OWNERS INSURANCE COMPANY v. LOPEZ et al

Filing 43

ORDER denying 18 Motion for Summary Judgment. Ordered by US DISTRICT JUDGE CLAY D LAND on 09/15/2015 (vac)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
OWNERS INSURANCE COMPANY,

*

Plaintiff,

*

vs.

*
CASE NO.

4:14-CV-290 (CDL)

NICOLE LOPEZ, DANIEL LOPEZ, and *
GRAYHAWK HOMES, INC.,
*
Defendants.
*
O R D E R
Defendants
constructed
After

Nicole

by

and

Defendant

becoming

Daniel

Grayhawk

dissatisfied

Lopez
Homes,

with

the

purchased
Inc.

a

(“Grayhawk”).

quality

of

construction, they brought a claim against Grayhawk.
notified
Company

its

liability

(“Owners”),

representation

of

of

insurance
the

Grayhawk

carrier,

claim.
under

a

Owners

Owners

home

Grayhawk
Insurance

undertook

reservation

the

of

the

rights.

Owners now contends that it was not notified of the claim in a
timely manner, and it seeks to be relieved of its responsibility
to defend or indemnify Grayhawk in the underlying litigatqion.
Presently pending before the Court is Owners’ motion for summary
judgment

on

its

declaratory

judgment

claim.

Owners motions for a preliminary injunction.
finds

that

a

genuine

factual

dispute

Alternatively,
Because the Court

exists

as

to

whether

Grayhawk notified Owners in a timely manner, Owners’ motion for
summary judgment (ECF No. 18) is denied.

Because the present

record does not establish a substantial likelihood that Owners
will prevail on its untimely notice contention, Owners is not
entitled to a preliminary injunction.
SUMMARY JUDGMENT STANDARD
Summary judgment may be granted only “if the movant shows
that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law.”
Civ. P. 56(a).

Fed. R.

In determining whether a genuine dispute of

material fact exists to defeat a motion for summary judgment,
the evidence is viewed in the light most favorable to the party
opposing summary judgment, drawing all justifiable inferences in
the opposing party’s favor.
477 U.S. 242, 255 (1986).

Anderson v. Liberty Lobby, Inc.,
A fact is material if it is relevant

or necessary to the outcome of the suit.

Id. at 248.

A factual

dispute is genuine if the evidence would allow a reasonable jury
to return a verdict for the nonmoving party.

Id.

BACKGROUND
The record viewed in the light most favorable to Defendants
reveals the following:
Nicole and Daniel Lopez bought a home built by Grayhawk in
August
Lopezes

2010.
noticed

Over

two

large

years

cracks

later,
in

2

the

in

November

walls,

2012,

baseboards,

the
tile

floors,

and

exterior

builder, Grayhawk,
2013.

of

bricks.

The

Lopezes

notified

the problems with the home

their

in January

Grayhawk inspected the home and determined that it was

“settling” due to soft soil.

Def.’s Resp. to Mot. for J. on the

Pleadings Attach. 1, Erickson Aff. ¶ 6, ECF No. 22-1.

Grayhawk

had previously encountered wet soil when it was constructing the
Lopez home.
system.

Grayhawk hardened the soil by installing a drain

Def.’s Resp. to Mot. for Summ. J. Attach. 1, Erickson

Aff. ¶ 5, ECF No. 40-1.

When the soft soil problem reemerged in

2013, the President of Grayhawk determined that it was “not
unusual” and installed another drain system.

Id. ¶ 6-7.

After

installing the second drain system, Grayhawk did not receive any
more complaints from the Lopezes and therefore assumed that it
had fixed the settling problem.
Grayhawk also believed that any remaining problems with the
home

would

be

resolved

through

the

Lopezes’

home

warranty.

Def.’s Resp. to Mot. for J. on the Pleadings Attach. 1, Erickson
Aff.

¶ 9.

warranty,

The

Lopezes

filed

Bonded

Builder

Warranty

problems in January 2013.

a

claim
Group,

against
for

their

the

home

settling

The warranty group did a nine-month

investigation of the Lopez home (from January through September
2013) and never indicated that it would deny coverage.
But on November 12, 2013, Grayhawk received a letter from
the Lopezes stating that the warranty group denied coverage on

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the Lopezes’ claim and that the Lopezes intended to sue Grayhawk
for the problems with the home.

Id. ¶ 11.

Fifteen days later,

on November 27, 2013, Grayhawk notified Owners Insurance Company
that the Lopezes might make a claim against it.
The Lopezes then brought an arbitration proceeding against
Grayhawk on a variety of claims related to the problems with the
home.

Owners has provided Grayhawk’s defense in the arbitration

under a reservation of rights.

Owners asks the Court to issue a

declaratory judgment, or alternatively a preliminary injunction,
relieving it of its duty to defend or indemnify Grayhawk in the
arbitration.
DISCUSSION
I.

Motion for Summary Judgment
Grayhawk’s insurance policy required it to notify Owners

“as

soon

as

practicable

result in a claim.”
ECF

No.

18-3.

of

an

‘occurrence’ . . . which

may

Pl.’s Mot. for Summ. J. Ex. A., Policy 47,

Owners

contends

that

Grayhawk

knew

of

an

“occurrence” in January 2013 when the Lopezes first notified
Grayhawk of the problems with the home, and yet failed to notify
Owners until ten months later, in November 2013.

Owners argues

that the ten-month delay is unreasonable as a matter of law.
Because timely notice is a condition precedent to coverage under
the

policy,

Owners

asserts

that

it

Grayhawk in the arbitration proceeding.

4

has

no

duty

to

defend

In Georgia, “[a]s a general rule, limitations in insurance
policies requiring the insured to report an incident ‘as soon as
practicable’ are subject to a factual determination.”

Newberry

v. Cotton States Mut. Ins. Co., 242 Ga. App. 784, 785, 531
S.E.2d 362, 364 (2000) (quoting Guar. Nat’l Ins. Co. v. Brock,
222 Ga. App. 294, 295, 474 S.E.2d 46, 48 (1996)).

Questions

regarding timely notice are typically for a jury to resolve.
“In many cases an insured may be able to present evidence of
excuse or justification for the delay.”

Gibson v. Dempsey, 167

Ga. App. 23, 24, 306 S.E.2d 32, 33 (1983) (quoting Richmond v.
Ga. Farm Bureau Mut. Ins. Co., 140 Ga. App. 215, 220, 231 S.E.2d
245, 249 (1976)).

“Whether the excuse or justification was

sufficient and whether the insured acted diligently in giving
the notice ‘are generally questions of fact, to be determined by
the jury, according to the nature and circumstances of each
individual case.’”

Plantation Pipeline Co. v. Royal Indem. Co.,

245 Ga. App. 23, 25, 537 S.E.2d 165, 167 (2000) (quoting S. Tr.
Ins. Co v. Clark, 148 Ga. App. 579, 582, 251 S.E.2d 823, 827
(1978)).
Courts applying Georgia law have occasionally removed the
timely

notice

insured’s

question

unexcused

and

from

the

jury

significant

and

delay

in

insurer was unreasonable as a matter of law.

decided

that

notifying

an

their

See, e.g., Ill.

Union Ins. Co. v. Sierra Contracting Corp., 744 F. Supp.2d 1349,

5

1352 (N.D. Ga. 2010) (finding a delay unreasonable as a matter
of law because the insured did “not offer any justification for
this nine-month delay”) (emphasis added); Richmond, 140 Ga. App.
at 220-22, 231 S.E.2d at 249-50 (concluding that an eight-month
delay was unreasonable as a matter of law because the insured
knew of the occurrence and delayed simply because the insured
concluded that he was without fault).
Grayhawk

asserts

that

it

This is not such a case.

notified

Owners

soon

after

learning that the Lopezes intended to bring a claim against it
personally.

Although Grayhawk became aware of the problems with

the Lopezes’ home in January 2013, Grayhawk contends that it
believed that the warranty group would resolve any claim brought
by the Lopezes.

The President of Grayhawk testified that he

knew that the Lopezes filed a claim against their home warranty
for the problems with the home.

Def.’s Resp. to Mot. for J. on

the Pleadings Attach. 1, Erickson Aff. ¶ 9.
that

the

warranty

group

would

cover

the

Grayhawk assumed
claim

because

the

warranty group did a nine-month investigation of the Lopezes’
home

without

Fifteen

days

ever

indicating

after

Grayhawk

that
learned

it

would

that

the

deny

coverage.

warranty

group

denied coverage and that the Lopezes intended to hold it liable
for the problems with the home, it gave Owners notice of the
claim.

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Grayhawk also presents evidence that it believed that it
had

fixed

the

system.

settling

Grayhawk

because

the

drain

emerged

during

problem

contends
system

that

solved

construction

by

of

installing

this
the

the

belief
soft

home,

another
was

soil
and

drain

reasonable

problem
because

that
after

Grayhawk installed the drain system in January, it received no
further complaints from the Lopezes until November.1
Based

on

the

present

record,

a

genuine

factual

dispute

exists as to whether Grayhawk gave Owners notice as soon as
practicable.

“[A]n insured is not ‘required to foresee every

possible claim, no matter how remote,’ that might arise from an
event and give notice of it to his insurer.”

Forshee v. Emp’rs

Mut. Cas. Co., 309 Ga. App. 621, 623, 711 S.E.2d 28, 31 (2011)
(quoting Guar. Nat’l Ins. Co. v. Brock, 222 Ga. App. 294, 295,
474 S.E.2d 46, 48 (1996)).

An insured is required only “to act

reasonably under the circumstances.”

Id.

A reasonable juror

could conclude that Grayhawk acted reasonably when it notified
Owners shortly after it learned that a claim may be asserted
against
with

it

the

personally—not

home.

Georgia

the

warranty

courts

inappropriate under similar facts.
1

have

group—for
found

the

summary

defects
judgment

See, e.g., Newberry, 242 Ga.

Owners contends that it was unreasonable for Grayhawk to believe
that the drain would solve all the problems with the Lopez home. Even
assuming that the drain solved the wet soil problem, Owners contends
that there is no way the drain could fix the cracks in the walls and
baseboards.
Whether Grayhawk’s evidence is believable or persuasive
is a question for the jury, not the Court.

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App. at 785, 531 S.E.2d at 363-64 (reversing a trial court for
granting summary judgment when an insured waited eleven months
to notify his insurer of an occurrence because the insured had
“actual knowledge that the plaintiff in the underlying lawsuit
had filed a workers’ compensation claim” and “believed that if a
claim

was

filed,

it

would

be

handled

through

workers’

compensation”); Clark, 148 Ga. App. at 582, 251 S.E.2d at 827
(finding a jury question when an insured waited sixteen months
after an occurrence to notify his insurer because the insured
believed that his employer’s insurance would cover the claim).2
The Court therefore denies Owners’ motion for summary judgment.
II.

Motion for a Preliminary Injunction
As

an

alternative

to

summary

judgment,

Owners

seeks

a

preliminary injunction relieving it of its obligation to defend
Grayhawk.
remedy.”
2011).

A

preliminary

injunction

“is

an

extraordinary

Bloedorn v. Grube, 631 F.3d 1218, 1229 (11th Cir.
“A party

seeking a preliminary injunction bears the

2

The Court’s analysis is not altered by the Georgia Court of Appeals’
decision in Richmond, 140 Ga. App. at 220-22, 231 S.E.2d at 249. In
Richmond, the insured’s delay was unreasonable as a matter of law
because the insured knew that an aggrieved party asserted a claim
against him, and did not notify his insurer because he independently
concluded “that he was free of fault and that there was no liability
to the other party.”
Id. at 220, 231 S.E.2d at 249 (quoting
Bituminous Cas. Corp. v. J. B. Forrest & Sons, Inc., 132 Ga. App. 714,
717, 209 S.E.2d 6, 9 (1976)).
Grayhawk, however, presents evidence
that it believed that the warranty group would resolve the Lopezes’
claim, and that Grayhawk’s insurance policy would not be implicated.
Grayhawk also presents evidence that it notified Owners shortly after
learning that the Lopezes intended to bring a claim against it.
Therefore, unlike Richmond, a genuine factual dispute exists as to
whether Grayhawk acted reasonably.

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burden of establishing its entitlement to relief.”
Roberts, 612 F.3d 1279, 1290 (11th Cir. 2010).

Scott v.

To prevail on a

petition for a preliminary injunction, Owners must establish:
(1) “a

substantial

likelihood

of

success

on

the

merits;

(2) irreparable injury will be suffered unless the injunction
issues; (3) the threatened injury to [Owners] outweighs whatever
damage

the

proposed

injunction

may

cause

[Defendants];

and

(4) if issued, the injunction would not be adverse to the public
interest.”

Bloedorn, 631 F.3d at 1229.

The present record does not support a finding that Owners
has a substantial likelihood of succeeding on the merits of its
declaratory judgment action.

It may ultimately succeed, but as

discussed above, a reasonable juror could conclude that Grayhawk
notified

Owners

of

the

Lopezes’

potential

claim

as

soon

as

practicable and that Owners is obligated to defend Grayhawk on
this claim.

The imposition of the extraordinary remedy of a

preliminary

injunction

circumstances.

is

not

warranted

under

these

Accordingly, Owners’ request for a preliminary

injunction is denied.
CONCLUSION
A genuine factual dispute exists as to whether Grayhawk
gave Owners timely notice of the Lopezes’ claim against it.

The

present record also does not support a finding that Owners has a
substantial

likelihood

of

succeeding

9

on

the

merits

of

its

declaratory judgment claim.

Accordingly, Owners is not entitled

to summary judgment or a preliminary injunction, and its motion
(ECF No. 18) is denied.
IT IS SO ORDERED, this 15th day of September, 2015.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA

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