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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 14-14457

Non-Argument Calendar

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D.C. Docket No. 4:13-cv-00139-WTM-GRS

PHILLIP O'DELL, 

as Assignee of Roland B. Mahoney and Sandra R. Mahoney,

 Plaintiff - Appellant,

versus

PACIFIC INDEMNITY COMPANY, 

 Defendant - Appellee.

________________________

Appeal from the United States District Court

for the Southern District of Georgia

________________________

(July 17, 2015)

Before MARCUS, MARTIN and ANDERSON, Circuit Judges.

PER CURIAM: 

Phillip O’Dell, as assignee of Roland and Sandra Mahoney (“the 

Mahoneys”), appeals from the district court’s grant of summary judgment in favor 

of Pacific Indemnity Company (“Pacific Indemnity”), in O’Dell’s lawsuit seeking 

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recovery under an insurance policy covering the Mahoneys’ former home. O’Dell 

argues on appeal that the district court erred in granting summary judgment to

Pacific Indemnity because: (1) the court failed to consider covered claims for 

physical damage; (2) diminution in value resulting from misrepresentation amounts 

to covered property damage; and (3) even if no coverage existed, Pacific Indemnity 

breached its duty to defend the Mahoneys. After careful review, we affirm. 

We review an order granting summary judgment de novo, viewing all of the 

facts in the light most favorable to the non-movant. Brooks v. Cnty. Comm’n of 

Jefferson Cnty., Ala., 446 F.3d 1160, 1161-62 (11th Cir. 2006). Summary 

judgment is appropriate 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). After the party moving for summary judgment shows the 

absence of a genuine issue of material fact, the burden shifts to the non-movant, 

who must present affirmative evidence to show that a genuine issue of material fact 

exists. Porter v. Ray, 461 F.3d 1315, 1320 (11th Cir. 2006). We may affirm the 

district court’s judgment based on “any ground supported by the record, regardless 

of whether that ground was relied upon or even considered by the district court.” 

Kernel Records Oy v. Mosley, 694 F.3d 1294, 1309 (11th Cir. 2012). 

“Under Georgia law [which the parties agree applies], contracts of insurance

are interpreted by ordinary rules of contract construction.” Boardman Petroleum, 

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Inc. v. Federated Mut. Ins. Co., 498 S.E.2d 492, 494 (Ga. 1998). Where the terms 

are unambiguous, we “look to the contract alone to ascertain the parties’ intent.” 

Id. Although ambiguities are construed against the insurer, we consider the 

contract as a whole and give each provision its intended effect. Id. 

The facts viewed in the light most favorable to O’Dell are these. The 

Mahoneys owned a home in Savannah, Georgia (the “Property”) that was damaged

by flooding. The Mahoneys insured the Property with a “Masterpiece” Policy 

issued by Pacific Indemnity (the “Policy”). The Policy included “Personal 

Liability Coverage,” covering “damages a covered person is legally obligated to 

pay for personal injury or property damage which take[s] place anytime during the 

policy period and are caused by an occurrence.” Thus, Pacific Indemnity was 

obliged to defend the Mahoneys from “any suit seeking covered damages for 

personal injury or property damage.” “Property damage” was defined as “physical 

injury to or destruction of tangible property, including the loss of its use.” 

“Occurrence” was defined as “an accident or offense to which this insurance 

applies and which begins within the policy period. Continuous or repeated 

exposure to substantially the same general conditions unless excluded is 

considered to be one occurrence.” However, “[d]amage to covered person’s 

property” was excluded from the Personal Liability Coverage -- meaning there was 

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no personal liability coverage “for property damage to property owned by any 

covered person.”

Philip O’Dell contracted to purchase the Property. As part of the agreement, 

O’Dell received a disclosure statement that omitted the prior flooding experienced

by the Mahoneys. The sale of the Property closed on February 14, 2005, and the 

Mahoneys cancelled the Masterpiece policy effective February 15, 2005. 

Sometime later, O’Dell experienced flooding and septic problems at the 

Property. He subsequently learned that the Property had sustained flood damage

while the Mahoneys owned it. O’Dell filed suit against the Mahoneys in the State 

Court of Georgia on March 17, 2008. Through a series of amended complaints, 

O’Dell alleged claims against the Mahoneys for negligent failure to disclose prior 

flooding and septic issues, misrepresentation, and breach of contract relating to the 

sale of the Property. Specifically, O’Dell argued that his damages included the 

cost to “repair [flood and septic] damage” and “diminution of the property’s 

value.” The Mahoneys requested a defense under the Masterpiece Policy. Pacific 

Indemnity refused to defend or indemnify the Mahoneys because O’Dell’s

complaint did not seek covered damages and, alternatively, because any otherwise 

covered damages were excluded by the Policy. 

Prior to trial in the underlying suit, O’Dell settled with the Mahoneys for the 

maximum amount of coverage under the Policy ($500,000), but agreed not to 

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enforce the settlement against the Mahoneys. Rather, the Mahoneys assigned to 

O’Dell their rights and interests in any claims they had against Pacific Indemnity. 

O’Dell filed the instant action against Pacific Indemnity in the State Court of 

Georgia seeking damages, as assignee, for Pacific Indemnity’s “bad faith” refusal 

to defend and indemnify the Mahoneys in the underlying litigation. Pacific 

Indemnity removed this suit to the United States District Court for the Southern 

District of Georgia. The district court granted Pacific Indemnity’s motion for 

summary judgment, finding that O’Dell’s complaint did not allege covered 

“property damage” because it alleged only economic losses, which were not 

covered by the Policy. 

O’Dell’s first argument on appeal is that the damages he alleged in the 

underlying suit were not purely economic. Rather, he also sought the “cost of 

repairs” for physical damage due to flooding and septic problems. This argument 

ignores the undisputed facts and the plain language of the Policy. The “cost of 

repairs” sought by O’Dell could mean one of only two things: (1) the repair of 

damage that occurred after O’Dell purchased the Property; or (2) the repair of 

damage that occurred while the Mahoneys still owned the Property. Neither 

alternative alleges covered, non-excluded damages. 

To the extent we construe the underlying complaint to seek repair costs for 

damage that occurred after the closing, the Policy plainly provides no coverage. 

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The Policy’s Personal Liability Coverage unambiguously states that it covers only 

“property damage which takes place anytime during the policy period and [is]

caused by an occurrence.” Because the Mahoneys cancelled the Policy on 

February 15, 2005, any post-closing flood damage did not “take[] place anytime 

during the policy period.” Thus, no coverage exists under the unambiguous terms 

of the Policy. See Planters & Citizens Bank v. Home Ins. Co., 786 F. Supp. 977, 

985-87 (S.D. Ga. 1992) (noting that, under Georgia law, physical damage 

sustained outside the effective date of an insurance policy is not covered).

To the extent we construe O’Dell’s underlying complaint to seek repair costs 

for damage that occurred while the Mahoneys still owned the Property, his 

argument likewise fails. “Damage to covered person’s property” is expressly 

excluded from the Personal Liability Coverage. Thus, any liability for flood 

damage that occurred while the Mahoneys owned the property would be excluded 

as personal liability “for property damage to property owned by any covered 

person [here, the Mahoneys].” See, e.g., Claussen v. Aetna Cas. & Sur. Co., 754 F. 

Supp. 1576, 1578-79 (S.D. Ga. 1990) (noting that owned property exclusions bar

coverage for liability arising from damage to property owned by the insured

person). Regardless of how we construe O’Dell’s underlying complaint, it did not 

allege a covered, non-excluded claim for the cost of repairs.

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O’Dell’s second argument is that the Policy provides coverage for the 

diminution in the Property’s value resulting from the Mahoneys’ misrepresentation 

that no prior flooding had occurred. But the district court did not err by finding 

that O’Dell’s claim for diminution in value (a purely economic loss) was not 

covered “property damage.” “Property damage” is defined by the Policy as

“physical injury to or destruction of tangible property, including the loss of its 

use.” Assuming that the diminution in value occurred during the Policy period, it 

still did not involve any physical injury to or destruction of tangible property and, 

thus, the Policy does not provide coverage. See Nationwide Mut. Ins. Co. v. Bader 

& Assocs., Inc., No. 2:13-CV-00032-RWS, 2014 WL 231980, at *4 (N.D. Ga. Jan. 

22, 2014) (“The damages claimed [loss of the rental value of more than 20 homes 

caused by a misrepresentation regarding the number of functional bedrooms in 

light of limited septic capacity] . . . are purely economic losses which do not 

constitute ‘property damage’ under the definition in the Policies at issue.”).

Indeed, courts have noted that “cases are virtually unanimous in their 

holdings that damages flowing from misrepresentation and/or fraud have no basis 

in property damage.” State Farm Fire & Cas. Co. v. Brewer, 914 F. Supp. 140, 

142 (S.D. Miss. 1996); see id. (‘[T]he only cognizable damages from such torts are 

economic and contractual in nature and as such do not fall within the scope of 

coverage afforded by policies like [the one at hand].”); Safeco Ins. Co. of Am. v. 

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Andrews, 915 F.2d 500, 502 (9th Cir. 1990) (noting that a misrepresentation that 

materially impacts the value of a property does not constitute “damage to tangible 

property,” but only “economic loss,” which is “outside the scope of the [insurance] 

policy”). Because O’Dell’s claim for diminution in value was purely economic in 

nature, the district court did not err by finding that it did not constitute covered 

“property damage” under the Policy.1

Finally, O’Dell argues that even if the Policy does not provide coverage for 

the underlying claims, Pacific Indemnity breached its obligation to defend the 

Mahoneys. It is true that “an insurer’s duty to defend is broader than its duty to 

indemnify.” Shafe v. Am. States Ins. Co., 653 S.E.2d 870, 873 (Ga. Ct. App. 

2007). The Policy itself contemplates an obligation to provide coverage “even if 

the suit is groundless, false, or fraudulent.” However, both meritorious and nonmeritorious suits may allege facts that do not implicate coverage -- yielding no 

duty for the insured to defend. See Great Am. Ins. Co. v. McKemie, 259 S.E.2d 

39, 40 (Ga. 1979) (“[A] distinction must be drawn between groundless suits and 

actions which, even if successful[,] would not be within the policy coverage.” 

 1 O’Dell relies primarily on a Supreme Court of Colorado case to argue that economic damages 

resulting from a misrepresentation in the sale of property can constitute covered “property 

damage.” See Cyprus Amax Minerals Co. v. Lexington Ins. Co., 74 P.3d 294 (Colo. 2003). 

However, Cyprus involved an alleged misrepresentation in the sale of a mine that was insured by 

a policy with a “completed operations” clause -- extending coverage beyond the date of the sale -

- which expressly contemplated that “‘property damage’ can arise from ‘reliance on a 

representation.’” Id. at 307. Thus, Cyprus does not support a different result in this case. In any 

event, we’re bound by Georgia law.

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(quotation omitted)). As demonstrated above, even taking all of the facts alleged 

by O’Dell as true, he simply did not allege a claim that would be covered by the 

Policy. Thus, the district court did not err by finding no duty for Pacific Indemnity 

to defend the Mahoneys in the underlying suit.

AFFIRMED.

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