Opinion
CIVIL ACTION FILE NO. 1:17-cv-3943-TCB
2019-04-04
NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY and Nationwide Mutual Fire Insurance Company, Plaintiffs, v. RENAISSANCE BLISS, LLC; Renaissance Residential, LLC; City Walk Apartments, LLC ; Renaissance Retail, LLC ; and Cohen & Associates, LLC, Defendants.
Connor McGinnis Bateman, Seyfarth Shaw, LLP, Philip Wade Savrin, Jessica Christine Samford, Seth Freeman Kirby, Freeman Mathis & Gary, LLP, Atlanta, GA, for Plaintiffs. Brent William Brougher, Joe P. Reynolds, Kilpatrick Townsend & Stockton, LLP, Atlanta, GA, for Defendants.
Connor McGinnis Bateman, Seyfarth Shaw, LLP, Philip Wade Savrin, Jessica Christine Samford, Seth Freeman Kirby, Freeman Mathis & Gary, LLP, Atlanta, GA, for Plaintiffs.
Brent William Brougher, Joe P. Reynolds, Kilpatrick Townsend & Stockton, LLP, Atlanta, GA, for Defendants.
ORDER
Timothy C. Batten, Sr., United States District Judge
I. Background
Nationwide is on your side. That is, unless you fail to timely report an occurrence that may result in a claim.
In this declaratory judgment action, Plaintiffs Nationwide Property and Casualty Insurance Company and Nationwide Mutual Fire Insurance Company seek a declaration that Defendants Renaissance Bliss, LLC; Renaissance Residential, LLC; City Walk Apartments, LLC; Renaissance Retail, LLC; and Cohen & Associates, LLC are not entitled to benefits under liability insurance policies Plaintiffs issued to Defendants.
The underlying claims were asserted against Defendants by Paris Evans after she was brutally assaulted on or near Defendants' premises in Atlanta on September 2, 2013. The premises consist of a 161-unit condominium building with sidewalk retail space.
The policies contain the following language: "You must see to it that we are notified as soon as practicable of an ‘occurrence’[, which "means an accident,"] which may result in a claim." [2-2] at 19, 23. Defendants did not notify Plaintiffs of the attack until more than twenty-one months after it happened. The issue in this case is whether this delay authorizes the two Plaintiff-insurers to deny coverage.
Plaintiffs argue that Defendants breached the notice provisions of the policies. Defendants argue that they did not breach the provisions because they were not reasonably aware that a claim would be brought against them.
A. Insurance Policies
Both policies at issue (primary and excess) named Renaissance Bliss, Renaissance Residential, Renaissance Retail, and Cohen as insureds. The primary policy identified the business as property owner/condo manager, and the only address listed is 171 Auburn Avenue NE Atlanta, GA, 30303. This is the address of the property described in the underlying lawsuit, and the attack occurred in the building's only parking garage. The excess policy incorporates the terms and conditions of the primary policy by reference. The policies contain Georgia-specific endorsements.
The primary policy states, "You must see to it that we are notified as soon as practicable of an ‘occurrence’[, which "means an accident,"] which may result in a claim." [2-2] at 19, 23. It further provides, "No person or organization has a right under this Coverage Part ... [t]o sue us on this Coverage Part unless all of its terms have been fully complied with." Id. at 20. The excess policy similarly states, "You must see to it that we and your underlying insurers ... are notified as soon as possible of any ‘occurrence’ which may result in a claim if the claim may involve this policy or any ‘underlying insurance’ ...." Id. at 65.
B. Relevant Parties
At the time of Evans's injuries, Renaissance Residential owned 140 of 161 condominium units on the property and Renaissance Retail had a ground lease for the retail units on the first floor. This was the only property Renaissance Residential or Renaissance Retail maintained.
Renaissance Bliss was a holding company for, and the single member of, Renaissance Residential and Renaissance Retail.
Cohen was the asset manager for Renaissance Bliss. Renaissance Bliss paid Cohen fees to conduct Renaissance Retail's operations through Cohen's employees. Cohen also managed the retail tenants on Renaissance Retail's behalf.
City Walk was formed in October 2013 (approximately a month after Evans was attacked) to take title to the condominium units that Renaissance Residential owned.
A separate entity, Renaissance Walk Condominium Association (separately insured and having no corporate affiliation with Defendants), owned, controlled, and maintained the common area (including security cameras) where the incident occurred. The association hired KPM International, LLC to monitor the cameras and provide concierge services. It also hired Heritage Property Management Services, Inc. to manage the services it provided.
Roni Braitanbaum was the chief operating officer of Cohen, and also the de facto COO of Renaissance Bliss, Renaissance Residential, and Renaissance Retail because none of those entities had employees. His title at Renaissance Residential and Renaissance Retail was asset manager. He was responsible for operating those entities.
Yvette Moore was, at the time of the incident, a regional manager for Cohen. The only property she managed in Georgia was the property on which Evans was attacked. She was responsible for reporting incidents or property issues to Braitanbaum. Roughly two months before Evans was attacked, Moore told the concierge and security company for the property that she should be notified of all incidents because ownership was being placed at a high risk of liability.
At the time of the incident, Evans was the property manager on site and was employed by Riverstone, a third-party management company contracted by Cohen. Before the incident, she worked closely with Moore.
C. Factual Background
On September 2, 2013, Evans was a victim of rape, battery, and assault while on the property. The attack occurred in a common staircase leading to a parking garage and exterior door in the condominium building with sidewalk retail space. The police and an ambulance were called, and Evans was taken to the hospital for her injuries.
The night of the attack, it was reported to Moore, who reported it to Braitanbaum, who reported it to Gidi Cohen, the owner of Defendant Cohen. Braitanbaum flew to Atlanta from California that night or early the next morning because of the attack. He investigated, spoke to witnesses, observed where Evans stated the attack occurred, and collected video footage and computer data.
On September 6, Braitanbaum obtained the police report. It included Evans's statement that she was assaulted by an unknown male near a ground-level parking-deck door that was often left open. The report also indicated that apartment staff said the security camera near the area where the attack occurred was not functioning.
On September 9, Braitanbaum forwarded the police report to the insurance brokers for his companies' workers' compensation insurance. He did not forward the report to his general liability insurer, Nationwide. The brokers advised Braitanbaum that this seemed to be a workers' compensation claim for the management company, not Braitanbaum's companies, and that there was no reason for Braitanbaum's companies to get sued. Braitanbaum did not provide notice of the incident to Plaintiffs.
Over twenty-one months later, on June 12, 2015, Renaissance Residential, Cohen, and City Walk received correspondence from Evans's counsel demanding the disclosure of their liability insurance that would potentially cover claims arising from the assault. That same day, this correspondence and the underlying incident were reported to Plaintiffs for the first time.
D. State-Court Lawsuit
On August 20, 2015, Evans filed a lawsuit in the State Court of Fulton County against Defendants, along with the association, Riverstone, Heritage, and KPM. She alleged that as of September 2013, Renaissance Bliss managed the property; Cohen owned, occupied, operated, and managed the property; and City Walk Apartments owned, occupied, operated, and managed the property and assumed duties and liabilities of its co-defendants. She alleged that those three defendants, along with Renaissance Residential and Renaissance Retail, were liable for her injuries because of their failure to keep the property in repair, failure to keep the property safe, and general negligence.
Plaintiffs appointed the law firm Hawkins Parnell Thackston & Young LLP to represent Renaissance Residential and City Walk (who were initially the only two Defendants in this action to be named as defendants in the underlying state-court action). At first, Plaintiffs provided a defense without reservation.
On December 18, Plaintiffs sent a letter to Renaissance Residential stating that they learned that Renaissance Residential "had knowledge of the incident the same day that it occurred," [39-14] at 2, and therefore that their continued defense would "be under reservation of [Plaintiffs'] rights to disclaim coverage," id. at 3. Renaissance Residential and City Walk responded by disputing Plaintiffs' assertion.
On April 28, 2017, Evans amended her complaint to add Cohen, Renaissance Bliss, and Renaissance Retail as defendants. Plaintiffs appointed Hawkins Parnell to represent them also. On May 25, Plaintiffs sent a letter to Michael Wilson, who acts as general counsel for Cohen, Renaissance Bliss, and Renaissance Residential, stating that Plaintiffs were providing a defense to these Defendants under a reservation of rights.
Plaintiffs did not purport to reserve rights as to Renaissance Retail or City Walk.
On August 14, Defendants moved for summary judgment in the underlying case, making various arguments as to why they were not liable for Evans's injuries, and arguing (regarding a statute-of-limitations tolling provision) that several Defendants would have no reason to know that an action would be brought against them.
While the summary judgment motions were pending, a mediation was scheduled for Monday, October 9, 2017. On Friday, October 6, Plaintiffs filed this action, seeking a declaration that they did not owe coverage to any of the Defendants for damages in the underlying action.
At the mediation, the parties in the underlying suit reached a settlement agreement. Plaintiffs agreed to pay $375,000 on behalf of the five Defendants and made no allocation of liability among those five. Plaintiffs and Defendants entered into a confidential "Funding and Status Quo Agreement" providing that the settlement payment would "not be deemed a voluntary payment and will not waive [Plaintiffs'] right to litigate" this action. [45-2] at 3. Plaintiffs agreed to forego recoupment of defense costs from the underlying action, along with $100,000 of the settlement payment. Thus, the dispute for this Court involves the remaining $275,000.
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). There is a "genuine" dispute as to a material fact if "the evidence is such that a reasonable jury could return a verdict for the nonmoving party." FindWhat Inv'r Grp. v. FindWhat.com , 658 F.3d 1282, 1307 (11th Cir. 2011) (quoting Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986) ). In making this determination, however, "a court may not weigh conflicting evidence or make credibility determinations of its own." Id. Instead, the court must "view all of the evidence in the light most favorable to the nonmoving party and draw all reasonable inferences in that party's favor." Id.
"The moving party bears the initial burden of demonstrating the absence of a genuine dispute of material fact." Id. (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). If the nonmoving party would have the burden of proof at trial, there are two ways for the moving party to satisfy this initial burden. United States v. Four Parcels of Real Prop. , 941 F.2d 1428, 1437–38 (11th Cir. 1991). The first is to produce "affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial." Id. at 1438 (citing Celotex Corp. , 477 U.S. at 331, 106 S.Ct. 2548 ). The second is to show that "there is an absence of evidence to support the nonmoving party's case." Id. (quoting Celotex Corp. , 477 U.S. at 325, 106 S.Ct. 2548 ).
If the moving party satisfies its burden by either method, the burden shifts to the nonmoving party to show that a genuine issue remains for trial. Id. At this point, the nonmoving party must " ‘go beyond the pleadings,’ and by its own affidavits, or by ‘depositions, answers to interrogatories, and admissions on file,’ designate specific facts showing that there is a genuine issue for trial." Jeffery v. Sarasota White Sox, Inc. , 64 F.3d 590, 593–94 (11th Cir. 1995) (quoting Celotex Corp. , 477 U.S. at 324, 106 S.Ct. 2548 ).
III. Discussion
A. Applicable Law
Initially, the Court must resolve a dispute between the parties regarding which state's law applies. Because the contract was performed in Georgia, Plaintiffs contend that Georgia law applies. However, because the contract was delivered in California and conceivably could have been performed anywhere, Defendants argue that California law applies.
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 the Se. v. Trimm , 252 Ga. 95, 311 S.E.2d 460, 461 (1984) ); Convergys Corp. v. Keener , 276 Ga. 808, 582 S.E.2d 84, 87 (2003) (reaffirming Georgia's adherence to the traditional conflict-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. And under Georgia law, "an insurance contract is ‘made’ where it is delivered." Id. ; Gen. Elec. Credit Corp. v. Home Indem. Co. , 168 Ga.App. 344, 309 S.E.2d 152, 158 (1983) ("The insurance contract is constructively made at the place where the contract is delivered." (quoting Iowa State Travelers Mut. Ass'n v. Cadwell , 113 Ga.App. 128, 147 S.E.2d 461, 463 (1966) )).
However, "where the contract is made in one state and is to be performed in another state, the substantive law of the state where the contract is performed will apply." Amstell, Inc. v. Bunge Corp. , 213 Ga.App. 115, 443 S.E.2d 706, 707 (1994) (quoting Fed. Ins. Co. v. Nat'l Distrib. Co. , 203 Ga.App. 763, 417 S.E.2d 671, 673 (1992) ). According to Plaintiffs, the policies cover a risk of liability in connection with the only scheduled property, which is in Georgia, and contain state-specific endorsements only for Georgia. Thus, they argue, the contract was intended to be performed only in Georgia.
Defendants respond that the contract technically could have been performed anywhere. The Court is inclined to agree with Plaintiffs on this point: it would be difficult for the contract to be performed anywhere other than Georgia, given that the only property insured is in Georgia.
Even if this were not true, Georgia law would apply because Georgia's lex loci contractus rule is subject to another limitation: "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. v. Ga. Sprinkler Co. , 713 F.2d 1500, 1503 (11th Cir. 1983) (citation omitted) (applying Georgia law); Coon v. Med. Ctr., Inc. , 300 Ga. 722, 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.").
Here, Defendants have not cited any California statute that applies. Rather, they seek to apply California's notice-prejudice rule and its limitations on an insurer's implied right to reimbursement of defense or settlement costs. Both of these involve common law, not statutory law. The Court therefore concludes that Georgia law applies.
B. Analysis Under Georgia Law
In Georgia, the interpretation of an insurance policy is a question of law for the Court. O.C.G.A. § 13-2-1. "[T]he cardinal rule of contract construction is to ascertain the intention of the parties." Garrett v. S. Health Corp. of Ellijay, Inc. , 320 Ga.App. 176, 739 S.E.2d 661, 667 (2013) (alteration in original) (quoting Bd. of Comm'rs of Crisp Cty. v. City Comm'rs of Cordele , 315 Ga.App. 696, 727 S.E.2d 524, 527 (2012) ). "Where the terms are clear and unambiguous, and capable of only one reasonable interpretation, the court is to look to the contract alone to ascertain the parties' intent." Boardman Petroleum , 498 S.E.2d at 494 (quoting General Tel. Co. v. Trimm , 252 Ga. 95, 311 S.E.2d 460, 461 (1984) ). "[N]o construction is required or even permitted when the language employed by the parties in the contract is plain, unambiguous, and capable of only one reasonable interpretation." Shepherd v. Greer, Klosic & Daugherty , 325 Ga.App. 188, 750 S.E.2d 463, 465 (2013) (alteration in original omitted) (quoting Homelife Cmtys. Grp. v. Rosebud Park, LLC , 280 Ga.App. 120, 633 S.E.2d 423, 425 (2006) ).
Courts interpreting insurance policies under Georgia law should also ascertain the parties' intention by examining the contract as a whole. Ryan v. State Farm Mut. Auto. Ins. Co. , 261 Ga. 869, 413 S.E.2d 705, 707 (1992). The terms of an insurance policy should be considered in light of their legal and ordinary meaning, id. , and the policy "should be read as a layman would read it," York Ins. Co. v. Williams Seafood of Albany, Inc. , 273 Ga. 710, 544 S.E.2d 156, 157 (2001). "[T]he plain meaning of [unambiguous] terms must be given full effect, regardless of whether they might be beneficial to the insurer or detrimental to the insured." Tripp v. Allstate Ins. Co. , 262 Ga.App. 93, 584 S.E.2d 692, 694 (2003) (quoting Grain Dealers Mut. Ins. Co. v. Pat's Rentals, Inc. , 269 Ga. 691, 505 S.E.2d 729, 730 (1998) ).
Here, the policies required that Defendants notify Plaintiffs "as soon as practicable" of an "occurrence" that "may result in a claim." Defendants did not notify Plaintiffs of the assault until twenty-one months after it occurred. Plaintiffs argue that such a delay is not "as soon as practicable" and, thus, they are not required to provide coverage under the policies. See, e.g. , Protective Ins. Co. v. Johnson , 256 Ga. 713, 352 S.E.2d 760, 761 (1987) (holding that a seventeen-month delay was unreasonable as a matter of law); Advocate Networks, LLC v. Hartford Fire Ins. Co. , 296 Ga.App. 338, 674 S.E.2d 617, 619–20 (2009) (holding that a four-month delay was unreasonable as a matter of law).
Under Georgia law, the insured has the burden of showing that a delay in providing notice is justified under the circumstances. Johnson & Bryan, Inc. v. Utica Mut. Ins. Co. , 741 F. App'x 722, 725 (11th Cir. 2018). Whether a justifiable reason exists may be decided as a matter of law. See, e.g. , Ill. Union Ins. Co. v. NRI Constr., Inc. , 846 F. Supp. 2d 1366, 1370–73 (N.D. Ga. 2012).
"Georgia courts have consistently held that the insured's duty to give notice ‘as soon as practicable of an occurrence or an offense which may result in a claim,’ is triggered when the potential for liability related to an occurrence or offense is objectively known to the insured." Allstate Ins. Co. v. Airport Mini Mall, LLC , 265 F. Supp. 3d 1356, 1380 (N.D. Ga. 2017) (citing Forshee v. Emp'rs Mut. Cas. Co. , 309 Ga.App. 621, 711 S.E.2d 28, 31–32 (2011) ). The test is whether the insured acted "reasonably under the circumstances." Forshee , 711 S.E.2d at 31 (quoting Guar. Nat'l Ins. Co. v. Brock , 222 Ga.App. 294, 474 S.E.2d 46, 48 (1996) ). "So, if a reasonable and ordinarily prudent person would conclude that an event forms no basis for a possible claim, the failure of the insured to give notice of the event is justified and no bar to coverage." Id.
This is a two-part test. Courts first look to the specific circumstances of each defendant at the time of the incident; then, from that viewpoint, courts consider whether "the insured actually knew or should have known of the possibility that it might be held liable for the offense in question." Airport Mini Mall, LLC , 265 F. Supp. 3d at 1379 (citing Forshee , 711 S.E.2d at 31 ).
Defendants argue that they had no reason to believe they could be liable for Evans's injuries. Specifically, they contend that they did not own, maintain, or control the particular portion of the property on which the attack occurred, and they did not employ Evans.
Defendants also argue that certain Defendants could not have had any reasonable expectation that they would be sued. For instance, Community Walk did not exist at the time of the incident, and Renaissance Bliss and Renaissance Retail were not added to the underlying lawsuit until later (and their attorney argued that they had no reason to know any action would be brought against them). However, the settlement was made on behalf of all Defendants, with no allocation of liability. Although Defendants argue that California law requires an insurer to bear the burden of allocating indemnity costs, Georgia law applies here, and no party has cited to any similar law in Georgia (and the Court is aware of none).
However, under Georgia law, an "assessment of the liability issues arising from an occurrence" is not a justifiable reason to delay in providing notice. Brit UW Ltd. v. Hallister Prop. Dev., LLC , 6 F. Supp. 3d 1321, 1329 (N.D. Ga. 2014) ; see also Richmond v. Ga. Farm Bureau Mut. Ins. Co. , 140 Ga.App. 215, 231 S.E.2d 245, 250 (1976) ("The purpose of the notice provision ... is to enable the insurer to investigate promptly the facts surrounding the occurrence while they are still fresh and the witnesses are still available, to prepare for a defense of the action, and in a proper case, to determine the feasibility of settlement of the claim."). Defendants' analysis thus does not justify their delayed notice.
Defendants also contend that the broker for their workers' compensation insurance told them they should not be liable. However, relying on representations of an insurance agent as to whether an incident may lead to a claim does not justify late notice. NRI Constr. , 846 F. Supp. 2d at 1372–73.
Here, the issue is whether, under the factual circumstances present in this case, Defendants knew or should have known of the possibility that they might be subject to liability for Evans's injuries. The Court finds that they did know or should have known.
Ultimately, although Defendants may not have owned, managed, or controlled the precise area in which Evans was attacked, Evans was attacked at the insured address. Critically, Defendants owned, operated, or controlled the majority of the premises at that address. Moore was the on-site manager who worked closely with Evans. The agents acting on behalf of the Defendants with respect to the property at issue were Moore and Braitanbaum. Defendants notified their workers' compensation insurer of the attack. Finally, Defendants ended up contributing to the settlement of Evans's underlying lawsuit.
The cases on which Defendants rely are distinguishable. See State Farm Fire & Cas. Co. v. LeBlanc , 494 F. App'x 17, 23 (11th Cir. 2012) (finding excuse of ignorance of policy's contents insufficient to justify a four-month delay in providing notice); Forshee , 711 S.E.2d at 32–33 (remanding for determination on reasonableness regarding a slip-and-fall claimant who refused medical assistance, went home without leaving contact information, and never told anyone at the business she received medical treatment); Newberry v. Cotton States Mut. Ins. Co. , 242 Ga.App. 784, 531 S.E.2d 362, 364 (2000) (finding a jury issue on reasonableness where insured claimed he had no idea his homeowners' insurance policy might cover him for a fight in which he was involved hundreds of miles from his home); Brock , 474 S.E.2d at 47–48 (involving school district employee who did not reasonably foresee being sued as transportation supervisor for a bus accident in which he was not directly involved).
Defendants argue that the cases on which Plaintiffs rely are distinguishable. Although neither side has provided a case with facts identical to those at issue here, the Court concludes that the facts reasonably should have put Defendants on notice that they may be subject to liability.
In contrast, several cases demonstrate that businesses near the situs of a violent attack can be subjected to liability claims even if those claims ultimately fail. See, e.g. , Six Flags Over Ga. II, L.P. v. Martin , 320 Ga.App. 52, 743 S.E.2d 25, 26 (2013) (involving a victim who sued various Six Flags entities and a parking company after being attacked at a nearby bus stop); Woodall v. Rivermont Apartments P'ship , 239 Ga.App. 36, 520 S.E.2d 741, 742 (1999) (involving a victim who sued a partnership, general partner, and property manager following an attack in common-area parking).
Further, because even unrelated businesses located near the places of violent attacks have been subject to lawsuits, the Court is not persuaded by Defendants' argument that they had no reason to believe a claim would be brought against them on the basis that O.C.G.A. § 44-3-106(g) required Evans's claims to be brought against the association, not them.
Based on the entirety of the facts, the Court concludes that as a matter of law Defendants reasonably should have known that the incident could result in a claim against them. Indeed, the incident did result in such a claim, and Defendants contributed to the settlement of that claim. Therefore, the notice provision applies to relieve Plaintiffs of their duty to defend and indemnify.
Defendants, in urging the Court to apply California common law (which requires a showing of actual prejudice to the insurer in order for it to be relieved of any coverage obligations), argue that Plaintiffs' motion fails because they have not shown that Defendants' delay resulted in prejudice to Plaintiffs. Specifically, they argue, Plaintiffs had notice of the attack before any suit against Defendants was filed. However, Georgia courts have enforced notice provisions without a showing of prejudice to the insurer. See, e.g. , Kay-Lex Co. v. Essex Ins. Co. , 286 Ga.App. 484, 649 S.E.2d 602, 608 (2007) ; Se. Express Sys., Inc. v. S. Guar. Ins. Co. of Ga. , 224 Ga.App. 697, 482 S.E.2d 433, 436 (1997). Even so, Plaintiffs argue that the delay in learning of the potential claim led to the possibility of spoliation issues, the inability to interview or examine Evans until much later, and other problems.
Defendants respond that no Georgia court has held that a notice provision bars coverage when notice, even if delayed, was provided before a lawsuit was filed. However, they point to no binding authority, and the Court is aware of none, holding that such a situation is prohibited.
C. Recoupment
Defendants argue that even if Plaintiffs prevail regarding the notice provision, Plaintiffs are not entitled to the $275,000 because they have not demonstrated that they are entitled to recoup any portion of the settlement payment from any of the Defendants. They contend that nothing in the Funding and Status Quo Agreement requires them to pay Plaintiffs any amount of money. They argue that Georgia law does not recognize a carrier's right to recoupment of policy benefits from its insured. See, e.g. , Ill. Union Ins. Co. v. William C. Meredith Co. , No. 1:07-cv-1840-WBH, 2009 WL 10669607, at *3 (N.D. Ga. June 5, 2009).
Defendants respond that California law should apply, and make various arguments for why California law does not allow Plaintiffs to recoup the payments they seek. However, as the Court held supra , Georgia law applies.
However, Plaintiffs seek reimbursement based on the separate written agreement into which the parties entered. Although Defendants argue that the agreement does not require reimbursement, the agreement clearly allowed Plaintiffs to seek reimbursement, which they are doing in this lawsuit. Indeed, the very purpose of the agreement was for Plaintiffs to maintain the right to recoup the payment.
For the same reasons, Defendants' fourth and fifth affirmative defenses, that Plaintiffs' claims are barred by the voluntary payment doctrine and that Plaintiffs released or waived their claims based on the Funding and Status Quo Agreement, fail.
D. Waiver
Finally, Defendants argue that Plaintiffs waived their argument regarding late notice by failing to promptly seek declaratory relief. However, Plaintiffs learned in October 2015, after months of investigation, that Moore knew of the incident immediately after it occurred. Based on this information, they began evaluating whether a late-notice defense was proper. Then, in December, they issued their reservation of rights letter.
Georgia law provides that an insurer must seek immediate declaratory relief when an insured refuses to consent to a defense under reservation of rights. Facility Invs., LP v. Homeland Ins. Co. of N.Y. , 321 Ga.App. 103, 741 S.E.2d 228, 233 (2013). Here, although Defendants disagreed with Plaintiffs' letter regarding late notice, they never refused to consent to the defense under reservation of rights. Further, as discussed above, the parties contractually agreed that Plaintiffs were permitted to seek to recoup most of what they paid to settle the underlying case. Therefore, the Court concludes that Plaintiffs did not waive their argument regarding late notice. Summary judgment for Defendants is appropriate.
For this reason, Defendants' second affirmative defense, that Plaintiffs' claims are barred by the doctrines of waiver, estoppel, and/or laches, fails.
For the reasons discussed herein, Defendants' first affirmative defense, that the amended complaint fails to state a claim upon which relief may be granted, fails. Defendants do not appear to rely on their third affirmative defense (regarding forfeiture) in their briefing. The Court nonetheless determines that this defense does not apply.
IV. Conclusion
For the foregoing reasons, Plaintiffs' motion [31] for summary judgment is granted, and Defendants' cross-motion [39] for summary judgment is denied. Plaintiffs have no duty to indemnify or pay damages to Defendants stemming from the underlying tort action. Plaintiffs are entitled to recoup the sum of $275,000 from Defendants for a portion of the settlement. The Clerk is directed to close this case.
IT IS SO ORDERED this 4th day of April, 2019.