Sullivan's Administrative Managers II, LLC v. Guarantee Insurance Company et al

Filing 146

ORDER granting Guarantee's 111 Motion for Summary Judgment. Signed by Chief Judge Lisa G. Wood on 10/11/2016. (ca)

N the Entub btatto 38totritt Court
for the fiboutbiern itritt of 4eorgia
'abannab Mbioion
SULLIVAN' S ADMINISTRATIVE
MANAGERS II, LLC,
Plaintiff,
No. 4:12-CV-212

VS.

GUARANTEE INSURANCE COMPANY,
Defendant.

ORDER
Before the Court is Defendant Guarantee Insurance Company's
("Guarantee") Motion for Summary Judgment Based on Res Judicata
and Collateral Estoppel. Dkt. No. 111. Plaintiff Sullivan's
Administrative Managers II, LLC ("SAM II") responded. Dkt. No.
117. Guarantee replied. Dkt. No. 124.
Then, the Court stayed proceedings pending resolution of a
related Florida state-court case. Dkt. No. 135. The Florida
appellate decision and mandate arrived at 2015's end. Dkt. Nos.
136-37. SAN II responded to Guarantee's notice of the mandate.
Dkt. No. 138. Guarantee replied. Dkt. No. 140.
The Court denied SAN II's motion for a hearing on the
mandate notice. Dkt. Nos. 139, 141. The parties filed a surresponse and sur-reply to the mandate notice. Dkt. Nos. 142-43.
AO 72A
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The Motion is ready for resolution. For the reasons stated
below, it is GRANTED.
Background

Juliet famously asked, "What's in a name?"
SHAKESPEARE, ROMEO AND JULIET,

act 2, sc. 2.

WILLIAM

As this "Sullivan"-

saturated story shows, "several years and multiple lawsuits."
"Sullivan Administrative Managers I, LLC" Gets Insurance

The Sullivan entities discussed here share the same
ownership, and Martin R. Sullivan ("Mr. Sullivan") is their
manager. Dkt. No. 111-18 at 3-4.
Four insurance policies issued by Guarantee name as their
insured "Sullivan Administrative Managers I, LLC" ("SAM I").
Dkt. No. 111-15 at 15-21. These annual policies were in effect
from 2008 to 2012. Id. at 15-20.
The policies' 2007 application identified the insured by a
variety of mostly "Sullivan"-related names. Id. at

35_36.1 The

application was made by a Florida-based agent named Arthur J.
Gallagher ("Gallagher"). Id.
At 2007's end, Gallagher's company instructed Guarantee
that the named insured "is to read as follows: Sullivan Group

Among them: "Sullivan's Staffing, Inc.," "Sullivan Staffing, Inc.," and
"Sullivan Administrative Managers."
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Financial, LLC 2 [;] [SAN I];

[SAN 11 3 ]; Sullivan Staffing, Inc. [;

and] Simplifying Business, LLC." Id. at 37.
In February 2008, Gallagher's company told Guarantee that
the first named insured should be SAM I, with SAN II and the
rest as named insureds. Dkt. No. 111-16 at 22.
Guarantee and SAM I Communicate Regularly

Guarantee communicated with SAN I. Dkt. No. 111-22 at 7.
In May 2010, Guarantee sent SAN I a letter discussing the terms
of SAN I's insurance policy. Id. It referred to SAN I as
"Sullivan Administrative Managers." See generally id.
SAM I reciprocated through Mr. Sullivan.

Mr. Sullivan

"acknowledged, agreed to and accepted" the May 2010 letter as
SAM I's chairman. Id. at 9. He signed both a January 2011
security agreement and May 2011 collateral agreement with
Guarantee as chairman of SAN I. Id. at 10-19. Mr. Sullivan
also signed a January 2011 commercial promissory note from
Guarantee on behalf of SAM I. Id. at 22-26.
Guarantee Sues SAM I in Florida

In February 2012, Guarantee sued SAM I, "a/k/a Sullivan's
Administrative Managers, LLC, n/k/a Sullivan's Administrative
Managers, Inc.," in Florida court, alleging breach of the four
policies for failure to pay premiums. Dkt. No. 111-7 at 6-11.
2

Sullivan's Administrative Managers, LLC absorbed this entity in 2003. Dkt.
No. 111-19 at 1.
SAM II was once known as "Sullivan Target Co." Dkt. No. 111-18 at 1, 5.
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SAM I moved to dismiss on March 30, 2012, nowhere alleging
anything relating to its corporate identity or SAM II. Dkt. No.
111-5. The court denied the motion in June 2012. Dkt. No. 1116. SAM I moved to dismiss a second time on July 26, 2012, again
keeping silent as to corporate identity and SAM II. Dkt. No.
111-7; see also Dkt. No. 111-8 (amending this motion on August
12, 2012, still without raising identity). This motion was also
denied. Dkt. No. 111-9 (order of October 4, 2012).
SAM I then answered the complaint. Dkt. No. 111-10. None
of SAM I's six affirmative defenses concerned its corporate
identity. See id. at 4-5. They were: failure to mitigate
damages, unclean hands, negligent misrepresentations, failure to
state a cause of action for breach of contract, and the statute
of limitations. Id.
The Florida Courts Award Smm'riry Judgment for Guarantee, SAM I's
Corporate-Identity Argument Notwithstanding

Guarantee moved for summary judgment.

Dkt. No. 111-12.

Guarantee pointed out Florida law requiring insureds to exhaust
administrative remedies before raising defenses based on premium
calculation. Id. at 16-17. Guarantee also responded to each of
SAM I's affirmative defenses on the merits. Id. at 18-19.
In responding, SAM I finally argued that "each policy was
issued to [SAM II], a company separate and distinct from [SAM
I), which has never existed." Dkt. No. 111-13 at 2. SAN I also

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argued against the applicability of Florida administrativeexhaustion requirements, claiming that Florida did not apply
because Guarantee did not prove that the policies were delivered
in Florida. Id. at 3.
The Florida trial court granted Guarantee summary judgment
on all counts "as to liability" on November 4, 2013. Dkt. No.
111-14. The order styled the defendant as

"[SAN I], a/k/a

Sullivan's Administrative Managers, LLC, n/k/a Sullivan's
Administrative Managers, Inc." Id.
Just under two weeks later, SAN I moved to amend the final
judgment so that it would only be entered against SAN I. Dkt.
No. 111-15 at 3. This motion again argued that SAM I "has never
existed." Id. at 2-3. The trial court de facto denied it. See
Dkt. No. 111-17 (listing all defendants in final judgment).
The Florida District Court of Appeal summarily affirmed on
December 10, 2015. Dkt. No. 136-1.
While the Florida Litigation Is Ongoing, SAM II Sues Guarantee
in Georgia

Meanwhile, north of the Florida-Georgia line, the present
lawsuit was already under way. On July 2, 2012—while SAN I was
unsuccessfully attempting to dismiss the Florida case—SAM II
It named the appellant SPJ4 I.
Id.; see also Dkt. No. 137-1 (giving same
name in mandate). The reason why it gave this name is not apparent. SAM I
did not move the appellate court to do so.
SAM II does not raise any argument based on the appellate styling, and
the Court "will not undertake to formulate [SAN II's] summary
judgment arguments for it." Shears v. Mobile Cty. Revenue Coinm'n, Civ. A.
No. 07-0491, 2008 WL 4493234, at *8 (M.D. Ala. Oct. 3, 2008).
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sued Guarantee in Georgia. Dkt. No. 1-1 at 1. SAM II's claims
centered on the same policies. Id. at 3. SAM II alleged
negligent misrepresentations, breach of contract, fraud, and
conversion. Id. at 6-9. The matter was removed to the Court on
August 15, 2012. Dkt. No. 1.
Following the Florida judgment, Guarantee filed the present
Motion. Dkt.

No.

111; cf. Dkt.

No.

110 (modifying motions

deadline). The parties briefed the matter. Dkt. Nos. 117, 124.
The Court then stayed proceedings pending the appellate
decision. Dkt. No. 135. That decision and mandate arrived at
2015's end. Dkt. Nos. 136-37. SAM II responded and Guarantee
replied. Dkt.

Nos.

138, 140. The Motion is now ripe for

judgment.
Legal Standard

Summary judgment is granted where "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." Fed. R.
Civ. P. 56(a). "A fact is 'material' if it 'might affect the
outcome of the suit under the governing law." FindWhat Inv'r
Grp. v. FindWhat.com , 658 F.3d 1282, 1307 (11th Cir. 2011)
(quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986)). "A dispute . . . is 'genuine' if the 'evidence is such

It also raised Georgia's RICO; this was dismissed. Id. at 9; Dkt. No. 29.
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that a reasonable jury could return a verdict for the nonmoving
party." Id. (quoting Anderson, 477 U.S. at 248).
The Court interprets the evidence most favorably to the
nonmoving party and draws all reasonable inferences in its
favor. Johnson v. Booker T. Washington Broad. Serv.., Inc., 234
F.3d 501, 507 (11th Cir. 2000). The moving party must show a
lack of evidence supporting the nonmoving party's case. Celotex
Corp. v. Catrett, 477 U.S. 317, 323, 325 (1986). If it does,
then the nonmovant has to present affirmative evidence proving
that a genuine issue of fact exists. Anderson, 477 U.S. at 257.
Discussion
I. TWO SAM II BRIEFS ARE STRICKEN AS IMPROPER.

The Court first strikes as improper two briefs filed by SAN
II: Plaintiff's Response to Defendant Guarantee Insurance
Company's Notice of Mandate from the Florida Court of Appeal
("The Response"), dkt. no. 138, and Plaintiff's Reply to
Defendant Guarantee Insurance Company's Reply to Plaintiff's
Response to Notice of Mandate from the Florida Court of Appeal
("The Sur-Response"), dkt. no. 142.
The Response was untimely. Guarantee's Notice of Mandate
was filed on December 30, 2015. Dkt. No. 137. The Response was
not filed until March 7, 2016. Dkt. No. 138. This was over two
and a half months later. The Court's local rules require all
responses to be submitted within fourteen days. S.D. Ga. L. R.
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7.5.

SAN II made no attempt whatsoever to justify its

tardiness.

It did not even move the Court to accept the

untimely filing. The Court thus STRIKES the Response. See Fed.
R. Civ. P. 6(b) (1) (B) (requiring motion for extension of time
demonstrating good cause and excusable neglect if extension
sought after time has expired).
The Sur-Response is also improper.

To be clear, this

district does not cap the number of reply briefs. Royal v. N.Y.
Life Ins. Co., No. 6:10-CV-104, 2015 WL 339781, at *5 (S.D. Ga.
Jan. 26, 2015). But "[SAN II's] sur reply is not a sur reply at
all. Rather, it is a resubmission of [SAM II's] response to
[Guarantee's] motion for summary judgment." Id. at *6. In
fact, the Sur-Response goes far beyond SAM II's timely summary
judgment response brief. The earlier brief was three-and-afifth pages long and had no attachments. Dkt. No. 117. The
Sur-Reply appended 107 pages of exhibits, including a new
affidavit. Dkt. No. 142. The Sur-Reply was nothing less than
an "attempt[] to take another bite at responding." Royal, 2015
WL 339781, at *6.
It was thus an abuse of the Court's liberality. The Court
bans "reply" briefs that go beyond rebuttal, because not doing
so would be an invitation to "attorneys to submit bare-bones
responses as a sort of temporal bookmark by which they could
preserve their right to respond while taking more time than the
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Rules allow to gather evidence and to formulate an argument."
Id. at *6_7. That is what SAN II tried to do by following up
its scanty, un-evidenced summary judgment response with the
rather hefty Sur-Reply. As Judge Edenfield aptly put it, "[SAN
II] chose to attempt to pull the wool over the Court's eyes and
take more time than was allowed in responding to Defendant[']s[]
motion for summary judgment." Id. at *6.
But

"[s]he is not tricked who knows

[s]he is being

tricked." Id. Therefore, the Court STRIKES the Sur-Response.
II. GUARANTEE IS ENTITLED TO SUARY JUDGMENT.

The Court now GRANTS Guarantee's Motion, as SAN II's case
is barred by res judicata and collateral estoppel. The Court
determines the preclusive effect of a Florida judgment using
Florida law. See Bennett v. Zurich Am. Ins. Co., No. CV 512061, 2013 WL 3048493, at *3 (S.D. Ga. June 17, 2013). Florida's
res judicata rule is that "a judgment on the merits bars a
subsequent action between the same parties on the same cause of
action." State v. McBride, 848 So.2d 287, 290 (Fla. 2003). Of
course, res judicata also extends to "claims that could have
been raised in the prior action." Id.
Florida defines collateral estoppel as a bar on "identical
parties . . . relitigating the same issues that have already
been decided." Id. at 290 (quoting Dep't of Health & Rehab.
Servs. v. B.J.M., 656 So.2d 906, 910 (Fla. 1995)).
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What these two doctrines boil down to is that SAN III
claim is barred if the Florida state proceedings featured: (1)
the same parties; (2) the same causes of action; and (3) a
judgment on the merits. They did.
A. The Florida Suit Featured the Same Parties.

The Florida proceedings featured the same parties as appear
here, because SAN I is just a misnomer for SAN II. Mr. Sullivan
admits that SAN II contracted with Guarantee for the four
policies. Dkt. No. 62-1 ¶ 4. SAN II's federal employer
identification number appeared on the front of each. Id. 91 5.
Mr. Sullivan admits that SAN I has never existed. Id. ¶ 3. SAN
I had no reality other than as the primary named insured on SAM
II's policies. Thus, SAM I was a mere misnomer for SAM II.
It does not matter that Guarantee sued "SAN I." "[P]ersons
who are sued by the wrong name may nevertheless appear and
defend the action, and if they fail to object to the misnomer by
appropriate pleading or motion they may be bound by a
judgment . . . ." RHPC, Inc. v. Gardner, 533 So.2d 312, 314
(Fla. Dist. Ct. App. 1988); see also Royal Ati. Health Spa, Inc.
v. B.L.N., Inc., 677 So.2d 1385 (Fla. Dist. Ct. App. 1996). SAM
II appeared and defended the Florida case.

SAM II did not

object to its misnomer until it defended against summary
judgment.

1

That objection was not

sustained.
AO 72A
(Rev. 8/82)

Dkt. No. 111-13 at 2.
See Dkt. No. 111-14.

The Florida trial court

10

declined to limit its judgment to the fictitious SAM I, despite
SAM II's request. See Dkt. No. 111-17. SAM II is thus the same
party as SAM I.
Even assuming that SAM I were not SAM II's alter ego, and
so SAM II were not "technically not a party" to the Florida
case, SAM II still "had an interest in the prior litigation and
the right to participate therein." Red Carpet Corp. of Panama
City Beach v. Roberts, 443 So.2d 377, 380 (Fla. Dist. Ct. App.
1983). After all, the insurance policies properly belonging to
SAM II were at issue. Besides, SAM II is "controlled by the
individual[] involved in the prior action," that is, Mr.
Sullivan, and "the events alleged to have resulted in injury to
[SAM II] are the same as those which were or could have been
alleged in the former action." Id.; see also discussion infra.
SAM I and SAM II are the same party. See id.
B. The Florida Suit Featured the Same Causes of Action.

Whatever claims SAM II could bring here were or could have
been raised in the Florida proceedings. Here, SAM II alleges:
(1) negligent misrepresentations; (2) fraud; (3) breach of
contract; and (4) conversion. Dkt. No. 1-1 at 6-9.
(1) Negligent misrepresentations were actually raised in
the Florida case. Dkt. No. 110-10 at 4.
(2) SAM II's fraud claim here is based on "willful[] and/or
negligent[) misrepresent[ations]." Dkt. No. 1-1 at 8.
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Again,

negligent misrepresentations were raised; further, "SAM I" based
its unclean hands defense on "[Guarantee's] . . . false
representations." Dkt. No. 110-10 at 4.
(3) "SAM I" could have counterclaimed breach of contract.
(4) SAM II's conversion claim alleges overbilling and
"refusing to return [SAM II's] overcharged premium." Dkt. No.
1-1 at 8. This echoes its breach of contract claim, see id. at
7, and so it also could have been counterclaimed.
SAN II argues that its claims could not have been litigated
in the Florida suit because the court there "relied upon a[
Florida] administrative exhaustion doctrine that barred SAN I
from even raising its claims as defenses." Dkt. No. 117 at 3.
This may not be true, as the court's order merely said that
summary judgment was granted. Dkt. No. 111-14.
Even if it were, this objection is without merit.

In

resisting summary judgment, "SAM I" specifically argued that
Florida law did not apply to the dispute. Dkt. No. 111-13 at 3.
It also argued against barring its defenses for failure to
exhaust administrative remedies. Id. at 6-12.
There are two possibilities. One is that "SAM I" persuaded
the Florida court. If that happened, then that court rejected
"SAM I's" defenses, and res judicata and estoppel clearly apply.
The other possibility is that the Florida court barred "SAM
I's" defenses based on Florida law. Is there, then, a genuine
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issue of material fact as to whether SAN II could not have
raised claims available to it here in the earlier proceeding?
There is not.

Even in Georgia, Florida law would govern

this dispute, so administrative exhaustion would apply.

The

Court would follow Georgia choice-of-law doctrine. See Wausau
Underwriters Ins. Co. v. Danfoss, LLC, No. 2:14-CV-14420, 2015
WL 6456569, at *6 ("[A]pplying the substantive law of the forum
state means applying the choice-of-law rules of the forum state,
not merely concluding that the forum state's law
applies . . . .").

Georgia adheres to the lex loci contractus

rule in determining choice-of-law for contract disputes.

See,

e.g., Lima Delta Co. v. Glob. RI-022 Aerospace, Inc., 789 S.E.2d
230, 235 (Ga. Ct. App. 2016). Under Georgia's interpretation of
that rule, the law of the place where a contract was delivered
governs disputes arising under it. Id.; Fed. Ins. Co. v. Nat'l
Dist. Co., 417 S.E.2d 671 (Ga. Ct. App. 1992) (holding rule
applies to insurance contract with named insureds in multiple
states).
The undisputed evidence showed that the policies at issue
were delivered in Florida:
(1) The policies were negotiated on SAN II's behalf by
Gallagher's company, which is located in Florida. Dkt. No. 30
at 2 ("The policies were negotiated by Arthur Gallagher, Inc. on
behalf of SAM II."); Dkt. No. 30-1 191 1-3 (describing the
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negotiations); Dkt. No. 111-24 at 3-4 (giving Gallagher's
company's address as in Florida).
(2) Gallagher's company discussed final touches on the
policies with Guarantee, like the ordering of the named insureds
and their corporate names. Dkt. No. 111-24 at 3-5.
(3) The negotiations resulted in coverage for SAM II. Dkt.
No. 30-2 at 2.
(4) SAM II renewed its coverage. Id. at 3.
(4) Mr. Sullivan communicated with Guarantee regarding his
coverage. Dkt. No. 111-22.
(5) The policies were not delivered in Georgia. Dkt. No.
60, 16:05-06; Dkt. No. 62-1 at 2.
This is all strong evidence that the policies were
delivered to Gallagher's company in Florida. Delivery of
policies to the insured's agent is delivery to the insured. See
O.C.G.A. § 10-6-58 ("Notice to the agent of any matter connected
with his agency shall be notice to the principal."); Essex Ins.
Co. v. Zota, 985 So.2d 1036, 1050 (Fla. 2008); cf. Sumitomo
Marine & Fire Ins. Co. of Am. v. S. Guar. Ins. Co. of Ga., 337
F. Supp. 2d 1339, 1353-54 (N.D. Ga. 2004) ("Defendants, through
the acts of their agent, had knowledge of the Certificates of
Insurance. This is true even if defendants did not actually
receive copies of the Certificates . . .

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SAM II claims that Guarantee did not even deliver the
policies to Gallagher. Dkt. No. 116 at 2. But its only
evidence is the following statement:
. where we delivered the
.
I can't prove .
policies . . . . Guarantee would [have] give (n] the
policies to Gallagher. Gallagher is in Clearwater,
Florida. . . . I don't have . . . evidence that [the
policies] were delivered to Gallagher in Florida. But
that is the normal course of business for our clients.
[The policies] certainly weren't delivered in
Georgia .
Dkt. No. 60, 15:17-16:06.
This is not evidence that the policies were never delivered
to Gallagher. Quite the opposite, it further suggests that they
were. This statement thus fails to satisfy SAM II's burden of
resisting summary judgment with affirmative evidence. Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986)).
Guarantee has presented strong evidence that the policies
were delivered in Florida, and SAM II lacks any affirmative
evidence to the contrary. There is no genuine dispute of
material fact as to this point.
Thus, under lex loci coritractus, Florida law—adniinistrative
exhaustion rule and all—would govern these proceedings. See
Wausau Underwriters Ins. Co., 2015 WL 6456569, at

*1 n.1

(holding that the court would apply whatever administrative

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exhaustion requirements may have barred insured's defenses under
law of state determined pursuant to lex loci contractus)

•6

The prior Florida judgment was not based on any bar to
defenses that could be lowered here. Whatever claims could be
raised here could have been raised in the earlier proceeding.
C. The Florida Suit Featured Judgment on the Merits.

Lastly, the Florida court entered judgment on the merits.
For a judgment to be "on the merits," there only has to be a
"statement that clearly shows that the issue was considered by
the court on the merits and relief was denied." Topps v. State,
865 So.2d 1253, 1258 (Fla. 2004). The judgment here explicitly
stated that summary judgment was granted "as to liability."
Dkt. No. 111-14. This suffices.
Conclusion

"[T]hat which we call a rose [b]y any other name would
smell as sweet."

WILLIAM SHAKESPEARE, ROMEO AND JULIET,

act 2, sc. 2.

Conversely, "SAN I" can call itself "SAN II" all it likes, but
that does nothing to lessen the preclusive effect of the Florida
judgment against it. Res judicata and collateral estoppel bar
this action.

6

Georgia will not give effect to another state's law if that law violates
Georgia public policy. Fed. Ins. Co. v. Nat'l Dist. Co., 417 S.E.2d 671, 674
(Ga. Ct. App. 1992). There does not appear to be any Georgia public policy
against requiring insureds to exhaust administrative remedies before raising
defenses.
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For the foregoing reasons, Guarantee's Motion for Summary
Judgment Based on Res Judicata and Collateral Estoppel, (dkt.
no. 111), is hereby GRANTED.
SO ORDERED, this 11TH day of October, 2016.

LISA GODBEY OOD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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