DONALDSON v. OLD REPUBLIC INSURANCE COMPANY
Filing
14
ORDER granting 3 Motion to Dismiss for Failure to State a Claim. Ordered by US DISTRICT JUDGE CLAY D LAND on 5/11/2015 (vac).
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
BRYAN ALLEN DONALDSON,
*
Plaintiff,
*
vs.
*
CASE NO. 4:14-CV-256 (CDL)
OLD REPUBLIC INSURANCE COMPANY, *
Defendant.
*
*
O R D E R
Plaintiff
Bryan
Allen
Donaldson
was
involved
in
an
automobile accident with an eighteen-wheel tractor-trailer.
The
driver
Old
of
the
tractor-trailer
was
insured
by
Republic Insurance Company (“Old Republic”).
Defendant
Alleging that the
driver of the tractor-trailer was negligent, Donaldson sued Old
Republic
directly
in
the
Superior
Court
of
Muscogee
County
pursuant to Georgia’s Direct Action Statute, O.C.G.A. §§ 40-1112(c)
and
40-2-140(d)(4).
Old
Republic
timely
removed
action to this Court based on diversity of the parties.
Republic
now
moves
to
dismiss
the
action,
contending
the
Old
that
Alabama law applies, and that Alabama law does not authorize a
direct action against an insurance carrier until the injured
party obtains a judgment against the insured.
The Court agrees:
Alabama law applies, and Donaldson’s claim against Old Republic
is
premature.
The
Court,
therefore,
dismisses
Donaldson’s
claim.
DISCUSSION
For purposes of this motion, the following is undisputed:
the motor vehicle accident giving rise to this action occurred
in Auburn, Alabama, and Donaldson has not obtained a judgment
against the allegedly negligent driver insured by Old Republic.
Georgia law permits a direct action against an insurance carrier
under these circumstances, but Alabama law does not.
law applies, this action may proceed.
If Georgia
If Alabama law applies,
it must be dismissed.
A federal court sitting in diversity uses the choice-of-law
rules of the state in which it sits.
See Klaxon Co. v. Stentor
Elec. Mfg. Co., 313 U.S. 487, 496 (1941).
looks to Georgia’s choice-of-law rules.
Court
first
nature.
determines
whether
the
The Court, therefore,
Under those rules, the
issue
is
procedural
in
If it is, the principle of lex fori requires the Court
to apply the law of the forum.
Federated Rural Elec. Ins.
Exch. v. R.D. Moody & Assocs., Inc., 468 F.3d 1322, 1325 (11th
Cir. 2006) (per curiam).
Id.
If the issue is not procedural,
then the Court must determine the nature of the action.
cases,
the
Court
uses
the
law
of
the
state
where
occurred, according to the rule of lex loci delicti.
the
dispute
involves
the
validity,
2
nature,
In tort
the
tort
Id.
construction,
If
or
interpretation
of
a
contract,
then
the
Court
applies
the
principle of lex loci contractus and uses the law of the state
where the contract was formed.
I.
Id.
Is The Issue Procedural?
Donaldson brings this action pursuant to Georgia’s direct
action statute, which provides that an injured party can “join
in the same action the motor carrier and the insurance carrier.”
O.C.G.A.
Donaldson
§ 40-1-112(c);
contends
see
that
also
the
O.C.G.A.
direct
§ 40-2-140(d)(4).
action
statute
is
a
procedural rule because it allows an injured party to join an
insurance carrier to a
suit against the insured.
Donaldson
points to various cases describing the direct action statute,
when used as a joinder mechanism, as procedural.
See, e.g.,
Johnson v. Woodard, 208 Ga. App. 41, 46, 429 S.E.2d 701, 705
(1993) (Beasley, J., concurring in part and dissenting in part)
(“Whether
joinder
is
allowed
is
a
matter
of
procedure[.]”).
Thus, Donaldson contends that this dispute raises a procedural
issue, and that the rule of lex fori therefore requires the
Court to apply Georgia law to the dispute.
The Court concludes that Georgia’s direct action statute is
both procedural and substantive.
The statute allows an injured
party to join an insurance carrier to an action against the
insured.
an
But it also creates a separate cause of action against
insurance carrier, because it allows
3
an injured party to
recover
a
judgment
directly
against
the
insurance
carrier
without first obtaining a judgment against the insured.
In the
latter situation, the Court finds that the question of whether
an injured party may bring a separate suit against an insurance
carrier directly without first obtaining a judgment against the
insured is not sufficiently procedural to warrant application of
this forum’s law.
Little case law exists on this issue, but the
few federal district courts in Georgia that have addressed the
issue reached a similar conclusion.
Sur.
Co.,
234
Louisiana’s
F.
direct
Supp.
action
41,
42
statute
See Shapiro v Aetna Cas. &
(N.D.
Ga.
1963)
substantive,
(declaring
rather
than
procedural, in nature); see also Hidalgo v. Ohio Sec. Ins. Co.,
Civil Action No. 4:10-CV-183-HLM, 2011 U.S. Dist. LEXIS 46002,
at *9 (N.D. Ga. Feb. 24, 2011) (interpreting a dispute brought
pursuant to Georgia’s direct action statute as a suit sounding
in tort, not as one raising a procedural issue).
II.
Is the Claim Based in Tort or Contract?
Because the issue of whether Donaldson can sue Old Republic
directly
is
not
procedural,
the
Court
next
must
determine
whether Donaldson’s claim sounds in contract or tort.
Donaldson
argues that the claim sounds in contract because he is a thirdparty beneficiary to the contract between the insurance carrier
and the insured.
party
Notwithstanding Donaldson’s status as a third-
beneficiary,
the
present
4
dispute
does
not
involve
the
validity, nature, construction, breach, or interpretation of the
insurance
contract.
implicate
the
Donaldson’s
underlying
direct
insurance
action
contract—the
provides funds to satisfy the judgment—but the
based in contract.
claim
may
contract
claim is not
See Federated, 468 F.3d at 1325-26.
Donaldson’s claim is based on the tortious conduct of Old
Republic’s insured.
“While the cause of action . . . is not on
the tort, nevertheless the tort constitutes the real cause of
action,
and
the
liability
of
the
insurance
carrier
on
its
policy, issued as required by law, is merely ancillary . . . .”
Addington v. Ohio S. Express, Inc., 118 Ga. App. 770, 771-72,
165 S.E.2d 658, 659 (1968) (internal quotation marks omitted);
see also Md. Cas. Co. v. Dobson, 57 Ga. App. 594, 594, 196 S.E.
300, 302 (1938).
Consequently, under the principle of lex loci
delicti, the Court applies the law of the state where the tort
occurred.
Donaldson was injured in a car accident in Auburn, Alabama.
The
Court,
therefore,
must
apply
Alabama
law.
“[A]
direct
action against an insurance carrier [is] not allowable under
Alabama
law
because
an
injured
party
cannot
bring
a
direct
action against the insurance carrier, absent a final judgment
against its insured.”
894
So.
omitted);
2d
643,
see
State Farm Mut. Auto. Ins. Co. v. Brown,
648
also
(Ala.
Ala.
2004)
Code
5
(internal
§ 27-23-2.
quotation
Here,
marks
Donaldson
attempts to bring a claim against Old Republic without first
obtaining a final judgment against its insured.
does not
recognize this cause of action.
Alabama law
Consequently,
the
Court must dismiss Donaldson’s action.
III. Georgia’s Public Policy Exception
Donaldson
argues
that
even
if
traditional
choice-of-law
principles support the application of Alabama law, the Court
should
public
not
apply
policy
circumstances,
Alabama
of
the
courts
law
because
state
applying
of
it
is
contrary
Georgia.
Georgia
law
In
will
to
the
limited
displace
the
traditional choice-of-law analysis for the sake of fidelity to
Georgia’s public policy.
But this dispute does not call for
such extreme action—application of Alabama law to this dispute
does not substantially violate Georgia public policy.
Under Georgia law, courts do “not apply the substantive law
of the place where the tort was committed if application of the
foreign
law
‘contravenes
policy . . . .’”
[Georgia’s]
established
public
Alexander v. Gen. Motors Corp., 219 Ga. App.
660, 661, 466 S.E.2d 607, 609 (1995) (quoting S. Ry. Co. v.
Decker, 5 Ga. App. 21, 25, 62 S.E. 678, 680 (1908)), rev’d on
other grounds in Alexander v. Gen. Motors. Corp., 267 Ga. 339,
339, 478 S.E.2d 123, 123-24 (1996).
exception
applies
when
“the
foreign
Georgia’s public policy
statute
is
designed
to
redress an injury, but prescribes a form of redress which is
6
radically
system
dissimilar
of
omitted).
to
anything
jurisprudence.”
existing
Id.
in
(internal
[Georgia’s]
quotation
own
marks
The party seeking to invoke the exception bears the
burden of demonstrating that it applies.
Id.
Georgia’s direct action statute is designed “to protect the
public
against
injuries
caused
by
the
motor
carrier’s
negligence,” Andrews v. Yellow Freight Sys., Inc., 262 Ga. 476,
476, 421 S.E.2d 712, 713 (1992), and “facilitate suit against,
and liability of, [insurance] carriers.”
Johnson, 208 Ga. App.
at 45, 429 S.E.2d at 704.
Alabama also has a direct action statute, but it requires
the injured party to first obtain a judgment against the insured
before bringing a direct action against the insurance carrier.
Although
different
from
Georgia’s
statute,
action statute is not “radically dissimilar.”
Ga. App. at 661, 466 S.E.2d at 609.
Alabama’s
direct
Alexander, 219
An injured party, in both
Alabama and in Georgia, can sue an insurance carrier directly to
recover for their losses.
step to such actions:
Alabama simply adds an additional
An injured party must first obtain a
judgment against the policyholder, and then sue the insurance
carrier.
See Ala. Code § 27-23-2 (“[I]f the judgment [against
the insured] is not satisfied within 30 days after the date when
it
is
entered,
the
judgment
creditor
may
proceed
against
the . . . insurer to reach and apply the insurance money to the
7
satisfaction
of
the
judgment.”);
Brown,
894
So.
2d
at
648
(internal quotation marks omitted) (“The injured party, however,
can
bring
an
action
against
the
insurer
only
after
he
has
recovered a judgment against the insured”); Wiggins v. State
Farm Fire & Cas. Co., 686 So.2d 218, 220 (Ala. 1996) (concluding
that
an
insurance
injured
party
carrier,
as
can
long
against the insured).
bring
as
a
he
direct
first
action
receives
Thus, Alabama law still
against
a
an
judgment
achieves the
policy goal of facilitating suits against insurance carriers.
In sum, Alabama’s direct action statute “is not radically
dissimilar to Georgia law but rather pursues a similar public
policy by somewhat different methods.”
Alexander, 219 Ga. App.
at 662, 466 S.E.2d at 610.
The Court therefore finds that
Georgia’s
not
public
policy
does
prevent
the
application
of
Alabama law in this case.
CONCLUSION
Alabama law governs this dispute.
Donaldson
cannot,
at
this
time,
sue
And under Alabama law,
Old
Republic
directly.
Accordingly, this action is dismissed without prejudice.
IT IS SO ORDERED, this 11th day of May, 2015.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
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