Diamond State Insurance Company v. Re
Filing
44
ORDER granting 41 Motion for Summary Judgment. Signed by Judge William T. Moore, Jr on 3/20/2012. (loh)
IN THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF GEORGIA
2flI7 M D
A 2 0 AM 9*SAVANNAH DIVISION
MIN
DIAMOND STATE INSURANCE CO.,
Plaintiff,
V.
CASE NO. CV409-157
ANDREA RE, d/b/a Re Realty,
Defendant.
ORDER
Before the Court is Plaintiff Diamond State Insurance
Company's Motion for Summary Judgment
Defendant Andrea Re did not file a response.
(Doc. 41.)
For the
following reasons, Plaintiff's motion is GRANTED.
The
Clerk of Court is DIRECTED to enter judgment in favor of
Plaintiff and close this case.
BACKGROUND
This case stems from a dispute concerning the scope
of coverage provided by two insurance policies issued by
Plaintiff. Defendant Andrea Re is a licensed real estate
broker and the sole principal of Re Realty.'
(Doc. 41,
1 Because Defendant did not respond to Plaintiff's motion,
the Court accepts as true Plaintiff's factual statements
for the purpose of ruling on its motion. See S.D.L.R. 7.5
('Failure to respond within the applicable time period
shall indicate that there is no opposition to a motion,");
Id. 56.1 ('All material facts set forth in the statement
[of material facts] required to be served by the moving
Attach. 1 at 3.)
As her business grew, Defendant became
associated with several real estate sales agents when they
affiliated their agent licenses with Defendant's broker
license. (Id.) Because part of these associates' business
involved accepting security deposits and rents, Defendant
was required to maintain a trust account for these funds
and register it with the Georgia Real Estate Commission.
(Id.) ; see O.C.G.A. 5 43-40-20(a) ; Id. 43-40-20(b)
Sometime in 1996, Lavinia Strickland, whose real
estate agent license was affiliated with Defendant's broker
license, operated Re Realty Property Management Division
("RRPMD"), which engaged in the business of managing rental
properties. (Doc. 41, Attach. 1 at 3-4.) Ms. Strickland
was the sole owner of RRPMD, which was a separate business
entity from Re Realty.
(Id. at 4.)
While in operation,
RRPMD maintained separate bank accounts to hold funds paid
by tenants of properties managed by RRPMD. (Id.)
Defendant never received or reviewed any bank statements
for the RRPMD accounts. (Id.)
Late in 2008, Elizabeth Garrigus purchased RRPMD from
Ms. Strickland, renaming it Re Realty Rentals ("RRR").
(Id.) The business remained separate and distinct from Re
party will be deemed to be admitted unless controverted by
a statement served by the opposing party.").
2
Realty, continuing to maintain separate bank accounts for
security deposits and rents. (Id.) This time, however,
Defendant signed the Deposit Account Agreements for the RRR
accounts, but failed to register them with the Georgia Real
Estate Commission.
(Id. at 4-5); see O.C.G.A. § 43-40-
20(b).
Also in late 2008, Ms. Garrigus informed Defendant
that there were some discrepancies concerning the RRPMD
accounts.
(Doc. 41. Attach. 1 at 4.)
In April 2009, RRR
closed its doors, ceasing business operations. (Id. at 5.)
Around this time, Ms. Garrigus informed Defendant that
there was insufficient money in RRR's security deposit and
rental trust accounts to pay for all of its outstanding
liabilities. (Id.) All told, approximately $170,000 was
missing from the trust accounts due to Mses. Strickland and
Garrigus unlawfully converting or misappropriating the
funds for their private uses. (Id.) Several individuals
and entities sued Defendant for the return of deposits and
rental funds, with Plaintiff defending Defendant under a
reservation of rights.
According
to
(Id. at 6.)
Plaintiff,
Defendant
submitted
applications for insurance in May 2007 and April 2008.
(Id.)
In these applications, Defendant stated that Re
Realty had a staff member with thirteen years experience
ii
managing properties and that Defendant was engaged in the
business of providing property management services,
specifically RRPMD. (Id. at 6-7.) However, Plaintiff was
never informed that RRPMD was a separate entity over which
Defendant had no control. (Id. at 7.) According to
Plaintiff, it would have declined to issue the subject
insurance policy if it had been aware that Defendant
exercised no control over the separate business entities
involved in property management. (Id.)
On October 15, 2009, Plaintiff filed a complaint with
this Court. (Doc. 1.) With the consent of Defendant (Doc.
14), Plaintiff filed an amended complaint on January 8,
2010 . 2 (Doc. 13) In the amended complaint, Plaintiff
seeks a declaratory judgment that the insurance policy does
not require it to defend or indemnify Defendant for claims
arising out of the misappropriated funds.
(Id. ¶ 43.) On
May 20, 2011, Plaintiff filed its Motion for Summary
Judgment.
(Doc. 41.) In the motion, Plaintiff argues that
coverage does not exist because Defendant misrepresented
her role in the property management entities.
13.)
(Id. at 8-
In addition, Plaintiff contends that Defendant's
2
Oddly, even though she answered the first complaint,
Defendant failed to answer the amended complaint. Of
course, this would entitle Plaintiff to a default judgment.
4
failure to comply with some of the policy's conditions
preclude coverage under the policy. (Id. at 14-20.)
Finally, Plaintiff reasons that several exclusions bar
coverage.
Defendant did not respond to
(Id. at 20-23.)
Plaintiff's motion.
ANALYSIS
I. SUMMARY JUDGMENT STANDARD
According to Fed. R. Civ. P. 56(a), '[a] party may
move for summary judgment, identifying each claim or
defense—or the part of each claim of defense—on which
summary judgment is sought." Such a motion must be granted
"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." Id. The "purpose of summary judgment is
to 'pierce the pleadings and to assess the proof in order
to see whether there is a genuine need for trial.'
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S.
574, 587 (1986) (quoting Fed. R. Civ. P. 56 advisory
committee notes)
Summary judgment is appropriate when the nonmovant
"fails to make a showing sufficient to establish the
existence of an element essential to that party's case, and
Surprisingly, however, Plaintiff never requested that type
of relief.
5
on which that party will bear the burden of proof at
trial."
Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). The substantive law governing the action
determines whether an element is essential. DeLong Equip.
Co. v. Wash. Mills Abrasive Co., 887 F.2d 1499, 1505 (11th
Cir. 1989)
As the Supreme Court explained:
[A] party seeking summary judgment always bears
the initial responsibility of informing the
district court of the basis for its motion, and
identifying those portions of the pleadings,
depositions, answers to interrogatories, and
together
with
the
file,
on
admissions
affidavits, if any, which it believes
demonstrate the absence of a genuine issue of
material fact.
Celotex, 477 U.S. at 323. The burden then shifts to the
nonmovant to establish, by going beyond the pleadings, that
there is a genuine issue as to facts that are material to
the nonmovant's case.
Clark v. Coats & Clark, Inc., 929
F.2d 604, 608 (11th Cir. 1991)
The Court must review the evidence and all reasonable
factual inferences arising from it in the light most
favorable to the nonmovant. Matsushita, 475 U.S. at 58788. However, the nonmoving party \ t must do more than simply
show that there is some metaphysical doubt as to the
material facts."
Id. at 586.
A mere "scintilla" of
evidence, or simply conclusory allegations, will not
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suffice.
See, e.g., Tidwell v. Carter Prods., 135 F.3d
1422, 1425 (11th Cir. 1998) . Nevertheless, where a
reasonable fact finder may 'draw more than one inference
from the facts, and that inference creates a genuine issue
of material fact, then the Court should refuse to grant
summary judgment."
Barfield v. Brierton, 883 F.2d 923,
933-34 (11th Cir. 1989).
Even though a motion requesting summary judgment is
unopposed, it may only be granted when appropriate—there
must be an evidentiary showing that the moving party is
entitled to judgment as a matter of law. United States v.
One Piece of Real Property Located at 5800 SW 74th Ave.,
Miami, Fla., 363 F.3d 1099, 1101 (11th Cir. 2004). To this
end, a district court cannot simply accept the factual
statements in the unopposed motion as true, "but must
ensure that the motion itself is supported by evidentiary
materials." Id. It is only when the court concludes that
the moving party's factual statements find evidentiary
support in the record that the court may grant an unopposed
request for summary judgment. See id.
II. PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT
In its Motion for Summary Judgment, Plaintiff contends
that Defendant is not entitled to coverage under the policy
pursuant to O.C.G.A. § 33-24-7(b) (2).
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(Doc. 41, Attach. 1
at 8-10.) Under that provision, misrepresentations or
incorrect statements may preclude recovery under an
insurance policy if they are 11 [m]aterial either to the
acceptance of the risk or to the hazard assumed by the
insurer." O.C.G.A. § 33-24-7(b)(2). For a
misrepresentation to be material, it must be " 'one that
would influence a prudent insurer in determining whether or
not to accept the risk, or in fixing a different amount of
premium in the event of such acceptance.' " Am. Gen. Life
Ins. Co. v. Schoenthal Family, LLC, 555 F.3d 1331, 1340
ting
(11th Cir. 2009) (quoting Lively v. S. Heritage Ins. Co.,
256 Ga. App. 195, 196, 568 S.E.2d 98, 100 (2002)).
The
focus is not on the misrepresentation's effect on any
particular insurer.
Id.
Rather, a court should look to
" 'an objective standard of conduct against which to
measure the effect of the insured's false declarations.'
If
Id. (quoting Woods v. Indep. Fire Ins. Co., 749 F.2d 1493,
1497 (11th Cir. 1985)).
In support of its motion, Plaintiff has submitted the
affidavit of one of their underwriters—Margaret Robinson.
(Doc. 41, Ex. 13.) In the affidavit, Ms. Robinson stated
that, from an underwriting perspective, "[t]here is a
substantial difference between a policyholder actively
operating, supervising and controlling its own property
8
management business and a policyholder who is not engaged
in the business of property management."
(Id. ¶ 15.)
[t1his changes the nature,
According to Ms. Robinson,
extent and character of the risks being insured against."
(Id.) In addition, she states that if Plaintiff, as a
prudent insurer, knew that Defendant was not in control of
the property management operations, then it would have
either not offered Defendant the policy in question or
modified it to exclude claims arising from property
management services.
(Id. ¶ 16.)
After reviewing the record, this Court must conclude
that Plaintiff is entitled to summary judgment. Based on
the lack of any opposition offered by Defendant, 3 the Court
concludes that Plaintiff has adequately established that
Defendant's misrepresentations on the insurance
applications were material. As a result, Plaintiff is not
required to provide coverage for the claims that they would
have declined to insure absent Defendant's material
The Court notes that it would not have been difficult for
Defendant to create a genuine issue of material fact with
respect to this contention. By not offering any response,
however, the Court must accept the truth of Plaintiff's
factual assertion, which is supported by evidence in the
record.
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misrepresentation.
Accordingly, Plaintiff's Motion for
Summary Judgment is GRANTED.'
CONCLUSION
For the foregoing reasons, Plaintiff's Motion for
Summary Judgment is GRANTED. The Clerk of Court is
DIRECTED to enter the appropriate judgment in favor of
Plaintiff and to close this case.
SO ORDERED this
,2
day of March 2012.
WILLIAM T. MOORE, JR.
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
Because the Court finds that Plaintiff is entitled to
summary judgment based on O.C.G.A. § 33-24-7(b) (2), it need
not address the remainder of Plaintiff's arguments.
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