ACCIDENT INSURANCE COMPANY v. DONALD BOWLES INC et al
Filing
29
ORDER granting 25 Motion for Summary Judgment Ordered by US DISTRICT JUDGE CLAY D LAND on 03/01/16 (nmr)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
COLUMBUS DIVISION
ACCIDENT INSURANCE COMPANY,
*
Plaintiff,
*
vs.
*
DONALD BOWLES, INC., et al.
*
Defendants.
CASE NO. 4:15-CV-36-CDL
*
O R D E R
In
this
declaratory
judgment
action,
Plaintiff
Accident
Insurance Company sues Defendants Donald Bowles, Inc., Donald
Bowles,
All
Clinkscales
Terrain
claiming
Grading
that
it
and
has
Septic,
no
LLC,
and
insurance
claims related to a construction project.1
Kristy
coverage
for
On July 31, 2015, the
Court granted a motion for default judgment against All Terrain.
Presently
pending
unopposed
motion
Defendants.
For
before
for
the
the
summary
Court
is
judgment
following
Accident
against
reasons,
the
Insurance’s
the
remaining
Court
grants
Accident Insurance’s motion for summary judgment (ECF No. 25).
STANDARD
Summary judgment may be granted only “if the movant shows
that there is no genuine dispute as to any material fact and the
1
Donald Bowles is the owner and chief operating officer of Donald
Bowles, Inc.
This Order will refer to Donald Bowles and Donald
Bowles, Inc. collectively as “Bowles.”
movant is entitled to judgment as a matter of law.”
Civ. P. 56(a).
In determining whether a
genuine
Fed. R.
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.
FACTUAL BACKGROUND
I.
Local Rule 56
With its motion for summary judgment, Accident Insurance
filed
a
record
Civ.
R.
statement
citations
56.
of
as
“All
undisputed
required
material
material
by
facts
Local
facts
Rule
contained
supported
56.
in
M.D.
the
by
Ga.
movant’s
statement which are not specifically controverted by specific
citation to particular parts of materials in the record shall be
deemed to have been admitted, unless otherwise inappropriate.”
Id.
Defendants
fail
to
controvert
statement of undisputed material facts.
Accident
Insurance’s
The Court has reviewed
the statement and citations and “determine[d] . . . [that] there
is,
indeed,
no
genuine
issue
of
material
fact.”
Reese
v.
Herbert, 527 F.3d 1253, 1269 (11th Cir. 2008) (quoting United
2
States v. One Piece of Real Prop. Located at 5800 Sw. 74th Ave.
Miami, 363 F.3d 1099, 1103 n.6 (11th Cir. 2004)).
Thus, the
Court considers the following facts admitted.
II.
The Underlying Dispute
In summer 2011, Bowles contracted with All Terrain to clear
and grade a piece of property in Columbus, Georgia.
the
contract,
All
Terrain
relocated
a
sewer
Pursuant to
pipe
that
ran
underneath the property, backfilled the hole, and compacted the
soil for construction of a home.
Bowles certified All Terrain’s
project as complete in December 2011 and built a home on the
property.
In January 2012, Bowles sold the home to Clinkscales.
At that time, there were no visible problems with the home and
Clinkscales did not know about the sewer pipe relocation.
A
few
months
later,
Clinkscales
driveway and settling in the yard.
Bowles to ask about the cracks.
normal
settling.
Bowles
did
noticed
cracks
in
the
In April 2012 she contacted
Bowles told her that it was
not
mention
the
sewer
pipe
relocation to Clinkscales, but he did ask All Terrain to make
some repairs to the site.
While making the repairs, All Terrain
told Clinkscales about the relocation of the sewer pipe.
In July and August 2012, Clinkscales noticed more cracks in
the driveway, sloping of the floors inside her home, and cracks
in the foundation and ceiling.
again,
and
he
repeated
that
the
3
Clinkscales contacted Bowles
problems
arose
from
normal
settling.
month.
Clinkscales
claims
that
the
damage
worsens
every
In her opinion, the home is sinking into the hole where
the sewer
pipe
previously
ran because All Terrain used poor
quality soil to fill the hole and did not compact the soil
properly.
On January 17, 2014, Clinkscales sued Donald Bowles, Inc.,
Donald Bowles, and All Terrain in Muscogee County Superior Court
claiming: (1) negligent construction; (2) fraud; (3) negligent
misrepresentation; (4) bad faith; and (5) breach of warranty.
Clinkscales seeks actual damages, punitive damages, and general
damages for physical and emotional injury.
III. The Insurance Policy
In summer and fall 2011 when All Terrain relocated the
sewer
pipe
and
graded
the
property,
Bowles
maintained
a
Commercial General Liability Policy (“the Policy”) with Accident
Insurance.
The Policy was effective from December 7, 2010 to
December 7, 2011.2
Compl. Ex. B, Insurance Policy 3, 5, ECF No.
1-3 (“Insurance Policy”).3
Under the Policy, Accident Insurance
must defend Bowles and/or pay damages for “bodily injury” or
2
In its brief in support of summary judgment, Accident Insurance
states that the policy period ended on December 11, 2011. Pl.’s Br.
in Supp. of Summ. J. 1, ECF No. 25-1.
But according to the Policy
declarations, the Policy term ended on December 7, 2011.
Compl. Ex.
B, Insurance Policy 3, 5, ECF No. 1-3. Whether the Policy expired on
December 7 or December 11 does not change the outcome of this motion.
3
Plaintiff’s exhibit B contains several documents including the main
Policy contract, attached endorsements, and a binder. This Order will
cite these documents collectively as the “Insurance Policy.”
4
“property damage” caused by an “occurrence” during the policy
period.
Insurance Policy §§ I.1.a & I.1.b.
To claim coverage,
Bowles must notify Accident Insurance of an “‘occurrence’ or an
offense which may result in a claim” or a “‘suit’ . . . as soon
as practicable.”
Id. §§ IV.2.a & IV.2.b.
There are several endorsements attached to the main policy
contract, including one titled “sunset provision” that reads:
This policy will not provide any coverage, regardless
of the other terms and conditions of the policy,
including the definition of ‘occurrence’ for any claim
or ‘suit’ made against an insured unless the claim or
‘suit’ is reported in writing to us within two (2)
years after expiration of the policy period.
Id.
at
35.
Accident
Insurance
labels
the
type
provided to Bowles “Occurrence w/ 2 year Sunset.”
IV.
of
coverage
Id. at 65.
Bowles’s Report to Accident Insurance
Bowles did not notify Accident Insurance of Clinkscales’s
complaints in April or August 2012.
After Clinkscales filed
suit on January 17, 2014, Bowles told Accident Insurance about
her claims.
Accident Insurance filed this declaratory judgment
action to determine its obligations under the Policy.
DISCUSSION
I.
Applicable Law
When subject matter jurisdiction is based on diversity, the
Court
must
apply
the
forum
state’s
determine which law governs the action.
choice-of-law
rules
to
Bituminous Cas. Corp.
v. Advanced Adhesive Tech., Inc., 73 F.3d 335, 337 (11th Cir.
5
1996).
“Under Georgia choice-of-law rules, interpretation of
insurance
contracts
is
governed
by
the
place . . . where the contract is delivered.”
law
of
the
Id. (quoting Am.
Family Life Assurance Co. v. U.S. Fire Co., 885 F.2d 826, 830
(11th Cir. 1989)).
Georgia.
Here, the Policy was delivered to Bowles in
The Court therefore applies Georgia law.
Georgia
courts
use
the
ordinary
rules
construction to interpret insurance policies.
of
contract
U.S. Fid. & Guar.
Co. v. Park ‘N Go of Ga., Inc., 66 F.3d 273, 276 (11th Cir.
1995)
(per
curiam).
“Every
insurance
contract
shall
be
construed according to the entirety of its terms and conditions
as
set
forth
in
the
policy
and
as
amplified,
extended,
or
modified by any rider, endorsement, or application made a part
of the policy.”
O.C.G.A. § 33-24-16.
“Where the terms and
conditions of an insurance contract are clear and unambiguous,
such
terms
must
be
given
their
literal
meaning.”
Ga.
Farm
Bureau Mut. Ins. Co. v. Meyers, 249 Ga. App. 322, 324, 548
S.E.2d 67, 69 (2001).
Where, however, a term is susceptible to
two or more constructions, “such term is ambiguous and will be
strictly construed against the insurer as the drafter and in
favor
of
[insurance]
court.”
the
insured.”
contract
is
Id.
[often]
The
a
“construction
question
U.S. Fid. & Guar. Co., 66 F.3d at 276.
6
of
law
of
for
a[n]
the
II.
Summary Judgment
Defendants did not respond to Accident Insurance’s motion
for summary judgment.
Yet “the district court cannot base the
entry of summary judgment on the mere fact that the motion was
unopposed, but, rather, [the Court] must consider the merits of
the motion.”
Reese, 527 F.3d at 1269 (quoting One Piece of Real
Prop. Located at 5800 Sw. 74th Ave. Miami, 363 F.3d at 1101).
To
show
that
Insurance
must
it
is
entitled
establish
to
that
summary
the
judgment,
unambiguous
Accident
terms
of
the
Policy do not cover the underlying dispute.
A.
Sunset Provision
Accident
endorsement
dispute.
Insurance
unambiguously
argues
bars
that
the
coverage
sunset
of
the
provision
underlying
For the following reasons, the Court agrees.
1.
The Sunset Provision Is Unambiguous
The sunset provision endorsement is unambiguous.
It states
that the “policy will not provide any coverage . . . for any
claim or ‘suit’ . . . unless the claim or ‘suit’ is reported in
writing
to
[Accident
Insurance]
expiration of the policy period.”
within
two
(2)
years
after
Insurance Policy 35.
This
language has only one reasonable meaning—to receive coverage,
the insured must report a claim in writing to Accident Insurance
within two years of the Policy’s expiration.
Thus, the sunset
provision endorsement creates an unambiguous condition precedent
7
to coverage.
King-Morrow v. Am. Family Ins. Co., 334 Ga. App.
802, 803-04, 780 S.E.2d 451, 453 (2015) (concluding that similar
“unless” language created an unambiguous condition precedent to
coverage although the condition did not apply to the plaintiff
in the case).
Additionally,
the
sunset
provision
endorsement
is
clear
that it “modifies [the] insurance provided” in the main contract
and applies “regardless of the other terms and conditions of the
policy.”
Insurance Policy 35.
In fact, the terms of the sunset
provision follow a header that reads, “THIS ENDORSEMENT CHANGES
THE POLICY.
PLEASE READ CAREFULLY.”
Id.
Thus, there is no
ambiguity in the sunset provision’s terms or the fact that it
modifies
the
main
Policy
contract.
Accordingly,
“its
plain
terms must be given full effect even [if] they are beneficial to
the insurer and detrimental to the insured.”
Serrmi Prods.,
Inc. v. Ins. Co. of Pa., 201 Ga. App. 414, 415, 411 S.E.2d 305,
306-07 (1991) (quoting Woodmen of the World Life Ins. Soc’y v.
Ethridge, 223 Ga. 231, 235, 154 S.E.2d 369, 372 (1967)) (holding
that the unambiguous terms of a claims-made policy barred the
insured’s claim).
2.
The Plain Terms of the Sunset
Coverage of the Underlying Action
Provision
Bar
Here, the plain terms of the sunset provision are indeed
detrimental
to
Bowles.
Bowles’s
8
policy
period
expired
December 7, 2011.
from
this
Under the sunset provision, he had two years
date—until
December
7,
2013—to
report
claims
in
writing to Accident Insurance.
It is undisputed that Bowles did
not
of
notify
Accident
Insurance
Clinkscales’s
complaints
or
suit until at least January 17, 2014, about a month and ten days
after the deadline for reporting claims.
exists
for
the
claims
asserted
in
Thus,
Clinkscales’s
no
coverage
state
court
action.
Georgia law suggests that it would not matter that Bowles
did not know about Clinkscales’s suit until after the two year
reporting period expired.
In analogous circumstances, Georgia
courts strictly enforce the terms of similar reporting periods
in claims-made policies:
If a court were . . . to allow an extension of
reporting time after the end of the policy period [and
any extended reporting period], such is tantamount to
an extension of coverage to the insured gratis,
something for which the insurer has not bargained.
This extension of coverage, by the court, so very
different from the mere condition of the policy, in
effect rewrites the contract between the two parties.
Serrmi Prods., Inc., 201 Ga. App. at 415, 411 S.E.2d at 307
(second and third alterations in original) (quoting Gulf Ins.
Co. v. Dolan, Fertig & Curtis, 433 So. 2d 512, 515-16 (Fla.
1983)).
Although claims-made policies are distinguishable from
occurrence policies like Bowles’s policy, the Court can conceive
of no reason why Georgia courts would enforce the unambiguous
9
terms of an “occurrence w/ 2 year sunset” policy differently
than
a
here.4
claims-made
Even
if
policy
the
under
Georgia
the
courts
circumstances
did
impose
presented
some
notice
requirement for an occurrence sunset provision, the undisputed
evidence in the present action establishes that Bowles knew that
Clinkscales had problems with her home as early as April and
August 2012—well within the two year reporting period.
Court
simply
cannot
rewrite
the
Policy
to
expand
The
Bowles’s
coverage beyond the terms agreed to by the parties.
B.
Accident Insurance’s Exclusion Arguments
Accident
endorsements
Insurance
to
support
also
its
relies
motion
on
for
alternatively, partial summary judgment.
several
summary
exclusion
judgment
or,
The Court finds that
no coverage exists due to the sunset provision.
Thus, the Court
need not address Accidental Insurance’s alternative arguments.
CONCLUSION
Based on the Policy’s unambiguous terms, Accident Insurance
has
no
duty
to
defend
or
indemnify
Bowles
for
any
claims
asserted by Clinkscales in the underlying state court action.
Accordingly, the Court grants Accident Insurance’s motion for
summary judgment (ECF No. 25).
A declaratory judgment shall be
4
A claims-made policy usually covers only claims that are made and
reported to the insurer during the policy period.
Serrmi Prods.,
Inc., 201 Ga. App. at 414, 411 S.E.2d at 306.
A true occurrence
policy covers claims based on occurrences during the policy period
even when the claims are reported to the insurer long after the policy
expires. Id.
10
issued that provides that Accident Insurance has no coverage for
any claims asserted by Clinkscales in the underlying state court
action.
IT IS SO ORDERED, this 1st day of March, 2016.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
11
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