LOUIS GUIROLA, Jr., Chief District Judge.
After reviewing the Motions, the record in this matter, and the applicable law, the Court finds that Federal's Motion for a Certificate of Appealability and Motion to Stay should be denied. Singing River's Motion to Strike is moot, because the exhibits at issue do not affect this Court's ruling. The Court further finds that a stay of this Court's ruling on Federal's pending Motions is unnecessary. Therefore, Singing River's Motion to Stay is denied.
Numerous state and federal lawsuits have arisen out of the alleged underfunding of the Singing River Health System Employees' Retirement Plan and Trust. Federal issued an insurance policy to Singing River Health System for the period March 1, 2014, through March 1, 2015. The policy contains two coverage sections:
(1) an Executive Liability, Entity Liability, and Employment Practices Liability Coverage Section that provides $5 million in coverage and (2) a Fiduciary Liability Coverage Section that provides $1 million in coverage. Federal agreed to defend all insureds under the policy subject to a reservation of rights in the lawsuits related to the Retirement Plan and Trust. Federal allowed its insureds to select their own counsel.
Federal filed this lawsuit seeking a declaration that the maximum coverage available under the policy is the $1 million limit pertaining to fiduciary liability claims, and that no coverage is provided under the Executive Liability, Entity Liability, and Employment Practices Liability Coverage Section of the policy. It also seeks a declaration that defense costs incurred while defending the insureds under the Fiduciary Liability coverage has eroded the $1 million policy limits.
On October 2, 2015, this Court entered a Memorandum Opinion and Order [62] holding that defense costs paid in the underlying pension plan litigation should not be deducted from the policy limits, because Federal, not Singing River, was "legally obligated to pay" those defense costs pursuant to Moeller v. American Guarantee & Liability Insurance Co., 707 So.2d 1062 (Miss. 1996). Federal seeks permission to appeal the Memorandum Opinion and Order. It also asks the Court to stay its obligation to pay its insureds' defense costs while the interlocutory appeal is pending.
On October 30, 2015, the same day that Federal filed its reply in support of its pending Motions, Federal filed a Notice of Appeal [83]. Singing River has filed a Motion asking the Court to stay its ruling on Federal's Motions, so that it can research whether Federal's Notice of Appeal divested this Court of jurisdiction to consider Federal's Motions.
Fed. R. Civ. P. 54(b) provides that "the court may direct entry of a final judgment as to one or more, but fewer than all, claims or parties only if the court expressly determines that there is no just reason for delay." A district court order is appealable "[i]f the language in the order . . . either independently or together with related portions of the record referred to in the order, reflects the district court's unmistakable intent to enter a partial final judgment under Rule 54(b). . . ." Kelly v. Lee's Old Fashioned Hamburgers, Inc., 908 F.2d 1218, 1220 (5th Cir. 1990).
The decision whether to certify an order as a final judgment is left to the district court's discretion. PYCA Indus., Inc. v. Harrison Cty. Waste Water Mgmt. Dist., 81 F.3d 1412, 1421 (5th Cir. 1996).
Id. at 1421 (internal citations omitted).
In its Rule 54(b) Motion, Federal argues that it would be subjected to hardship if it were not permitted to appeal this Court's Memorandum Opinion and Order [62]. Federal asserts that it has now paid more than $1.4 million in defense fees in the underlying pension plan litigation, while it claims the policy limits for defense fees as well as coverage total $1 million. However, Federal's argument disregards the fact that the policy issued to Singing River contains two coverage sections: (1) an Executive Liability, Entity Liability, and Employment Practices Liability Coverage Section that provides $5 million in coverage and (2) a Fiduciary Liability Coverage Section that provides $1 million in coverage. No determination has yet been made regarding whether coverage or a defense is owed under the Executive Liability, Entity Liability, and Employment Practices Liability Coverage Section of the policy. As a result, even if this Court had held that the defense costs Federal has been paying pursuant to Moeller eroded the policy limits, this Court could not have held as a matter of law that Federal could stop paying its insureds' defense costs upon paying $1 million at this stage of the litigation. For this same reason, Federal cannot demonstrate that it will be subjected to undue harm if it is not permitted to appeal this Court's Memorandum Opinion and Order.
The issue of whether coverage exists under the Executive Liability, Entity Liability, and Employment Practices Liability Coverage Section of the policy is pending before the Court in a Motion for Summary Judgment [32] filed by Federal. And the Court has taken measures to provide an expedited ruling on this issue.
Federal also argues that an immediate appeal is necessary, because this Court's Memorandum Opinion and Order [62] has created confusion and uncertainty in the insurance industry. Federal contends that this Court gave no meaning to numerous policy provisions that it claims are clear and unambiguous. This Court has, in accordance with Mississippi law, attempted to construe Federal's policy as a whole. The meaning of all of the provisions that Federal references in its Motion have been examined in conjunction with Federal's own policy definitions of "defense costs" and "loss."
In Moeller, the Mississippi Supreme Court held that "[w]hen defending under a reservation of rights . . . a special obligation is placed upon the insurance carrier. .. . . [N]ot only must the insured be given the opportunity to select his own counsel to defend the claim, the carrier must also pay the legal fees reasonably incurred in the defense." Moeller v. Amer. Guar. & Liab. Ins. Co., 707 So.2d 1062, 1069 (Miss. 1996). Therefore, the insured is not "legally obligated" to pay defense costs incurred under Moeller. The Court's opinion was limited to Moeller counsel fees and did not address any other form of "defense costs" that may be incurred. It is the policy language in combination with the Mississippi Supreme Court's decision in Moeller that produces this case specific result. Thus, the Court's ruling is not nearly as apocalyptic as Federal claims.
In the alternative, Federal asks this Court to certify its Memorandum Opinion and Order [62] as a final judgment pursuant to 28 U.S.C. § 1292(b), which provides:
As noted above, an appeal will not "materially advance the ultimate termination of this litigation" until this Court has had an opportunity to rule on the pending Motion regarding the Executive Liability, Entity Liability, and Employment Practices Liability Coverage Section. As a result, there is no need for an immediate appeal at this time. Federal's Motion for Certificate of Appealability and Motion for Stay are denied.
In its Motion to Stay, Singing River seeks time to research whether Federal's Notice of Appeal [83] divested this Court of jurisdiction to consider Federal's Motion for permission to appeal and Motion to stay.
"[T]he filing of a valid notice of appeal from a final order of the district court divests that court of jurisdiction to act on the matters involved in the appeal, except to aid the appeal, correct clerical errors, or enforce its judgment so long as the judgment has not been stayed or superseded." Ross v. Marshall, 426 F.3d 745, 752 (5th Cir. 2005). Rule 4(a)(4)(B)(i) of the Federal Rules of Appellate Procedure provides:
One of the Motions listed in Rule 4(a)(4)(A) is a Motion to alter or amend a judgment under Rule 59. Fed. R. App. P. 4(a)(4)(A)(iv).
Assuming that Federal's Notice of Appeal, which was filed before any final judgment was entered, could divest this Court of jurisdiction, Federal's Motion for a Certificate of Appealability is, in essence, a motion to amend this Court's Memorandum Opinion and Order [62]. Specifically, Federal is asking the Court to convert the Memorandum Opinion and Order [62] into an appealable order. As a result, this Court is permitted to rule on Federal's Motion. Furthermore, this Court's Order on Federal's Motion will aid the appellate court by clarifying that this Court has not granted Federal permission to appeal the Memorandum Opinion and Order [62]. As a result, Singing River's Motion to Stay is denied.
Singing River's Motion to Strike the exhibits that Federal provided in support of its Motion is moot, because those exhibits had no impact on this Court's ruling.