State Auto Property and Casualty Company v. Matty et al

Filing 36

ORDER granting 26 Motion to Quash. Ordered by Judge Clay D. Land on 05/29/2012. (CGC)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
STATE AUTO PROPERTY AND
CASUALTY COMPANY,

*
*

Plaintiff,
*
vs.

CASE NO. 4:11-CV-14 (CDL)
*

FRANK GRIFFIN, KAREN GRIFFIN
and RACHEL GRIFFIN,

*

Defendants.

*
O R D E R

This action is the second declaratory judgment action filed
by

State

Auto

Property

and

Casualty

Company

(“State

Auto”)

arising from Rachel Griffin’s collisions with cyclists Matthew
Scott Matty and Michael Davis.

Matty died as a result of his

injuries suffered in the collisions, and Davis suffered serious
personal injuries.

At the time of the collisions, State Auto

insured Rachel Griffin and her parents, Frank and Karen Griffin.
In the first declaratory judgment action, State Auto sought a
declaration that the two collisions should be considered one
accident under the Griffin’s insurance policy, and therefore,
the

total

policy

limits

available

for

both

personal

injury

liability claims was $100,000.

State Auto lost that action, and

it

there

has

$100,000

been

determined

personal

injury

that

liability

were
limits

two

accidents

available

for

with
each

claim.

In this second action, State Auto seeks a declaration

that it did not act in bad faith in addressing the settlement
demands related to the collisions.
contends that
registry

of

Specifically, State Auto

its initial decision to pay $100,000 into the
the

Court

pursuant

to

its

first

declaratory

judgment/interpleader action and its subsequent payment of an
additional

$100,000

into

the

registry

of

the

Court

upon

a

determination that two accidents occurred negate any bad faith
that would be required to hold State Auto legally responsible
for any liability arising from these two accidents in excess of
the $200,000 that it has paid into the registry of the Court.
During
action,

discovery

State

Auto

in
sent

this

second

subpoenas

to

declaratory
the

judgment

attorneys

who

represented Matty and Davis in the first declaratory judgment
action, seeking correspondence regarding that action between the
attorneys for Matty and Davis.

State Auto seeks the documents

in an attempt to discover evidence that the attorneys colluded
to “set up” State Auto for a bad faith claim.

The attorneys for

Matty and Davis filed a motion to quash the subpoenas, claiming
that the subpoenas seek work product that was produced during a
joint

and

produced

common
the

privileged,

defense

responsive

for

in

camera

arrangement.
documents,
inspection.

The

which

attorneys
they

Having

have

claim

are

reviewed

the

documents, the Court finds that they are not relevant to the

2

issues
action.

to

be

decided

in

this

present

declaratory

judgment

For that reason, the subpoenas are quashed.
DISCUSSION

The issue presented in this declaratory judgment action is
whether State Auto acted in bad faith when it failed to settle
the underlying claims of Matty and Davis within its insureds’
liability policy limits.

See Southern Gen. Ins. Co. v. Holt,

262 Ga. 267, 268, 416 S.E.2d 275, 276 (1992) (“An insurance
company may be liable for damages to its insured for failing to
settle

the

claim

guilty

of

negligence,

compromise

the

of

an

injured
fraud,

claim.”).

person

or

To

bad

where

the

insurer

is

faith

in

failing

to

determine

whether

an

insurer

engaged in bad faith in its handling of a claim, the standard
applied by the Court (and by the factfinder if a genuine factual
dispute exists) is whether “the insurer, in view of the existing
circumstances,

has

accorded

the

insured

‘the

consideration it gives its own interest.’”

same

faithful

Id. at 269, 416

S.E.2d at 276 (quoting Great Am. Ins. Co. v. Exum, 123 Ga. App.
515, 519, 181 S.E.2d 704, 707 (1971)).

“[W]hen the [insurance]

company has knowledge of clear liability and special damages
exceeding the policy limits,” the issue is “whether the insurer
acted

unreasonably

settlement offer.”

in

declining

Id.

3

to

accept

a

time-limited

It is clear that the focus in a bad faith failure to settle
claim is on the conduct of the insurance company.

Consequently,

the Court cannot conceive of how correspondence between counsel
for the injured parties who obtained judgments in excess of the
insured’s policy limits could be relevant to a subsequent bad
faith failure to settle claim against the insurance company by
its insured.

State Auto suggests that such evidence may be

relevant based on the following dicta from the Georgia Supreme
Court’s opinion in Holt, which quoted a federal district court
judge from the district of Oregon as follows:
Nothing in this decision is intended to
rule of law that would mean that a
attorney under similar circumstances could
insurer for an excess judgment merely by
settle within the policy limits and by
unreasonably short time within which the
remain open.

lay down a
plaintiff's
“set up” an
offering to
imposing an
offer would

Pl.’s Reply to Defs.’ Mot. to Quash Subpoenas to Non-Parties 67, ECF No. 31 (quoting Holt, 262 Ga. at 269, 416 S.E.2d at 276
(quoting Grumbling v. Medallion Ins. Co, 392 F. Supp. 717, 721
(D. Or. 1975))).
“[c]ollaboration
Griffins]

to

Based on this dicta, State Auto argues that
among

‘set

up’

legitimate discovery.”
Subpoenas

to

counsel
a

bad

for
faith

[Matty,
case

is

Davis,
the

and

the

subject

of

Pl.’s Reply to Defs.’ Mot. to Quash

Non-Parties

11.

The

differently.

4

Court

interprets

Holt

As previously noted, the issue for determination in a bad
faith failure to settle action is whether the conduct of the
insurance

company,

under

all

of

the

relevant

circumstances,

demonstrates that it acted in bad faith in its handling of the
claims presented to it.

An indicator of that bad faith is the

extent to which the insurer favored its own interest over the
interest of its insured.
district

judge

from

motivation

of

the

resolution

of

this

The Holt dicta, quoting the federal

Oregon,

insured’s
issue.

does

not

counsel
It

indicate

is

simply

that

the

to

the

that

the

pertinent
indicates

imposition of an unreasonably short time within which an offer
to settle would remain open is a relevant factor in evaluating
whether the insurance company acted unreasonably in failing to
accept such an offer.

The Court does not understand how the

insured’s motivation has any bearing on whether the insurance
company

responded

motivation,
relevant.

such

properly.
as

an

Of

course,

unreasonably

the

short

result

of

deadline,

that

may

be

It is relevant not because the insured or its counsel

was attempting to “set up” the insurance company but because the
amount of time that the insurance company was given to respond
to

an

offer

of

settlement

goes

directly

to

the

insurance

company’s conduct and the constraints on its ability to respond.
The Court is unpersuaded that the Holt “set up” dicta means that
the subjective intent of the parties or their attorneys has any

5

relevance to the determination of bad faith on the part of the
insurance company.

Even if the attorneys for Matty and Davis

did have the subjective intent to “set up” State Auto for a bad
faith claim, their intent

simply

is not relevant to whether

State Auto’s response was in bad faith.

State Auto has pointed

the Court to no holding of any Georgia appellate court that
supports State Auto’s “set up” theory.

Moreover, the Court does

not find the authority relied on by State Auto to be persuasive
on the point for which State Auto relies on it. 1

If State Auto

wishes to plow new ground, it will have to wait until the case
gets to the Eleventh Circuit, at which time the Court of Appeals
may have the opportunity to refer the question to the Georgia
Supreme Court.2
CONCLUSION
Because the documents that State Auto seeks through its
subpoenas are not relevant and are not reasonably calculated to

1

Under State Auto’s theory, if a lawyer for an insured drafted a
letter consistent with Holt and part of his motivation in doing so was
his hope that it would be rejected so that he could pursue a bad faith
claim, then his motivation would be relevant in evaluating whether the
insurance company acted in bad faith. The Court is convinced that the
Georgia Supreme Court never envisioned that its quotation of a federal
judge’s dicta would ever be carried to this extreme.
2
This Court recognizes that it has the authority to certify the
question to the Georgia Supreme Court, but it finds the resolution of
the issue to be so clear, even as a matter of first impression, that
referral to the Georgia Supreme Court would be a waste of that Court’s
limited time and resources and would unnecessarily delay the
disposition of this action.

6

lead to the discovery of

admissible

evidence,

the Motion to

Quash those subpoenas (ECF No. 26) is granted.

IT IS SO ORDERED, this 29th day of May, 2012.
S/Clay D. Land
CLAY D. LAND
UNITED STATES DISTRICT JUDGE

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