Jonathan Isom v. Valley Forge Insurance Company, e, 17-60014

Jonathan Isom, an anesthesiologist, sued surgeon Thomas Baylis and Premier Orthopedic for racial discrimination and obtained a consent judgment for $4 million; the insureds assigned to Isom only their rights against their liability insurers rather than paying money.
Isom sued Valley Forge and Transportation Insurance (the Insurers) for breach of contract and breach of the covenant of good faith and fair dealing, seeking the $4 million and punitive damages.
Relevant policies included an Employment Practices Liability (EPL) form (covering claims by an "employee" but excluding independent contractors) and a Businessowners Liability Coverage Form (BLCF) that excluded employment-related discrimination and expected/intentional acts.
Insurers denied coverage after investigation concluded Isom was an independent contractor (not an "employee") and that the alleged conduct was intentional, then declined to defend; the parties settled and Isom sued the insurers in state court, later removed to federal court.
The district court granted summary judgment for the insurers, holding no duty to defend under the EPL (Isom was not an employee and complaint/exhibits showed that), rejected BLCF coverage arguments (Isom forfeited them), and dismissed the bad-faith claim; the court also disqualified two of Isom’s out-of-state attorneys for unauthorized practice.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Duty to defend under EPL	Complaint could be read to allege Isom was a leased/loaned employee (borrowed servant), so claim arguably within EPL coverage	Complaint and attached EEOC dismissal establish Isom was an independent contractor, and policy excludes independent contractors	No duty to defend; summary judgment for insurers
Coverage under BLCF	Complaint could be construed to allege covered personal injury (e.g., slander or invasion of privacy)	Employment-related discrimination and intentional acts are excluded under BLCF; insurer denied coverage	Forfeited on appeal by Isom; district court rejection affirmed
Effect of insurer investigation ("true facts" doctrine)	Insurer’s initial uncertainty shows duty to defend at least until facts clarified	Investigation produced facts showing no employee relationship, releasing duty to defend	Investigation confirmed lack of coverage; insurer entitled to deny defense
Disqualification of out-of-state counsel	Counsel’s involvement was necessary and did not constitute unauthorized practice	Counsel allowed names on pleadings and negotiated settlement before pro hac admission, violating Mississippi rules	District court’s disqualification of out-of-state counsel was not an abuse of discretion

Estate of Bradley ex rel. Sample v. Royal Surplus Lines Ins. Co., 647 F.3d 524 (5th Cir. 2011) (summary-judgment review; duty-to-defend analysis depends on complaint and policy)
QBE Ins. Corp. v. Brown & Mitchell, Inc., 591 F.3d 439 (5th Cir. 2009) (compare complaint to policy to determine duty to defend)
Auto. Ins. Co. of Hartford v. Lipscomb, 75 So. 3d 557 (Miss. 2011) (insurer’s knowledge of true facts can eliminate or create duty to defend)
Baker Donelson Bearman & Caldwell, P.C. v. Muirhead, 920 So. 2d 440 (Miss. 2006) (duty to defend arises only if complaint contains reasonable, plausible allegations of covered conduct)
LogistiCare Sols., LLC v. State Farm Mut. Auto. Ins. Co., 751 F.3d 684 (5th Cir. 2014) (policy interpretation principles; clear policy controls)
Starcher v. Byrne, 687 So. 2d 737 (Miss. 1997) (surgeon–anesthetist context; anesthetist not borrowed servant of surgeon)
Jones v. James Reeves Contractors, Inc., 701 So. 2d 774 (Miss. 1997) (borrowed-servant factors; control is dispositive)
N. Elec. Co. v. Phillips, 660 So. 2d 1278 (Miss. 1995) (borrowed-servant doctrine described)
U.S. Fid. & Guar. Co. of Miss. v. Martin, 998 So. 2d 956 (Miss. 2008) (clear and unambiguous policy language must be enforced as written)