Cheryl Coogan and Craig Coogan v. Nationwide Property and Casualty Insurance Company

        IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

                               NO. 2022-CA-01063-COA

CHERYL COOGAN AND CRAIG COOGAN                                            APPELLANTS

v.

NATIONWIDE PROPERTY AND CASUALTY                                            APPELLEE
INSURANCE COMPANY

DATE OF JUDGMENT:                          11/21/2022
TRIAL JUDGE:                               HON. LAWRENCE PAUL BOURGEOIS JR.
COURT FROM WHICH APPEALED:                 HANCOCK COUNTY CIRCUIT COURT
ATTORNEY FOR APPELLANTS:                   EDWARD D. MARKLE
ATTORNEY FOR APPELLEE:                     THOMAS LYNN CARPENTER JR.
NATURE OF THE CASE:                        CIVIL - INSURANCE
DISPOSITION:                               AFFIRMED AND REMANDED - 12/12/2023
MOTION FOR REHEARING FILED:

       BEFORE BARNES, C.J., GREENLEE AND EMFINGER, JJ.

       EMFINGER, J., FOR THE COURT:

¶1.    Cheryl and Craig Coogan (mother and son) appeal from the order of the Hancock

County Circuit Court granting Nationwide’s motion for partial summary judgment as to their

claims for bad faith and punitive damages arising from damages they allege occurred while

their vehicle, insured by Nationwide, was in the possession of a thief.

                       FACTS AND PROCEDURAL HISTORY

¶ 2.   On August 11, 2021, Craig Coogan gave a statement to Revell Dixon of Nationwide

Property and Casualty Insurance Company describing events that occurred on July 14 and

15, 2021. On July 14, Craig was at a grocery store in Bay Saint Louis, around 9 p.m., when

he encountered a stranger who asked him for a ride to the Hollywood casino. With Craig
driving his 2007 Toyota Tacoma truck, they went to the Hollywood casino, and Craig

watched the unidentified stranger gamble for a while. Then, at the stranger’s request, they

went to the Golden Nugget casino in Biloxi. Craig could not provide an explanation, but at

some point the stranger ended up with his truck keys, credit card, and cell phone. According

to Craig, at some point during the early morning hours of July 15, while making “a scene”

trying to get his keys back from the stranger, he was removed from the Golden Nugget.

Because they would not let Craig back in the casino, he stayed by his truck until around 10

or 11 a.m., at which point he walked to a store to get some water. Upon his return, he

discovered that his truck, along with his cell phone and credit card, were gone. Craig called

his mother Cheryl and told her what had happened.

¶3.    Cheryl called the Biloxi Police Department to report the theft. At some point, she

called Craig’s phone, which was still in the truck. The person who answered said he would

leave the truck at the Walmart in Pass Christian. Cheryl went to the Walmart, but the truck

was not there. She continued to exchange text messages with the person, asking that he return

the truck and its contents. The truck was recovered later that night, around 10 p.m., by the

Long Beach Police Department.

¶4.    Cheryl notified Nationwide, her insurance carrier, of the theft. The Coogans, at some

point, filed a claim for damages to the truck as a result of the theft.1 After the truck was

recovered, it was taken, at Nationwide’s expense, to Copart in New Orleans, an online car-

       1
         There was no written claim form completed and signed by Cheryl identifying
exactly what damage she claimed was caused by the theft. The claim was apparently based
on Cheryl’s phone call to Nationwide, their internet communications, and phone
conversations.

                                             2
auction company. While there on July 23, 2021, photos were taken, showing damage to the

vehicle. Those photos were provided to Rick Peterson, the claims examiner assigned to the

Coogans’ claim. As part of their investigation of the claim, Nationwide representatives also

spoke with Craig and Cheryl concerning the condition of the truck before and after the theft.

¶5.    Nationwide denied the claim based partly on Peterson’s opinion that oxidized rust

appeared in the photos of the damaged area of the truck, which Peterson said could not have

developed only eight days after the theft. That opinion was reinforced by the interviews of

Craig and Cheryl, who both acknowledged that the truck had some pre-existing damage.

¶6.    Both Craig and Cheryl admitted that there was prior damage to the passenger side and

rear quarter panel, but both contended that the damage was not as bad as what existed after

the theft. They claimed the damage to the area below the headlight on the driver’s side was

the result of the theft. However, Craig told Revell Dixon that he had caused damage to that

area a couple of months earlier when he was turning and hit a “metal concrete thing” at a gas

station. Cheryl admitted only that the driver’s side headlight was broken and replaced before

the theft. As to damage to a side mirror, Craig admitted that he had caused the damage to the

passenger side mirror by hitting a mailbox or somebody’s garbage that “was sticking out of

the freaking aisleway. I had to get to work on time, I left.” Cheryl argued that because of his

mental issues, Craig’s statements were not accurate. Nationwide concluded that the damage

claimed by the Coogans pre-existed the theft.2

       2
        In their complaint, the Coogans did not claim damages for any collision that may
have caused prior damage to the truck. Nationwide maintains that the Coogans did not make
any argument for collision coverage until the summary judgment pleadings. Instead, they
claimed that all the damage was a result of the theft.

                                              3
¶7.    The Coogans filed a complaint on September 30, 2021, a little over two months after

the theft, for contractual and punitive damages against Nationwide. Nationwide filed a

motion for partial summary judgment as to the bad faith and punitive damages claims and

for a determination that the Coogans’ deductible for their contractual claim was $2,000. In

its motion for summary judgment, Nationwide asserted first that it had an arguable basis for

its position that the Coogans had failed to show that the damage to the covered vehicle was

the result of the theft. In support of its position, Nationwide attached, among other items,

photos of the truck, Craig’s deposition, transcript of Craig’s recorded statement, and

Peterson’s affidavit. Second, Nationwide argued that the Coogans had produced no summary

judgment proof that it had “committed a wilful or malicious wrong, or acted with gross and

reckless disregard for the insured’s rights.”

¶8.    The Coogans countered by arguing that Nationwide had no legitimate basis on which

to deny their claim. The Coogans contend that issues of fact were present because the parties’

versions of the events are at odds, citing Cook v. Children’s Medical Group P.A., 

 (¶15) (Miss. 1999).3 While Nationwide contended that there was damage to the

Coogan’s vehicle before the theft, the Coogans maintained that the damages for which they

sought recovery occurred during the time the vehicle was under the thief’s control.

According to Peterson’s affidavit, “Cheryl Coogan told [Peterson] that the damage to the

front grill and side mirrors were pre-existing” and that “there were areas of damage on the

       3
        “Issues of fact sufficient to require denial of a motion for summary judgment
obviously are present where one party swears to one version of the matter in issue and
another says the opposite.” Miss. Dep’t of Wildlife, Fisheries & Parks v. Miss. Wildlife
Enforcement Officers’ Ass’n Inc., 

 (¶11) (Miss. 1999).

                                                4
truck that were present before the theft, but they were larger now.” During discovery, Cheryl

denied making some of those statements but admitted that there were some areas of damage

to the truck, but she claimed they were just larger after the theft.

¶9.    The Coogans also argued that regardless of when or how the damages occurred, they

are covered by their Nationwide policy. They argued before the trial court and here on

appeal, that

       if the damages occurred during the time the vehicle was under the thief’s
       control, which it did, it is covered under the Comprehensive section of the
       policy. If the damages occurred as a result of a prior collision, as alleged by
       Nationwide, the claim is payable under the Collision section of the policy.

The Coogans also argued that the policy has no exclusion for pre-existing damage. As a

result, the Coogans contended that Nationwide’s failure to pay their claim amounted to an

intentional tort deserving of punitive damages.

¶10.   After briefing and oral arguments, the circuit court granted Nationwide’s motion and

dismissed the Coogans’ bad faith and punitive damage claims. When the Coogans’ trial

counsel advised the circuit court that he intended to file an interlocutory appeal from the

judgment, the circuit court stayed the case pending resolution of the Coogans’ punitive

damages and bad faith claims by this Court. The circuit court entered an agreed amended

order that its “judgment was a final judgment on the issue of [the Coogans’] bad

faith/punitive damage claims and actions and expressly determine[d] that there [was] no just

reason for delay and expressly direct[ed] that there be an entry of final judgment on said

issues in accordance with M.R.C.P. 54(b).”

                                STANDARD OF REVIEW

                                               5
¶11.   In Holloway v. National Fire & Marine Insurance Co., 

, 674-75 (¶¶8-

9) (Miss. Ct. App. 2023), we stated:

       We review the grant of a motion for summary judgment de novo, viewing
       the evidence in the light most favorable to the non-movant. Karpinsky v. Am.
       Nat. Ins., 

 (¶9) (Miss. 2013). The movant is entitled to
       summary judgment if the record evidence “show[s] that there is no genuine
       issue as to any material fact and that the [movant] is entitled to judgment as a
       matter of law.” 

 at (¶10) (quoting M.R.C.P. 56(c)). The non-movant “may
       not rest upon the mere allegations or denials of his pleadings, but his response,
       by affidavits or as otherwise provided in [Rule 56], must set forth specific facts
       showing that there is a genuine issue for trial.” 

 (quoting M.R.C.P. 56(e)).
       In other words, “the non-movant cannot just sit back and remain silent, but he
       must rebut by producing significant probative evidence showing that there are
       indeed genuine issues for trial.” McMichael v. Nu-Way Steel & Supply Inc.,
       

 (Miss. 1990) (quoting Newell v. Hinton, 

 (Miss. 1990)).

       “In order to pursue a claim for bad faith denial of coverage in Mississippi,
       the insured bears a heavy burden to prove that its insurer lacked any
       arguable or legitimate basis to deny such coverage and that the ‘insurer
       committed a wilful or malicious wrong, or acted with gross and reckless
       disregard for the insured’s rights.’” Mut. Assur. Inc. v. Banks, 

 (S.D. Miss. 2000) (quoting State Farm Mut. Auto. Ins. Co. v.
       Grimes, 

 (¶12) (Miss. 1998)). Whether there is an
       arguable basis for denying coverage is a question of law to be decided by
       the court. Murphree v. Fed. Ins. Co., 

 (Miss. 1997).

(Emphasis added). “Partial summary judgment is also permissible under our rules, utilizing

the same criteria for a grant or denial of a summary judgment and the same standard of

review on appeal.” Holcomb Dunbar Watts, Best, Masters and Golmon P.A. v. 400 South

Lamar Oxford Mad Hatter Partners LLC, 

, 572 (¶7) (Miss. 2022) (quoting

One S. Inc. v. Hollowell, 

 (¶6) (Miss. 2007)).

                                         ANALYSIS

¶12.   The Coogans raise two basic issues on appeal. First, they contend that the lower court

                                               6
erred by dismissing “the extracontractual bad faith punitive damages claim.” Second, they

argue that the trial court erred by dismissing their “tort, bad faith claim for extra-contractual

damages under Veasley.”4 We address these issues below.

       I.       Whether the circuit court erred by granting partial summary
                judgment as to “the extracontractual bad faith punitive damages
                claim.”

¶13.   We first look at the Coogans’ burden of proof as to their punitive damage claim. In

Fonte v. Audubon Ins. Co., 

 (¶13) (Miss. 2009), the supreme court stated:

       In State Farm Mutual Automobile Insurance Company v. Grimes, 

 (Miss. 1998), this Court addressed the issue of punitive damages for denial
       of an insurance claim, determining that:

                [t]he issue of punitive damages should not be submitted to the
                jury unless the trial court determines that there are jury issues
                with regard to whether:

                       1. The insurer lacked an arguable or legitimate
                       basis for denying the claim, and

                       2. The insurer committed a wilful or malicious
                       wrong, or acted with gross and reckless
                       disregard for the insured’s rights.

       

 (emphasis in original). See also Jenkins v. Ohio Cas. Ins. Co., 

 (Miss. 2001).

(Emphasis added).

                A.     Did Nationwide have an arguable or legitimate basis for
                       denying the theft claim?

¶14.   Based on the photos of the truck after the theft, Peterson’s statement in his affidavit

that rust was present in the damaged area, and the statements of Craig and Cheryl as to prior

       4
           Universal Life Ins. Co. v. Veasley, 

 (Miss. 1992).

                                               7
damage to the truck, we find that Nationwide made a prima facie showing of a reasonably

arguable basis for denying the Coogans’ theft-damage claim. The burden then shifted to the

Coogans to produce sufficient summary judgment proof to demonstrate that Nationwide had

no arguable reason for handling their claim as it did. See Caldwell v. Alfa Ins. Co., 

 (Miss. 1996).

¶15.   The Coogans filed a response to the motion for summary judgment and attached

seventy-two exhibits to their response. The Coogans argued that whether the damage

occurred before or during the theft, all the damage was covered by their policy with

Nationwide under either the comprehensive or the collision provisions. Nationwide’s

contention that the damage to the truck “pre-existed” the theft, according to the Coogans, is

“their red herring. This is their elaborate scheme to deny this poor lady $7,000 to repair her

vehicle.” The Coogans also contend that the word “pre-existing” is not found in the policy

and that there is no “exclusion” for “pre-existing” damage. They further argued that Peterson

had never personally inspected the truck, and what he determined from the photo to be rust

could well have been bed liner glue. The Coogans also point out that what Peterson

determined to be rust was not in the area of damage; it was only near the damaged area. The

Coogans make these same arguments on appeal.

¶16.   In response to the Coogans’ contention that all damage to the truck is covered by the

Nationwide policy regardless of when or how the damage occurred, Nationwide points to the

policy itself. First, had there been damage to the truck as a result of a collision sometime

prior to the theft, Nationwide argues the Coogans should have filed a timely claim for any



                                              8
such damage. The policy reads, in part, as follows:

       PART E-DUTIES AFTER AN ACCIDENT OR LOSS

       We have no duty to provide coverage under this policy if the person seeking
       coverage fails to comply with the following duties:

               A. We must be notified promptly of how, when and where the accident
       or loss happened. Notice should also include the names and addresses of any
       insured persons and of any witnesses . . . .

The Coogans had not filed a prior collision claim for damage to the truck. Accordingly, if

there was damage to the truck from a prior collision that was not “promptly” reported to

Nationwide, there may not be coverage for such prior damage. Further, if there was damage

from a prior collision, it would be subject to a separate $2,000 deductible. Nationwide argues

that the claim at issue is a theft claim and that the complaint concerns the denial of the theft

claim. The Coogans raised the issue of a collision claim only in response to the motion for

summary judgment.

¶17.   In response to the Coogans’ argument that there is no policy “exclusion” for “pre-

existing” damage, Nationwide points out that the policy provides coverage for a loss caused

by the covered peril, which in this case is theft. Nationwide correctly argues that the Coogans

bore the burden of proof to show that the damage claimed was caused by the theft and did

not “pre-exist” the theft. In Mississippi Farm Bureau Casualty Insurance Co. v. Hardin, 

, 1040 (¶18) (Miss. 2021), the supreme court explained:

       “Under ‘named perils’ coverage, the burden of proof rests with the insured ‘to
       prove that the damages sustained were covered by the peril insured against
       . . . .’” Corban [v. United Servs. Auto. Ass’n], 20 So. 3d [601,] 619 (¶52)
       [(Miss. 2009)] (quoting Lunday [v. Lititz Mut. Ins. Co.], 276 So. 2d [696,] 699
       [(Miss. 1973))].


                                               9
Nationwide’s position is that the Coogans have not, at this point, met their burden to show

that the claimed damage to the truck was caused by the theft.

¶18.   As to the contention that Peterson’s affidavit was wrong concerning “rust” in the

damaged area of the rear passenger-side quarter panel, the Coogans offered no expert or

other witness to dispute this finding. The Coogans did not depose Peterson or any other

witness concerning the presence or absence of rust and offered no affidavit in this regard.

Peterson’s affidavit stands unrebutted.

¶19.   Nationwide was granted summary judgment as to punitive damages, but the

underlying contract claim is still before the trial court. Nationwide maintains that its dispute

with the Coogans relates only to the value of the Coogans’ claim for theft damages to the

truck. Nationwide admits that the policy provides coverage to the Coogans for any damage

to the truck caused by the theft. Our courts have often said that a legitimate dispute

concerning the value of a claim, or “pocketbook dispute,” cannot give rise to punitive

damages. See Rudd v. State Farm Fire and Cas. Co., 

, 585 (¶20) (Miss. Ct.

App. 2020); Cossitt v. Alfa Ins. Corp., 

 (¶21) (Miss. 1998); State Farm

Mut. Auto. Ins. Co. v. Roberts, 

 (Miss. 1980).

¶20.   After our de novo review of the record in this matter, we find that Nationwide had an

arguable basis to support its handling of the Coogans’ theft claim.

              B.      Did Nationwide commit a wilful or malicious wrong, or act
                      with gross and reckless disregard for the Coogans’ rights?

¶21.   The second part of the claim for punitive damages requires that the Coogans show that

Nationwide’s handling of their claim amounts to an independent tort. However, in Windmon


                                              10
v. Marshall, 

 (¶24) (Miss. 2006), in its discussion of what constitutes an

arguable basis for the denial of a claim, the supreme court stated:

       We find Farm Bureau’s conduct was not bad faith because there was a valid
       and arguable reason to deny the uninsured motorist claim. An arguable reason
       has been defined by this Court as ‘nothing more than an expression indicating
       the act or acts of the alleged tortfeasor do not rise to [the] heightened level of
       an independent tort.’ Universal Life Ins. Co. v. Veasley, 

       (Miss. 1992) (quoting Pioneer Life Ins. Co. of Illinois v. Moss, 

 (Miss. 1987)).

Because we find that Nationwide had an arguable basis to support its handling of the claim,

we find that Nationwide’s conduct does not rise to the level of an independent tort.

       II.    Whether the circuit court erred by failing to allow the Coogans’
              Veasley damage claims to be considered by a jury.

¶22.   The Coogans also contend that the circuit court “erred by failing to allow the Veasley

bad faith claims from being considered by a jury because such claims involve questions of

material fact which only a jury can resolve.” The Coogans note that it is unclear whether the

circuit court actually dismissed their Veasley claims, but they argue that if the circuit court

did in fact dismiss those claims, the court committed error in so doing.

¶23.   We first clarify what is meant by “Veasley claims.” The facts in Veasley are very

different than these in the case at bar. In August 1985, Teretha Veasley purchased a life

insurance policy from Universal Life Insurance Company. Veasley, 

. Her

mother, Martha Veasley, was the sole beneficiary. 

 Upon completion of the application,

Teretha paid one premium of $7.29. 

 Subsequently, Teretha was informed that the policy

had been approved, but with a higher risk rating that would require monthly premiums in the

amount of $10.76. 

 The first premium in the higher amount was due on September 18,

                                              11
1985, but it was never paid. 

 After the due date of a premium not paid, the policy provided

that it would remain in effect for a thirty-one-day grace period. 

 Teretha died on October

18, 1985, due to complications from childbirth. Id.

¶24.   Martha Veasley gave the policy to Viola Malone at Malone Funeral Home. Id. Malone

was also an agent for Universal. Id. Malone agreed to submit the claim to Universal, use the

proceeds to cover the cost of Veasley’s funeral, and remit the balance to Martha. Id. Malone

contacted Universal and was told the coverage was in effect. Id. Unfortunately, for reasons

not explained in the record, Malone did not submit the claim packet to Universal until July

1, 1986. Id.

¶25.   Due to mistakes in the handling of the claim, it was first denied in a written notice on

July 16, 1986. Id. After several contacts between the Veasley family and after their attorney

sent a letter to Universal questioning the reason for the denial of the claim, Universal advised

Veasley’s attorney on September 12, 1986, that a mistake had been made and that the claim

would be paid promptly. Id. at 292. On September 26, 1986, a $1,458 check was mailed to

Malone Funeral Home, and the balance due under the policy was mailed to Veasley. Id.

¶26.   The funeral home cashed the check, but on the advice of her attorney, Veasley tore

her check in half and mailed it, with a letter asserting a bad faith claim, back to Universal.

Id. The complaint contained claims of tortious breach of contract, fraud in the inducement,

and breach of fiduciary duty. Id. In addition to contractual and punitive damages, Veasley

also sought extra-contractual damages for emotional distress caused by Universal’s

mishandling of her claim. Id.



                                              12
¶27.      The matter went to trial, and the jury awarded Veasley $3,052.76 as the balance due

under the contract, $500 for actual extra-contractual damages, and $175,000 in punitive

damages. Id. On appeal, the supreme court found that the handling mistake did not constitute

an arguable reason to deny a just claim. Id. at 293-94. However, the court found that the

evidence was insufficient to show that “the acts of the defendant were willful or grossly

negligent, as opposed to an inadvertent calculation due to inattention and substitute personnel

handling the claim.” Id. at 294. Therefore the court reversed and rendered the award for

punitive damages. Id. at 296.

¶28.      As to the jury’s award of $500 for extra-contractual damages, the supreme court

stated:

          Some justices on this court have suggested that extra-contractual damages
          ought be awarded in cases involving a failure to pay on an insurance contract
          without an arguable reason even where the circumstances are not such that
          punitive damages are proper. Pioneer Life [Ins. Co. of Ill. v. Moss, 927,] 932
          [(Miss. 1987)]. (Sullivan, J., concurring, joined by D. Lee, Prather and
          Robertson, JJ.). Applying the familiar tort law principle that one is liable for
          the full measure of the reasonably foreseeable consequences of her actions, it
          is entirely foreseeable by an insurer that the failure to pay a valid claim
          through the negligence of its employees should cause some adverse result to
          the one entitled to payment. Some anxiety and emotional distress would
          ordinarily follow, especially in the area of life insurance where the loss of a
          loved one is exacerbated by the attendant financial effects of that loss.
          Additional inconvenience and expense, attorneys fees and the like should be
          expected in an effort to have the oversight corrected. It is no more than just
          that the injured party be compensated for these injuries.

          In the instant case, while not voluminous, evidence existed to support
          Veasley’s contention that the refusal of Universal Life to pay the claim cause
          her worry, anxiety, insomnia, and depression. Additionally, she experienced
          difficulty in coping with daily life and children, her grandchildren, in
          particular. Veasley stated that she did not have any of these emotional
          problems prior to her contact with Universal. Thus, the amount awarded by the

                                                13
       jury for Veasley’s emotional distress was no more than just compensation for
       her claims which, although contested, were presumably credited by the jury.

Veasley, 

 (emphasis added). While the supreme court found that Universal

did not have an arguable basis to deny the claim and denied punitive damages, the supreme

court did allow extra-contractual damages for emotional distress caused by the denial of

Martha Veasley’s claim. Subsequent cases have confirmed that “Veasley claims” for extra-

contractual damages are not available where the insurer had an arguable basis for the denial

of the claim. Fulton v. Miss. Farm Bureau Cas. Ins. Co., 

 (¶28) (Miss.

2012); Essinger v. Liberty Mut. Fire Ins. Co., 

 (5th Cir. 2008).

¶29.   In the present case, the complaint sought damages for, among other things, “physical

and mental anguish” and “mental pain and suffering.” The phrase “Veasley damages” is not

mentioned in the complaint, the motion for summary judgment, or the response to the motion

for summary judgment. The motion for summary judgment did, however, seek the dismissal

of “the bad faith and punitive damages claims.” The trial court’s amended order addressed

Nationwide’s motion for partial summary judgment as to “the extracontractual bad faith

punitive damages claim.” The order specifically stated that the “Plaintiffs’ claims on bad

faith and punitive damages are dismissed.” Because we find that Nationwide had an arguably

reasonable basis to support its handling of the Coogans’ theft claim, we also find that the trial

court did not err by dismissing their Veasley claims.

                                       CONCLUSION

¶30.   We find that the trial court did not err by granting summary judgment as to the

Coogans’ extra-contractual bad faith and punitive damages claims. We remand to the circuit


                                               14
court for further proceedings as to the contractual claims.

¶31.   AFFIRMED AND REMANDED.

      BARNES, C.J., CARLTON AND WILSON, P.JJ., GREENLEE AND SMITH,
JJ., CONCUR. McCARTY, J., CONCURS IN PART AND IN THE RESULT
WITHOUT SEPARATE WRITTEN OPINION. WESTBROOKS, J., CONCURS IN
RESULT ONLY WITHOUT SEPARATE WRITTEN OPINION. McDONALD, J.,
DISSENTS WITHOUT SEPARATE WRITTEN OPINION. LAWRENCE, J., NOT
PARTICIPATING.




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