DOWDY v. GEICO GENERAL INSURANCE COMPANY
ORDER finding that Plaintiff may not recover pre-excess-verdict emotional distress damages. Ordered by US DISTRICT JUDGE CLAY D. LAND on 9/21/2017 (tlf).
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
GEICO GENERAL INSURANCE
CASE NO. 4:16-CV-303 (CDL)
O R D E R
Under well-established Georgia law, a liability insurance
against its insured in excess of the policy limits if it had a
reasonable opportunity to settle the claim before the verdict
and it failed to exercise that degree of care that a reasonably
McCall v. Allstate Ins. Co., 310 S.E.2d 513, 514
addition to the amount of the excess verdict, the insured may
recover any damages proximately caused by the entry of judgment
This Court’s jurisdiction is based upon diversity of citizenship, and
therefore, it must apply Georgia substantive law.
Flintkote Co. v.
Dravo Corp., 678 F.2d 942, 945 (11th Cir. 1982).
Although the Court has not researched this issue, the Defendant
concedes that emotional-distress damages post-verdict are recoverable.
Plaintiff’s counsel seeks to push the envelope in this action
and recover for all emotional distress suffered by Plaintiff
after Defendant failed to accept the policy-limits demand in the
underlying tort action, including distress preceding the entry
of the excess verdict.
Counsel has pointed this Court to no
decision by any Georgia appellate court authorizing the recovery
of pre-excess-verdict emotional distress damages in the failure
to settle context.
Moreover, counsel is unable to even point
the Court to an example of any trial court in the state of
Georgia having authorized the recovery of such damages.
Court informed the parties prior to the start of the trial that
it had concluded that such damages are not recoverable under
This Order explains the Court’s rationale.
“An automobile liability insurance company may be liable
for damages to its insured for failing to adjust or compromise
the claim of a person injured by the insured and covered by its
liability policy, where the insurer is guilty of negligence or
of fraud or bad faith in failing to adjust or compromise the
claim to the injury of the insured.”
McCall, 310 S.E.2d at 514.
As the Georgia Supreme Court explained, “[h]ence, where a person
injured by the insured offers to settle for a sum within the
policy limits, and the insurer refuses the offer of settlement,
the insurer may be liable to the insured to pay the verdict
rendered against the insured even though the verdict exceeds the
policy limit of liability.”
Id. at 514–15.
“The reason for
this rule is that the insurer ‘may not gamble’ with the funds of
its insured by refusing to settle within the policy limits.”
Id. at 515.
The underlying rationale for this tort in Georgia
is that an insurer owes a duty not to unreasonably expose its
insured to personal liability in excess of the limits of the
insured’s insurance policy.
See Cotton States Mut. Ins. Co. v.
Brightman, 580 S.E.2d 519, 521 (Ga. 2003) (explaining that a
unreasonably exposing its insured to excess liability for the
sake of potentially minimizing the insurer’s payout under the
The parties agree that Plaintiff’s cause of action is not
complete until an excess verdict has been rendered against the
Trinity Outdoor, LLC v. Cent. Mut. Ins. Co., 679 S.E.2d 10, 11
whether an action for negligent failure to settle requires that
an excess judgment be entered against an insured before the
insured may bring suit).3
Given the nature of the tort upon
In Trinity, the Georgia Supreme Court based its rationale on the
language of the insurance policy.
The parties in this action agree
which Plaintiff’s claim rests and the requirement under Georgia
law that any such action cannot be brought without the insured
first having an excess verdict entered against her, the Court
finds that Georgia courts would likely conclude that emotional
verdict are not recoverable.
Thus, any evidence of Plaintiff’s
emotional distress prior to the entry of the excess verdict is
irrelevant and inadmissible.
IT IS SO ORDERED, this 21st day of September, 2017.
S/Clay D. Land
CLAY D. LAND
CHIEF U.S. DISTRICT COURT JUDGE
MIDDLE DISTRICT OF GEORGIA
indistinguishable from the policy in Trinity.
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