IN THE UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF MISSISSIPPI

SOUTHERN DIVISION

HENRY KUEHN and JUNE P. KUEHN PLAINTIFFS

VERSUS No. 1:08-cv-577-LTS-RHW

STATE FARM FIRE & CASUALTY COMPANY, et al. DEFENDANTS

STATE FARM’S REPLY MEMORANDUM IN FURTHER SUPPORT OF ITS

MOTION FOR SUMMARY JUDGMENT RE: APPRAISAL [63] [64]

BRYAN, NELSON, SCHROEDER, HICKMAN, GOZA & SPRAGINS, PLLC

CASTIGLIOLA & BANAHAN
John A. Banahan (MSB #1761)
H. Benjamin Mullen (MSB #9077)
4105 Hospital Road, Suite 102-B
Pascagoula, Mississippi 39567
(228) 762-6631
H. Scot Spragins (MSB # 7748)
Post Office Drawer 668
Oxford, Mississippi 38655-0668
(662) 234-4000

Attorneys for Defendant

State Farm Fire and Casualty Company
 TABLE OF CONTENTS

I. Preliminary Statement ............................................................................................................ 1

II. Pl
ai
nti
ff
sAdmi
tTh
atMr
.O’
Lea
ryWa
sTh
eirZe
alousa
ndDi
li
gen
tAdv
oca
te....................... 2

III. As a Matter of Law, the Appraisal Clause Precludes Causation Determinations ..................... 4

IV. Plaintiffs Cannot Show That the Scope and Conduct of the Appraisal Was Proper ................. 6

V. Non
eofPl
ai
nti
ff
s’Mi
sdi
rec
teda
ndBe
lat
edEs
top
pelTh
eor
iesAppl
ie
s................................. 9

A. Judicial Estoppel Does Not and Cannot Apply ................................................................ 9

B. Collateral Estoppel Does Not Apply Because No Court Has Scrutinized the Appraisal.. 11

C. Plaintiffs Cannot Obtain the Extraordinary Remedy of Equitable Estoppel.................... 13

VI. Pl
ai
nti
ff
s’Va
gueAs
ser
ti
onsFa
ilToSa
ti
sf
yRul
e56(
f)........................................................ 15

VII. Conclusion........................................................................................................................... 16

i
I. PRELIMINARY STATEMENT
Unable to refute the rank bias and partisanship of Lewis O’
Leary, Plaintiffs double-down and

embrace it, but fatally undermine the declaratory and injunctive relief they seek. Plaintiffs freely admit

Leary “
that Mr. O’ zealously represented Plaintiffs’interests”and undertook “
passionate efforts on

[Plaintiffs’
] behalf during the appraisal.” [68] at 21-22. These admissions confirm that Mr. O’
Leary

was not a “
disinterested”appraiser as required by the policy, [63-2] at 100019, by Fifth Circuit case law,

Phoenix Assur. Co., Ltd. of London v. Davis, 67 F.2d 824, 825 (5th Cir. 1933), and as corroborated by

leading commentators. 15 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 211:33 & n.17

(2008) (citing Davis as primary authority). This Court need go no further to grant summary judgment.

Nor does Plaintiffs’effort to manufacture an ambiguity in the policy withstand scrutiny. The

appraisal language at issue here is substantively and judicially indistinguishable from the appraisal

clause construed by the Mississippi Supreme Court in Hartford Fire Ins. Co. v. Jones, 108 So. 2d 571,

571 (Miss. 1959), which was wholly adopted by that court in Munn v. Nat’
l Fire Ins. Co. of Hartford,

115 So. 2d 54, 56 (Miss. 1959). To show ambiguity, Plaintiffs must show that “
a term or provision is

susceptible to more than one reasonable meaning”without resort to any extrinsic evidence. Leonard v.

Nationwide Mut. Ins. Co., 499 F.3d 419, 429 (5th Cir. 2007). Plaintiffs make no effort to satisfy that

legal test. Thus, not only do Plaintiffs fall far short of their burden to show an ambiguity in the appraisal

language, but the Mississippi Supreme Court’

s cases on the issue also preclude any such showing.

Nor can Plaintiffs show that the scope and conduct of the appraisal comported with the policy

and Mississippi law. It did not. In addition to the uniform testimony that the appraisers made causation

and coverage determinations, even under Plaintiffs’depiction of the record, the appraisal went awry.

Despite their claim that the appraisal assessed wind damage above the flood line only, even that

approach is riddled with impermissible causation determinations. Summary judgment is thus warranted.

Bereft of any bona fide grounds to avert summary judgment, Plaintiffs desperately and belatedly

resort to equitable arguments in a scattershot discussion of estoppel theories. None avails Plaintiffs.
II. PLAINTIFFS ADMIT THAT MR. O’
LEARY WAS THEIR ZEALOUS AND DILIGENT ADVOCATE
To obtain the relief they seek, Plaintiffs must demonstrate that Mr. O’
Leary was disinterested

during the appraisal under both the policy language and governing law. Yet in their response, Plaintiffs

Leary “
freely admit that Mr. O’ diligently and zealously represented Plaintiffs’interests”and undertook

“
passionate efforts on [Plaintiffs’
] behalf during the appraisal.”[68] at 21-22. It is thus undisputed, and

readily confirmed, that Mr. O’

Leary was a biased, partisan advocate for Plaintiffs during the appraisal.

Plaintiffs seek to excuse Mr. O’ s blatant zealotry by arguing that to be “

Leary’ disinterested,”Mr.

Leary merely had to have “

O’ had no pecuniary stake in the outcome of the appraisal.” Id. at 21

(emphasis in original). Plaintiffs are wrong. As the Fifth Circuit held more than seventy-five years ago,

the requirement of a “
disinterested”appraiser “
excludes not merely pecuniary interest but also bias and

prejudice, and is designed to secure a tribunal acting in a quasi judicial capacity free from partisanship

and seeking to do equal justice between the parties.”Davis, 67 F.2d at 825 (citation omitted). Likewise,

as the court subsequently held in Lawler v. Ins. Co., 54 A.2d 685, 686 (Me. 1947), appraisers must be

“
disinterested”“
not only in the narrow sense of being without relationship and pecuniary interest, but

also in the broad, full sense of being competent, impartial, fair and open minded, substantially

indifferent in thought and feeling between the parties, and without bias or partisanship either way.”

The only support Plaintiffs cite for their notion of “

disinterested”are two inapposite case

citations from Couch on Insurance. Pls. Exs. 25 [68-29] & 26 [68-30]. By its terms, the policy in the

first case, Southeast Nursing Home, Inc. v. St. Paul Fire & Marine Ins. Co., 750 F.2d 1531 (11th Cir.

1985), “
did not require impartial appraisers.”Id. at 1537 & 1538 (emphasis added). Not so here. As

Plaintiffs note, “
State Farm’
s policy is different.” [68] at 23 (emphasis in original). It requires the

appraisers to be “
disinterested,”[63-2] at 100019, whereas Mr. O’
Leary was a zealot. [68] at 21. The

second case, Linford Lounge, Inc. v. Michigan Basic Prop. Ins. Ass’
n, 259 N.W.2d 201 (Mich. Ct. App.

1977), offers no solace. The court merely held that being a former adjuster “
does not automatically

disqualify the appraiser, absent a showing of prejudicial misconduct,”id. at 203, which abounds here.
2
 Ironically, the excerpt from Couch on Insurance that Plaintiffs attach as an exhibit, [68-29], goes

on to squarely refute the assertions that they are making here and to squarely support State Farm’
s.

Where loss, in case of disagreement, is to be ascertained by “ disinterested”

appraisers appointed by the parties, the word “disinterested”does not mean merely a lack
of pecuniary interest, but is used in a broader sense, as meaning not only without
pecuniary interest, but impartial, fair, open-minded, and without partisanship, prejudice,
or bias. Conversely, an “ interested appraiser”is one who is partial, unfair, arbitrary, and
dominated by bias and prejudice for or against the parties or the property in controversy,
or both, or has some pecuniary interest in the result or performance of the duties of
appraiser.

Id. (Couch on Insurance, §50:137, “

Interest or disinterest defined”
) (citing Davis as primary authority).

Leary is a textbook example of an appraiser who is not “

Mr. O’ disinterested.” From the

Leary plotted with Plaintiffs to “

beginning, Mr. O’ pre
vai
l,
”to“
nev
erpa
ssac
han
cet
ocr
eat
eev
enmor
e

of a
nedgewh
ere
verpos
sibl
e,
”to“
go full bore,”and to attack the “
credibility”of State Farm’
s appraiser

(whomever he or she would be) in order to “

hurt him in the umpire’
s eyes,”all as part of the

premeditated “
ticket we need for success.” [63-3] at 1. Plaintiffs’counsel later joined strategies with

Mr. O’
Leary and assigned him to protect Plaintiffs’litigation interests during the appraisal. [63-4.]

Confronted with these “

smoking gun”emails, Plaintiffs lamely attempt to spin them away as “
‘puffing,’

for his client.”[68] at 21. But they cannot. Mr. O’

Leary engaged in such conduct during the appraisal

Leary was acting as “

and Plaintiffs have admitted that Mr. O’ an appraiser to zealously advocate [his]

s position,”who “
client’ diligently and zealously represented Plaintiffs’interests in the appraisal

process,”and undertook “
passionate efforts on [Plaintiffs’
] behalf during the appraisal.” Id. at 21-22.

Leary was not “

These facts, and these admissions, establish that Mr. O’ disinterested”–and not by

“
State Farm’
s definition of this term,”id. at 21, but by the definition embraced by the Fifth Circuit in

Davis more than seventy-five years ago and still cited as the leading case by Couch on Insurance today.

Regardless of any other matters raised by Plaintiffs, the admitted zealotry of Mr. O’
Leary is

dispositive of Plaintiffs’claims for declaratory and injunctive relief. Summary judgment in favor of

State Farm is warranted on that ground alone.

3
III. AS A MATTER OF LAW, THE APPRAISAL CLAUSE PRECLUDES CAUSATION DETERMINATIONS
In Hartford Fire, the Mississippi Supreme Court judicially construed the identical policy

language at issue –i.e., appraisal as to “

the amount of loss”–as precluding causation or coverage

determinations. See 108 So. 2d at 571. In Hartford Fire, the insurance “

policy contained the standard

appraisal clause as to how the amount of loss was to be determined,”and specifically, the clause applied

“
If the insured and the company fail to agree as to the amount of loss ….
”Id. (emphasis added). So,

too, here. Using virtually identical language, the appraisal clause in Plaintiffs’policy applies “
If you

and we fail to agree on the amount of loss ….

”[63-2] at 100019 (emphasis added).

Construing this substantively and judicially indistinguishable policy language, the Hartford Fire

court noted that “

appraisement is an agreed method of ascertaining value or amount of damage,

stipulated in advance, ... with the object of preventing future disputes, rather than settling present ones.

Liability is not fixed by means of an appraisal; there is only a finding of value, price, or amount of loss

or damage.”108 So. 2d at 572 (emphasis added) (quoting 3 Am. Jur., Arbitration and Award, § 3, at pp.

830-31); accord Munn, 115 So. 2d at 56-57 (same). The Mississippi Supreme Court’
s judicial

interpretation of the effectively identical appraisal clause in Hartford Fire applies with equal force here.

In Munn, the Mississippi Supreme Court adopted Hartford Fire as “

a splendid discussion of the

effect of an appraisal in Mississippi.”Id. at 56. While Plaintiffs wholly ignore the policy language in

Hartford Fire, and mistakenly believe that the policy language in Munn was meaningfully different

based on there being “

no mention of any other definitions within the policy,”[68] at 23, the appraisal

clause in Munn only allowed the appraisers to “

appraise the loss.”Munn, 115 So. 2d at 55. So does the

appraisal clause here. “

[N]owhere in the standard form for submission to appraisal is any power vested

in or conferred upon the appraisers to determine the cause of the loss.” Id. at 56. Nor is there here.

Instead, the cause of damage must first be “

stipulated in advance,”id. at 56 (quoting Hartford Fire, 108

So. 2d at 572), or judicially determined, Jefferson Davis, 2009 WL 367688, at *2, but in no case can

cause be determined by appraisal. Hartford Fire, 108 So. 2d at 572; Munn, 115 So. 2d at 55.
4
 The Mississippi Supreme Court’
s holdings in Hartford Fire and Munn readily dispose of

Plaintiffs’so-called “
ambiguity”claim. See [68] at 22-24. “
[T]he ‘
interpretation of a contract is a

”Gladney v. Paul Revere

question of law, including the question whether the contract is ambiguous,’

Life Ins. Co., 895 F.2d 238, 241 (5th Cir. 1990), and “
Mississippi law acknowledges that the standard

insurance policy is a contract, and its terms are a matter of usual contract interpretation unless some

statutory imperative controls.”Lynch v. Miss. Farm Bureau Cas. Ins. Co., 880 So. 2d 1065, 1070 (Miss.

Ct. App. 2004). Moreover, “

[t]he most basic principle of contract law is that contracts must be

interpreted by objective, not substantive standards.” Cherry v. Anthony, 501 So. 2d 416, 419 (Miss.

1987). There is perhaps no more “

objective standard”for the interpretation of the appraisal clause than

sjudicial construction of such language in its leading cases on the issue.

the Mississippi Supreme Court’

To be sure, the “
mere fact that lawyers may disagree on the meaning of a contractual provision is

not enough to constitute ambiguity,”Stinnett v. Colo. Interstate Gas Co., 227 F.3d 247, 254 (5th Cir.

2000), just as “
[t]he mere fact that the parties disagree about the meaning of a provision of a contract

does not make the contract ambiguous as a matter of law.”Leonard, 499 F.3d at 429. Whether, in an

effort to stave off summary judgment, Plaintiffs claim to misunderstand the appraisal clause is of no

legal moment. Their subjective and extrinsic interpretation does not affect this Court’
s analysis. Id.

“
[A] court must refrain from altering or changing a policy where terms are unambiguous, despite

resulting hardship on the insured.”Titan Indem. Co. v. Estes, 825 So. 2d 651, 656 (Miss. 2002); accord

Farmland Mut. Ins. Co. v. Scruggs, 886 So. 2d 714, 717 (Miss. 2004). “
No rule of construction requires

or permits [Mississippi courts] to make a contract differing from that made by the parties themselves, or

to enlarge an insurance company’

s obligations where the provisions of its policy are clear.” Leonard,

499 F.3d at 429 (alteration in original). Plaintiffs satisfy none of the legal requirements of showing an

ambiguity in the policy.

5
IV. PLAINTIFFS CANNOT SHOW THAT THE SCOPE AND CONDUCT OF THE APPRAISAL WAS PROPER
Under Mississippi law, appraisers are powerless to determine the cause of damage for any loss,

see, e.g., Hartford Fire, 108 So. 2d 571; Munn, 115 So. 2d 54, as this Court has repeatedly recognized.

See Kuehn v. State Farm Fire & Cas. Co., No. 1:06-cv-723-LTS-RHW, 2007 WL 184647, at *1 (S.D.

Miss. Jan. 19, 2007) (Senter, J.) (“

Kuehn I”
); accord Mar. 31, 2009 Order [62] at 1. Indeed, as recently

applied in a Hurricane Katrina case that Plaintiffs fail to distinguish, “

[i]t is clear that under Mississippi

law that the purpose of an appraisal is not to determine the cause of loss or coverage under an insurance

policy; rather, it is ‘
limited to the function of determining the money value of the property’at issue.”

Jefferson Davis County Sch. Dist. v. RSUI Indemn. Co., 2009 WL 367688, at *2 (S.D. Miss. Feb. 11,

2009) (emphasis added) (quoting Munn, 115 So. 2d at 55; citing Kuehn I, 2007 WL 184647, at *1).

Plaintiffs pay lip service to these fundamental principles but fatally misapprehend them.

Plaintiffs labor under the misimpression that by appraising all damage above the flood line, the appraisal

panel limited its inquiry to the value of covered damage. [68] at 18-19. Plaintiffs are wrong on multiple

levels, any one of which renders the appraisal award unsound as a matter of law.

First, to conclude that all damage above a flood line is caused by “

wind only,”as opposed to any

other force, is itself a causation determination. The same is true for “

apprais[ing] wind only”anywhere

in the house, [68] at 18, which requires determining what parts of the house were damaged by wind and

not by any other force. Even Plaintiffs’suggested rubric of valuing only damage above a flood line

requires causation and coverage determinations. Under any of these methods, the appraisers determined

the cause and coverage of the damage, which is forbidden by the policy and Mississippi law.

“
[A]ppraisers have no power to determine the cause of the damage.” Munn, 115 So. 2d at 55. By

determining the cause of damage, the appraisal panel deprived State Farm of its “
constitutional rights to

have determined in a court of justice the liability of an insurer.”Id. The appraisal award cannot stand.

Second, Plaintiffs’argument is divorced from reality because the appraisal panel did not limit its

inquiry to damage above a flood line. Mr. O’

Leary planned from the beginning to argue causation, [63-
6
3] at 1, knowing that he “
would definitely be addressing causation.” [63-5] at 84:20-86:1. Mr. Minor

Leary “
testified that was precisely what took place when Mr. O’ would want to argue the windows on the

first floor and say that wind got there before the flood.” [63-6] at 120:13-121:1. Mr. Voelpel also

confirmed that the panel did not limit their inquiry to damage above a flood line. [63-7] at 36:13-18.

sa
Further, the panel’ ppr
ais
alapproach also commingled any alleged wind and flood damage to

the second floor in one computation. The appraisal panel did not independently compute the so-called

“
winddamage.
”Instead, it computed the damage to the entire second floor and decided that 75% of all

the second-floor damage was from wind, id. at 25:16-26:11; 29:10-21; 33:6-13; 93:15-94:1 –a

simplistic methodology that Mr. Voelpel could not recall using in any other appraisals. Id. at 103:10-16.

Nor
,asPl
ai
nti
ff
sas
ser
t,di
dSt
ateFa
rm“
agr
ee”dur
ingt
he30(
b)(6) deposition of Rick Moore

“
tha
tda
magea
bov
eth
ewa
ter
li
nef
rom Hu
rri
can
eKa
tri
nawa
sduet
owi
nd.
”[68]a
t3,18
.Mr
.Moor
e

s
aidn
osuc
hthi
ng.I
nfa
ct,h
eonl
yte
sti
fi
edt
hatda
magea
bov
eth
ewa
terl
inewa
snot“
don
ebywa
ter
.”

Q. And do you take the position that the damage done above the water line in the Kuehn
house was done by water as opposed to wind?

A. No.

[68-25] at 101:6-9. Yet the appraisal panel improperly concluded that damage above the flood line was

caused by wind and awarded damaget

o“h
eavys
truc
tur
alf
rami
ngoft
heh
ome
,whi
chwa
snot affected

”Id. at 15:19-16:13; accord id. at 16:21-17:3. In any event, whether there was actual wind
by the wind.

da
maget
oanyofPl
ai
nti
ff
s’pr
ope
rtywa
snotat
opi
cfort
he30(
b)(
6)de
pos
it
ion
. See [44]. Issues

r
ela
tedt
oPl
ai
nti
ff
s’a
ctua
lda
mage
sorSt
ateFa
rm’
sadj
ust
men
toft
hec
lai
mar
eout
si
det
hisph
aseoft
he

bifurcated discovery, which is exclusively directed to the validity of appraisal. Jan. 5, 2009 Order [15]

at 2, a
ff’
d, Mar. 31, 2009 Order [62].

Third, Plaintiffs completely ignore that the appraisal award even went beyond structural damage

to Plaintiffs’house. The appraisal panel also made determinations and awards for personal property,

law and ordinance, and ALE coverages. [63-18.] Going beyond any adherence to a flood line, the panel

7
purportedly computed damage to items that were submerged in flood water. [63-6] at 83:4-84:9. The

appraisal panel also independently decided which personal property items were moved to the second

floor before the storm, ignored and went beyond the parties’list of damaged items, and independently

determined the cause to be wind. See [63-5] at 41:16-25; 54:19-22; 61:24-62:16; [63-7] at 45:22-46:3.

As a matter of law, none of those causation or coverage determinations is permissible.

Plaintiffs also ignore the fact that the appraisal panel made causation determinations for the law

and ordinance and ALE awards, despite any flood line –a

ndPl
ai
nti
ff
s’r
eli
anc
eonon
e. The panel

decided that 31% of the law and ordinance coverage and the ALE expenses were due to wind damage.

[63-7] at 40:25-12; [63-19]at 5. Mr. Voelpel cannot explain how the appraisers attributed this 31% to

wind damage, [63-7] at 40:25-41:16, but he confirmed that 31% was intended to be the “
[p]ercentage of

damage caused by wind ”for the “

[i]ncrease[d] cost of construction due to code caused by wind.”[63-

20] (emphasis added). To be sure, no award for law and ordinance or ALE would be possible without

specific findings of causation and coverage, as reflected in the policy itself. [63-2] at 100009, 100029.

Forth, Plaintiffs completely ignore the deposition testimony from both appraisers and the umpire,

all showing that the appraisal panel sought to determine the cause of damage on their own. All members

of the appraisal panel uniformly testified that they independently determined the cause of damage to

Plaintiffs’property in their appraisal award. [64] at 13-18. Indeed, Plaintiffs’advocate, Mr. O’

Leary,

freely admitted that he “

would definitely be addressing causation in my consideration, absolutely,”[63-

5] at 84:20-86:1, which, he testified, is exactly what was done in this case but “
in a grander scale”for

Plaintiffs’entire claim. Id. at 86:2-4. So, too, Mr. Voelpel recognized that the appraisal was improperly

“
wading in deeper”into making “
coverage”determinations, [63-17], and that the appraisal panel “
took a

proportion of the square footage and attributed it to wind and a portion of the square footage and

attributed it to water.”[63-7] at 25:16-26:11. To determine which parts of the house were damaged by

wind is to determine the cause of damage –a function that rests in a court, not an appraisal panel.

8
 Beyond any genuine dispute, time and again, the record establishes that the appraisal panel

determined the cause of damage to Plaintiffs’property and assigned coverage liability for the structure,

contents, law and ordinance, and ALE provisions, all of which is prohibited by Mississippi law and the

policy. Under the policy and Mississippi law, “

the appraisers were without authority”to make those

determinations. Munn, 115 So. 2d at 58. Plaintiffs cannot meet their burden to show otherwise. State

Farm is thus entitled to summary judgment on Plaintiffs’claim for declaratory and injunctive relief.

V. NONE OF PLAINTIFFS’MISDIRECTED AND BELATED ESTOPPEL THEORIES APPLIES

Seeking to divert attention away from the fatal flaws in the appraisal process, Plaintiffs engage in

a campaign of misdirection by belatedly attempting to raise several estoppel doctrines. None applies.

Nor have Plaintiffs sought any affirmative relief under any of their estoppel theories, and Plaintiffs have

waived the right to do so by allowing the deadline to lapse on April 14, 2009. Feb. 13, 2009 Text Order.

Plaintiffs’estoppel arguments ask this Court to turn a blind eye to the dispositive information

revealed in discovery –i.e., Mr. O’

Leary is an admittedly biased and partisan zealot who advocated on

Plaintiffs’behalf during the appraisal, and the appraisal panel impermissibly made causation and

coverage determinations. By invoking estoppel, Plaintiffs seek to enforce an appraisal award that

violates the policy and Mississippi law. None of Plaintiffs’contrived estoppel theories survives review,

and none of them can cure Plaintiffs’inability to carry their burden to obtain the relief they seek.

A. Judicial Estoppel Does Not and Cannot Apply

Plaintiffs assert that State Farm is judicially estopped from contesting the legal validity of the

appraisal based on statements in “

remand-related discovery”and in an email during settlement

negotiations between the parties. [68] at 17-18, Pls. Ex. 17 [68-18]. Plaintiffs bear the burden of

satisfying the requirements of judicial estoppel, see McBride v. Bilberry Family Ltd. P’
ship, 2008 WL

4286532, at *3 (S.D. Miss. Sept. 16, 2008); LOL Fin. Co. v. Delta Pride Catfish, Inc., 2006 WL

3469619, at *2 (N.D. Miss. Nov. 30, 2006), but they neither acknowledge nor satisfy such requirements.

9
 The only support Plaintiffs cite for their argument is Edwards v. Aetna Life Ins. Co., 690 F.2d

595 (6th Cir. 1982), which held that judicial estoppel was not applicable. See [68] at 18. In Edwards,

the Sixth Circuit held that a district court improperly applied judicial estoppel because the party’
s

previous position was never adopted by a judicial tribunal. 690 F.2d at 599-600. “
In light of the

policies underpinning judicial estoppel, the rule can not be applied in a subsequent proceeding unless a

party has successfully asserted an inconsistent position in a prior proceeding,”and the party must have

been “
successful in getting the first court to accept the position.”Id. at 599. Since the parties resolved

their dispute without the need for a judicial tribunal accepting any position, judicial estoppel did not

apply in Edwards. Id. at 599-600. Nor does it here.

The Fifth Circuit imposes the same requirement. To invoke judicial estoppel, a “
previous court

must have accepted the party’

s earlier position.”Hopkins v. Cornerstone Am., 545 F.3d 338, 349 (5th

Cir. 2008) (citation omitted); accord GP Plastics Corp. v. Interboro Packaging Corp., 108 F. App’
x

832, 835 (5th Cir. 2004). The doctrine requires that “

a court has ‘
necessarily accepted and relied on’a

party’
s position in making a determination,”which Plaintiffs must show to invoke judicial estoppel. GP

x at 835. Indeed, “
Plastics Corp., 108 F. App’ judicial estoppel is designed to protect the judicial

system, not the litigants.”In re Superior Crewboats, Inc., 374 F.3d 330, 334 (5th Cir. 2004).

Plaintiffs make no such showing here, nor can they. The Mississippi Chancery Court had no

opportunity to adjudicate the validity of the appraisal, if any, because the appraisal had not yet occurred.

See [23-5] at 1-2. As reflected in its order, the sole issue before the Chancery Court was whether to

conduct an appraisal at all, not whether the appraisal was properly conducted. Id. No court has yet

addressed the propriety of the scope and conduct of the appraisal (though State Farm asks this Court to

do so now). Thus, any contention that the appraisal was legally unsound could never have been

accepted by any court, which precludes judicial estoppel. Hopkins, 545 F.3d at 349. Plaintiffs cannot

backfill the Chancery Court’

s order with new and unaddressed issues. And while Plaintiffs breathlessly

10
 s appraisal provision applies only to “
and repeatedly state that State Farm’ covered”losses, [68] at 13 &

n.4, 16, 18-19, 22-24, recognizing the obvious does not invoke estoppel or avert summary judgment.

Further, beyond inappropriately distorting comments made by counsel by taking them out of

context and by disingenuously mixing and matching them with other statements in a contrived fashion,

none of which are “

admissions by State Farm,”a
sPl
ai
nti
ff
spos
it
,see, e.g., [68] at 12, any statements

made during settlement negotiations are inadmissible. “

Rule 56 states that a court may consider only

admissible evidence in ruling on a summary judgment motion.”Mersch v. City of Dallas, 207 F.3d 732,

734-35 (5th Cir. 2000). So, too, “

statements made in compromise negotiations regarding the claim”are

“
nota
dmi
ssi
bleonb
eha
lfofa
nypa
rty
,wh
en,of
fer
edt
opr
ovel
ia
bil
it
yfor… ac
lai
mth
atwa
s

disputed.”Fed. R. Evid. 408(a)(2). “

The purpose of this rule is to encourage settlements which would

be discouraged if such evidence were admissions.”Fed. R. Evid. 408 advisory committee’

s note. The

broad exclusions contained in Rule 408 are “

designed to encourage settlements by fostering free and full

discussion of the issues.”Ramada Develop. Corp. v. Rauch, 644 F.2d 1097, 1106 (5th Cir. 1981). Here,

Plaintiffs improperly rely on statements made during settlement negotiations between the parties, Pls.

Ex. 17 [68-18], which are inadmissible for these purposes.

B. Collateral Estoppel Does Not Apply Because No Court Has Scrutinized the Appraisal
Plaintiffs contend that State Farm is collaterally estopped from contesting the legal validity of the

appraisal. [68] at 15-16. Collateral estoppel “

‘applies only to questions actually litigated in a prior suit,

” Lange v. City of Batesville, 92 So. 2d 11, 22

and not to question which might have been litigated.’

(Miss. Ct. App. 2008) (emphasis added; quoting Dunaway v. W.H. Hopper & Assoc., 422 So. 2d 749,

751 (Miss. 1982)). Though not even an implied holding in a prior suit between the parties is enough to

collaterally estop subsequent litigation, id. at 22-23, here, there was no prior holding by a court –

implied or express –as to the propriety or effect of appraisal. Collateral estoppel does not apply.

The Mississippi Chancery Court did not address the propriety of the scope or conduct of the

appraisal because the appraisal had not yet happened. See [23-5] at 1-2. The propriety of the scope or
11
conduct of the appraisal “
has not been actually litigated and determined”by the Chancery Court, and its

order “
cannot now be utilized upon the basis of collateral estoppel.”Johnson v. Bagby, 171 So. 2d 327,

331 (Miss. 1965). Any resolution of disputes over the propriety of the scope or conduct of the appraisal

was left for another day. [23-5] at 2. Only now, after the appraisal, Plaintiffs seek declaratory and

injunctive relief “
to enforce the appraisal [a]ward as a binding amount to be paid.”Am. Compl. [67] ¶

44. This is the first time that the scope, conduct, and validity of the appraisal has been at issue.

Plaintiffs cite no authority from Mississippi or anywhere else that would deprive State Farm the

right to raise defenses to the appraisal where the legal validity of the appraisal has not been judicially

scrutinized. The only collateral estoppel case cited by Plaintiffs, Hollis v. Hollis, 650 So. 2d 1371

(Miss. 1995), is inapposite. See [68] at 15 n.5. In Hollis, the parties to a divorce previously litigated the

division of property set forth in an antenuptual agreement. 650 So. 2d at 1377-78. Though the plaintiff

ostensibly moved to modify the original judgment, “

only a small part of it could truly be characterized

as an actual request for modification. The rest is a plea … to retry matters which were effectively settled

in the original divorce proceeding and its appeal.”Id. at 1377. In the previous case, the parties “
asked

that their property and contract rights be adjudicated and the Final Judgment shows that they were so

adjudicated.”Id. Not so here. Unlike Hollis, the Chancery Court was not asked to adjudicate the merits

or enter judgment on an appraisal because it had not yet happened. Instead, those issues are raised for

the first time in this Court.

Plaintiffs’other cases –Loui

sGar
densofEnc
inoHome
owne
rsAs
s’nv
.Tr
uckI
ns.Ex
change
, 82

Cal. App. 4th 648 (Cal. Ct. App. 2000) (California law), and FDL, Inc. v. Cincinnati Ins. Co., 135 F.3d

503 (7th Cir. 1998) (Indiana law) –do not discuss collateral estoppel and are grossly inapposite. See

[68] at 16 & n.6. As explained in Louis Gardens, California law equates arbitration and appraisal, 82

Cal. App. 4th at 658, but Mississippi law strictly distinguishes them. Hartford Fire, 108 So. 2d at 572.

Further, California has a statutory scheme under which “

the court must confirm the [appraisal] award,

unless it either vacates or corrects it”within 100 days. Louis Gardens, 82 Cal. App. 4th at 658-59
12
(emphasis in original; applying Cal. Ins. Code § 1286). None of those California statutes applies here.

In the second case, FDL, the insured disputed whether the appraisers should measure the replacement

value of its inventory using market value or manufacturing costs. 135 F.3d at 503-04. There was no

dispute over the bias and partisanship of the appraisers or over determinations as to cause of loss. Such

a“
basis for setting aside the appraisal award”was not even alleged. Id. at 505. Here, such a basis has

not only been raised, but it has also been robustly demonstrated by the record developed in discovery.

C. Plaintiffs Cannot Obtain the Extraordinary Remedy of Equitable Estoppel

Plaintiffs claim that State Farm is equitably estopped from challenging the validity of the

appraisal. [68] at 16-17. Plaintiffs assert that because “

State Farm did not actually complain or allege

any impropriety in the process”until Plaintiffs filed suit, State Farm should be estopped from defending

against Plaintiffs’suit. Id. at 17. Plaintiffs demonstrate no entitlement to equitable estoppel.

To the extent Plaintiffs invoke equitable estoppel to obtain coverage contrary to the policy

language, “
estoppel can have a field of operation only when the subject matter is within the terms of the

policy.… [E]stoppel cannot operate so as to bring within the coverage of the policy property, or a loss,

or a risk, which by the terms of the policy is expressly excepted or otherwise excluded.”Employers Fire

Ins. Co. v. Speed, 133 So. 2d 627, 629 (Miss. 1961). This is the “
‘long-settled rule of law in

Mississippi.” Provident Life & Accident Ins. Co. v. Goel, 274 F.3d 984, 996 (5th Cir. 2001) (citation

omitted); accord Pongetti v. First Cont’

l Life & Accident Co., 688 F. Supp. 245, 248 (N.D. Miss. 1988)

(Senter, J.). Thus, Plaintiffs cannot invoke equitable estoppel to side step State Farm’
s policy defenses.

No matter how Plaintiffs frame their request, “

[e]quitable estoppel is an extraordinary remedy

and should only be invoked to prevent unconscionable results.” Harrison Enters., Inc. v. Trilogy

Comms. Inc., 818 So. 2d 1088, 1095 (Miss. 2002). As “

[t]he law does not regard estoppels with favor,”

the doctrine is “
applied cautiously and only when equity clearly requires it.” Id. (citations omitted);

accord Turner v. Terry, 799 So. 2d 25, 37-38 (Miss. 2001). To invoke this extraordinary remedy,

Plaintiffs must show that they reasonably and detrimentally relied on an alleged representation. Miss.
13
Dep’
t of Public Safety v. Stringer, 748 So. 2d 662, 665 (Miss. 1999); Lynch v. Miss. Farm Bureau Cas.

Ins. Co., 88 So. 2d 1065, 1072 (Miss. Ct. App. 2004). Among other elements, “
equitable estoppel

requires an ‘
intent’that a misrepresentation or silence be relied upon,”and without proof of such intent,

equitable estoppel does not apply. Smith v. Chrysler Corp., 2002 WL 1899615, at *3 (5th Cir. July 11,

2002). Plaintiffs show none of these requirements.

Plaintiffs cannot show any detrimental reliance. Plaintiffs did not sit idly on their hands after the

appraisal award was issued. Quite to the contrary, after the appraisal panel issued an award on March 7,

2008, [63-18]; [63-21], Plaintiffs engaged in a course of conduct to actively pursue their interests.

 On April 26, 2008, Plaintiffs wrote a letter to State Farm to learn how it would treat the
appraisal award. See Apr. 26, 2008 letter from Kuehn to Foster (attached as Ex. V)).

 Plaintiffs maintained “
records”to keep track of the time since the appraisal award issued. Id.

 From May 30, 2008 to June 9, 2008, Plaintiffs’counsel attempted to negotiate settlement of
the appraisal award and solicited payment of the award. See Pls. Ex. 17 [68-18].

 On June 4, 2008, Plaintiffs asked Mr. O’

Leary for a “
supplement”to the appraisal award to
“clarify the wording.”June 4, 2008 email from Kuehn to O’
Leary (attached as Ex. W) at 2.

 Between June 10 and 13, 2008, the appraisal panel annotated their prior award, specifying
that the amounts were for damage caused by “
wind only.”[63-18.]

 On August 29, 2008, Plaintiffs filed this suit. [1].

Plaintiffs can thus show no detrimental reliance after the appraisal award. Though they claim they

“
forbore litigation,”they identify no prejudice from any delay, [68] at 17, and filed suit in short order.

[1]. Indeed, even before the appraisal took place, Plaintiffs planned to sue State Farm. [63-4].

Nor do Plaintiffs show any reasonable reliance. In fact, Plaintiffs knew State Farm’
s objections

to the appraisal award from their correspondence with State Farm and settlement negotiations with its

counsel. So, too, Plaintiffs knew the policy requirements for appraisal, see, e.g., Leonard, 499 F.3d at

438, including the requirement that Mr. O’

Leary be disinterested. Plaintiffs knew Mr. O’
Leary was not

disinterested, [63-3], as did Plaintiffs’counsel. [63-4]. Such a blatant violation of the policy refutes any

pretense of reasonable reliance.

14
 Even the sole authority Plaintiffs cite for their equitable estoppel theory, Thomas v. Bailey, 375

So. 2d 1049 (Miss. 1979), undermines their position. See [68] at 16. “
In order to establish equitable

estoppel, a party must show a change of position in reliance upon the conduct of another and detriment

caused thereby. In the case sub judice, there was no change in position by the appellant in reliance upon

appellees’conduct nor has the appellant suffered any detriment or injury,”which precludes any

equitable estoppel claim. Thomas, 375 So. 2d at 1052 (citation omitted). So, too, here.

VI. PLAINTIFFS’VAGUE ASSERTIONS FAIL TO SATISFY RULE 56(F)

Plaintiffs wish to delay the resolution of the instant motion to attempt to take another 30(b)(6)

deposition and to file papers related to the 30(b)(6) deposition that was taken on March 26, 2009. Seven

weeks have passed since that deposition, and a month has passed since State Farm and Plaintiffs

received the transcript on April 15, 2009. Yet Plaintiffs have filed nothing, the time in which to do so

having long since expired. See Local R. 7.2(B)(2) (“

Discovery motions must be filed sufficiently in

advance of the discovery deadline so as to not affect the deadline.”

); Feb. 13, 2009 Text Order

(discovery deadline for the appraisal issue expired on March 31, 2009). Nor have Plaintiffs identified

anything they may obtain in a second 30(b)(6) deposition that would raise a genuine question of material

fact, as they must under Fed. R. Civ. P. 56(f). The record already establishes that Mr. O’
Leary was not a

disinterested appraiser and that the appraisal panel improperly made causation and coverage

determinations. Nothing from any follow-up 30(b)(6) deposition –however unwarranted –can or will

change those immutable facts. Plaintiffs’request for a delay should be denied.

Since Rule 56(b) permits a defendant to seek summary judgment “

at any time,”“
Rule 56 does

not require that any discovery take place before summary judgment can be granted; if a party cannot

adequately defend such a motion, Rule 56(f) is his remedy.”Washington v. Allstate Ins. Co., 901 F.2d

1281, 1285 (5th Cir. 1990) (emphasis added). “

[U]nder Rule 56(f), the appropriate way to raise [a claim

of inadequate discovery] is for the party opposing the motion for summary judgment to file a motion for

a continuance with an attached affidavit stating why the party cannot present by affidavit facts essential
15
to justify the party’
s opposition.” Access Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 720

(5th Cir. 1999). Plaintiffs’response woefully fails to satisfy the requirements of Rule 56(f).

By its express terms, Rule 56(f) requires a party seeking a continuance for discovery to show

“
for specified reasons, [that] it cannot present facts essential to justify its opposition.” Fed. R. Civ. P.

56(f) (emphasis added).1 Thus, a party “

may not invoke Rule 56(f) by the mere assertion that discovery

is not yet complete, but must show how the additional discovery will establish a genuine issue of

material fact.”Mauldin v. Fiesta Mart, 114 F.3d 1184, 1997 WL 255640, *2 (5th Cir. 1997) (table).

That is, the nonmovant must show “

specific facts explaining his inability to make a substantive

r
espon
se… byspecifically demonstrating ‘
how postponement of a ruling on the motion will enable him,

by discovery or other means, to rebut the movant’ ”

s showing of the absence of a genuine issue of fact.’

Washington, 901 F.2d at 1285 (citations omitted). Rule 56(f) cannot be used as a “
‘fishing expedition’

calculated to uncover something upon which to rest the otherwise unsupported allegations in

s] complaint,”Mauldin, 1997 WL 255640, at *2, and “

[nonmovant’ vague assertions that additional

discovery will produce needed, but unspecified, facts”are wholly inadequate. Access Telecom, 197 F.3d

at 719. Plaintiffs’request, which raises no areas of supposedly necessary discovery, utterly fails to

satisfy the requirements of Rule 56(f). Plaintiffs’request for delay should be denied.

VII. CONCLUSION
For the foregoing reasons, this Court should grant State Farm summary judgment [63] [64]

dismissing Plaintiffs’claims for declaratory and injunctive relief as to the validity and enforceability of

the appraisal in their entirety. Am. Compl. [67] ¶¶ 36-46, 112-13.

1
Under Fifth Circuit authority, an affidavit is not necessary to support a Rule 56(f) application, nor is the invocation of
the Rule itself. See, e.g., Perkins v. Nationsbank of Tex., N.A., 116 F.3d 1476, 1997 WL 304131, at *2 (5th Cir. 1997)
(table); Enplanar, Inc. v. Marsh, 11 F.3d 1284, 1291-92 (5th Cir. 1994); see also Washington, 901 F.2d at 1285-86.
Thus, State Farm is not opposing Pl aint
iff s
’re questdue to those omissions in form. Rather, State Farm is opposing the
request due to its substantive deficiencies.

16
Dated: May 14, 2009

Respectfully submitted,

/s/ John A. Banahan

John A. Banahan (MSB #1761)
H. Benjamin Mullen (MSB #9077)
BRYAN, NELSON, SCHROEDER,
CASTIGLIOLA & BANAHAN
4105 Hospital Road, Suite 102-B
Pascagoula, Mississippi 39567
(228) 762-6631

H. Scot Spragins (MSB # 7748)

HICKMAN, GOZA & SPRAGINS, PLLC
Post Office Drawer 668
Oxford, Mississippi 38655-0668
(662) 234-4000

Attorneys for Defendant

State Farm Fire and Casualty Company

17
 CERTIFICATE OF SERVICE

I, JOHN A. BANAHAN, one of the attorneys for the Defendant, STATE FARM FIRE &

CASUALTY COMPANY, do hereby certify that I have on this date electronically filed the foregoing

document with the Clerk of Court using the ECF system which sent notification of such filing to all

counsel of record.

DATED, May 14, 2009.

/s/ John A. Banahan

JOHN A. BANAHAN

John A. Banahan (MSB #1761)

H. Benjamin Mullen (MSB #9077)
BRYAN, NELSON, SCHROEDER,
CASTIGLIOLA & BANAHAN
4105 Hospital Road, Suite 102-B
Pascagoula, Mississippi 39567
(228) 762-6631

18