Insurasource, Inc. v. The Phoenix Insurance Company
2:11-cv-00049
S.D. Miss.Dec 5, 2012Background
- ISI is a Mississippi finance company that funds premium payments and takes security interests in unearned premiums, with power of attorney to cancel policies.
- ISI alleges two premium finance agreements with Universal for Phoenix-insured Policy BA3865M78309 (Jan 29, 2010–Jan 29, 2011) were financed via broker Rocco, who ISI claims was Phoenix’s authorized agent.
- ISI sent Notices of Financed Premium to Phoenix and Norman-Spencer claiming ISI would receive unearned premiums upon cancellation and that Rocco would forward payments to Phoenix; no signed Notices were ever returned.
- Rocco’s New Jersey license was revoked for fraud related to premium financing, and the policy number at issue may not have existed as claimed by ISI.
- Phoenix removed the case to federal court on diversity grounds; Phoenix moves for summary judgment contending no valid policy or PFAs existed.
- The court grants Phoenix’s motion, finding lack of existence of the alleged policy, lack of valid PFAs, and lack of agency for Rocco; ISI’s ratification theory is rejected as untimely.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Policy BA3865M78309 exist and were PFAs valid? | ISI asserts existence of policy and PFAs; Rocco acted as Phoenix’s agent to obtain financing and collect premiums. | Policy did not exist; PFAs are not valid contracts; no agency authority established for Rocco. | Policy and PFAs not proven; Phoenix entitled to summary judgment on Counts I–II for lack of contract. |
| Whether N.J. 17:22-6.2a/17:29C-4.1 claims depend on a valid contract and policy? | Payment to Rocco constitutes payment to Phoenix under statute; unearned premiums and penalties due. | No contract/policy exists to support agency or penalties; statute requires a contract/policy. | Statutory claims fail due to absence of a valid policy/contract; summary judgment granted on Counts I and IV. |
| Did ISI validly contract with Universal via PFAs? | PFAs created security interest in unearned premiums and allowed ISI to recover them. | PFAs lack essential elements and signing by an authorized Universal representative; Rocco’s signatures improper. | PFAs fail to meet contract formation elements; Count II fails and Phoenix awarded summary judgment. |
| Is there a genuine issue of agency (actual, apparent, or ratification) regarding Rocco? | Phoenix ratified Rocco’s actions by silence/inaction; ISI relied on that authority. | No express authority; no implied or apparent authority; ratification not properly pled or timely raised. | No genuine issue on agency; ratification raised too late; summary judgment as to Count III based on lack of authority. |
Key Cases Cited
- Adams Cmty. Care Ctr., LLC v. Reed, 37 So. 3d 1155 (Miss. 2010) (contract formation six elements; admissible evidence required)
- Mladineo v. Schmidt, 52 So. 3d 1154 (Miss. 2010) (apparent authority elements and reliance standard)
- Estate of Cappaert v. Barnes, 991 So. 2d 1209 (Miss. 2008) (inactivity can support apparent authority in limited circumstances)
- The Miss. Bar v. Thompson, 5 So. 3d 330 (Miss. 2008) (agency/apparent authority standards and proof requirements)
- Nat’l Premium Budget Plan Corp. v. Nat’l Fire Ins. Co. of Hartford, 254 A.2d 819 (N.J. Super. Ct. App. Div. 1969) (implied authority and agency concepts in New Jersey contexts)
- AMB Prop., LP v. Penn Am. Ins. Co., 14 A.3d 65 (N.J. Super. Ct. App. Div. 2011) (apparent authority standards under New Jersey law)
- Gordon v. Gordon, 135 F. Supp. 2d 529 (D.N.J. 2000) (apparent authority and agency analysis in federal context)
- Kinwood Capital Group, L.L.C. v. BankPlus, 60 So. 3d 792 (Miss. 2011) (ratification and agency concepts in Mississippi)