Westfield Insurance Company v. Dabbs-Williams General Contractors, LLC et al

Filing 51

ORDER granting 24 Plaintiff's Motion for Summary Judgment. Signed by Chief Judge Lisa G. Wood on 9/27/2012. (csr)

in ttjt Vnitib Atatto Ditrttt Court
for the 6authan 0ittritt of &orgta
tateboro Otbiton
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Plaintiff,
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vs.
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DABBS-WILLIAMS GENERAL
CONTRACTORS, LLC; TILLMAN PARK, *
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LLC; AND T. HOLMES RAMSEY, JR.,
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Defendants.
WESTFIELD INSURANCE COMPANY,

CV 611-013

ORDER
Presently before the Court is a Motion for Summary
Judgment filed by Plaintiff Westfield Insurance Company
("Westfield" or "Insurer") . Dkt. No. 24. For the reasons
stated below, Plaintiff's motion is GRANTED.
BACKGROUND
The present dispute grew out of a construction project in
Statesboro, Georgia. Tillman Park, LLC and T. Holmes Ramsey
(collectively "Tillman") hired Defendant Dabbs-Williams ("DabbsWilliams" or "Insured") to build a condominium complex across
from the main entrance to Georgia Southern University. Dkt. No.
39, Attach. A-i.

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Eventually, the relationship between Dabbs-Williams and
Tillman deteriorated. Dkt. No. 26, Ex. 1 35:1-12. In October
2007, after the completion of the project, Dabbs-Williams filed
suit against Tillman in the Superior Court of Bulloch County
alleging that Tillman had not fully paid Dabbs-Williams for its
work. Dkt. No. 1, Ex. A. In response, Tillman filed
counterclaims against Dabbs-Williams for, among other things,
negligent and defective construction and for breach of implied
duty to perform in a fit and workmanlike manner. Dkt. No. 1,
Ex. B. Specifically, Tillman alleged that because of DabbsWilliams's negligent excavation of the crawl space, the
"excavations [were] collect[ing] and hold[ing] water and
creat[in g ] moisture problems for the individual units and the
structure as a whole." Dkt. No. 1, Ex. B ¶ 43. Also, Tillman
alleged it had incurred "substantial costs in correcting the
defects and repairing the damages" that resulted from DabbsWilliams's negligent construction and breach of implied duties.
Dkt. No. 1, Ex. B ¶I 45, 51. Tillman also alleged that it had
incurred damages because the construction defects had "caused a
substantial delay in [Tillman's] ability to sell the units."
Dkt. No. 1, Ex. B 191 46, 52. Finally, in the professional
affidavit attached to Tillman's counterclaim, Tillman's expert
stated that Dabbs-Williams's "construction of excavated crawl
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spaces [would] cause moisture problems in the units, including
but not limited to mold and mildew spores, rot, wood destroying
organisms, and other structural problems." Boyles Aff., Dkt.
No. 26, Ex. 2 ¶ 10.
Upon receipt of the counterclaim, Dabbs-Williams conferred
with its counsel and decided not to file a notice of a claim
with its insurance company, Westfield, because Dabbs-Williams
concluded it was "a non-coverable issue.". Dkt. No. 26, Ex.l
24:1-5. The notice provisions in Dabbs-Williams's insurance
policy required that Westfield be "notified as soon as
practicable of an 'occurrence' or an offense which may result in
a claim." Dkt. No. 1, Ex. E. The insurance policy also
required notice of a "suit" to be given as soon as practicable,
with "suit" defined as "a civil proceeding in which damages
because of . . . 'property damage' or 'personal and advertising
injury' to which this insurance applies are alleged." Dkt. No.
1, Ex. E.
For two years, the Superior Court of Bulloch County stayed
discovery while determining the enforceability of a mandatory
arbitration provision in the construction contract between
Dabbs-Williams and Tillman. Dkt. No. 30, 5-6. After denying
the motion to compel arbitration, the superior court turned once
again to the merits of the suit and directed that the parties

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proceed with discovery. Dkt. No. 30, 6. In May 2010, Tillman
responded to Dabbs-Williams's supplemental discovery requests
and further expanded its allegations of negligence and faulty
construction to other parts of the building. Dkt. No. 30, 5;
Dkt. No. 33, Ex. 1. Tillman amended its counterclaim to reflect
these new allegations. Dkt. No. 33, Ex. 1.
On June 10, 2010, two years and seven months after the
filing of the initial counterclaim, Dabbs-Williams notified
Westfield of the pending suit. Dkt. No. 29 ¶ 23. DabbsWilliams's explanation for this lengthy delay was that it
thought the initial claims were limited to construction defects
in the crawl space, whereas the later amendments added
construction defects in the building envelope. Dkt. No. 30, 12. As such, Dabbs-Williams believed that, although the initial
claims were not covered by the policy, these amended claims
would be. Dkt. No. 30, 1-2.
Westfield began defending Dabbs-Williams in the state court
litigation, but pursuant to a Non-Waiver Agreement, DabbsWilliams reserved its right to file this declaratory judgment
action in federal court. Dkt. No. 24, Ex. 1 ¶ 22.
LEGAL STANDARD

Under Federal Rule of Civil Procedure 56(a), summary
judgment is appropriate "if the movant shows that there is no

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genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law." The court must view
the evidence and draw all inferences in the light most favorable
to the nonmovant. Adickes v. S.H. Kress & Co., 398 U.S. 144,
157-59 (1970). The party seeking summary judgment must first
identify grounds that show the absence of a genuine issue of
material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322-24
(1986). To discharge this burden, the movant must show the
court that there is an absence of evidence to support the
nonmoving party's case. Id. at 325. The burden then shifts to
the nonmovant to go beyond the pleadings and present affirmative
evidence to show that a genuine issue of fact does exist.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257 (1986).
DISCUSSION
Summary judgment is appropriate here because no reasonable
jury could conclude that Dabbs-Williams's notice to Westfield
was given "as soon as practicable" as required by the policy.
Dabbs-Williams's explanation is insufficient, and the delay was
unreasonable as a matter of law.
There is no question that the notice provisions here are
valid. See e.g., Federated Mut. Ins. Co. v. Ownbey Enters.
Inc., 627 S.E.2d 917 (Ga. Ct. App. 2006); Plantation Pipeline
Co. v. Royal Indem. Co., 537 S.E.2d 165 (Ga. Ct. App. 2000);

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Richmond v. Ga. Farm Bureau Mut. Ins. Co., 231 S.E.2d 245 (Ga.
Ct. App. 1976). Under Georgia law, "notice provisions are made
a condition precedent to coverage so that insurers can be
certain that they are given the opportunity to investigate the
facts surrounding an incident promptly and to prepare a defense
or settlement while the facts are still fresh and witnesses are
still available." Illinois Union Ins. Co. v. Sierra Contracti
Corp., 744 F. Supp. 2d 1349, 1351 (N.D. Ga. 2010). The duty to
provide notice "is triggered when the insured actually knew or
should have known of the possibility that it might be held
liable for the occurrence in question." S.C. Ins. Co. v. Cood
F. Supp. 234, 237 (M.D. Ga. 1997).
When, as here, the insured has offered a justification for
the delay, the standard for evaluating that justification is
objective reasonableness. See Forsehee v. Emp'rs Mut. Cas. Co.,
711 S.E.2d 28, 31-32 (Ga. Ct. App. 2011). "[I]f a reasonable
and ordinarily prudent person would conclude that an event forms
no basis for a possible claim, the failure of the insured to
give notice of the event is justified and no bar to coverage."
Id. at 31. Generally, whether an insured gave reasonable notice
is a question for the factfinder. Plantation Pipeline, 537
S.E.2d at 167. However, "'[u]nder all the facts and
circumstances of a particular case[,] it may be found that an
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insured's delay in giving notice of an accident to his insurer
was unjustified and unreasonable' as a matter of law." Id.
(citing Richmond, 231 S.E.2d at 249) . This is one of those
cases; Dabbs-Williams's delay of over two and a half years was
unreasonable as a matter of law.'
To justify its delay, Dabbs-Williams focuses on the
amendments Tillman made to its counterclaim in May 2010. DabbsWilliams makes two related, but distinct arguments based on
those changes. First, Dabbs-Williams argues that, when Tillman
amended its counterclaim to include construction defects in
other parts of the building, the counterclaim changed so
fundamentally that the change constituted a new "occurrence."
Dkt. No. 30. Second, Dabbs-Williams asserts that the insurance
policy would not have offered any coverage for the initial
counterclaims filed by Tillman. Dkt. No. 38. According to
Dabbs-Williams, only after the later amendments were any of the
claims even potentially covered. Dkt. No. 38.

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Georgia law does not require prejudice to the insurer when the notice
provisions are made a condition precedent to coverage. See Se.
Express Sys., Inc. v. S. Gaur. Ins. Co. of Ga., 482 S.E.2d 433, 436
(Ga. Ct. App. 1997). Here, the notice provisions are a condition
precedent to coverage. Dabbs-Williams has admitted that the policy
here has "identical notice requirements" as the policy in Trinity
Universal. Dkt. No. 30, 18; see Trinity Universal Ins. Co. v. Ga.
Cas. & Sur. Co., No. 1:08-cv-1332-JOF, 2009 WL 1174659 (N.D. Ga. Apr.
28, 2009) . And, in that case, the court held that compliance with
the notice provisions was a condition precedent to coverage. Id. at
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The additions made in Tillman's amended counterclaim did
not constitute a separate occurrence. Tillman's amendments in
May 2010 did not change the nature of the counterclaims, but
merely enlarged their scope. Compare Dkt. No. 1, Ex. B, with
Dkt. No. 33, Ex. 1. Tillman did not add any additional counts.
Most of the counterclaim remained intact. The most significant
change was that Tillman specifically listed additional instances
of construction defects under Count I, the negligence claim.
Compare Dkt. No. 1, Ex. B ¶ 43, with Dkt. No. 33, Ex. 1 ¶ 45.
As such, Tillman's filing of its amended counterclaim cannot
constitute a new occurrence for notice purposes. The amendments
were not as monumental as Dabbs-Williams suggests.
Secondly, Dabbs-Williams's conclusion that its insurance
policy provided no potential coverage for Tillman's initial
counterclaim was unreasonable. Under Georgia law, "while
construction defects constituting a breach of contract are not
covered by [Commercial General Liability] policies, negligently
performed faulty workmanship that damages other property may
constitute an 'occurrence.'" Hathawa y Dev. Co., Inc. v. Am.
Empire Surplus Lines Ins. Co., 686 S.E.2d 855 (Ga. Ct. App.
2009), aff'd, 707 S.E.2d 369 (Ga. 2011). The record here does
not support Dabbs-Williarns's conclusion that the initial
counterclaim was limited to defects in the crawl space and "did
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not involve any claims of damage to other portions of the
construction project or the need for any repairs or remediation
of resulting damage." Dkt. No. 30.
Far from being limited, Tillman's initial counterclaim
referenced extensive problems and substantial damages. The
counterclaim described "moisture problems for the individual
units and the structure as a whole." Dkt. No. 1, Ex. B ¶ 43.
Tillman also alleged it had incurred "substantial costs in
correcting the defects and repairing the damages" that resulted
from Dabbs-Williams's conduct. Dkt. No. 1, Ex. B 191 45, 51. In
the expert affidavit attached to the counterclaim, Tillman's
expert stated that the defects in the crawl spaces would "cause
moisture problems in the units, including but not limited to
mold and mildew spores, rot, wood destroying organisms and other
structural problems." Boyles Aff., Dkt. No. 26, Ex. 2 ¶ 10.
Although Dabbs-Williams may have subjectively and optimistically
hoped that the initial counterclaims would prove to be very
limited, that belief was objectively unreasonable.
Furthermore, Georgia law and the policy itself require
notice if there may be a claim. See Forsehee, 711 S.E.2d at 31.
Given that Dabbs-Williams admits that, when it received the
initial counterclaim, it was unsure as to the extent of what
Tillman was claiming, it was unreasonable for Dabbs-Williams to
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conclude there was no possibility that anything in the
counterclaim might be covered. Dkt. No. 26, Ex. 1 18:16-25,
19:1-8.
Also, as discussed above, the changes Tillman made when it
amended its counterclaim were relatively insignificant. DabbsWilliams has not put forth any persuasive explanation for why
the initial claims would not be covered, but the amended claims
would be. Whether the construction defects were in the crawl
space or the building envelope is, in this instance, a
distinction without a difference.
Given that Dabbs-Williams's justification for the delay is
unreasonable as a matter of law, this Court must next determine
whether the notice Dabbs-Williams gave Westfield in June 2010
complies with the notice provisions. Clearly it does not. Two
years and seven months passed from the time Dabbs-Williams
received the initial counterclaim in October 2007 and when it
gave Westfield notice in June 2010. Courts have repeatedly held
that much shorter delays precluded coverage. See, e.g., Am.
Ins. Co. v. Evercare Co., 699 F. Supp. 2d 1361, 1368 (N.D. Ga.
2010) (holding that nine month delay did not constitute notice
"as soon as practicable"); Cotton States Mut. Ins. Co. v. Int'l
Surplus Lines Ins. Co., 652 F. Supp. 851, 856 (N.D. Ga. 1986)
("The Georgia courts have repeatedly held that where no valid

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excuse exists, failure to give written notice for periods in the
range of four to eight months is unreasonable as a matter of
law."); Kay-Lex Co. v. Essex Inc. Co., 649 S.E.2d 602, 608 (Ga.
Ct. App. 2007) (delay of one year unreasonable as a matter of
law). Accordingly, this Court holds that Dabbs-Williams's delay
of over two and a half years before providing notice to
Westfield did not constitute notice "as soon as practicable,"
and, thus, the policy does not cover Tillman's claims.
CONCLUSION

Because Dabbs-Williams's proffered justification for the
lengthy delay is unreasonable as a matter of law, summary
judgment is proper. Accordingly, Plaintiff's Motion for Summary
Judgment, Dkt. No. 24, is GRANTED.

SO ORDERED, this 27th day of September, 2012.

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SA GODBEY VkOD, CHIEF JUDGE
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF GEORGIA

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