard of his personal residence; that at the

time of the fire, his only source of income was rental income; that he had never received a

copy of the policy until after the fire; that Buddy Oliver, his agent, had told him before and

after the fire that he was fully covered, and that “this will be taken care of you know;” that




                                               6
Oliver knew that he rented rooms in his home, as well as the apartment building behind his

house, and that they had discussed his renting situation at social occasions.

¶11.   After reviewing the unambiguous language of the policy, the complaint, and the

relevant deposition testimony, this Court must come to the conclusion that the conduct

alleged in Plaintiffs’ complaint is outside the coverage of the policy. Plaintiffs’ complaint

and Lipscomb’s deposition testimony reveal that Lipscomb was operating a business by

renting out rooms inside his home, as well as the two rooms in the apartment building behind

his home. And it is undisputed that Lipscomb’s sole source of income at the time of the fire

was his rental properties. Lipscomb’s policy with AIC clearly precludes coverage when

bodily injury or property damage occurs that arises out of or in connection with a business

engaged in by the insured, or that arises out of the rental of any premises by the insured that

is not an insured location.9    Since the conduct alleged in the complaint falls outside the

coverage of the policy, AIC has no duty to defend Lipscomb against Plaintiffs’ claims.10

                                       CONCLUSION

¶12.   The terms of the policy expressly preclude coverage when bodily injury or property

damage occurs that arises out of or in connection with a business engaged in by the insured,

or that arises out of the rental of any premises by the insured that is not an insured location.

The record shows that the conduct alleged in the complaint falls outside the coverage of the


       9
       The policy indicates that the only property insured by the policy was 723 Euclid
Avenue, Jackson, Mississippi, 39202. This property was Lipscomb’s personal residence.
The apartment building had its own separate address: 723 ½ Euclid Avenue, Jackson,
Mississippi, 39202.
       10
        See Scruggs, 886 So. 2d at 719; Delta Pride Catfish, Inc., 697 So. 2d at 403; and
Moeller, 707 So. 2d at 1069.

                                               7
policy. Accordingly, the trial court erred in denying AIC’s motion for summary judgment,

as no genuine issue of material fact exists as to whether AIC must provide coverage.

Accordingly, we reverse and remand for entry of an order consistent with this opinion. AIC

is dismissed with prejudice.

¶13.   REVERSED AND REMANDED.

    CARLSON AND DICKINSON, P.JJ., RANDOLPH, LAMAR, CHANDLER
AND KING, JJ., CONCUR. KITCHENS, J., DISSENTS WITH SEPARATE
WRITTEN OPINION. WALLER, C.J., NOT PARTICIPATING.

       KITCHENS, JUSTICE, DISSENTING:

¶14.   I dissent in the instant case because I believe the majority is remiss in its failure to

address the argument by Lipscomb that alleged misrepresentations made to him by the

insurance agent, Buddy Oliver, created a duty for AIC to provide coverage under the

homeowner’s policy. As evidence of this, the plaintiffs cite the deposition of Lipscomb,

wherein he attested that his agent, Oliver, had actual knowledge that Lipscomb was renting

out the detached, garage apartment where the injured plaintiffs were residing at the time of

the fire. Lipscomb contends that, in spite of this knowledge, Oliver assured Lipscomb that

his homeowner’s policy would cover the rented portions of the property.            Moreover,

Lipscomb attested that he never received this policy, and thus, had no actual knowledge that

his coverage did not include the rental property. According to Lipscomb, because he

detrimentally relied on the agent’s incorrect representations, he did not procure another

policy that would have covered the claims of the injured plaintiffs.

¶15.   Because a genuine issue of material fact remains with respect to whether Lipscomb

received his policy, the policy’s contents cannot be imputed to Lipscomb as a matter of law,

                                              8
specifically that the rental property was excluded from coverage under his AIC homeowner’s

policy. If Oliver were found to have negligently represented to Lipscomb that his policy

covered the rental property, AIC could be liable for Oliver’s actions under a theory of

apparent authority. Thus, the trial court committed no error in denying AIC’s motion for

summary judgment, as no findings of fact had been made concerning the agent’s

representations to the insured, or the lack thereof.

¶16.   “[I]t is well settled that an insurer is liable for actions of its agents within the scope

of the agent's actual or apparent authority.” Dixie Ins. Co. v. Mooneyhan, 684 So. 2d 574,

583 (Miss. 1996) (citing Eaton v. Porter, 645 So. 2d 1323, 1325 (Miss. 1994); Ford v.

Lamar Life Ins. Co., 513 So. 2d 880, 888 (Miss. 1987)). This Court has defined apparent

authority as follows:

       Apparent 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 of the duties entrusted to the
       agent, that the agent has the power he is assumed to have. Andrew Jackson
       Life Ins. Co. v. Williams, 566 So. 2d 1172, 1180 (Miss. 1990) (quoting Ford
       v. Lamar Life Ins. Co., 513 So. 2d 880, 888 (Miss. 1987)).

Mladineo v. Schmidt, 52 So. 3d 1154, 1167 (Miss. 2010). To recover under the theory of

apparent authority, three factors must be present: “(1) acts or conduct on the part of the

principal indicating the agent's authority, (2) reasonable reliance on those acts, and (3) a

detrimental change in position as a result of such reliance.” Id. (quoting Williams, 566 So.

2d at 1180; Ford, 513 So. 2d at 888).

¶17.   In Mladineo, the question before this Court was whether the insurer, Nationwide, was

bound under a theory of apparent authority by the alleged misrepresentations of its agent.



                                               9
Mladineo, 52 So. 3d at 1166. The Court held that Nationwide was not bound by the acts of

its agent because “after receipt of the insurance policy, it was not reasonable for the

[plaintiffs] to rely on any oral representations by [the agent] which contradicted the terms of

that policy.” Id. at 1167. The Court found that the plaintiffs in Mladineo had been in

possession of their policy for four months, that the terms of the policy were in direct conflict

with the alleged misrepresentations by the insurer’s agent, and that a sufficient amount of

time had passed to “recognize and remedy the deficit in coverage.” Id.

¶18.   Contrary to Mladineo, in the instant case, the plaintiffs have insisted that the insured,

Lipscomb, had not received his policy, and, as such, was never made aware that the terms

of that policy contradicted the alleged misrepresentations of AIC’s agent. According to the

plaintiffs, Lipscomb continued to rely on the misrepresentations of the agent, and such

reliance worked to his detriment by dissuading him from obtaining a policy that would have

covered damage to the rental property and/or the damages incurred by his tenants.

¶19.   Conversely, AIC contends that Lipscomb received a copy of his policy. Moreover,

AIC maintains that the evidence, including the testimony of its agent and the activity log that

noted the policy was mailed, creates a presumption of delivery to the insured. See Thames

v. Smith Ins. Agency, Inc., 710 So. 2d 1213, 1216 (Miss. 1998) (“There is a presumption

that mail deposited, postage prepaid and properly addressed is timely delivered to the person

addressed.”). AIC maintains that, where a presumption of delivery exists, Lipscomb’s

testimony that he did not receive the policy is insufficient as a matter of law to rebut the

presumption.




                                              10
¶20.   The issue before the Court in Thames, 710 So. 2d at 1214, was not the delivery of an

insurance policy, but rather, whether the trial court had erred in failing to grant either a

continuance or a new trial, based on plaintiff’s claim of lack of notice of a pretrial conference

and trial. The evidence showed that the circuit clerk’s office had mailed the notices to

plaintiff’s counsel at an address that was correct except for an erroneous ZIP code. Id. at

1215. Clearly, Thames did not address an insurer’s duty to provide a copy of the policy to

an insured and the means by which the insurer may prove receipt of that policy.

¶21.   This Court has never recognized that the testimony of the insurer’s employee, coupled

with the insurance company’s own internal document, i.e., an activity log, creates a

presumption of delivery of the insured’s policy. This Court has addressed proof of delivery

of a notice of cancellation of a policy and, in doing so, has recognized a presumption of

delivery of notice where an insurer has proof of a certificate of mailing from the post office.

See State Farm Ins. Co. v. Gay 526 So. 2d 534, 537 (Miss. 1988) (“[T]he Supreme Court

of Mississippi has held that the agent's testimony that the letter was mailed and a post office

certificate are adequate proof of notice.”) (citation omitted); Employers Mut. Cas. Co. v.

Nosser, 250 Miss. 542, 592, 168 So. 2d 119, 120 (Miss. 1964) (“To say that the mere

testimony of the addressee that he did not receive the notice created a permissible inference

that the letter was never mailed, would require us to disregard not only the explanatory

testimony of the insurer's clerk, but the unimpeached, uncontradicted, written official

acknowledgment of the post office that it received this letter for transmission by mail to the

addressee at his correct address.”). These cases are consistent with the statute pertaining to

proof of notice of cancellation of an automobile policy. See Miss. Code Ann. § 83-11-9 (Rev.

                                               11
2011) (“Proof of mailing of notice of cancellation, or of intention not to renew, or of reasons

for cancellation to the named insured by a certificate of mailing, at the address shown in the

policy, shall be sufficient proof of notice.”). Given that there is no certificate of mailing in

the instant case, a presumption of delivery of the policy is not present.

¶22.   Since there is testimonial evidence that Lipscomb never received his policy and that,

because of this, he never had opportunity to learn that the terms of his policy contradicted

the alleged misrepresentations of the insurance agent, these factual issues must be resolved

before a determination can be made of whether AIC is bound by the actions of its agent,

Buddy Oliver. Accordingly, summary judgment was improper in this case. I would affirm

the trial court’s denial of AIC’s motion for summary judgment.




                                              12
