State Auto Property and Casualty Company v. Matty et al
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
STATE AUTO PROPERTY AND
CASE NO. 4:11-CV-14 (CDL)
FRANK GRIFFIN, KAREN GRIFFIN
and RACHEL GRIFFIN,
O R D E R
This action is the second declaratory judgment action filed
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
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,
liability claims was $100,000.
State Auto lost that action, and
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.
Specifically, State Auto
its initial decision to pay $100,000 into the
judgment/interpleader action and its subsequent payment of an
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.
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
documents, the Court finds that they are not relevant to the
For that reason, the subpoenas are quashed.
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
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
consideration it gives its own interest.’”
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
It is clear that the focus in a bad faith failure to settle
claim is on the conduct of the insurance company.
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
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
lay down a
“set up” an
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))).
Based on this dicta, State Auto argues that
Pl.’s Reply to Defs.’ Mot. to Quash
As previously noted, the issue for determination in a bad
faith failure to settle action is whether the conduct of the
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.
The Holt dicta, quoting the federal
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
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
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
relevance to the determination of bad faith on the part of the
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
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
Because the documents that State Auto seeks through its
subpoenas are not relevant and are not reasonably calculated to
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.
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.
lead to the discovery of
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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