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Williams v. Liberty Mutual Ins. Co.

United States Court of Appeals, Fifth Circuit

January 28, 2014

Clinton WILLIAMS, Plaintiff-Appellant,
v.
LIBERTY MUTUAL INSURANCE CO., Defendant-Appellee.

Page 618

Samuel Robert Hammond, Jr. (argued), Esq., S. Robert Hammond, Jr., P.L.L.C., Hattiesburg, MS, for Plaintiff-Appellant.

Clifford K. Bailey, III, Esq., Trey Christian Dellinger (argued), Wells, Marble & Hurst, P.L.L.C., Ridgeland, MS, for Defendant-Appellee.

Appeal from the United States District Court for the Southern District of Mississippi.

Before DAVIS, DENNIS, and HAYNES, Circuit Judges.

JAMES L. DENNIS, Circuit Judge:

The conflict of laws issue in this diversity case, removed from a Mississippi state

Page 619

court, is which state's law, that of Mississippi or Alabama, applies to decide whether the plaintiff, a Mississippi resident injured in Mississippi while working for an Alabama resident contractor, has an action in tort for damages against the employer's worker's compensation insurer because of the insurer's intentional bad-faith refusal to pay him worker's compensation when due. Under Mississippi law, upon the same alleged facts, except that the worker was employed by a Mississippi resident employer when she was injured, the worker could recover damages in tort from the employer's worker's compensation insurer. See Southern Farm Bureau Cas. Ins. Co. v. Holland, 469 So.2d 55 (Miss.1984). The Mississippi Supreme Court held that the action is not barred by the exclusive remedy provision of the Mississippi Worker's Compensation Act because the action arises from an independent tort committed by the insurer outside of the scope of the worker's employment. Id. at 56. On the other hand, the Alabama Supreme Court has held that the Alabama Worker's Compensation Act's exclusive remedy provision bars such an action, although it does not bar an action for the tort of " outrage" against an insurer involving extreme and outrageous conduct over and beyond a mere intentional bad-faith refusal to pay compensation. Stewart v. Matthews Indus., Inc., 644 So.2d 915, 918 (Ala.1994).[1] Williams has sufficiently alleged an intentional bad-faith refusal to pay worker's compensation claim against Liberty Mutual under Mississippi law, a claim that would be barred by the exclusivity provision of the Alabama Worker's Compensation Act. See id. Hence, the choice of which state's law applies is crucial to Williams' ability to state a claim upon which relief can be granted. The district court concluded that Alabama's substantive law applied, and accordingly dismissed Williams' suit. We reverse and remand the case to the district court for further proceedings consistent with this opinion.

I.

Clinton Williams, the Mississippi resident plaintiff, was injured in the course and scope of his employment in Mississippi while he was working for Steven Tanner, an Alabama resident contractor. The employer's insurer, Liberty Mutual Insurance Company, did not timely begin paying Williams worker's compensation. In fact, it delayed payments for eight months, during which time Williams brought proceedings for compensation against Liberty Mutual both in the Mississippi Worker's Compensation Commission (MWCC) and in an Alabama state court. Additionally, Williams asserted a claim for damages for " outrageous conduct" against Liberty Mutual in his Alabama suit. Ultimately, Liberty Mutual conceded its liability to Williams for worker's compensation under both Mississippi and Alabama law and reached settlement agreements with Williams in which Williams reserved his rights to sue the insurer for intentional bad-faith refusal to pay compensation in Mississippi and for outrageous conduct in Alabama.[2] The parties, however, later

Page 620

agreed to dismiss his Alabama suit for " outrageous conduct" damages without prejudice. Williams sued Liberty Mutual in Mississippi state court for damages resulting from the insurer's intentional bad-faith refusal to pay him compensation timely. Liberty Mutual removed Williams' Mississippi state-court suit to the U.S. District Court for the Southern District of Mississippi and successfully moved to dismiss Williams' suit. Williams v. Liberty Mut. Ins. Co., No. 2:10-CV-205-KS, 2011 WL 5183572 (S.D.Miss. Oct. 31, 2011) (unpublished). Williams timely appealed.

II.

This Court reviews questions of law, including conflicts of law questions, de novo and district court factual determinations for clear error. Abraham v. State Farm Mut. Auto. Ins. Co., 465 F.3d 609, 611 (5th Cir.2006). The facts here are undisputed, so our review is de novo. See Coats v. Penrod Drilling Corp., 5 F.3d 877, 882 (5th Cir.1993), opinion reinstated in part on reh'g en banc, 61 F.3d 1113 (5th Cir.1995).

A federal court sitting in diversity must apply the choice-of-law rules of the state in which it sits. Day & Zimmermann, Inc. v. Challoner, 423 U.S. 3, 4-5, 96 S.Ct. 167, 46 L.Ed.2d 3 (1975) (per curiam); Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Ellis v. Trustmark Builders, Inc., 625 F.3d 222, 225 (5th Cir.2010); see also Erie R.R. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938). This diversity action was removed from Mississippi state court to the U.S. ...


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