DOWDY v. GEICO GENERAL INSURANCE COMPANY

Filing 80

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
COLUMBUS DIVISION
HANNAH DOWDY,

*

Plaintiff,

*

vs.

*

GEICO GENERAL INSURANCE
COMPANY,

*

CASE NO. 4:16-CV-303 (CDL)

*
Defendant.
*
O R D E R
Under well-established Georgia law, a liability insurance
company

is

liable

to

its

insured

for

any

verdict

rendered

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
prudent

insurance

circumstances.
(Ga.

1984).1

company

would

have

exercised

under

similar

McCall v. Allstate Ins. Co., 310 S.E.2d 513, 514
It

also

appears

to

be

well

settled

that

in

addition to the amount of the excess verdict, the insured may
recover any damages proximately caused by the entry of judgment
upon

that

excess

verdict,

including

damages

for

emotional

distress.2
1

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).
2
Although the Court has not researched this issue, the Defendant
concedes that emotional-distress damages post-verdict are recoverable.

As

creative

and

zealous

advocates

are

wont

to

do,

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.

The

Court informed the parties prior to the start of the trial that
it had concluded that such damages are not recoverable under
Georgia law.

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

2

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
tortious

failure

to

settle

claim

prevents

an

insurer

from

unreasonably exposing its insured to excess liability for the
sake of potentially minimizing the insurer’s payout under the
policy).
The parties agree that Plaintiff’s cause of action is not
complete until an excess verdict has been rendered against the
Plaintiff.
before

an

Georgia
insured

law

may

clearly

bring

suit

requires

an

under

these

excess

judgment

circumstances.

Trinity Outdoor, LLC v. Cent. Mut. Ins. Co., 679 S.E.2d 10, 11
(Ga.

2009)

(answering

affirmatively

the

certified

question

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

3

In Trinity, the Georgia Supreme Court based its rationale on the
language of the insurance policy.
The parties in this action agree

3

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
distress

damages

suffered

verdict are not recoverable.

prior

to

the

entry

of

an

excess

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

that
the
language
in
the
policy
here
indistinguishable from the policy in Trinity.

4

is

substantively