Liberty Mutual Fire Insurance Company v. Coker et al
Filing
13
ORDER denying 5 Motion to Dismiss Complaint. Ordered by Judge Clay D. Land on 11/15/2011 (ajp)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
ATHENS DIVISION
LIBERTY MUTUAL FIRE
INSURANCE COMPANY,
*
*
Plaintiff,
*
vs.
CASE NO. 3:11-CV-66 (CDL)
*
GARY WAYNE COKER and
TERESINA COKER,
*
Defendants.
*
O R D E R
Plaintiff
Liberty
Mutual
Fire
Insurance
Company
(“Plaintiff”) brings this action, pursuant to the Declaratory
Judgment Act, 28 U.S.C. § 2201, seeking a determination of its
rights
and
obligations
under
two
insurance
policies
to
pay
uninsured motorist benefits to Defendants Gary Wayne Coker and
Teresina
Coker
(collectively
“Defendants”).
Defendants
seek
dismissal of Plaintiff‟s Complaint based on lack of personal
jurisdiction, the absence of a justiciable controversy, and the
existence of a parallel pending state court action.
to Dismiss Pl.‟s Compl. (ECF No. 5).
Defendants‟ motion is denied.
Defs.‟ Mot.
For the following reasons,
FACTUAL BACKGROUND
Defendant
Gary
Coker
was
involved
in
a
motor
vehicle
accident in Georgia while driving a truck owned by his employer.
Compl. ¶ 9, ECF No. 1; Br. in Opp‟n to Defs.‟ Mot. to Dismiss
[hereinafter Br. in Opp‟n] Attach. 2, Summers Aff. ¶¶ 6-7, ECF
No. 11-2.
He suffered personal injuries which he claims were
caused by the negligence of another driver who had liability
insurance coverage with limits of $25,000.
Plaintiff insured
the vehicle driven by Mr. Coker through his employer.
vehicle was principally garaged and used in Georgia.
¶ 10;
Summers
Aff.
¶
6.
After
the
accident,
That
Compl.
Mr.
Coker‟s
attorney sent a letter to Mr. Coker‟s employer notifying it of
the accident, informing it that Mr. Coker intended to pursue an
uninsured
motorist
claim,
and
seeking
information
about
any
uninsured motorist coverage on the vehicle driven by Mr. Coker.
Br. in Opp‟n Attach. 1, Sleezer Aff. ¶ 3, ECF No. 11-1; Sleezer
Aff. Ex. 1, Letter from Y. Smolar to K. Anders 1, Oct. 24, 2007,
ECF
No.
11-1
[hereinafter
Oct.
24,
2007
Letter].
Plaintiff
responded to that letter informing Mr. Coker‟s attorney that its
named
insured,
motorist
Dismiss
Mr.
coverage
Pl.‟s
Coker‟s
pursuant
Compl.
employer,
to
Georgia
[hereinafter
had
law.
Defs.‟
rejected
Defs.‟
Mot.
to
uninsured
Mot.
to
Dismiss]
Attach. 2, Smolar Aff. ¶ 6, ECF No. 5-2; Smolar Aff. Ex. A,
2
Letter from J. Barczykowski to Y. Smolar 1, Nov. 10, 2007, ECF
No. 5-2 [hereinafter Nov. 10, 2007 Letter].
Mr. Coker, along with his wife, sued the alleged negligent
driver in the Superior Court of Walton County, Georgia (“The
Coker Action”), Compl. Ex. A, Compl. in the Superior Ct. of
Walton County, Sept. 14, 2009, ECF No. 1-1, and also served
Plaintiff as an alleged uninsured motorist carrier under Georgia
law, Smolar Aff. Ex. B, Notice of Filing, Sheriff‟s Entry of
Service
for
Liberty
Mutual
Insurance
Company,
ECF
No.
5-2.
Plaintiff did not make an entry of appearance in that action.
Smolar Aff. ¶ 9.
Mr. and Mrs. Coker ultimately obtained a
consent judgment against the negligent motorist in the amount of
$5,500,000 and provided the negligent motorist with a limited
release
upon
the
tender
limits of $25,000.
ECF No. 1-2
Release
of
that
motorist‟s
to
policy
Compl. ¶¶ 15-16; Compl. Ex. B, Consent J.,
[hereinafter Consent J.];
Pursuant
liability
O.C.G.A.
§
[hereinafter Limited Release].
Compl. Ex. C, Limited
33-24-41.1
¶
3,
ECF
No.
1-3
The Cokers subsequently made a
demand upon Plaintiff for $5,000,000, claiming that they had
uninsured motorist coverage under two insurance policies issued
by Plaintiff to Mr. Coker‟s employer.
Compl. ¶ 17; Compl. Ex.
D, Letter from M. Kendall to Liberty Mutual 3, Mar. 14, 2011,
ECF No. 1-4 [hereinafter Demand Letter].
Plaintiff subsequently
filed this present action seeking a declaration that no coverage
3
exists
because
pursuant
Georgia
to
its
named
Georgia
because
insured
law.
rejected
Plaintiff
Defendants,
who
uninsured
brought
presently
this
reside
coverage
action
in
in
Alabama,
were residents of Georgia at the time that the events giving
rise to this action occurred, and they have transacted business
in Georgia for purposes of the Georgia Long-Arm Statute.
DISCUSSION
I.
Defendants’ Motion
Jurisdiction
to
Dismiss
for
Lack
of
Personal
“A federal court sitting in diversity undertakes a two-step
inquiry in determining whether personal jurisdiction exists: the
exercise of jurisdiction must (1) be appropriate under the state
long-arm statute and (2) not violate the Due Process Clause of
the
Fourteenth
Amendment
to
the
United
States
Constitution.”
Diamond Crystal Brands, Inc. v. Food Movers Int’l, Inc., 593
F.3d 1249, 1257-58 (11th Cir. 2010) (internal quotation marks
omitted).
Plaintiff maintains that Defendants are subject to personal
jurisdiction under the “transaction of business” prong of the
Georgia Long-Arm Statute.
Defendants
are
Preliminarily, it appears clear that
non-residents
and
thus
fall
within
the
application of the Georgia Long-Arm statute, O.C.G.A. § 9-10-91.
They were residents of Georgia at the time of the events giving
rise to this action,
but
they
4
subsequently moved to Alabama
where
they
resided
when
Thus,
they
qualify
as
jurisdiction.
they
were
served
nonresidents
for
with
purposes
this
action.
of
long-arm
See O.C.G.A. § 9-10-90.
The long-arm statute provides in relevant part that “[a]
court of this state may exercise personal jurisdiction over any
nonresident . . ., as to a cause of action arising from [the
nonresident‟s transaction of business within this state] in the
same manner as if he or she were a resident of this state.”
O.C.G.A.
§
9-10-91(1).
“„[T]ransacts
any
business‟
requires
that the „nonresident defendant has purposefully done some act
or consummated some transaction in [Georgia].‟”
Diamond Crystal
Brands, Inc., 593 F.3d at 1264 (second alteration in original)
(quoting Aero Toy Store, LLC v. Grieves, 279 Ga. App. 515, 517,
631 S.E.2d 734, 737 (2006)).
A defendant need not enter the
state to transact business, and “[a]s a result, a nonresident‟s
mail,
telephone
calls,
and
other
„intangible‟
acts,
though
occurring while the defendant is physically outside of Georgia,
must be considered.”
The
Georgia
Court
finds
sufficient
Id.
that
to
Defendants
confer
Georgia‟s long-arm statute.
transacted
personal
business
jurisdiction
in
under
At the time of the accident, Mr.
Coker was driving a car in Georgia owned by his employer which
was garaged and principally used in Georgia.
Summers Aff. ¶¶ 6-7.
Compl. ¶ 9-10;
Mr. Coker worked in Georgia and was within
5
the scope of his employment in Georgia.
Defs.‟ Mot. to Dismiss
Attach. 3, G. Coker Aff. ¶ 5, ECF No. 5-3; Summers Aff. ¶ 4.
The
Cokers
damages
sued
and
Georgia
negligent
subsequently
with
Compl. ¶¶
the
that
12,
entered
motorist
14-15;
motorist
Consent
into
who
a
was
J.
in
Georgia
consent
a
for
judgment
Georgia
Pursuant
to
tort
in
resident.
the
consent
judgment, the Cokers executed a limited liability release with
the negligent motorist that was signed in Georgia.
Limited Release 5-6.
Compl. ¶ 16;
The terms of the limited liability release
provided that Georgia law governed the release and it was to be
construed pursuant to Georgia law.
their
demand
letter
to
Id. ¶ 6.
Plaintiff
through
The Cokers sent
Georgia
lawyers
to
Plaintiff‟s registered agent for service of process in Georgia,
demanding
payment
in
obtained in Georgia.
demand
letter
makes
satisfaction
of
the
consent
judgment
Compl. ¶ 17; Demand Letter 1, 3.
a
claim
for
uninsured
motorist
The
benefits
under insurance policies issued to Mr. Coker‟s employer which
employed
conduct
Mr.
Coker
amounts
to
in
Georgia.
the
The
transaction
Court
of
finds
business
that
in
this
Georgia
sufficient to satisfy the Georgia long-arm statute.
The Court also finds that the exercise of jurisdiction over
the
Defendants
process
rights.
in
Georgia
The
Due
does
not
Process
violate
Clause
Defendants‟
requires
“that
due
the
defendant‟s conduct and connection with the forum State are such
6
that
he
should
there.”
reasonably
anticipate
haled
into
court
Burger King v. Rudzewicz, 471 U.S. 462, 474 (1985)
(internal quotation marks omitted).
be
being
exercised
over
defendants
that
Personal jurisdiction can
have
established
“certain
minimum contacts with [the State] such that the maintenance of
the suit does not offend traditional notions of fair play and
substantial justice.”
Int’l Shoe Co. v. Wash., 326 U.S. 310,
316 (1945) (internal quotation marks omitted).
As previously explained, Defendants lived in Georgia at the
time
of
the
Defendants
accident,
initiated
a
and
Mr.
lawsuit
in
Coker
worked
Georgia
in
against
Georgia.
a
Georgia
resident, making “full use of the procedures available to [them]
under [Georgia] law.”
Cir. 1984).
Huff v. Pharr, 748 F.2d 1553, 1555 (11th
After executing a consent judgment in the Georgia
action, Defendants made a demand for payment in satisfaction of
the consent judgment by sending a demand letter to Plaintiff in
Georgia.
In the demand letter, Defendants asserted Georgia law
as the basis for their claims for benefits under the insurance
policies issued to Mr. Coker‟s employer that he worked for in
Georgia.
The action arises out of Defendants demand for payment
of benefits for the accident that occurred in Georgia, under
policies issued to a company Mr. Coker worked for in Georgia, in
satisfaction
Therefore,
of
the
a
consent
Court
finds
judgment
that
7
entered
Defendants
in
have
Georgia.
sufficient
minimum contacts with Georgia, and the exercise of jurisdiction
does
not
offend
“traditional
substantial justice.”
notions
of
fair
play
and
Int’l Shoe Co., 326 U.S. at 316 (internal
quotation marks omitted).
II.
Defendants’ Motion to Dismiss for Lack of Subject Matter
Jurisdiction
Defendants
argue
that
the
Court
lacks
subject
matter
jurisdiction because Plaintiff denied coverage for the accident
and therefore seeks only an advisory opinion validating that
denial.
In proceedings under the Declaratory Judgment Act, “the
threshold question is whether a justiciable controversy exists.”
Atlanta Gas Light v. Aetna Cas. and Sur. Co., 68 F.3d 409, 414
(11th Cir. 1995).
The Declaratory Judgment Act provides that
“[i]n a case of actual controversy within its jurisdiction . . .
any
court
of
the
United
States,
upon
the
filing
of
an
appropriate pleading, may declare the rights and other legal
relations
whether
of
or
any
not
interested
further
28 U.S.C. § 2201(a).
party
relief
seeking
is
or
such
could
declaration,
be
sought.”
“Congress limited federal jurisdiction
under the Declaratory Judgment Act to actual controversies, in
statutory recognition of the fact that federal judicial power
under Article III, Section 2 of the United States Constitution
extends only to concrete „cases or controversies.‟”
Light Co., 68 F.3d at 414.
Atlanta Gas
A party is required to show “that at
8
the time the complaint was filed, he has suffered some actual or
threatened injury resulting from the defendant‟s conduct, that
the injury fairly can be traced to the challenged action, and
that the injury is likely to be redressed by a favorable court
disposition.”
Id.
(internal quotation marks omitted).
To
evaluate whether the plaintiff has met this burden, the Court
“look[s]
to
the
state
of
affairs
as
of
the
filing
of
the
complaint; a justiciable controversy must have existed at that
time.”
Id. (internal quotation marks omitted).
A.
November 10, 2007 Letter
Defendants
argue
that
Plaintiff
denied
the
existence
of
uninsured motorist coverage in its November 10, 2007 Letter and
no justiciable controversy exists because any decision of the
Court
would
merely
determine
whether
Plaintiff‟s
denial
of
coverage for Defendants‟ claims was proper.1
The Court rejects
this
Letter,
argument.
In
the
November
10,
2007
Plaintiff
informed Defendants‟ counsel that its named insured had rejected
1
Plaintiff argues that the November 10, 2007 was made in response to a
written
request
for
insurance
coverage
information
under
O.C.G.A. § 33-3-28(a), and “[t]he information provided to a claimant
or his attorney as required by [O.C.G.A. § 33-3-28(a)] shall not
create a waiver of any defenses to coverage available to the insurer
and shall not be admissible in evidence unless otherwise admissible
under Georgia law.”
O.C.G.A. § 33-3-28(c).
The Court finds it
unnecessary to decide whether the November 10, 2007 Letter can be
admitted as evidence of a denial of Defendants‟ claims because the
Court finds that the November 10, 2007 Letter does not constitute a
denial of Defendants‟ claims for uninsured motorist benefits under the
policies.
9
uninsured
existed
motorist
under
employer.
coverage,
any
of
and
therefore,
Plaintiff‟s
no
policies
such
with
At that time, Plaintiff did not
coverage
Mr.
deny
Coker‟s
Defendants‟
claim for benefits because no such claim had been presented.
Defendants had merely notified Mr. Coker‟s employer of potential
claims and requested information regarding
insurance
policies
that might cover their potential claims.
See Oct. 24, 2007
Letter (placing Mr. Coker‟s employer “on formal notice of any
claims
that
[Defendants]
may
have
under
[his
employer‟s]
automobile policy of insurance as a result of the incident for
any uninsured or underinsured motorist claims,”
information
regarding
potential claims).
Defendants‟
insurance
coverage
and requesting
available
to
cover
The November 10, 2007 Letter responded to
request
for
uninsured
motorist
benefits
policy
information for potential claims and stated that Mr. Coker‟s
employer rejected uninsured motorist benefits.
Defendants did not make a demand for payment of the claims
until
they
sent
their
demand
letter
directly
to
Plaintiff.
Until Defendants sent the demand letter, Plaintiff was unaware
of Defendants‟ current arguments that the rejection of uninsured
motorist
benefits
coverage
was
ineffective
policy provided uninsured motorist benefits.
or
that
another
Sleezer Aff. ¶ 10.
Upon receiving the demand letter, Plaintiff filed this action
10
seeking a declaration from the Court as to whether the policies
provided coverage for Defendants‟ claims.
The Court finds that the November 10, 2007 Letter does not
eliminate the presence of a justiciable controversy.
B.
The Coker Action
Defendants also contend that Plaintiff failed to answer or
otherwise
respond
in
the
Cokers‟
Action
against
the
alleged
underinsured motorist, and that this failure to participate in
that
action
uninsured
amounts
motorist
to
a
denial
benefits.
of
Defendants‟
Although
claims
Defendants
for
served
Plaintiff with the complaint in the Coker Action, the option of
becoming a party to the tort action is left up to the uninsured
motorist carrier under Georgia law.
See O.C.G.A. § 33-7-11(d)
(providing that the uninsured motorist carrier must be served in
the tort action but “shall have the right to file pleadings and
take other action allowable by law in the name of either the
known owner or operator or both or itself.”); see also Allstate
Ins. Co. v. Baldwin, 244 Ga. App. 664, 666, 536 S.E.2d 558, 560
(2000) (noting the “uninsured motorist insurance carrier could
not be forced to become a party to [the] tort action; [the
insurer] could opt to participate in the proceedings in its own
name, in [the uninsured motorist‟s name], or in both or could do
nothing.”).
Here, Plaintiff did not file an answer or otherwise
respond in its own name, and thus did not become a party to the
11
Coker Action.
Plaintiff‟s decision not to respond in the Coker
Action prevented insurance coverage from becoming an issue.
See
Knight v. Ga. Farm Bureau Mut. Ins. Co., 184 Ga. App. 312, 315,
361 S.E.2d 190, 193 (1987) (noting that when an insurer “is not
a party to the damage [action]. . . the question of its coverage
is
not
in
quotation
issue
marks
there.”)
omitted).
(alteration
The
Court
in
original)
finds
that
(internal
Plaintiff‟s
decision not to become a party or raise coverage issues in the
Coker Action was an option legally available to Plaintiff under
Georgia law and does not somehow operate as a denial of coverage
for the claims.
Defendants claim that Plaintiff “inexplicably delayed” in
filing the declaratory judgment action because Plaintiff waited
until the consent judgment was rendered in the Coker Action and
waited until Plaintiff faced bad faith penalties.
Under Georgia
law, a judgment against the uninsured motorist in the underlying
action is a condition precedent to suit against the uninsured
motorist carrier.
Kent v. State Farm Mut. Ins. Co., 233 Ga.
App. 564, 565, 504 S.E.2d 710, 712-13 (1998).
Notwithstanding
Defendants contention that Plaintiff “inexplicably delayed,” the
Court concludes that the existence of the judgment in the Coker
Action
and
Defendants‟
demand
for
payment
demonstrates
justiciable controversy exists ripe for adjudication.
a
Finally,
although the sixty day deadline for bad faith damages has passed
12
since the filing of this action, that does not moot the question
of whether coverage exists under the policies.
Court
finds
it
has
subject
matter
Accordingly, the
jurisdiction
to
hear
the
dispute.
III. Defendants’ Motion to Dismiss in Favor of Pending State
Court Action
Defendants seek to have this action dismissed even if the
Court finds personal and subject matter jurisdiction, arguing
that
the
Court
should
decline
parallel state proceeding.
post-judgment
Plaintiff
discovery
seeks
to
jurisdiction
in
light
of
a
The Coker Action remains pending for
and
collection
challenge
the
proceedings.
validity
of
Since
the
consent
judgment in that action as it affects Plaintiff‟s liability for
uninsured motorist benefits, Defendants contend that this Court
should
exercise
discretion
and
defer
to
those
state
court
proceedings.
“The Declaratory Judgment Act is „an enabling Act, which
confers a discretion on courts rather than an absolute right
upon the litigant.‟”
Ameritas Variable Life Ins. Co. v. Roach,
411 F.3d 1328, 1330 (11th Cir. 2005) (quoting Wilton v. Seven
Falls Co., 515 U.S. 277, 287 (1995)).
Act
“only
gives
the
federal
The Declaratory Judgment
courts
competence
to
make
a
declaration of rights; it does not impose a duty to do so.”
Id.
In
the
Brillhart
v.
Excess
Ins.
Co.,
13
316
U.S.
491
(1942),
Supreme Court reasoned that “it would be uneconomical as well as
vexatious
for
a
federal
court
to
proceed
in
a
declaratory
judgment suit where another suit is pending in a state court
presenting the same issues, not governed by federal law, between
the same parties.”
Brillhart, 316 U.S. at 495.
The Court there
remanded the case to the district court to determine “whether
the questions in controversy between the parties to the federal
suit,
and
which
are
not
foreclosed
under
the
applicable
substantive law, can be better settled in the proceeding pending
in the state court.”
Id.
According to the Supreme Court,
“[g]ratuitous interference with the orderly and comprehensive
disposition of a state court litigation should be avoided.”
Id.
The Court finds that abstention in the present case is not
warranted.
First, Plaintiff is not a party in the Coker Action.
See Baldwin, 244 Ga. App. at 666, 536 S.E.2d at 560 (noting the
“uninsured motorist insurance carrier could not be forced to
become a party to [the] tort action; [the insurer] could opt to
participate
in
the
proceedings
in
its
own
name,
in
[the
uninsured motorist‟s name], or in both or could do nothing.”).
Moreover, the state court proceeding does not involve the same
issues that are presented in this declaratory judgment action.
Under Georgia law, insurance coverage issues are not addressed
in the tort action until the insurer opts to participate in its
own name.
See Knight, 184 Ga. App. at 315, 361 S.E.2d at 193
14
(noting the insurer was “not a party to the damage [action] and
the
question
of
its
coverage
(alteration
in
original)
Accordingly,
a
parallel
is
(internal
state
not
in
issue
there.”)
quotation
marks
omitted).
proceeding
involving
the
same
issues and the same parties does not exist.
Further,
upon
review
of
guideposts
set
forth
by
the
Eleventh Circuit in Ameritas Variable Life Ins. Co. v. Roach,
411
F.3d
1328
(11th
Cir.
2005)
to
help
determine
whether
abstention in favor of a state proceeding is appropriate, the
Court
finds
that
dismissal
of
the
action
is
not
warranted. 2
Based on the Court‟s analysis of the Ameritas guideposts, the
Court finds that entertaining the action will not result in the
“gratuitous” or inappropriate interference with a state court
proceeding.
2
The factors outlined in Ameritas are: (1) the strength of the state‟s
interest in having the issues raised decided in the state courts; (2)
whether judgment in the federal declaratory action would settle the
controversy; (3) whether the federal declaratory action would serve a
useful purpose in clarifying the legal relations at issue; (4) whether
the declaratory remedy is being used merely for the purpose of
procedural fencing; (5) whether the use of a declaratory action would
increase the friction between the state and federal courts; (6)
whether there is an alternative remedy that is more effective; (7)
whether the underlying factual issues are important to an informed
resolution of the case; (8) whether the state trial court is in a
better position to evaluate those factual issues than is the federal
court; and (9) whether there is a close nexus between the underlying
factual and legal issues and state law or public policy, or whether
federal common or statutory law dictates a resolution of the
declaratory judgment action. Ameritas, 411 F.3d at 1331.
15
CONCLUSION
For
the
reasons
explained
above,
Defendants‟
Motion
to
Dismiss Plaintiff‟s Complaint (ECF No. 5) is denied.
IT IS SO ORDERED, this 15th day of November, 2011.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE
16
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