Opinion
CIVIL ACTION FILE NO. 1:19-CV-5292-MHC
2022-09-22
CITIZENS INSURANCE COMPANY OF AMERICA and Massachusetts Bay Insurance Company, Plaintiffs, and Westfield Insurance Company, Plaintiff-Intervenor, v. BANYAN TREE MANAGEMENT, LLC; Albany Downtown Hotel Partners, LLC; and Jane Doe, Defendants. Banyan Tree Management, LLC and Albany Downtown Hotel Partners, LLC, Third-Party Plaintiffs, v. Starr Indemnity & Liability Company, Third-Party Defendant. Starr Indemnity & Liability Company, Third-Party Counterclaim and Crossclaim Plaintiff, v. Banyan Tree Management, LLC and Albany Downtown Hotel Partners, LLC, Third-Party Counterclaim Defendants, and Citizens Insurance Company of America and Massachusetts Bay Insurance Company, Third-Party Crossclaim Defendants.
Joel Scott Isenberg, Pro Hac Vice, Susan Haygood McCurry, Ely & Isenberg, LLC, Birmingham, AL, Kenneth W. Boyles, Jr., Phelps Dunbar LLP, Birmingham, AL, for Plaintiffs/Third-Party Crossclaim Defendants. Spencer McCartney Taylor, I, Pro Hac Vice, Barze Taylor Noles Lowther LLC, Birmingham, AL, Derek Schwahn, Troutman Pepper Hamilton Sanders LLP, Atlanta, GA, Sharika Zutshi, Shattuck Ely, Fellows LaBriola LLP, Atlanta, GA, for Defendants/Third-Party Plaintiffs Banyan Tree Management, LLC, Albany Downtown Hotel Partners, LLC. Carey Michael Johnson, Thomas Kearney Wingfield, Hall Booth Smith, P.C., Atlanta, GA, for Third-Party Defendant/Third-Party Counterclaim and Crossclaim Plaintiff. Micajah D. Boatright, Pro Hac Vice, Roland T. Christensen, Pro Hac Vice, Arnold & Itkin, Houston, TX, Charles L. Clay, Jr., Clay Taulbee & Myers, LLC, Atlanta, GA, for Defendant Jane Doe. Richard Hoyle Hill, Jr., Mabry & McClelland, Atlanta, GA, for Plaintiff-Intervenor.
Joel Scott Isenberg, Pro Hac Vice, Susan Haygood McCurry, Ely & Isenberg, LLC, Birmingham, AL, Kenneth W. Boyles, Jr., Phelps Dunbar LLP, Birmingham, AL, for Plaintiffs/Third-Party Crossclaim Defendants. Spencer McCartney Taylor, I, Pro Hac Vice, Barze Taylor Noles Lowther LLC, Birmingham, AL, Derek Schwahn, Troutman Pepper Hamilton Sanders LLP, Atlanta, GA, Sharika Zutshi, Shattuck Ely, Fellows LaBriola LLP, Atlanta, GA, for Defendants/Third-Party Plaintiffs Banyan Tree Management, LLC, Albany Downtown Hotel Partners, LLC. Carey Michael Johnson, Thomas Kearney Wingfield, Hall Booth Smith, P.C., Atlanta, GA, for Third-Party Defendant/Third-Party Counterclaim and Crossclaim Plaintiff. Micajah D. Boatright, Pro Hac Vice, Roland T. Christensen, Pro Hac Vice, Arnold & Itkin, Houston, TX, Charles L. Clay, Jr., Clay Taulbee & Myers, LLC, Atlanta, GA, for Defendant Jane Doe. Richard Hoyle Hill, Jr., Mabry & McClelland, Atlanta, GA, for Plaintiff-Intervenor. ORDER MARK H. COHEN, United States District Judge
This case is before the Court on Defendants Banyan Tree Management, LLC ("Banyan") and Albany Downtown Hotel Partners, LLC ("Albany") (collectively, "Banyan and Albany")'s Motion for Partial Summary Judgment [Doc. 111]; Plaintiffs Citizens Insurance Company of America ("Citizens") and Massachusetts Bay Insurance Company ("Massachusetts Bay") (collectively "Hanover")'s Motion for Summary Judgment [Doc. 113]; Plaintiff-Intervenor Westfield Insurance Company ("Westfield")'s Motion for Summary Judgment [Doc. 107]; and Third-Party Defendant Starr Indemnity & Liability Company ("Starr")'s Motion for Summary Judgment on Banyan and Albany's Third-Party Complaint and its Third-Party Counterclaim and Crossclaim Against John Doe [Doc. 106]. I. BACKGROUND
At the outset, the Court notes that as this case is before it on the parties' cross-motions for summary judgment, the Court views the evidence presented by the parties in the light most favorable to the non-movants and has drawn all justifiable inferences in favor of the non-movants. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986); Sunbeam TV Corp. v. Nielsen Media Rsch., Inc., 711 F.3d 1264, 1270 (11th Cir. 2013). In addition, the Court has excluded assertions of fact that are immaterial or presented as arguments or legal conclusions or any fact not supported by citation to evidence (including page or paragraph number). LR 56.1B(1), NDGa. Further, the Court accepts as admitted those facts in the parties' respective statement of material facts, see Banyan and Albany's Statement of Material Facts ("Banyan and Albany's SMF") [Doc. 111-2], Hanover's Statement of Undisputed Material Facts ("Hanover's SUMF") [Doc. 113-1], Westfield's Statement of Material Facts as to Which There is no Genuine Issue to be Tried ("Westfield's SMF") [Doc. 107-2], Starr's Statement of Material Facts to which There is no Genuine Issue to be Tried ("Starr's SMF") [Doc. 106-2], and that have not been specifically controverted with citation to the relevant portions of the record. See LR 56.1B(2), NDGa.; Hanover's Resp. to Banyan and Albany's SMF [Doc. 123-1], Banyan and Albany's Resp. to Hanover's SUMF [Doc. 120-2], Banyan and Albany's Resp. to Westfield's SMF [Doc. 121-1], Starr's Am. Resp. to Banyan and Albany's SMF [Doc. 135].
This declaratory judgment action filed by Hanover presents insurance coverage issues regarding claims made in lawsuits filed by Jane Doe against Banyan and Albany and others in the State Court of Gwinnett County, Georgia, and the Circuit Court of Fairfax County, Virginia. Am. Compl. [Doc. 50] ¶ 1; see also Compl. ("Underlying Compl.") [Doc. 50-1 at 2-23], Jane Doe v. Banyan Tree Mgmt., LLC et al., Civil Action File No. 19-C-04673-S3 (State Ct. of Gwinnett Cnty. July 2, 2019) ("Underlying Lawsuit"); Jane Doe v. Hilton Worldwide Holdings Inc. et al., Case No. 2018-16980 (Circuit Ct. of Fairfax Cnty. Nov. 30, 2018) (the "Virginia Action") [Doc. 50-2 at 2-20]. Jane Doe filed the Underlying Lawsuit on July 2, 2019, based on allegations that she was secretly recorded fully nude while showering in a hotel bathroom (the "Incident"). Am. Compl. ¶¶ 1, 24-26. Jane Doe alleges that the Incident occurred in July 2015 while she was staying in the Hampton Inn and Suites ("Hampton Inn") in Albany, New York, a hotel owned by Albany and managed by Banyan. Id. ¶¶ 25-26. The above-styled action involves three different insurers that issued commercial general liability insurance policies to Banyan and Albany: (1) Hanover, (2) Westfield, and (3) Starr.
Banyan and Albany have requested insurance coverage from Citizens for the claims asserted against them by Jane Doe in the Underlying Lawsuit and the Virginia Action. Id. ¶¶ 2, 4. Citizens admits that it issued insurance policies containing commercial general liability coverage to Albany for the time period of April 21, 2015, to April 21, 2017, and that Banyan qualifies as an additional insured under the policies. Id. ¶¶ 14-15, 17; Hanover's Resp. to Banyan and Albany's SMF ¶¶ 1-2; Banyan and Albany's Resp. to Hanover's SUMF ¶¶ 23-26. However, Citizens contends that it does not owe a duty to defend or indemnify Banyan or Albany for the claims asserted in the Underlying Lawsuit or the Virginia Action under the commercial general liability policies because the requirements of the policies have not been met, and the policies contain exclusions that preclude coverage for the Underlying Lawsuit. Id. ¶¶ 5, 43-62.
The Court notes that Hanover has made a typographical error in the numbering of the paragraphs after paragraph 54 on page 14 (Count II) of the Amended Complaint. Erroneously numbered paragraph 42 on page 14 (Count III) should be numbered paragraph 55 and the remaining paragraphs should be renumbered sequentially. Further, Hanover has erroneously enumerated two claims as "Count V." The second listed Count V (Recoupment) should be labeled Count VI, and currently-labeled Count VI (Recoupment) should be labeled Count VII.
On February 20, 2020, Westfield moved to intervene as a matter of right, contending that it issued excess general insurance policies to Banyan. Mot. to Intervene [Doc. 12]. The Court granted Westfield's Motion to Intervene in an Order dated March 31, 2020 [Doc. 23], at which time Westfield became an intervening plaintiff in this case and filed its Complaint for Declaratory Judgment ("Compl. in Intervention") [Doc. 25]. Westfield disputes that it owes any coverage to Banyan and Albany. Compl. in Intervention ¶ 5.
Additionally, on July 13, 2020, Banyan and Albany filed a Third-Party Complaint for Declaratory Judgment against Starr seeking a judicial determination of, inter alia, Starr's rights and obligations with respect to any duty it has to defend the Underlying Lawsuit or the Virginia Action. Third-Party Compl. for Decl. J. [Doc. 54] ¶¶ 1-5. Starr denies that it has any duty to defend and indemnify Banyan and Albany in the Underlying Lawsuit or the Virginia Action. Starr's Third-Party Countercl. and Crosscl. for Decl. J. [Doc. 67] at 3.
A. Allegations of the Underlying Lawsuit
In July of 2015, Jane Doe alleges she was staying at the Hampton Inn-Albany in Albany, New York, owned by Albany and managed by Banyan. Underlying Compl. ¶ 9. During that stay, Jane Doe alleges she was recorded fully nude without her consent by a hidden camera located in the shower and that the perpetrator of this act was John Doe, an employee or agent of Banyan and/or Albany. Id. ¶¶ 1, 8-10, 34-35, 40-46. Jane Doe alleges that she became aware of the recording years after her stay, on September 30, 2018, when she received an e-mail that included a link to a video with her nude image posted on a pornographic website, but she does not allege when the video was first posted on the website. Id. ¶¶ 11-12. The title of the video contains Jane Doe's full name. Id. Later that same night, Jane Doe received another e-mail from the same sender that included specific personal details (where she attended university, where she took the bar exam, where she worked, etc.). Id. ¶ 14. Following the two September 30, 2018, e-mails, Jane Doe received a series of emails from the same unknown sender in which the sender threatened to post the video of her on additional websites if she failed to respond with additional images of her or otherwise acquiesce to the sender's threats and attempts to extort and blackmail her into cooperation with the sender's various demands. Id. ¶¶ 14-30. Jane Doe never responded to the sender's threats. Id. ¶¶ 20, 29. The video was posted on numerous pornographic and video-sharing websites and sent to her friends and colleagues. Id. ¶¶ 11, 18, 21, 25-27, 29.
She alleges she received emails on the following dates: October 1, 2018; October 11, 2018; October 19, 2018; October 20, 2018, and October 26, 2018. Id. ¶¶ 15-17, 19, 23-26, 28.
Jane Doe alleges she suffered emotional distress as a consequence of the posting of her video:
[T]here is a causal connection between John Doe's conduct and Plaintiff's emotional distress. Namely, Plaintiff did not suffer from any type of remotely similar emotional distress until after she became aware of John Doe's recording of her fully nude in her hotel bathroom. Additionally, the emotional distress suffered by Plaintiff severe [sic]. She has had numerous instances where she has not been able to leave her apartment after this incident because of the emotional distress she is in. Further, Plaintiff has been physically harmed as well. Since the incident she has sustained significant gastrointestinal issues and has lost over 30 pounds to date. Plaintiff did not have these problems prior to this incident.Id. ¶ 46. Based on these allegations, Jane Doe filed the Underlying Lawsuit, asserting claims of negligence (Counts I, II, & IV) and premises liability (Count III). Id. ¶¶ 51-74.
B. The Insurance Policies
1. The Hanover Policies
Hanover issued successive commercial general liability insurance policies to Albany in which Banyan was an additional insured (the "Hanover Policies"). Am. Compl. ¶¶ 14, 17; Hanover's Resp. to Banyan and Albany's Statement of Material Facts ¶ 1; Hanover Commercial Line Policy No. ZBY-A617294-00 (the "Hanover 2015-16 Policy") [Doc. 113-7]; Hanover Commercial Line Policy No. ZBY-A617294-01 (the "Hanover 2016-17 Policy") [Doc. 113-8]. The policy periods for the Hanover Policies ran from April 21, 2015, to April 21, 2017. Id.
The Coverage A of the Hanover Policies provided as follows:
SECTION I - COVERAGES
COVERAGE A BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property
damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.
***
b. This insurance applies to "bodily injury" and "property damage" only if:
Hanover 2015-16 Policy at 176; Hanover 2016-17 Policy at 205. The Hanover Policies define "bodily injury" as "bodily injury, sickness or disease sustained by a person, including death resulting from any of these at any time," and "includes mental anguish or other mental injury resulting from 'bodily injury.' " Hanover 2015-16 Policy at 168; Hanover 2016-17 Policy at 179. The Hanover Policies define "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Hanover 2015-16 Policy at 190; Hanover 2016-17 Policy at 219.(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";
(2) The "bodily injury" or "property damage" occurs during the policy period; . . .
The Hanover Policies also had exclusions in the Coverage A provisions, including:
q. Recording and Distribution of Material Or Information In Violation Of LawHanover 2015-16 Policy at 180-81; Hanover 2016-17 Policy at 209-10.
"Bodily injury" or "property damage" arising directly or indirectly out of any action or omission that violates or is alleged to violate:
(1) The Telephone Consumer Protection Act (TCPA) including any amendment of or addition to such law;
(2) The CAN-SPAM Act of 2003, including any amendment of or addition to any such law;
(3) The Fair Credit Reporting Act (FCRA), and any amendment of or addition to such law, including the Fair and Accurate Credit Transactions Act (FACTA); or
(4) Any federal, state or local statute, ordinance, or regulation, other than the TCPA, CAN-SPAM ACT of 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.
Coverage B for personal and advertising injury in the Hanover Policies contains substantially similar language to Coverage A:
COVERAGE B - PERSONAL AND ADVERTISING INJURY LIABIALITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "personal and advertising injury" to which this insurance does not apply. We may, at our discretion, investigate any offense and settle any claim or "suit" that may result.
***
No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments - Coverages A and B.
b. This insurance applies to "personal and advertising injury" caused by an offense arising out of your business but
only if the offense was committed in the "coverage territory" during the policy period.Hanover 2015-16 Policy at 181; Hanover 2016-17 Policy at 210.
The Hanover Policies define "personal and advertising injury" as "injury, including consequential 'bodily injury' arising out of one or more of the following offenses:"
***Hanover 2015-16 Policy at 190; Hanover 2016-17 Policy at 219.
c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
***
e. Oral or written publication in any manner of material, that violates a person's right of privacy . . .
The Hanover Policies also had exclusions in the Coverage B provisions, which explicitly state that the coverage in the policies do not apply to the following:
p. Recording And Distribution Of Material Or Information In Violation Of LawHanover 2015-16 Policy at 182; Hanover 2016-17 Policy at 211.
"Personal and advertising injury" arising directly or indirectly out of any action or omission that violates or is alleged to violate:
(1) The Telephone Consumer Protection Act (TCPA), including any amendment of or addition to such law;
(2) The CAN-SPAM Act of 2003, including any amendment of or addition to such law;
(3) The Fair Credit Reporting Act (FCRA), and any amendment of or addition to such law, including the Fair and Accurate Credit Transactions Act (FACTA); or
(4) Any federal, state or local statute, ordinance or regulation, other than the TCPA, CAN-SPAM Act of 2003 or FCRA and their amendments and additions, that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information.
2. The Westfield Policies
Westfield issued successive excess commercial general liability insurance policies to Banyan (the "Westfield Policies"). Compl. in Intervention ¶ 22; Commercial Ins. Coverage Policy (Dec. 11, 2018) [Doc. 12-4]; Commercial Ins. Coverage Policy No. CWP 6842110 [Docs. 12-4 & 12-5]. The policy period for the Westfield Policies was from August 30, 2014, through August 30, 2016, when the Westfield Policies were cancelled. Id. The Westfield Policies have identical terms to the Hanover Policies in all material respects (except for the policy periods). Westfield Policies.
Because the Hanover Policies and Westfield Policies are identical in all material respects, the Court will only reference to Hanover Policies in this Order.
3. The Starr Policy
Starr issued a commercial general liability insurance policy to Banyan for the period July 31, 2018, to July 31, 2019, in which Albany is an additional insured. Starr's Third-Party Countercl. and Crosscl. for Decl. J. ¶¶ 26-28; Starr Commercial General Liability No. 1000305221181 ("Starr Policy") [Doc. 67-3].
Coverage A of the Starr Policy provided as follows:
COVERAGE A - BODILY INJURY AND PROPERTY DAMAGE LIABILITY
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply. We may, at our discretion, investigate any "occurrence" and settle any claim or "suit" that may result.
***
b. This insurance applies to "bodily injury" and "property damage" only if:
Starr Policy at 18.(1) The "bodily injury" or "property damage" is caused by an "occurrence" that takes place in the "coverage territory";
(2) The "bodily injury" or "property damage" occurs during the policy period; . . .
The Starr Policy has an exclusion for the Coverage A provisions, stating that Coverage A "does not apply to . . . 'Bodily injury' arising out of 'personal and advertising injury.' " Id. at 22.
Coverage A of the Starr Policy provided as follows:
COVERAGE B - PERSONAL AND ADVERTISING INJURY LIABILITYId. at 22. The Starr Policy has the following exclusion for the Coverage B provisions:
1. Insuring Agreement
a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "personal and advertising injury" to which this insurance does not apply. We may, at our discretion, investigate any offense and settle any claim or "suit" that may result.
***
b. This insurance applies to "personal and advertising injury" caused by an offense arising out of your business but only if the offense was committed in the "coverage territory" during the policy period.
a. Knowing Violation Of Rights Of AnotherId. at 23.
"Personal and advertising injury" caused by or at the direction of the insured with the knowledge that the act would violate the rights of another and would inflict "personal and advertising injury".
***
d. Criminal Acts
"Personal and advertising injury" arising out of a criminal act committed by or at the direction of the insured.
The Starr Policy defines "bodily injury" to mean "physical injury, sickness or disease, including death resulting from any of these; or the following when accompanied by physical injury, sickness or disease: mental anguish; shock; or emotional distress." Id. at 29. "Occurrence" is defined to mean "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." Id. at 30. "Personal and advertising injury" is defined to mean
injury, including consequential "bodily injury", arising out of one or more of the following offenses:
***
c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or
premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;
***
e. Oral or written publication, in any manner, of material that violates a person's right of privacy . . .
Id.
The Access Or Disclosure Endorsement adds the following exclusion to Coverage A, stating that the insurance does not apply to:
p. Access Or Disclosure Of Confidential Or Personal Information And Data-Related Liability Damages arising out of:Id. at 60.
(1) Any access to or disclosure of any person's or organization's confidential or personal information, including patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information or any other type of nonpublic information . . .
The Access Or Disclosure Endorsement adds the following exclusion to Coverage B, stating that the insurance does not apply to:
Access Or Disclosure Of Confidential Or Personal Information
"Personal and advertising injury" arising out of any access to or disclosure of any person's or organization's confidential or personal information, including patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information or any other type of nonpublic information.
Id.
The "Violation of Statutes Endorsement" adds the following exclusions to Coverage A and Coverage B, stating that the Starr Policy does not apply to "Bodily injury" or "Personal and advertising injury"
arising directly or indirectly out of any action or omission that violates or is alleged to violate any statute, ordinance, or regulation of any federal, state or local government, including any amendment of or addition to such laws, that addresses or applies to the sending, transmitting or communicating of any material or information, by any means whatsoever.Id. at 85.
II. LEGAL STANDARD
Summary judgment is appropriate when "there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A party seeking summary judgment has the burden of informing the district court of the basis for its motion and identifying those portions of the record which it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions," and cannot be made by the district court in considering whether to grant summary judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986); see also Graham v. State Farm Mut. Ins. Co., 193 F.3d 1274, 1282 (11th Cir. 1999).
If a movant meets its burden, the party opposing summary judgment must present evidence demonstrating a genuine issue of material fact or that the movant is not entitled to judgment as a matter of law. Celotex, 477 U.S. at 324, 106 S.Ct. 2548. In determining whether a genuine issue of material fact exists, the evidence is viewed in the light most favorable to the party opposing summary judgment, "and all justifiable inferences are to be drawn" in favor of that opposing party. Anderson, 477 U.S. at 255, 106 S.Ct. 2505; see also Herzog v. Castle Rock Entm't, 193 F.3d 1241, 1246 (11th Cir. 1999). A fact is "material" only if it can affect the outcome of the lawsuit under the governing legal principles. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. A factual dispute is "genuine" if the evidence would permit a reasonable jury to return a verdict for the nonmoving party. Id. "If the record presents factual issues, the court must not decide them; it must deny the motion and proceed to trial." Herzog, 193 F.3d at 1246. But, "[w]here the record taken as a whole could not lead a rational trier of fact to find for the non-moving party," summary judgment for the moving party is proper. Matsushita, 475 U.S. at 587, 106 S.Ct. 1348.
[T]he filing of cross-motions for summary judgment does not give rise to any presumption that no genuine issues of material fact exist. Rather, cross-motions must be considered separately, as each movant bears the burden of establishing that no genuine issue of material fact exists and that it is entitled to judgment as a matter of law.Continental Cas. Co. v. Winder Laboratories, LLC, 535 F. Supp. 3d 1321, 1325 (N.D. Ga. 2021) (internal punctuation and citation omitted).
III. DISCUSSION
The pending motions for summary judgment all raise the issue of the various insurance companies' duties to defend the Underlying Lawsuit. The Court will analyze the motions as they relate the respective insurance companies' duty to defend under the relevant agreements.
The parties seek declarations as to the duty to defend and indemnity Banyan and Albany under the various policies. Am. Compl. ¶¶ 35, 40, 44-48, 50-53, 55, 58-61. However, the duty to defend and the duty to indemnify are "separate and independent obligations." Nationwide Mut. Fire Ins. Co. v. Somers, 264 Ga. App. 421, 424, 591 S.E.2d 430 (2003) (citation and quotation omitted). The duty to indemnify, in contrast to the duty to defend, depends upon whether the true facts constitute covered losses. See Elan Pharm. Research Corp. v. Emp'rs Ins. of Wausau, 144 F.3d 1372, 1375 (11th Cir. 1998) (noting that "an insurer need not indemnify an insured for a liability the insured incurs outside the terms of the insurance contract"). Thus, it is possible that an insurer could have a duty to defend an insured but, at the conclusion of the underlying lawsuit, have no duty to indemnify. Accordingly, the Court will not consider the duty to indemnify as that issue is not yet ripe for adjudication. See Mid-Continent Cas. Co. v. Delacruz Drywall Plastering & Stucco, Inc., 766 F. App'x 768, 770 (11th Cir. 2019) ("duty to indemnify . . . is not ripe for adjudication until the underlying lawsuit is resolved."); Am. Family Ins. Co. v. Almassud, 413 F. Supp. 3d 1292, 1300 (N.D. Ga. 2019) (citation omitted) ("Disputes related to an insurer's duty to indemnify are typically not ripe until liability is established in the underlying action.").
A. Georgia Insurance Law
Insurance policies are contracts, the construction and interpretation of which are matters of law for the court. Haulers Ins. Co. v. Davenport, 344 Ga. App. 444, 445, 810 S.E.2d 617 (2018). "To determine whether an insurer owes its insured a duty to defend a particular lawsuit, Georgia law directs us to compare the allegations of the complaint, as well as the facts supporting those allegations, against the provisions of the insurance contract." Elan Pharm., 144 F.3d at 1375; see also Ga. Farm Bureau Mut. Ins. Co. v. Smith, 298 Ga. 716, 719, 784 S.E.2d 422 (2016) ("As with any contract, in construing the terms of an insurance policy, we look first to the text of the policy itself."); City of Atlanta v. St. Paul Fire & Marine Ins. Co., 231 Ga. App. 206, 207, 498 S.E.2d 782 (1998) (citation omitted) ("An insurer's duty to defend turns on the language of the insurance contract and the allegations of the complaint asserted against the insured. We look to the allegations of the complaint to determine whether a claim covered by the policy is asserted.").
If the facts as alleged in the complaint even arguably bring the occurrence within the policy's coverage, the insurer has a duty to defend the action. However, . . . where the complaint filed against the insured does not assert any claims upon which there would be insurance coverage, the insurer is justified in refusing to defend the insured's lawsuit.St. Paul Fire & Marine, 231 Ga. App. at 207, 498 S.E.2d 782 (citations omitted); see also Penn-Am. Ins. Co. v. Disabled Am. Veterans, Inc., 268 Ga. 564, 565, 490 S.E.2d 374 (1997) (citation and quotation omitted) ("Where the claim is one of potential coverage, doubt as to liability and insurer's duty to defend should be resolved in favor of the insured.").
The terms in a policy must be given their "usual and common meaning" and the insurance policy "should read as a layman would read it and not as it might be analyzed by an insurance expert or an attorney," Ga. Farm Bureau Mut. Ins., 298 Ga. at 719, 784 S.E.2d 422 (citations and quotations omitted); see also Duckworth v. Allianz Life Ins. Co. of N. Am., 706 F.3d 1338, 1342 (11th Cir. 2013) ("A court must first consider the ordinary and legal meaning of the words employed in the insurance contract. An insurance policy should be read as a layman would read it."). Where an insurance policy's terms are unambiguous, the Court must apply them regardless of whether the carrier or the insured benefits. Ga. Farm Bureau Mut. Ins., 298 Ga. at 719, 784 S.E.2d 422.
Under Georgia law, "exclusions from coverage sought to be invoked must be strictly construed," and "all ambiguities as to policy exclusions are interpreted in favor of coverage because the insurer, having affirmatively expressed coverage through broad promises, assumes a duty to define any limitations on that coverage in clear and explicit terms." Great Am. All. Ins. Co. v. Anderson, 847 F.3d 1327, 1332 (11th Cir. 2017) (quotations, citations, and alteration omitted). "Further, an insurer seeking to invoke an exclusion to deny coverage has the burden of showing the existence of an exclusion and its applicability to the facts. Rountree v. Encompass Home & Auto Ins. Co., 501 F. Supp. 3d 1351, 1356 (S.D. Ga. 2020) (citing Nationwide Mut. Fire Ins. Co. v. Erwin, 240 Ga. App. 816, 818, 525 S.E.2d 393 (1999)).
B. Duty to Defend Under the Hanover Policies
Hanover is moving for summary judgment on all the claims it has asserted, arguing that it owes no duty to defend Banyan and Albany against the claims asserted in the Underlying Lawsuit because the Hanover Policies do not provide coverage for these claims. Mem. of Law in Supp. of Hanover's Mot. for Summ. J, ("Hanover's Summ. J. Br.") [Doc. 113-2] at 1-17. Hanover further argues that even if the Hanover Policies provided coverage for the claims in the Underlying Lawsuit, those claims are excluded from coverage. Id. at 17-18. Banyan and Albany have moved for summary judgment on Counts IV-VI of Hanover's Amended Complaint, the claims contesting coverage under Coverage B of the Hanover Policies, arguing that Hanover has a duty to defend the Underlying Lawsuit. Banyan and Albany Br. at 6, n.4.
1. Banyan and Albany acknowledge that there is no coverage under the Coverage A Section of the Hanover Policies.
Hanover argues that, because the Underlying Complaint does not include any allegations of "bodily injury" as that term is defined in the Coverage A section of the Hanover Policies, Hanover is under no obligation to defend the Underlying Lawsuit. Id. at 2, 5-7. Hanover also argues that even if the Underlying Lawsuit included allegations of "bodily injury," Coverage A of the Hanover Policies is not triggered because the Underlying Complaint does not include any allegations that Jane Doe's damages occurred during the Hanover Policies' policy periods. Id. at 2, 8-9. In response, "Albany and Banyan acknowledge the bodily injury alleged in the Doe Complaint arose after the expiration of the Hanover policy period[s], and therefore bodily injury coverage under Coverage A is not available." Banyan and Albany's Resp. in Opp'n to Pls.' Mot. for Summ. J. [Doc. 120] at 18.
Accordingly, Hanover is entitled to summary judgment on Counts I-III, the claims related to coverage under Coverage A of the Hanover Policies.
2. The allegations of injury in the Underlying Complaint trigger coverage under Coverage B of the Hanover Policies.
Hanover argues that the Underlying Complaint does not include allegations of "personal and advertising injury," as that phrase is defined in Coverage B of the Hanover Policies. Hanover's Summ. J. Br. at 2-3, 11-17. Hanover also argues that, even if the Underlying Complaint included allegations of "personal and advertising injury," Coverage B of the Hanover Policies would still not be triggered because the conduct that is alleged to have caused Jane Doe's injuries did not arise out of the normal conduct of Albany and Banyan's business. Id. at 12-17.
a. The Underlying Complaint includes allegations of a "personal and advertising injury."
Banyan and Albany respond by arguing that the Underlying Complaint include allegations of "personal and advertising injuries" invoking the following subsections (c) and (e) of Coverage B's definition of personal and advertising injuries:
c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor;Banyan and Albany's Resp. in Opp'n to Pls.' Mot. for Summ. J. at 5-10 (referencing Hanover 2015-16 Policy at 190; Hanover 2016-17 Policy at 219). Specifically, Banyan and Albany contend that the allegation in the Underlying Complaint that "John Doe either directly recorded or facilitated the recording of Plaintiff and numerous others at the Hampton Inn-Albany while in the course and scope of his employment for one or more of the Defendants" constitutes "a wrongful entry into" and "invasion of the right of private occupancy" in Jane Doe's hotel bathroom which qualifies as a "personal and advertising injury" under Coverage B of the Hanover Policies. Id. at 5 (citing Underlying Compl. ¶¶ 69-72).
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e. Oral or written publication in any manner of material, that violates a person's right of privacy . . . .
Hanover argues that this allegation from the Underlying Complaint falls short as it must allege "some infringement upon [Jane Doe's] possessory right to occupy the hotel room committed by the owner, landlord, or lessor." Reply in Supp. of Hanover's Mot. for Summ. J. ("Hanover's Reply") [Doc. 129] at 8. Hanover reasons that the Underlying Complaint does not assert any claim
based on any such infringement upon [Jane Doe's] possessory rights to occupy the hotel room. In fact, there is not a single allegation that Albany or Banyan prevented Jane Doe from occupying the
hotel room. Instead, Jane Doe alleges that Albany and Banyan's alleged negligence prevented them from discovering John Doe's placement of the camera in her hotel room.Id. Hanover relies on Auto-Owners Ins. Co. v. Robinson for the proposition that the language used in the definition of a "personal and advertising injury" (i.e., the "wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of its owner, landlord or lessor") is not ambiguous. Auto-Owners Ins. Co. v. Robinson, No. 3:05 CV 109(CDL), 2006 WL 2583356, at *4 (M.D. Ga. Sept. 6, 2006). However, Hanover has not presented any authority interpreting this or a similar provision in an insurance contract under Georgia law that would require Jane Doe to allege that she was prevented from occupying the hotel room in order to trigger Coverage B.
The Court agrees with Hanover that the language is unambiguous, but finds that the allegations in the Underlying Complaint sufficiently allege a "personal and advertising injury." Coverage B of the Hanover Policies defines a "personal and advertising injury" to include "[t]he wrongful . . . invasion of the right of private occupancy of a room." Hanover 2015-16 Policy at 190; Hanover 2016-17 Policy at 219. The crux of the Underlying Complaint is that an employee of the Hampton Inn managed by Banyan and owned by Albany secretly placed a video camera in Jane Doe's room and recorded her in the nude. See generally, Underlying Compl. There could be no clearer invasion of Jane Doe's right of private occupancy of that room than her allegation that she was secretly video-taped while nude in her bathroom. See Am. Guarantee & Liab. Ins. Co. v. 1906 Co., 273 F.3d 605, 619 (5th Cir. 2001) ("It is apparent from the above definitions that an average purchaser of insurance could reasonably understand the phrase 'invasion of the right of private occupancy of a room' to include the invasion of a room that is secluded from the sight, presence, or intrusion of others. John Thomson's invasion by hidden camera of the young women's right to occupy and change clothes in the women's dressing room reasonably falls within this definition."); see also Harleysville Preferred Ins. Co. v. Rams Head Savage Mill, LLC, 237 Md. App. 705, 187 A.3d 797, 808 (2018) ("We conclude that the plain meaning of the phrase 'invasion of the right of private occupancy of a room, dwelling or premises that a person occupies,' if construed on its own: (1) is unambiguous; and (2) encompasses allegations that an insured conducted video surveillance of individuals using a restroom stall on its premises.").
"The construction of a contract is a question of law for the court." O.C.G.A. § 13-2-1. In Georgia, "when a term of a policy of insurance is susceptible to two or more constructions, even when such multiple constructions are all logical and reasonable, such term is ambiguous and will be strictly construed against the insurer as the drafter and in favor of the insured." Auto-Owners Ins. Co. v. Neisler, 334 Ga. App. 284, 287, 779 S.E.2d 55 (2015) (internal quotation and citation omitted). However, "[w]here the language of a [contract] is clear, unambiguous, and capable of only one reasonable interpretation, no construction is necessary or even permissible." Estate of Sam Farkas, Inc. v. Clark, 238 Ga. App. 115, 119-20, 517 S.E.2d 826 (1999).
"The words used in policies of insurance, as in all other contracts, bear their usual and common significance, and policies of insurance are, as in all other contracts, to be construed in their ordinary meaning. An unambiguous policy, as here, requires no construction, and its plain terms must be given full effect even though they are beneficial to an insurer and detrimental to the insured. The natural, obvious meaning [of a policy provision] is to be preferred over any curious, hidden meaning which nothing but the exigency of a hard case and the ingenuity of a trained and acute mind would discover." Truitt Oil & Gas Co., Inc. v. Ranger Ins. Co., 231 Ga. App. 89, 90, 498 S.E.2d 572 (1998) (internal punctuation and citation omitted).
b. The injury alleged in the Underlying Complaint arises out of Banyan and Albany's business.
Hanover argues that even if the Underlying Complaint sufficiently alleges a "personal and advertising injury," Banyan and Albany fail to show that the injury was "caused by an offense arising out of [Banyan and Albany's] business." Hanover's Summ. J. Br. at 13-17 (quoting Hanover 2015-16 Policy at 181; Hanover 2016-17 Policy at 210). Specifically, Hanover argues that Banyan and Albany's business is owning, managing, and operating a hotel, and the surreptitious filming of guests nude in a bathroom "is not a legitimate aspect of [that] business." Id. at 14. The Court disagrees with Hanover's reasoning.
First, the Court notes that Hanover has added the word "legitimate" and the phrase "normal course" in its argument to modify "business" as that term is used in the Hanover Policies. See Hanover's Summ. J. Br. at 14 ("Albany and Banyan still cannot carry their burden to establish that Jane Doe's claims arise out of the normal course of Albany and Banyan's business.") (emphasis added), 16 ("Albany and Banyan cannot show that filming Jane Doe nude was a normal or legitimate aspect of Albany and Banyan's business.") (emphasis added); see also id. at 17, 20. However, the Hanover Policies do not require that any "personal and advertising injury" be caused by an offense arising out of Banyan and Albany's "legitimate" or "normal" business practices; but rather, they merely require that the offense arise out of Banyan and Albany's business. See Hanover 2015-16 Policy at 181; Hanover 2016-17 Policy at 210.
Hanover's attempt to add an additional phrase to the otherwise unambiguous policy language would amend the Hanover Policies to require that the "personal and advertising injury" offense include only those acts that are expressly authorized by Banyan and Albany's express business policies or practices. This is not what the plain language of the Hanover Policies state, nor is it reasonable to interpret them as such. Taken to its logical conclusion, Hanover's expanded interpretation of "arising out of" would render the Hanover Policies illusory and it would effectively mean that the policies would rarely, if ever, cover ordinary negligence claims as those are frequently proven by a showing of a deviation from business practices and policies. In addition to negligence, no legitimate business ever makes it their express purpose to commit a wrongful act.
Contrary to Hanover's proffered interpretation, within the context of an insurance policy, Georgia courts have "construed 'arising out of as meaning 'had its origins in,' 'grew out of,' or 'flowed from.' " BBL-McCarthy, LLC v. Baldwin Paving Co., 285 Ga. App. 494, 498, 646 S.E.2d 682 (2007). "[W]here the phrase 'arising out of is found in a coverage provision of an insurance policy, Georgia courts have construed that phrase broadly, holding that where an insurance contract provides that a loss must 'arise out of' a specified act, it does not mean proximate cause in the strict legal sense but instead encompasses almost any causal connection or relationship." Barrett v. Nat'l Union Fire Ins. Co. of Pittsburgh, 304 Ga. App. 314, 321, 696 S.E.2d 326 (2010) (internal punctuation and citation omitted); see also JNJ Found. Specialists, Inc. v. D.R. Horton, Inc., 311 Ga. App. 269, 270, 717 S.E.2d 219 (2011) ("Importantly, the term 'arising out of' does not mean proximate cause in the strict legal sense, nor [does it] require a finding that the injury was directly and proximately caused by the insured's actions. Almost any causal connection or relationship will do.") (internal punctuation and citation omitted). In this case, there are numerous causal connections between the alleged offenses that caused Jane Doe's claimed injuries and Banyan and Albany's business; namely: (1) the alleged offense of surreptitiously filming Jane Doe in her bathroom occurred during, and as a consequence of the transaction where Banyan and Albany provided lodging to Jane Doe for remuneration as part of their business; (2) the Incident occurred at the Hampton Inn run by Banyan and owned by Albany by a paying patron; (3) the victim was a paying patron of the business; and (4) the perpetrator is an alleged employee of the business who was given access to the room and Jane Doe's personal information while acting within the course and scope of employment. The Court finds that these causal connections are sufficient to find that the alleged offense "arose out of" Banyan and Albany's business.
Hanover's reliance on Maryland Cas. Co. v. Salon Ave. Suite 2, No. 1:13-CV-3056-TWT, 2014 WL 4925623, at *5 (N.D. Ga. Sept. 29, 2014), for the proposition that an injury does not "arise out of" the insured's business when the offense was not a "legitimate" part of the business, is not persuasive because the portion of the opinion relied upon by Hanover is dicta. The decision in Salon Ave. was based on the finding that the insured failed to give notice, a condition precedent to any coverage. Id. at *4-6 (only addressing the Coverage B language "assuming the [insured] gave timely notice"). The Court in Salon Ave. did not analyze the "arising out of" language and instead merely relied on the admission of the insured that surreptitious filming was not a legitimate part of the insured's business.
This Court finds that the allegations in the Underlying Complaint that John Doe planted a video camera to surreptitiously videotape Jane Doe fall within the ambit of a reasonable interpretation of the phrase "invasion of the right of private occupancy of a room." And the Court finds that the alleged injury was "caused by an offense arising out of [Banyan and Albany's] business." Consequently, in view of the Georgia rules of insurance policy construction and the ordinary meanings of the words involved, the Court construes the clauses at issue in favor of falling within the coverage of Coverage B of the Hanover Policies.
3. The claims against Banyan and Albany are not excluded from coverage based upon the Recording and Distribution Exclusion.
Hanover argues that even if Jane Doe has sufficiently alleged a "personal and advertising injury," any such damages would be excluded by the "Recording and Distribution of Material Information in Violation of Law" exclusion ("Recording and Distribution Exclusion") of the Hanover Policies. Hanover's Summ. J. Br. at 17-18. That exception excludes coverage for "personal and advertising injury" that violates any state law "that addresses, prohibits, or limits the printing, dissemination, disposal, collecting, recording, sending, transmitting, communicating or distribution of material or information." Id. (quoting Hanover 2015-16 Policy at 182; Hanover 2016-17 Policy at 211). Hanover argues that John Doe's alleged surreptitious recording of Jane Doe in her hotel bathroom and the subsequent distribution of the video violates New York Penal Law § 250.45. Id.
The rules of insurance contract construction are particularly strict when considering a policy's exclusions.
Exceptions and exclusions to coverage must be narrowly and strictly construed against the insurer and liberally construed in favor of the insured to afford coverage. While insurance is a matter of contract, not sympathy, the policy is to be construed liberally in favor of the
object to be accomplished. A contract of insurance is construed most strongly against the insurer and liberally in favor of the insured, particularly where the insurer seeks to deny coverage based upon a policy exclusion.Ga. Farm Bureau Mut. Ins. Co. v. Meyers, 249 Ga. App. 322, 324, 548 S.E.2d 67 (2001) (citations omitted). "Exclusions to an insurance policy require a narrow construction on the theory that the insurer, having affirmatively expressed coverage through broad promises, assumes a duty to define any limitations on the coverage in clear and explicit terms." Kerr-McGee Corp. v. Ga. Cas. & Sur. Co., 256 Ga. App. 458, 460, 568 S.E.2d 484 (2002) (internal alterations accepted and quotations and citations omitted).
Banyan and Albany maintain that the Recording and Distribution Exclusion is not applicable in this case and apply the principle of ejusdem generis. Banyan and Albany's Resp. in Opp'n to Pls.' Mot. for Summ. J. at 15-18. In Latin, "ejusdem generis" means "of the same kind or class." Black's Law Dictionary, p. 535 (7th ed. 1999). The ejusdem generis interpretation principal counsels that
when a statute or document enumerates by name several particular things, and concludes with a general term of enlargement, this latter term is to be construed as being ejusdem generis [i.e., of the same kind or class] with the things specifically named, unless, of course, there is something to show that a wider sense was intended.Ctr. For A Sustainable Coast v. Coastal Marshlands Prot. Comm., 284 Ga. 736, 737-38, 670 S.E.2d 429 (2008). The first three categories of the Recording and Distribution Exclusion exclude injuries that arise out of acts or omissions that violate three specific statutes: (1) the TCPA, (2) the CAN-SPAM Act of 2003, and (3) the FCRA. TCPA regulates telemarketing. See 47 U.S.C. § 227. The FCRA applies to consumer credit reporting agencies and regulates the creation, collection, dissemination, and reporting of credit information. See 15 U.S.C. § 1681. The CAN-SPAM Act applies to commercial emails and marketing. See 15 U.S.C. § 7701. No party contends that the allegations in the Underlying Complaint implicate these three acts and the claims and damages alleged in the Underlying Complaint do not fall into the same class of claims and damages covered by the statutes listed in the first three categories of the Recording and Distribution Exclusion. Hanover relies on the "catch-all" category at the end of the Recording and Distribution Exclusion to argue the Underlying Complaint's allegations fall within the scope of the exclusion. However, the statutes enumerated in the Recording and Distribution Exclusion relate to unwanted commercial solicitations or the improper collection and distribution of financial information. In contrast, the Underlying Complaint asserts claims of negligence and premises liability against Albany and Banyan.
Applying the construction of insurance contract exclusions as required by Georgia law, the Court construes the catch-all phrase at the end of the exclusion as being ejusdem generis and not applicable to the claims asserted in the Underlying Complaint. Therefore, Hanover has not carried its burden to show that the Recording and Distribution Exclusion applies to overcome its duty to defend Banyan and Albany.
Having found that the allegations in the Underlying Complaint fall within the ambit of coverage of Coverage B of the Hanover Policies and that the Recording and Distribution Exclusion does not apply to preclude coverage, the Court concludes that Banyan and Albany are entitled to summary judgment on Counts IV through VII of the Amended Complaint and that Hanover's Motion for Summary Judgment on Counts IV through VII fail. Hanover has a duty to defend Banyan and Albany in the Underlying Lawsuit under Coverage B.
C. Duty to Defend Under the Westfield Policies
1. Choice of Law - Georgia law governs this action.
As an initial matter, Westfield disputes whether Georgia or Florida applies to this action. See Mem. of Law by Pl. Intervenor ("Westfield's Summ. J. Br.") [Doc. 107-1] at 10-11; Banyan and Albany's Resp. in Opp'n to Westfield's Mot. for Summ. J. [Doc. 121] at 4-5. This Court's jurisdiction is based on diversity of citizenship, so the Court applies the choice-of-law rules of the forum state of Georgia. U.S. Fid. & Guar. Co. v. Liberty Surplus Ins. Corp., 550 F.3d 1031, 1033 (11th Cir. 2008) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)); Elder v. Reliance Worldwide Corp., 563 F.Supp.3d 1221, 1230-31 (N.D. Ga. 2021).
An insurance policy is a contract, and for a choice-of-law determination for contract interpretation, Georgia follows the traditional doctrine of lex loci contractus. Boardman Petroleum, Inc. v. Federated Mut. Ins. Co., 135 F.3d 750, 752 (11th Cir. 1998) (citing Gen. Tel. Co. of Se. v. Trimm, 252 Ga. 95, 95, 311 S.E.2d 460 (1984)); see also Convergys Corp. v. Keener, 276 Ga. 808, 812, 582 S.E.2d 84 (2003) (reaffirming Georgia's adherence "to the traditional conflicts of law rules."). Lex loci contractus provides that "contracts are governed as to their nature, validity and interpretation by the law of the place where they were made unless the contract is to be performed in a state other than that in which it was made." Boardman Petroleum, 135 F.3d at 752 (internal quotation and citation omitted). "Under Georgia law, an insurance contract is 'made' where it is delivered." Id.; see also Gen. Elec. Credit Corp. v. Home Indem. Co., 168 Ga. App. 344, 350, 309 S.E.2d 152 (1983) ("The insurance contract is constructively made at the place where the contract is delivered."). It is undisputed that the Westfield Policies were delivered to Banyan in Florida. Westfield's Summ. J. Br. at 10. On the face of the rule, then, it would appear that Florida law applies.
However, Georgia's lex loci contractus rule is subject to an exception: "the application of another jurisdiction's laws is limited to statutes and decisions construing those statutes. When no statute is involved, Georgia courts apply the common law as developed in Georgia rather than foreign case law." Frank Briscoe Co., Inc. v. Georgia Sprinkler Co., Inc., 713 F.2d 1500, 1503 (11th Cir. 1983) (citation omitted); see also Coon v. Med. Ctr., Inc., 300 Ga. 722, 729, 797 S.E.2d 828, 834 (2017) ("In the absence of a statute, . . . a Georgia court will apply the common law as expounded by the courts of Georgia."). The question for the Court is thus whether there is a Florida statute that would govern the interpretation of the Westover Policies. The parties have not identified any such statute. Accordingly, the Court will apply Georgia's common law.
2. Banyan and Albany acknowledge that there is no coverage under Coverage A of the Westfield Policies.
Westfield is moving for summary judgment on all the claims it has asserted in the Complaint in Intervention, arguing that it owes no duty to defend Banyan against the claims asserted in the Underlying Lawsuit because the Westfield Policies do not provide coverage for these claims. Westfield's Summ. J. Br. at 14-21. "Albany and Banyan do not dispute th[e] point and concede that Coverage A requires bodily injury within the policy period," and because the alleged bodily injury did not occur within the Westfield policy periods, it is "not covered under the Westfield Polic[ies'] Coverage A." Banyan and Albany's Resp. in Opp'n to Westfield's Mot. for Summ. J. at 8-9. Accordingly, Westfield is entitled to summary judgment on Counts I-II of the Complaint in Intervention; namely, the claims related to coverage under Coverage A of the Hanover Policies.
3. The allegations of injury in the Underlying Complaint trigger coverage under Coverage B of the Westfield Policies.
Westfield argues that Coverage B of the Westfield Policies is not triggered because the acts of John Doe (surreptitiously recording Jane Doe) do not "arise out of" Banyan and Albany's business because they were not done by John Doe "within the scope of his employment." Westfield's Summ. J. Br. at 18-20. Westfield, applying Florida law, erroneously focuses on a narrow question of the legal concept of scope of employment derived from employment law when the appropriate question is one of insurance contract interpretation under Georgia law. As explained above in Section III(B)(2)(b), Georgia courts have construed the phrase " 'arising out of' . . . broadly, holding that where an insurance contract provides that a loss must 'arise out of' a specified act, it does not mean proximate cause in the strict legal sense but instead encompasses almost any causal connection or relationship." Barrett, 304 Ga. App. at 321, 696 S.E.2d 326 (internal punctuation and citation omitted); see also JNJ Found. Specialists, 311 Ga. App. at 270, 717 S.E.2d 219 ("Almost any causal connection or relationship will do.") (internal punctuation and citation omitted).
The Court notes that the Underlying Complaint alleges that John Doc was an employee or agent of Banyan and Albany, and that "[a]t all material times referred to in this Complaint, John Doe was conducting himself in the normal course of business acting within the scope of his employment with one or more of the named Defendants. Defendant Banyan Tree Management, LLC, Defendant Albany Downtown Hotel Partners, LLC and Defendant John Doe are joint-tortfeasors and may be subject to venue in any county in which one or more of them reside pursuant to O.C.G.A. § 9-10-31." Underlying Compl. ¶ 8.
As it discussed above, the Court finds that there are sufficient causal connections to find that the offenses alleged in the Underlying Lawsuit "arose out of" Banyan and Albany's business, triggering coverage under Coverage B of the Westover Policies. See Supra. III(B)(2)(b).
4. The Recording and Distribution Exclusion in Coverage B is not applicable.
Westover argues that the "personal and advertising injury" claimed by Jane Doe is excluded by the Recording and Distribution Exclusion in Coverage B of the Westover Policies. Westfield's Summ. J. Br. at 20-21. Citing the same criminal law from New York, Westfield invokes the catch-all provision of the Recording and Distribution Exclusion and argues that the surreptitious recording of Jane Doe in her hotel bathroom and the subsequent distribution of the video violates New York Penal Law § 250.45. Id. For the reasons cited above in Section III(B)(3), the Court finds that Westover has not carried its burden to show that the Recording and Distribution Exclusion applies to preclude Westover from the duty to defend Banyan and Albany.
Having found that the allegations in the Underlying Complaint fall within the ambit of coverage of Coverage B of the Westover Policies and that the Recording and Distribution Exclusion does not apply to preclude coverage, the Court concludes that Banyan and Albany are entitled to summary judgment on Count III of the Complaint in Intervention and that Westover's Motion for Summary Judgment on Count III fails as a matter of law. Westfield has a duty to defend Banyan in the Underlying Lawsuit.
D. Duty to Defend Under the Starr Policy
1. Coverage under the Coverage A of the Starr Policy is excluded.
Starr argues that the Underlying Complaint does not include allegations of "bodily injury" caused by an "occurrence" during the policy period as those terms are defined in Coverage A of the Starr Policy and therefore Starr is under no obligation to defend the Underlying Lawsuit because the claims do not meet the requirements of Coverage A. Starr's Mem. of Law in Supp. of its Mot. for Summ. J. ("Starr's Br.") [Doc 106-1] at 12-16. Even if there were allegations of "bodily injury" caused by an "occurrence," Starr argues that coverage is precluded because there is an exclusion under Coverage A for "bodily injury arising out of a personal and advertising injury." Id. at 16-17 (citing Starr Policy at 22 (providing that Coverage A "does not apply to . . . 'Bodily injury' arising out of 'personal and advertising injury.' ")).
Banyan and Albany acknowledge there is an exclusion under Coverage A for "bodily injury" arising out of a "personal and advertising injury." Rather than contesting Starr's position as to the exclusion of coverage under Coverage A, Banyan and Albany contend that Starr's Coverage B is triggered because the Underlying Lawsuit alleges claims for bodily injury caused by a personal and advertising injury arising from Banyan and Albany's business. Banyan and Albany's Resp. in Opp'n to Starr's Mot. for Summ. J. [Doc. 122] at 14-15.
Pretermitting any analysis of whether the Underlying Complaint sufficiently alleges "bodily injury" caused by an "occurrence" during the policy period, the Court finds that the exclusion under Coverage A for bodily injury arising out of a personal and advertising injury precludes coverage under Coverage A of the Starr policy. Accordingly, Starr is entitled to summary judgment on Count II of its Third-Party Counterclaim and Crossclaim for Declaratory Judgment. Banyan and Albany's Motion for Summary Judgment on Counts I and II of Starr's Third-Party Counterclaim and Crossclaim for Declaratory Judgment fails.
2. The allegations of injury in the Underlying Complaint trigger coverage under Coverage B of the Starr Policy.
The Starr Policy, Coverage B, states that it only covers "personal and advertising injury" if it is "caused by an offense arising out of your business but only if the offense was committed in the coverage territory during the policy period." Starr Policy at 22. Starr argues that the Underlying Complaint does not include any allegations of "personal and advertising injury" arising out of Banyan and Albany's "legitimate business." Starr's Br. at 18. This is the same argument proffered by Hanover and Westfield and rejected by this Court in Sections III(B)(2)(b) and III(C)(3), supra.
The Court rejects Starr's argument for the same reasons. Within the context of an insurance policy, Georgia courts have "construed 'arising out of' as meaning 'had its origins in,' 'grew out of,' or 'flowed from.' " BBL-McCarthy, LLC, 285 Ga. App. at 498, 646 S.E.2d 682; see also Barrett, 304 Ga. App. at 321, 696 S.E.2d 326 (internal punctuation and citation omitted) ("[W]here the phrase 'arising out of' is found in a coverage provision of an insurance policy, Georgia courts have construed that phrase broadly, holding that where an insurance contract provides that a loss must 'arise out of' a specified act, it does not mean proximate cause in the strict legal sense but instead encompasses almost any causal connection or relationship.").
As discussed above, the Underlying Complaint contains allegations of numerous causal connections between the alleged offenses that caused Jane Doe's alleged injuries and Banyan and Albany's business; namely: (1) the alleged offense of surreptitiously filming Jane Doe in her bathroom occurred during, and as consequence of the transaction where Banyan and Albany provided lodging to Jane Doe for remuneration as part of their business; (2) the Incident occurred at the Hampton Inn run by Banyan and owned by Albany by a paying patron; (3) the victim was a paying patron of the business; and (4) the Incident is alleged to have been committed by an alleged employee of the business who was given access to the room and Jane Doe's personal information while acting within the course and scope of employment. The Court finds that these causal connections are sufficient to find that the alleged offense "arose out of" Banyan and Albany's business.
Starr also argues that even if the claims are interpreted to arise out of Banyan and Albany's business, they did not occur during the Starr policy period (July 31, 2018 through July 31, 2019). Starr's Br. at 18-21. Starr contends that there are two distinct periods during which acts occurred that form the basis of the claims in the Underlying Complaint: (1) July 2015 when Jane Doe was surreptitiously taped, and (2) 2018 when John Doe posted the video of Jane Doe on the internet and attempt to extort her. Id. Starr argues that the allegations concerning the invasion of Jane Doe's privacy occurred in 2015, prior to the inception of the Starr Policy on July 31, 2018, and there is, therefore, no coverage under Coverage B of the Starr Policy. Id.
Starr's argument focuses on one definition of personal and advertising injury that is alleged to have occurred in 2015: "c. The wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies, committed by or on behalf of its owner, landlord or lessor." Starr Policy at 30. However, the Starr Policy also defines "personal and advertising injury" to include: "e. Oral or written publication, in any manner, of material that violates a person's right of privacy." Id. The allegations of the Underlying Complaint allege that John Doe was an employee of Banyan and Albany and acquired the video of Jane Doe during the course of his employment and subsequently published the video on the internet on September 30, 2018. As alleged in the Underlying Complaint, the date of John Doe's placing the video on the internet is clearly within the Starr Policy period.
This Court finds that the allegations in the Underlying Complaint that John Doe, who is alleged to have been an employee of Banyan and Albany "[a]t all material times referred to in this Complaint" and published the video of Jane Doe while "conducting himself in the normal course of business acting within the scope of his employment," fall within the ambit of a reasonable interpretation of the phrase "publication, in any manner, of material that violates a person's right of privacy." Consequently, in view of the Georgia rules of insurance policy construction and the ordinary meanings of the words involved, the Court construes the clauses at issue in favor of coverage of Coverage B of the Starr Policy. 3. The Access or Disclosure of Confidential or Personal Information Exclusion does not preclude coverage of the claims from the Underlying Lawsuit.
Starr's argument that the "Knowing Violation of Rights of Another" and "Criminal Acts" exclusions apply to preclude coverage is without merit. See Starr's Br. at 21 (referencing Starr Policy at 23). The exclusions require an act "at the direction of the insured." Starr Policy at 23. There is no allegation that Banyan or Albany directed John Doe to act in the manner alleged.
The Access or Disclosure of Confidential or Personal Information Exclusion provides that the Starr Policy does not cover " 'personal and advertising injury' arising out of any access to or disclosure of any person's or organization's confidential or personal information, including patents, trade secrets, processing methods, customer lists, financial information, credit card information, health information or any other type of nonpublic information." Starr Policy at 60. Starr argues that "Jane Doe's naked image linked to her name is indisputably 'nonpublic information' " and protected personal information that qualifies under this exclusion, relying on the final, catch-all provision of the exclusion: "or any other type of nonpublic information." Starr Br. at 22-23 (citing Starr Policy at 60).
Banyan and Albany argue that the language of the exclusion makes clear that it was meant to apply to liability associated with data breaches, not the type of liability alleged in the Underlying Lawsuit. Banyan and Albany's Resp. in Opp'n to Starr's Mot. for Summ. J. at 20-23. Similar to the argument made regarding the application of the application of the Recording and Distribution Exclusions in the Hanover and Westfield Policies, Banyan and Albany argue that the application of the ejusdem generis principle clarifies that the type of claims and damages alleged in the Underlying Lawsuit do not fall into the same class of claims and damages covered by the Access or Disclosure of Confidential or Personal Information Exclusion. Banyan and Albany's Resp. in Opp'n to Starr's Mot. for Summ. J. at 20-23; see also Sections III(B)(3) and III(C)(4), supra.
Considering all of the language of the exclusion as a whole and recognizing that under Georgia law exclusions from insurance coverage "must be strictly construed," see Great Am. All. Ins. Co., 847 F.3d at 1332, the Court finds that Starr has failed to carry its burden to show that the Access or Disclosure of Confidential or Personal Information Exclusion applies to preclude its duty to defend Albany and Banyan.
4. The Violation of Statutes Exclusion does not preclude coverage of the claims from the Underlying Lawsuit.
The Starr Policy defines "personal and advertising injury" to include: "Oral or written publication, in any manner, of material that violates a person's right of privacy." Starr Policy at 30. However, the Violation of Statutes Exclusion excludes coverage under Coverage A and Coverage B for "Bodily injury" or "Personal and advertising injury"
arising directly or indirectly out of any action or omission that violates or is alleged to violate any statute, ordinance, or regulation of any federal, state or local government, including any amendment of or addition to such laws, that addresses or applies to the sending, transmitting or communicating of any material or information, by any means whatsoever.Starr Policy at 85. Starr argues that this exclusion precludes coverage under Coverage A or B of the Starr Policy. Starr's Br. at 23-25. Specifically, Starr argues that the alleged acts of John Doe that form the crux of the Underlying Complaint violate state and federal laws; namely, N.Y. PENAL CODE §§ 250.45, 250.55, criminalizing the unlawful surveillance in violation of someone reasonable expectation of privacy and the dissemination of an unlawful surveillance image. Id. Starr also notes that it is a federal crime to blackmail an individual. Id. (citing 18 U.S.C. § 875). Banyan and Albany argue, inter alia, that the exclusion is ambiguous as applied to the allegations in the Underlying Complaint. Banyan and Albany's Resp. in Opp'n to Starr's Mot. for Summ. J. at 20. Banyan and Albany also argue that Starr's interpretation of this exclusion renders the express grant of coverage for personal and advertising injury illusory. Id. at 25 (citing St. Paul Mercury Ins. Co. v. F.D.I.C., 774 F.3d 702, 709 (11th Cir. 2014)) ("[A] court must not interpret a policy to allow an insurer to provide largely illusory coverage.").
"Read as a layman would read it," Ga. Farm Bureau Mut. Ins., 298 Ga. at 719, 784 S.E.2d 422, the Starr Policy covers all personal injuries, including any manner of oral or written publication of material that violates a person's right of privacy. Starr Policy at 30. The same policy then excludes coverage for the same injury if it arises out of conduct that happens to violate any statute, ordinance, or regulation. Starr Policy at 85. The Violation of Statutes Exclusion essentially nullifies the coverage for this personal and advertising injury.
When an exclusion completely nullifies the coverage provided in a policy, that exclusion has no effect according to the Georgia Court of Appeals: "[W]e have a situation where one provision of the policy excludes liability and another accepts liability. Every written provision of an insurance contract must be given its apparent meaning and effect. The provisions currently under consideration are repugnant to one another. When that occurs in an insurance contract, the provision most favorable to the insured will be applied."Hooters of Augusta, Inc. v. Am. Glob. Ins. Co., 272 F. Supp. 2d 1365, 1378 (S.D. Ga. 2003), aff'd, 157 F. App'x 201 (11th Cir. 2005) (quoting Isdoll v. Scottsdale Ins. Co., 219 Ga. App. 516, 518, 466 S.E.2d 48 (1995)). Pursuant to Georgia law, when an insurance policy grants coverage under one provision and excludes it in another, the Court shall find that the effective provision shall be the provision finding coverage since that provision is the most favorable to the insured. Id. "This result adheres to the principal in Georgia law that insurers should not be allowed to provide illusory coverage. That is, the Insurers must not deceive insurance purchasers into believing they have coverage only to have an exclusionary provision entirely nullify it." Hooters, 272 F. Supp. 2d at 1378. This result is also consistent with the rules for construction of any exclusion in an insurance policy in Georgia; namely, that exclusions are construed narrowly and strictly against the insurer and liberally in favor of coverage for the policyholder. Meyers, 249 Ga. App. at 324, 548 S.E.2d 67.
Accordingly, the Court finds that the coverage under Coverage B of the Starr Policy is not excluded by the Violation of Statutes Exclusion. Having found that the allegations in the Underlying Complaint fall within the ambit of coverage for personal and advertising injury of Coverage B of the Starr Policy and that no exclusion applies to preclude coverage, the Court finds that Banyan and Albany are entitled to summary judgment as to Count IV of Banyan and Albany's Third-Party Complaint and Counts III and IV of Starr's Third-Party Counterclaim and Crossclaim for Declaratory Judgment. Consequently, Starr's is not entitled to summary judgment on Counts III and IV of its Third-Party Counterclaim and Crossclaim for Declaratory Judgment and Count IV of Banyan and Albany's Third-Party Complaint. Starr has a duty to defend Banyan and Albany in the Underlying Lawsuit.
IV. CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Plaintiffs Citizens Insurance Company of America's and Massachusetts Bay Insurance Company's Motion for Summary Judgment [Doc. 113] is GRANTED IN PART and DENIED IN PART. Hanover's Motion is GRANTED as to Counts I-III of the Amended Complaint and DENIED as to Counts IV-VII of the Amended Complaint.
It is further ORDERED that Plaintiff-Intervenor Westfield Insurance Company's Motion for Summary Judgment [Doc. 107] is GRANTED IN PART and DENIED IN PART. Westfield's Motion is GRANTED as to Counts I and II of the Complaint in Intervention and DENIED as to Counts III and IV of the Complaint in Intervention.
It is further ORDERED that Third-Party Defendant Starr Indemnity & Liability Company's Motion for Summary Judgment [Doc. 106] is GRANTED IN PART and DENIED IN PART. Starr's Motion is GRANTED as to Count II of its Third-Party Counterclaim and Crossclaim for Declaratory Judgment and DENIED as to Counts III and IV of Starr's Third-Party Counterclaim and Crossclaim for Declaratory Judgment and Count IV of Banyan and Albany's Third-Party Complaint for Declaratory Judgment.
It is further ORDERED that Defendants Banyan Tree Management, LLC's and Albany Downtown Hotel Partners, LLC's Motion for Summary Judgment [Doc. 111] is GRANTED IN PART and DENIED IN PART. Banyan and Albany's Motion is GRANTED as to Counts IV-VII of the Amended Complaint, Count III and IV of Westfield's Complaint in Intervention, Counts III and IV of Starr's Third-Party Counterclaim and Crossclaim for Declaratory Judgment and Count IV of Banyan and Albany's Third-Party Complaint for Declaratory Judgment. Banyan and Albany's Motion is DENIED as to Count II of Starr's Third-Party Counterclaim and Crossclaim for Declaratory Judgment.
It is further ORDERED that the parties shall file a joint status report within thirty (30) days of the date of this Order detailing what issues, if any, remain to be determined by the Court at this time.
IT IS SO ORDERED this 22nd day of September, 2022.