FCCI Insurance Company v. Mclendon Enterprises, Inc. et al

Filing 62

ORDER granting 44 Motion for Summary Judgment; denying 49 Motion for Summary Judgment. Signed by Judge B. Avant Edenfield on 12/19/13. (bcw)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA
SAVANNAH DIVISION

bus failed to stop at a stop sign and collided
with Mitchell. Id. The accident severely
injured Mitchell and his two passengers.

FCC! INSURANCE COMPANY,

GSBA Risk Management Fund
("GSBA") provided liability insurance to
Evans County at the time of the accident.
Id at 10. The policy had a liability limit of
$1,000,000. Id. GSBA has paid out to
Bobby Mitchell, Profit, and Mitchell the
policy limits for damages relating to the
accident. Id.

Plaintiff,
V

4:12-cv-191

.

MCLENDON ENTERPRISES, INC.; and
BROOKS LAMAR MITCHELL,
Defendants.
ORDER
I. INTRODUCTION
FCC! Insurance Company ("FCCI")
brings this action against McLendon
Enterprises, Inc. ("McLendon") and Brooks
Lamar Mitchell ("Mitchell") seeking
declaratory relief as to the rights and
obligations of the parties to an insurance
contract. ECF No. 1. Mitchell and FCC!
cross moved for summary judgment.' The
Court concludes that the proper
interpretation of the insurance contract
permits recovery by Mitchell and so it
GRANTS his motion and DENIES that of
FCC!.

FCCI insured McLendon. Id. at 3. The
FCC! policy provided that FCC! would pay
all money "the 'insured' is legally entitled to
recover as compensatory damages from the
owner or driver of an 'uninsured motor
vehicle." Id. at 11. "Uninsured motor
vehicle" included underinsured vehicles as
well, which the policy defined as those
vehicles:
for which the sum of the limits of all
liability. . . policies applicable at the
time of the 'accident' either (1) is not
enough to pay the full amount the
covered 'insured' is legally entitled
to recover as damages, or (2) has
been reduced by payment of claims
to an amount which is not enough to
pay the full amount the covered
'insured' is legally entitled to
recover as damages.

IL BACKGROUND'
On September 22, 2011, Mitchell, an
employee of McLendon Enterprises, drove a
company truck in which Bobby Brooks
Mitchell and Elijah Profit were passengers.
ECF No. 30 at 7. An Evans County school
McLendon maintains "a neutral position as to the
controversy at issue," and "neither supports nor
opposes either motion for summary judgment filed by
the other parties." ECF No. 53 at 1.
2 Taken substantially from ECF No. 40 at 1-2.

Id.
Mitchell never filed suit against Evans
because he settled with the county and
GCBA for $650,000. See ECF No. 30 at 22.
Mitchell admits that Evans is "immune from
any further liability above the liability limits
[of the GCBA policy]." Id Mitchell
nevertheless sent a settlement demand of

$1,000,000—the limits of the uninsured
motorist coverage FCC! issued to
McLendon—to FCC! subsequent to the
filing of this action. Id. at 6, 20-23.

Nos. 44 at 8; 54 at 5. FCC! argues the
phrase means recovery from the tortfeasor is
possible. ECF No. 49-6 at 15. Mitchell
argues that the phrase "means that the
insured must show that the fault of the
uninsured motorist gives rise to damages."
ECF No. 44 at 8. Both of these
interpretations are reasonable in light of the
common definitions of the words and the
remainder of the policy contract.
See
Netbank, 729 F.3d at 1349 (looking to the
four corners of the contract for clarification).
So, the Court concludes "legally entitled to
recover" is ambiguous.

FCCI filed this declaratory judgment
action seeking guidance on its liability and
coverage obligations as insurer for
McLendon. Id. at 16. FCC! contends that
Evans's statutorily limited liability prevents
the bus involved in the accident from being
considered an underinsured motor vehicle
under the policy. Id. at 15. FCCI therefore
believes it is not "obligated to defend,
indemnify or expend any sums on behalf of
McLendon for any damages.. . arising out
of the September 22, 2011 incident." Id. at
16.

C. Interpretation of the Contract
"Having found the [policy] to be
ambiguous, we apply the rules of contract
construction." Id. at 1350; see also S. Gen.
Ins. Co. v. Alford, 507 S.E.2d 179, 180 (Ga.
Ct. App. 1998) (holding "the ordinary rules
of contract construction govern when
construing the provisions of an insurance
policy"). No Georgia opinion has directly
addressed uninsured motorist coverage in
light of the statutory provision waiving
sovereign immunity to the extent that a
county obtains liability coverage. ECF Nos.
44 at 11; 49-6 at 16. Yet existing case law
combined with the statute is sufficient to
decide this issue.

III. ANALYSIS
A. Standard of Review
Summary judgment is appropriate when
"there is no genuine dispute as to any
material fact and the movant is entitled to
judgment as a matter of law." Fed. R. Civ.
P. 56(a). The parties agree as to the relevant
material facts, see ECF Nos. 44 at 4; 54 at 3,
5, and the Court decides this case as a matter
of law, O.C.G.A. § 13-2-1 ("The
construction of a contract is a question of
law for the court. Where any matter of fact
is involved, the jury should find the fact.").

O.C.G.A. § 33-24-51 provides

B. Ambiguity of the Insurance
Contract

(a) A... county. . . of this state is
authorized in its discretion to secure
and provide insurance to cover
liability for damages on account of
bodily injury or death resulting from
bodily injury to any person or for
damage to property of any person, or
for both arising by reason of

In Georgia, a contract is unambiguous if
there is only one reasonable interpretation of
the language. See In re NetBanlç Inc., 729
F.3d 1344, 1350 (11th Cir. 2013). The
insurance contract's phrase "legally entitled
to recover" is the focus of this dispute. ECF
2

ownership, maintenance, operation,
or use of any motor vehicle by the..
• county. . . and to pay premiums for
the insurance coverage.

insurance contract. ECF No. 54 at 12-14.
But in light of the statutory treatment of
Evans County as a private person, this
argument is not compelling because FCCI
would be in the same economic position if
Mitchell had been hurt by a motorist
susceptible to a judgment of exactly
$1,000,000. Disposing of this argument,
however, does not decide this matter in
Mitchell's favor.

(b) The sovereign immunity of local
government entities for a loss arising
out of claims for the negligent use of
a covered motor vehicle is waived as
provided in Code Section 36-92-2.
Whenever. . . a county . . . of this
state shall purchase the insurance
authorized by subsection (a) of this
Code section to provide liability
coverage for the negligence of any
duly authorized officer, agent,
servant, attorney, or employee in the
performance of his or her official
duties in an amount greater than the
amount of immunity waived as in
Code Section 36-92-2, its
governmental immunity shall be
waived to the extent of the amount of
insurance so purchased.. . . [T]he...
county shall [not] plead
governmental immunity as a defense;
and the . . . county. . . may make
only those defenses which could be
made if the insured were a private
person.

Tinsley v. Worldwide Insurance Co., 442
S.E.2d 877, 878-79 (Ga. Ct. App. 1994), on
the other hand, does. In Tinsley, the court
held that a plaintiff is legally entitled to
recover from an insurance company when
sovereign immunity completely bars
recovery from a tortfeasor. Allowing "an
insurer to escape liability under its contract
because of the uninsured motorist's"
sovereign immunity, the court said, "would
be contrary to the purpose of [Georgia's
uninsured motorist laws]." Id.
This Court finds Tinsley persuasive and
extends its sound reasoning to tortfeasors
who are partially protected by sovereign
immunity. If a tortfeasor's full discharge
from litigation by sovereign immunity does
not allow an insurance company to escape
liability, partial discharge should not either.

The statute treats Evans County as a private
person for the sake of this lawsuit. And for
the sake of this lawsuit, like a private
person, Evans County has limited means to
pay Mitchell. In fact, Evans County's only
resource here is the $1,000,000 insurance
policy.

To conclude otherwise would incentivize
counties who wish to allow accident victim
recovery to not purchase liability insurance
under § 33-24-51. Victims of fully immune
counties could pursue recovery under
uninsured motorist provisions, but victims in
counties with some liability insurance could
not. Assuming the liability insurance policy
limits fell below the amount of a victim's
damages, a victim in a county with liability

FCCI contends that its inability to
subrogate losses by suing Evans County
changes the benefit of the bargain of the
3

a

insurance would recover less than one in a
county without coverage. Such result is
contrary to § 33-24-51's goal of increasing
compensation for those injured by
employees of the state. Crider v. Zurich Ins.
Co., 474 S.E.2d 89, 91 (Ga. Ct. App. 1996).
FCCI may not escape liability here.
IV. CONCLUSION
Extending the reasoning of Tinsley
furthers the purposes of § 33-24-5 1 and
nothing counsels against the extension.
The Court therefore GRANTS Mitchell's
motion and DENIES FCCI's. The Clerk
shall enter judgment accordingly.

Thisday December 2013.
of

/

B. AVANT/?DNFIELD, JUI3E /
UNITED STATES DISTRIC'COURT
SOUTHERN DISTRICT OF 6EORGIA

4