323 So.3d 1034
Miss.2021Background
- Hardin purchased a Farm Bureau HO-2 homeowner policy (effective July 1, 2013–July 1, 2014); she contends certain endorsements were not mailed to her.
- In November 2013 Hardin discovered a sudden sag/collapse of portions of her floor and mold under the house; Farm Bureau inspected and paid only for limited damage under the shower, which Hardin rejected.
- Farm Bureau’s investigator concluded the damage resulted from long-term moisture/deterioration in the crawlspace caused by poor drainage and dryer exhaust, not an abrupt structural collapse.
- Hardin testified the Town of Leakesville’s filling of a nearby ditch caused surface water to collect and seep into her crawlspace, producing the moisture and mold.
- Hardin sued for breach of contract, specific performance, fraud/misrepresentation, emotional damages, attorneys’ fees, and punitive damages after Farm Bureau denied full coverage; Farm Bureau moved for summary judgment and the trial court denied it.
- The Mississippi Supreme Court granted interlocutory appeal, held the damage was excluded by the policy (not a covered peril and barred by the water exclusion), found the home not in a policy-defined "collapse," and reversed and remanded with summary judgment for Farm Bureau on the coverage/bad-faith issues.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether damage was caused by a "Peril Insured Against" | Hardin contends loss from the sudden collapse/mold is covered and endorsements were not part of her policy. | Farm Bureau argues the loss resulted from off-premises surface water (ditch) and thus is not a covered peril under the policy. | Court: Loss resulted from off-premises water drainage and is not a covered peril; summary judgment for Farm Bureau. |
| Whether the house was in a policy-defined "collapse" | Hardin asserts the floor collapse qualifies under the policy collapse coverage. | Farm Bureau contends the building is still standing and merely sagging, which the policy excludes from "collapse." | Court: Home is still standing and not in a state of collapse as defined by the policy. |
| Whether the policy's water-damage exclusion bars coverage | Hardin disputes applicability of the exclusion due to her view of sudden collapse and missing endorsements. | Farm Bureau maintains the broad exclusion for surface water/ground water applies because the ditch caused seepage and pressure from water. | Court: Evidence shows damage from surface/ground water seepage; water-damage exclusion applies. |
| Whether Farm Bureau had an arguable basis (bad-faith claim) | Hardin claims insurer acted improperly in denying coverage. | Farm Bureau asserts it had a legitimate, arguable basis to deny coverage given investigator report and policy exclusions. | Court: Insurer had an arguable/legitimate basis to deny the claim; bad-faith claim fails. |
Key Cases Cited
- Miss. Farm Bureau Cas. Ins. Co. v. Smith, 264 So. 3d 737 (Miss. 2019) (insurance-policy interpretation and summary-judgment de novo review)
- Hankins v. Md. Cas. Co./Zurich Am. Ins. Co., 101 So. 3d 645 (Miss. 2012) (contracts and insurance-policy interpretation principles)
- Hayne v. The Doctors Co., 145 So. 3d 1175 (Miss. 2014) (insurance policies construed as contracts)
- Noxubee Cnty. Sch. Dist. v. United Nat’l Ins. Co., 883 So. 2d 1159 (Miss. 2004) (insurers may rely on policy terms to preserve underwriting/rates)
- Corban v. United Servs. Auto. Ass’n, 20 So. 3d 601 (Miss. 2009) (insured bears burden under named-perils coverage)
- Lunday v. Lititz Mut. Ins. Co., 276 So. 2d 696 (Miss. 1973) (insured’s burden to prove peril insured against)
- Liberty Mut. Ins. Co. v. McKneely, 862 So. 2d 530 (Miss. 2003) (standard for insurer bad-faith requires showing insurer lacked arguable basis)
- State Farm Mut. Auto. Ins. Co. v. Grimes, 722 So. 2d 637 (Miss. 1998) (bad-faith/insurance-liability standards)