[PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT

________________________

No. 19-11114

________________________

D.C. Docket No. 1:17-cv-03657-LMM

AEGIS ELECTRIC & GAS INTERNATIONAL 

SERVICES LIMITED, 

 Plaintiff-Counter Defendant-Appellee,

versus

ECI MANAGEMENT LLC, 

f.k.a. ECI Management Corporation,

 Defendant-Counter Claimant-Appellant,

NICHON ROBERSON,

on behalf of herself and all others similarly situated,

 Defendant.

________________________

Appeal from the United States District Court

for the Northern District of Georgia

________________________

(July 30, 2020)

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2

Before WILSON, LAGOA and HULL, Circuit Judges.

HULL, Circuit Judge:

In this declaratory judgment action, Appellant ECI Management, LLC 

(“ECI”) appeals the district court’s grant of summary judgment in favor of its 

insurer Appellee AEGIS Electric & Gas International Services Limited 

(“AEGIS”). AEGIS brought this action to resolve the legal issue of whether 

AEGIS, as insurer, has a duty to defend or indemnify its insured ECI in an 

underlying state court lawsuit brought by a former tenant against ECI. In that 

lawsuit, the plaintiff—Roberson—was a former tenant at an apartment complex 

managed by ECI. Roberson’s state court complaint alleged that ECI had 

wrongfully withheld the security deposits of current and former tenants, in 

violation of Georgia’s security deposit law, O.C.G.A. § 44-7-35(c).

In the instant action, the district court concluded that insurer AEGIS has no 

duty to defend its insured ECI in the underlying lawsuit and thus no duty to 

indemnify ECI for any damages resulting from that lawsuit. The district court 

based its conclusion on two fundamental rulings: (1) none of the relief requested in 

the underlying lawsuit—or provided for in the applicable Georgia statute—

qualified as a “covered loss” under the terms of the policy issued by AEGIS, which 

explicitly carved out certain types of relief from the definition of “Loss”; and 

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(2) AEGIS did not waive those carve-outs when it failed to raise that defense until 

it filed the instant declaratory judgment action. 

On appeal, ECI contends both of these determinations were erroneous, and 

so too the district court’s grant of summary judgment in AEGIS’s favor. After 

review, and with the benefit of oral argument, we reverse the district court’s grant 

of summary judgment and conclude that AEGIS has a duty to defend ECI in the 

underlying state court lawsuit against it because that action and certain relief 

sought, if proved, would constitute a covered “Loss” under the insurance policy.

I. FACTUAL BACKGROUND

This case concerns an underlying state court lawsuit in which AEGIS 

declined to defend or indemnify ECI. First, we briefly summarize the terms of the 

policy agreement between AEGIS and ECI and the state court proceedings. Next, 

we discuss the instant declaratory judgment action.

A. The Policy

Based in Atlanta, Georgia, ECI is a company that manages multiple 

apartment properties in the state of Georgia. In 2016, ECI purchased a “Real 

Estate Services Professional Liability Insurance Policy” (the “Policy”) which was 

underwritten by AEGIS. The Policy limits liability to $1 million per claim and in 

the aggregate and covers a Policy Period of July 1, 2016, through July 1, 2017. 

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The Policy provides, in relevant part, that “[t]he Insurers [AEGIS] will pay 

on behalf of the Insured [ECI] all sums in excess of the Deductible amount . . . 

which the Insured shall become legally obligated to pay as Loss . . . resulting from 

Claims first made against the Insured during the Policy Period as a result of a 

Wrongful Act by the Insured.” The Policy further states that AEGIS, as the 

insurer, has the “duty to defend an Insured against any Claim that is covered by 

this Policy,” though it has “no duty to defend an Insured against any Claim to 

which this Policy does not apply.” 

The Policy defines “Claim(s)” to mean “any civil action, suit, proceeding, or 

written demand for money or Professional Services received by any Insured

seeking to hold the Insured responsible for Loss as a result of an alleged 

Wrongful Act committed by any Insured.”1

 Thus, “any civil action” that does 

not seek to hold the insured ECI responsible for a “Loss” under the Policy does not 

create a duty to defend on the part of the insurer AEGIS.

In turn, the Policy defines “Loss” as follows:

“Loss” means a compensatory monetary amount for which the Insured

may be held legally liable, including judgments (inclusive of any prejudgment or post-judgment interest), awards, or settlements negotiated 

with the prior approval of the Insurers, but shall not include:

1

There is no contention here that ECI’s alleged wrongdoing—that is, its alleged violation 

of Georgia’s security deposit statute—does not constitute a “Wrongful Act” under the terms of 

the Policy. We therefore do not discuss the Policy’s definition of this term. 

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a) any disgorgement, return, withdrawal, restitution or reduction of 

any sums which are or were in the possession or control of any 

Insured, or any amounts credited to any Insured’s account;

b) fines, sanctions, taxes, penalties or awards deemed uninsurable 

pursuant to any applicable law;

c) punitive, exemplary, treble damages or any other damages 

resulting from the multiplication of compensatory damages; [or]

d) equitable relief, or fees, costs or expenses incurred by the 

Insured to comply with any such equitable relief.

(emphasis added). 

B. The Underlying State Court Lawsuit

In May 2017 (during the Policy Period), Nichon Roberson filed a putative 

class action lawsuit against ECI and others in DeKalb County State Court. 

Plaintiff Roberson alleged that Defendant ECI systematically violated Georgia’s

security deposit statute by wrongfully withholding (in whole or in part) her 

security deposit and the security deposits of other current and former tenants of 

apartment complexes managed by ECI. Specifically, Roberson alleged that ECI

failed to provide departing tenants, within three days of termination of occupancy,

with a list of damages that justified withholding all or part of a tenant’s security 

deposit.

2

 

2

Georgia’s security deposit statute provides, in relevant part, that “[w]ithin three business 

days after the termination of the residential lease and vacation of the premises . . . the landlord or 

his or her agent shall inspect the premises and compile a comprehensive list of any damage done 

to the premises which is the basis for any charge against the security deposit.” O.C.G.A. § 44-7-

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The remedies for violating the statute are listed in O.C.G.A. § 44-7-35, 

which provides, in relevant part:

Any landlord who fails to return any part of a security deposit which is 

required to be returned to a tenant pursuant to this article shall be liable 

to the tenant in the amount of three times the sum improperly withheld 

plus reasonable attorney’s fees; provided, however, that the landlord 

shall be liable only for the sum erroneously withheld if the landlord 

shows by the preponderance of the evidence that the withholding was 

not intentional and resulted from a bona fide error which occurred in 

spite of the existence of procedures reasonably designed to avoid such 

errors.

O.C.G.A. § 44-7-35(c) (emphasis added). 

In her complaint, Roberson purported to represent a class made up of 

Georgia citizens: (1) “who had an agreement for the rental of real property with 

ECI”; (2) “who had all or some of their security deposit not returned”; and (3) “for 

whom Defendants did not provide . . . a comprehensive list of any damage done to 

the premises,” as required by Georgia law. Roberson Compl. at 6. As the result of 

Defendant ECI’s alleged statutory violations, Plaintiff Roberson’s complaint

sought, individually and on behalf of the putative class, the following relief:

(a) An order certifying the Class . . . [and] appointing [Roberson] as 

the representative of the Class . . . ;

(b) A damages award for [Roberson] and each Class Member in the 

amount of three times the unlawfully withheld security deposit

pursuant to O.C.G.A. §§ 44-7-33 and 44-7-35;

33(b)(1). Any landlord who fails to compile such a list and make it available to the tenant “shall 

not be entitled to retain any portion of a security deposit.” O.C.G.A. § 44-7-35(a)(3).

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(c) Injunctive or declaratory relief to prevent future violations of 

Georgia’s security deposit law; 

(d) An award of reasonable attorney fees to [Roberson] and each 

Class Member pursuant to O.C.G.A. § 44-7-35; and

(e) Such further and other relief as the Court deems reasonable and 

just.

Id. at 13. 

C. ECI Notifies AEGIS of the Claim 

On March 9, 2017, ECI gave timely notice of Roberson’s “Claim” to AEGIS 

in accordance with the Policy and requested coverage.3

 In April 2017, AEGIS, 

through its claims manager, notified ECI via email that it was denying coverage. 

The only ground for denying coverage, cited in the email, was that “[t]he Lawsuit’s 

allegations and relief demanded . . . concern ‘the gaining in fact of personal profit 

or advantage to which the Insured is not legally entitled,’ as well as a dispute 

regarding ECI’s fee.”4

 

D. AEGIS Formally Denies Coverage

3

Originally, Roberson filed suit in Fulton County Superior Court in February 2017, but 

her complaint was never properly served on ECI. As a result, the complaint was dismissed in 

May 2017 for failure to prosecute. The same day the Fulton County lawsuit was dismissed,

Roberson filed the above-discussed lawsuit in DeKalb County State Court. Despite Roberson’s 

failure to perfect service, ECI learned of the February 2017 Fulton County lawsuit and notified 

AEGIS on March 9, 2017. 

4

The Policy states that it “does not apply to any Claim based upon, arising out of, directly 

or indirectly, or in any way involving . . . the gaining in fact of any personal profit or advantage 

to which the Insured is not legally entitled, or out of any disputes involving the Insured’s fees 

or charges.” AEGIS has since abandoned this basis for denying coverage. 

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About a month later, on May 3, 2017, AEGIS, again through its claims 

manager, sent a formal follow-up letter that acknowledged receipt of the claim and 

asserted that “this matter does not fall within the coverage of the Policy,” and that 

“[n]either a duty to defend nor a duty to pay damages exists.” After quoting 

relevant portions of the Policy, AEGIS’s May 3 letter identified two broad grounds 

for the denial of coverage. First, the letter reiterated that Roberson’s allegations 

concerned “the gaining in fact of personal profit or advantage to which the Insured 

is not legally entitled, as well as a dispute regarding ECI’s fee.” 

Next, and as particularly relevant here, AEGIS’s May 3 letter asserted that 

several of Roberson’s “[i]tems of relief” were explicitly excluded from the Policy’s 

definition of “Loss.” Specifically, the letter pointed to Roberson’s requests for 

(1) class certification; (2) equitable relief to prevent future statutory violations; and 

(3) damages in the amount of three times the unlawfully withheld security deposit. 

The letter stated the first two items were excluded under subsection (d) of the 

Policy’s definition of “Loss,” while the third was excluded under subsection (c).5

5

AEGIS’s May 3 letter also noted that “Roberson alleges that ECI’s actions were 

intentional,” which would implicate the Policy’s provision excluding from coverage any 

“intentional wrongdoing, fraud, dishonesty, criminal or malicious acts by the Insured.” 

However, the letter further acknowledged that, under the terms of the Policy, that exclusion 

provision would only apply “[t]o the extent such intentional conduct is established via judgment 

or other final adjudication.” In other words, that provision would not provide a basis for refusing 

to defend in the first instance, though it might preclude indemnity down the road. 

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Notably, AEGIS did not, in its May 3 letter, invoke subsection (a) of the 

Policy’s definition of “Loss,” which excludes “any disgorgement, return,

withdrawal, restitution or reduction of any sums which are or were in the 

possession or control of any Insured.” However, the letter purported to reserve its 

“right to raise additional coverage issues should the need arise in the future.” 

E. Insured ECI Responds 

Insured ECI responded, through counsel, asking its insurer AEGIS to 

reconsider its position. The majority of ECI’s response was dedicated to rebutting 

AEGIS’s contention that the claims themselves fell under one or more of the 

Policy’s exclusions from coverage. ECI’s response also addressed AEGIS’s claim 

that none of the requested relief constituted a covered “Loss” as defined in the 

Policy. ECI argued that AEGIS’s letter falsely assumed that “the Lawsuit only 

seeks equitable nonmonetary relief and treble damages.” ECI noted that the 

Georgia statute limits a tenant’s recovery to “the sum erroneously withheld” if the 

“withholding was not intentional and resulted from a bona fide error which 

occurred in spite of the existence of procedures reasonably designed to avoid such 

errors.” See O.C.G.A. § 44-7-35(c). As a result, ECI pointed out, “the [c]ourt may 

not necessarily award treble damages and could limit relief to compensatory only.” 

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Such purely compensatory damages would fall within the Policy’s definition of 

“Loss.”6

 

F. Insurer AEGIS Follows Up

Insurer AEGIS, through counsel, acknowledged it had “reviewed the request 

for reconsideration” and requested supplemental information about the property 

where Roberson had lived. ECI provided the requested information and 

subsequently inquired several times into the status of AEGIS’s decision regarding 

coverage. Eventually (and apparently without definitively updating ECI as to the 

status of its coverage decision) AEGIS filed the instant declaratory judgment 

action in federal district court.

II. DISTRICT COURT PROCEEDINGS

A. AEGIS’s Complaint

In September 2017, AEGIS initiated the instant action by filing a 

“Complaint for Declaratory Judgment,” which included a single cause of action. 

AEGIS sought a declaratory judgment stating “[t]hat no coverage is afforded, no 

indemnity payments are due, and no duty to provide or pay for a defense for the 

claim under the Policy has arisen due to the application of the disgorgement/return 

6 Insured ECI also asserted that, under Georgia law, AEGIS was not permitted to reserve 

additional coverage defenses, citing Hoover v. Maxum Indemnity Co., 291 Ga. 402, 730 S.E.2d 

413 (2012). According to ECI, Hoover stands for the proposition that “[w]hen a third party 

claim is pending against its insured, a carrier cannot rely on boilerplate language in a notice 

reserving the right to assert any other defenses at a later date.” 

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of sums carve-out and treble damages carve-out to the Policy’s definition of 

‘Loss.’” 

Insurer AEGIS’s complaint pointed to the damages provision of the Georgia 

statute, which provides that a tenant would be entitled either to “three times the 

sum improperly withheld” or to “the sum erroneously withheld.” See O.C.G.A. 

§ 44-7-35(c). In either case, the complaint alleged, Roberson’s requested remedy 

thus would fall outside the Policy’s definition of “Loss,” either because it 

constituted treble damages (“three times the sum improperly withheld”) or because 

it constituted a disgorgement or return (“the sum erroneously withheld,” i.e., the 

return of the security deposit). As to the disgorgement and return carve-outs—

which insurer AEGIS had not previously raised—the complaint specifically 

alleged that the court-ordered return of Roberson’s security deposit “would amount 

to a disgorgement or return of any sum which w[as] in the possession or control of 

ECI.” 

Insured ECI filed its answer and asserted counterclaims for breach of 

contract and declaratory judgment. Following discovery, AEGIS moved for 

summary judgment on both the duty to defend and the duty to indemnify, while 

ECI moved for partial summary judgment on the issue of whether AEGIS has a 

duty to defend ECI. In this regard, ECI argued that, even if the Policy did not 

include coverage for treble damages, the factfinder in the underlying litigation 

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potentially could find that ECI did not act intentionally, in which case ECI would 

be liable only for the withheld security deposit. ECI insisted that any “untrebled 

compensatory damages”—i.e., damages in the amount of the withheld security 

deposit—would constitute a covered “Loss” under the Policy. ECI also argued that 

any attorney’s fee award that it might become obligated to pay under O.C.G.A. 

§ 44-7-35(c) would, on its own, constitute a “Loss” under the Policy because it 

would be “a compensatory monetary amount for which [ECI] may be held legally 

liable.” As to whether either of those amounts was otherwise excluded from the

Policy’s definition of “Loss” under the Policy’s disgorgement or return carve-outs, 

ECI argued AEGIS had waived that carve-out by failing to raise it earlier as a basis 

for denying coverage. 

B. The District Court’s Decision

The district court granted AEGIS’s motion for summary judgment on all 

claims and counterclaims and denied ECI’s motion for partial summary judgment. 

The district court first concluded that the relief sought in the underlying Roberson 

litigation were not covered “Loss[es]” under the Policy, focusing on Roberson’s 

requests for treble damages and equitable relief. 

The district court acknowledged ECI’s argument that Roberson would not be 

entitled to treble damages if ECI was found not to have acted intentionally, but the 

court concluded that “any issue of fact as to whether ECI will be found willful or 

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merely negligent cannot save ECI.” This was because even “[a]ny non-multiplied 

damages—or the return of allegedly improperly withheld security deposits”—

would be carved out from the Policy’s definition of “Loss” under the Policy’s 

exclusion of “any disgorgement, return, withdrawal, restitution or reduction of any 

sums which are or were in the possession or control of any Insured, or any amounts 

credited to any Insured’s account.” 

The district court also rejected ECI’s argument that AEGIS had waived the 

disgorgement and return carve-outs because it did not raise it until it filed the 

instant declaratory judgment action. The district court based its rejection of this 

argument on a distinction between coverage defenses and policy defenses, only the 

latter of which can be waived under the district court’s reading of Georgia law. 

Having found that none of Roberson’s requested relief—or, indeed, any 

relief to which Roberson would be entitled under the Georgia statute—qualified as 

a “Loss” under the Policy, the district court concluded that AEGIS has no 

obligation to defend—and, as a result, no duty to indemnify—ECI in the Roberson 

litigation and entered judgment in AEGIS’s favor. 

III. STANDARD OF REVIEW

We review a district court’s decision to grant or deny summary judgment de 

novo. Cagle v. Bruner, 112 F.3d 1510, 1514 (11th Cir. 1997). Where, as here, the 

district court’s summary judgment rulings “involve the interpretation and 

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application of the pertinent terms of [an] insurance contract[],” we likewise review 

de novo the district court’s construction of the Policy. Elan Pharm. Research Corp. 

v. Emp’rs Ins. of Wausau, 144 F.3d 1372, 1374–75 (11th Cir. 1998). And because 

this federal action is based on diversity, Georgia’s substantive law governs our

interpretation of the Policy. See Great Am. All. Ins. Co. v. Anderson, 847 F.3d 

1327, 1331 (11th Cir. 2017).

IV. DISCUSSION

A. The Policy’s Coverage: General Principles 

“To determine whether an insurer owes its insured a duty to defend a 

particular lawsuit, Georgia law directs us to compare the allegations of the 

complaint, as well as the facts supporting those allegations, against the provisions 

of the insurance contract.” Elan, 144 F.3d at 1375; see also City of Atlanta v. St. 

Paul Fire & Marine Ins. Co., 231 Ga. App. 206, 207, 498 S.E.2d 782, 784 (Ga. Ct. 

App. 1998) (“An insurer’s duty to defend turns on the language of the insurance 

contract and the allegations of the complaint asserted against the insured. We look 

to the allegations of the complaint to determine whether a claim covered by the 

policy is asserted.” (citation omitted)). “[W]here the complaint filed against the 

insured does not assert any claims upon which there would be insurance coverage, 

the insurer is justified in refusing to defend the insured’s lawsuit.” St. Paul Fire & 

Marine, 231 Ga. App. at 207, 498 S.E.2d at 784.

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In construing the Policy, we look first to its text, giving the terms used their 

“usual and common meaning.” See Ga. Farm Bureau Mut. Ins. Co. v. Smith, 298 

Ga. 716, 719, 784 S.E.2d 422, 424 (Ga. 2016) (quotation marks omitted). If we 

find the terms “explicit and unambiguous,” we simply apply the terms as written, 

“regardless of whether doing so benefits the carrier or the insured.” Id. (quotation 

marks omitted). 

Under Georgia law, however, “exclusions from coverage sought to be 

invoked must be strictly construed,” and “all ambiguities as to policy exclusions 

are interpreted in favor of coverage because the insurer, having affirmatively 

expressed coverage through broad promises, assumes a duty to define any 

limitations on that coverage in clear and explicit terms.” Anderson, 847 F.3d at 

1331–32 (quotation marks and alteration omitted). “If the facts as alleged in the 

complaint even arguably bring the occurrence within the policy’s coverage, the 

insurer has a duty to defend the action.” St. Paul Fire & Marine, 231 Ga. App. at 

207, 498 S.E.2d at 784.

ECI identifies two forms of relief Roberson sought pursuant to O.C.G.A. 

§ 44-7-35(c), each of which constitutes a covered “Loss” under the Policy: (1) the 

unmultiplied amount Roberson would be entitled to as a result of ECI’s alleged 

statutory violation—i.e., “the sum erroneously withheld”; and (2) attorney’s fees. 

We address each alleged “Loss” in turn.

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B. Return of Security Deposit: “The Sum Erroneously Withheld”

As quoted earlier, O.C.G.A. § 44-7-35(c) provides that: 

Any landlord who fails to return any part of the security deposit which 

is required to be returned to a tenant pursuant to this article shall be 

liable to the tenant in the amount of three times the sum improperly 

withheld plus attorneys’ fees; provided, however, that the landlord shall 

be liable only for the sum erroneously withheld if the landlord shows 

by the preponderance of the evidence that the withholding was not 

intentional and resulted from a bona fide error which occurred in spite 

of the existence of procedures reasonably designed to avoid such errors.

(Emphasis added). The parties do not appear to dispute that if Roberson were to 

receive an award “in the amount of three times the sum improperly withheld,” the 

Policy’s treble-damages carve-out would apply, at least as to the full multiplied 

amount. However, whether Roberson would ultimately be entitled to that

multiplied amount is a factual question—it turns on whether ECI’s conduct was 

intentional. If ECI establishes that any wrongful withholding of the security 

deposit “was not intentional” and “occurred in spite of the existence of procedures 

reasonably designed to avoid such errors,” Roberson would be entitled only to “the 

sum erroneously withheld.” See O.C.G.A. § 44-7-35(c). 

Accordingly, if this unmultiplied amount—“the sum erroneously 

withheld”—was recovered by Roberson, and if it would constitute a “Loss” under 

the policy, then ECI could incur coverable losses, and that possibility is enough to 

require AEGIS to defend the lawsuit. See St. Paul Fire & Marine, 231 Ga. App. at 

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207, 498 S.E.2d at 784. AEGIS therefore maintains a duty to defend ECI unless it 

is clear under the terms of the Policy that the return of any wrongfully withheld 

security deposit funds (“the sum erroneously withheld”) is excluded from the 

Policy’s definition of “Loss.” AEGIS insists any such amount would be excluded 

from the Policy’s definition of “Loss” because it would constitute a 

“disgorgement” or “return” of “sums which are or were in the possession or control 

of” ECI. 

As quoted earlier from the Policy, “Loss” means “a compensatory monetary 

amount for which the Insured may be held legally liable, including 

judgments[,] . . . awards, or settlements[,] . . . but shall not include: (a) any 

disgorgement, return, withdrawal, restriction or reduction of any sums which are or 

were in the possession or control of any Insured . . . .” (Emphasis added). To be a 

covered “Loss” in the first place, the liability must already be “a compensatory 

monetary amount for which the Insured may be held legally liable.” Therefore, 

any amounts that would be carved out from the Policy’s definition of “Loss” would 

necessarily have to be “compensatory monetary amount[s]” in the first place, 

otherwise there would be no need to exclude them. Thus, our inquiry becomes 

whether the “compensatory monetary amount” in the amount of “the sum 

erroneously withheld” by the landlord is a “disgorgement” or a “return” of “sums 

which are or were in the possession or control” of the Insured ECI.

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ECI argues that the relief sought cannot constitute a disgorgement because 

disgorgement is an equitable remedy. However, we need not resolve that issue 

because the carve-out also excludes from the definition of “Loss” monetary relief 

constituting “any . . . return, withdrawal, . . . or reduction of any sums which are or 

were in the possession or control” of ECI. For the reasons explained below, we 

conclude that the damages representing the return of the security deposit would 

constitute “any . . . return” of sums “in the possession or control” of ECI and 

would therefore be excluded from the Policy’s definition of “Loss.”

Giving, as we must, unambiguous policy terms their ordinary dictionary 

meaning, see Michna v. Blue Cross & Blue Shield of Ga., Inc., 288 Ga. App. 112, 

114, 653 S.E.2d 377, 380 (Ga. Ct. App. 2007), we must consider “return” to mean 

“[t]o revert to a former owner” or “[t]o give back to the owner,” see Return, The 

American Heritage Dictionary of the English Language (3d ed. 1996). 

Under Georgia law, a landlord must deposit a tenant’s security deposit in an 

escrow account, and the “security deposit shall be held in trust for the tenant by the 

landlord or such landlord’s agent except as provided in section 44-7-34.” Ga. 

Code. Ann. § 44-7-31. Georgia’s security deposit law thus operates under the 

premise that a tenant’s security deposit remains the tenant’s property, subject to the 

landlord’s rights to retain or withhold the deposit.

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Section 44-7-33 requires the landlord to inspect, prepare a final damage list, 

and permit a tenant inspection within certain times after lease termination, see id.

§ 44-7-33(b), and section 44-7-34 governs the timing and procedure for a landlord 

to return or make claims against a tenant’s security deposit, see id. § 44-7-34(a). If 

a landlord fails to compile and make available the final damage list required by 

section 44-7-33(b), the landlord “shall not be entitled to retain any portion of a 

security deposit.” Id. § 44-7-35(a)(3). Similarly, if a landlord fails to provide each 

of the written statements within the time periods specified in sections 44-7-33 and 

44-7-34, such failure “shall work a forfeiture of all the landlord’s rights to 

withhold any portion of the security deposit.” Id. § 44-7-35(b). Finally, section 

44-7-35(c) provides that “[a]ny landlord who fails to return any part of a security 

deposit which is required to be returned to a tenant” is liable to the tenant in the 

amount of “the sum erroneously withheld” and potentially treble damages and 

attorney’s fees. Id. § 44-7-35(c). 

Consistent with this statutory scheme, Roberson alleges that, pursuant to 

section 44-7-35(b), ECI forfeited its right to retain her security deposit because it 

failed to provide Roberson the statutorily mandated final damages list as part of the 

post-termination procedure. According to Roberson, ECI is therefore a “landlord 

who fail[ed] to return any part of a security deposit which is required to be returned 

to a tenant,” and she claims that under section 44-7-35(c), she can recover from 

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ECI either “the sum erroneously withheld” or three times that amount plus 

attorney’s fees. 

As noted, section 44-7-35(b) imposes a forfeiture of a landlord’s rights to 

make a claim against a security deposit. In this context, “forfeiture” means the 

“loss of a right, privilege, or property because of a crime, breach of obligation, or 

neglect of duty.” Forfeiture, Black’s Law Dictionary (11th ed. 2019). That 

provision, coupled with the tenant’s continued rights in the security deposit under 

section 44-7-31, demonstrates that an award against ECI for “the sum erroneously 

withheld” constitutes a “return” of Roberson’s money back to her. Therefore, if 

ECI ultimately is required to transfer any part of the security deposit back to 

Roberson under section 44-7-35(c)—as demanded by Roberson in her lawsuit—

such a transfer would fall within the scope of the Policy’s return carve-out.

7

7 Our dissenting colleague states that “O.C.G.A. § 44-7-35(c) makes the landlord liable 

for damages in the amount of the security deposit withheld, allowing the tenant to ‘replace’ the 

missing deposit with any of the landlord’s assets.” Dissent at 25. The dissent argues the penalty 

provision in § 44-7-35(c) “does not order the return of the deposit, but sets statutory damages for 

when the landlord fails to return the deposit.” Id. at 27. This argument fails to recognize that the 

critical language here is the text of the “Loss” definition in the Policy. To be a covered “Loss” in 

the first place, the sum must be “a compensatory monetary amount for which the Insured may 

be held legally liable.” The carve-outs then exclude a subset of those compensatory monetary 

amounts, including those that constitute “any disgorgement” or “any . . . return . . . of any sums 

which are or were in the possession or control of any Insured.” That the statute sets the 

compensatory damages—for failure to return any part of a security deposit required to be 

returned—as “the sum erroneously withheld,” if anything, underscores that the “compensatory 

monetary amount” for which the landlord is held liable is a “return” of the security deposit “in 

the possession” of ECI.

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We therefore conclude that an award of the allegedly wrongfully withheld 

security deposit would not constitute a “Loss” under the Policy.

8 But this 

conclusion does not end our analysis, and we now turn to ECI’s argument that any 

attorney’s fees that it might become obligated to pay as part of the judgment in the 

Roberson litigation would also fall within the Policy’s definition of “Loss.”

C. Attorney’s Fees

The Policy clearly obligates AEGIS to cover “all sums in excess of the 

Deductible amount . . . which the Insured shall become legally obligated to pay as 

Loss,” and further defines “Loss” to include a “compensatory monetary amount for 

which the Insured may be held legally liable, including . . . awards.” Thus, the 

Policy obviously contemplates coverage for any award of attorney’s fees unless, as 

AEGIS argues, any such fees are otherwise explicitly excluded from the Policy’s 

definition of “Loss.”

8 ECI also argues that AEGIS waived the disgorgement and return carve-outs by failing 

to initially raise them as bases for denying coverage. It is undisputed that AEGIS did not assert 

that the return of any security deposit withheld in contravention of O.C.G.A. § 44-7-33 would 

constitute a disgorgement or a return until AEGIS filed the instant declaratory judgment action. 

However, the disgorgement and return carve-outs are properly characterized as coverage 

defenses. And under Georgia law, such defenses cannot be waived because the doctrines of 

waiver and estoppel “may not be used to enlarge the coverage contained in a policy of 

insurance.” Sargent v. Allstate Ins. Co., 165 Ga. App. 863, 865, 303 S.E.2d 43, 45–46 (Ga. Ct. 

App. 1983) (quotation marks omitted). ECI points to certain broad language in a more recent 

Georgia Supreme Court decision, Hoover v. Maxum Indemnity Co., 291 Ga. 402, 730 S.E.2d 

413 (2012). But the specific defense at issue in Hoover was a policy defense of the sort Georgia 

courts have long held is subject to waiver, and there is no indication in Hoover that the Georgia 

Supreme Court intended to upend the longstanding rule that an insurer cannot waive coverage 

defenses. 

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As laid out above, O.C.G.A. § 44-7-35(c) states that a landlord who fails to 

return all or part of a tenant’s security deposit in violation of Georgia’s securitydeposit statute is liable for “three times the sum improperly withheld plus 

reasonable attorney’s fees.” O.C.G.A. § 44-7-35(c). Notably, the statute does not 

provide for an award of attorney’s fees where the landlord did not act intentionally, 

since a tenant would be entitled “only” to “the sum erroneously withheld” under 

such circumstances. Id.

The Policy’s treble-damages carve-out, in turn, applies to “any other 

damages resulting from the multiplication of compensatory damages.” AEGIS 

characterizes any potential award of attorney’s fees as additional “damages 

resulting from the multiplication of compensatory damages.” We disagree. 

First, while it is true that an award of attorney’s fees under the statute, as a 

practical matter, rises and falls with the award of treble damages, it does not 

directly flow from those damages. Rather, both the treble damages and the 

attorney’s fees flow from a finding that that the landlord acted intentionally and in 

the absence of procedures designed to prevent the wrongful withholding of security 

deposits. See O.C.G.A. § 44-7-35(c). 

Second, as this Court has noted in the past in construing an insurance policy, 

“[u]nder Georgia law, attorneys’ fees, even where recoverable, are not typically

included within the ordinary species of damages.” Alea London Ltd. v. Am. Home 

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Servs., Inc., 638 F.3d 768, 780 (11th Cir. 2011) (“That ‘attorneys’ fees’ would be 

subsumed within the Policy’s reference to ‘damages’ is not consistent with a plain, 

ordinary-meaning reading of the Policy.”).

Accordingly, we conclude that any award of attorney’s fees under O.C.G.A. 

§ 44-7-35(c) would constitute a potential “Loss” under the Policy, and AEGIS 

therefore maintains its duty to defend ECI. See St. Paul Fire & Marine, 231 Ga. 

App. at 207, 498 S.E.2d at 784. 

D. Duty to Indemnify

We decline to offer any opinion as to whether AEGIS, in addition to its duty 

to defend, has any duty to indemnify ECI. The district court concluded there was 

no duty to indemnify, but that conclusion simply flowed from its conclusion that 

there was no duty to defend. See Shafe v. Am. States Ins. Co., 288 Ga. App 315, 

317, 653 S.E.2d 870, 873 (Ga. Ct. App. 2007) (“[A]n insurer’s duty to defend is 

broader than its duty to indemnify.”). Under Georgia law, the duty to defend and 

the duty to indemnify are “separate and independent obligations.” Nationwide 

Mut. Fire Ins. Co. v. Somers, 264 Ga. App. 421, 424, 591 S.E.2d 430, 433 (Ga. Ct. 

App. 2003) (quotation marks omitted). 

We therefore leave for a later date the independent question of whether 

AEGIS must ultimately indemnify ECI for any particular liability it might incur as 

a result of the ongoing lawsuit against it. See Trizec Props. v. Biltmore Constr. 

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Co., 767 F.2d 810, 813 (11th Cir. 1985) (affirming a district court’s conclusion that 

a complaint triggered an insurer’s duty to defend and declining to address any duty 

to indemnify). For now, it is sufficient for us to say that, under the terms of the 

Policy, AEGIS maintains its duty to defend ECI in the underlying state court 

lawsuit.

V. CONCLUSION

For the reasons discussed above, we reverse the district court’s order 

granting AEGIS’s motion for summary judgment and denying ECI’s partial motion 

for summary judgment insofar as it concluded AEGIS has no duty to defend ECI in 

the state court Roberson litigation, and remand for additional proceedings 

consistent with this opinion.

REVERSED AND REMANDED.

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WILSON, Circuit Judge, concurring in part and dissenting in part:

If, on a sunny afternoon, you loaned your friend a pair of sunglasses and 

asked her to return them tomorrow, you would expect your friend to return that 

pair of sunglasses. You would not expect your friend to hand you a different, yet 

identical pair of sunglasses, because that would be a replacement pair, not a 

returned pair. Georgia law recognizes a similar distinction—a distinction that the 

majority erases. It holds today that O.C.G.A. § 44-7-35(c) compels a landlord to 

“return” an erroneously withheld security deposit, but the law does no such thing; 

it applies when the landlord does not return the security deposit. Then it makes the 

landlord liable for statutory damages in the amount of the withheld security 

deposit, allowing the tenant to replace the missing deposit with any of the 

landlord’s assets. Respecting this distinction in Georgia’s chosen penalty scheme, 

I would hold that the return carve-out does not bar coverage for Roberson’s claim.1

1 I agree with the rest of the majority’s opinion, save for two points. First, the majority punts on 

whether the disgorgement carve-out bars coverage. I would hold that it does not for two reasons. 

One, disgorgement is a form of return. See Tull v. United States, 481 U.S. 412, 424 (1987) (“An 

action for disgorgement . . . . is a remedy only for restitution—a more limited form of penalty 

than a civil fine. Restitution is limited to restoring the status quo and ordering the return of that 

which rightfully belongs to the purchaser or tenant.” (internal quotation mark omitted)). As I 

explain below, O.C.G.A. § 44-7-35(c) does not order the return of anything—it awards 

compensatory damages. Two, disgorgement is “an equitable remedy intended to prevent unjust 

enrichment.” S.E.C. v. Levin, 849 F.3d 995, 1006 (11th Cir. 2017). O.C.G.A. § 44-7-35(c), in 

contrast, provides not an equitable remedy but a legal remedy for damages. So the disgorgement 

carve-out does not apply.

Second, the majority holds in footnote eight that AEGIS did not waive its coverage defenses. 

Though you wouldn’t know it from the majority’s brief analysis, the waiver issue decided in that 

footnote is a vexing and disputed issue of Georgia law. See Century Communities of Ga., LLC v. 

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The return carve-out bars coverage for a judgment mandating the “return . . . 

of any sums which are or were in the possession or control of any Insured, or any 

amounts credited to any Insured’s account.” Like the majority, I agree that we 

must apply the plain meaning of “return,” which means “to revert to a former 

owner” or “to give back to the owner.” Majority Op. at 18 (alterations accepted). 

So this carve-out applies whenever an insured must revert or give back sums that 

belong or belonged to someone else but are or were in the insured’s possession.

A review of Georgia’s security-deposit scheme shows why this carve-out 

does not apply to damages awarded under O.C.G.A. § 44-7-35(c). To start, 

O.C.G.A. § 44-7-31 requires a landlord to put a tenant’s security deposit in escrow. 

O.C.G.A. § 44-7-33 then governs the landlord’s notice obligations. And O.C.G.A. 

§ 44-7-34, titled “Return of security deposit,” governs the landlord’s obligations 

for returning the deposit. Finally, O.C.G.A. § 44-7-35 provides “Remedies for 

noncompliance” with these statutes, and it has two key parts. The first part says 

that if a landlord violates these statutes, it “shall not be entitled to retain any 

portion of a security deposit” or its errors will otherwise “work a forfeiture” on 

both the landlord’s right to withhold the security deposit and its right to sue a 

Selective Way Ins. Co., 2019 WL 7491504 (N.D. Ga. Oct. 25, 2019) (describing the issue and the 

many ways courts have decided it). Were it me, I would assume that AEGIS did not waive its 

coverage defenses, hold that none of them apply anyway, and thus avoid ruling on an open

question that is better left for the state courts of Georgia.

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tenant for damages to the premises. See O.C.G.A. § 44-7-35(a)–(b). Summed up, 

the first part of O.C.G.A. § 44-7-35 describes the situations in which the law strips 

the landlord of its right to withhold the security deposit.

The second part—the part at issue here—describes the penalty the landlord 

faces if, after losing its right to withhold the security deposit, it still fails to return 

the security deposit. See id. § 44-7-35(c). The provision says that “[a]ny landlord

who fails to return any part of a security deposit which is required to be returned to 

a tenant pursuant to this article shall be liable to the tenant in the amount of . . . the 

sum erroneously withheld.” Id. (emphasis added). Subsection (c) thus says that if, 

after losing its right to withhold the security deposit, the landlord still fails to return 

the security deposit, the landlord becomes liable for statutory damages in the 

amount of the security deposit. The statute merely borrows the amount of the

deposit withheld as the amount of damages that the statute awards; it does not 

order the return of the security deposit that was held in escrow under O.C.G.A. § 

44-7-31. 

Indeed, the presence of the phrase “[a]ny landlord who fails to return” the 

deposit makes clear that this penalty provision does not order the return of the 

deposit, but sets statutory damages for when the landlord fails to return the deposit. 

See O.C.G.A. § 44-7-35(c). Because if the legislature had meant to order the 

return of the security deposit, it would have said so. It would not have written that 

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“[a]ny landlord who fails to return” the security deposit “shall be liable to the 

tenant in the amount of . . . the sum erroneously withheld”; it would have written 

that “[a]ny landlord who fails to return” the security deposit shall return the 

security deposit.

It makes sense why Georgia rejected a return-based penalty and instead 

chose a damages-based penalty. By making the landlord liable for damages in the 

amount of the deposit (rather than ordering the return of certain funds), the statute 

arms the tenant with more ways to recover a judgment for the landlord’s violation. 

The tenant is not limited to the deposit held in escrow (or even to money at all), but 

can recover immediately from any of the landlord’s assets, as any judgment 

creditor could. For this reason, the insured here, were it to lose the Roberson 

claim, would not need to revert or give back anything; it would be liable at law for 

compensatory damages in the amount of the security deposit withheld. This 

wording reflects a conscious choice by the state legislature to expand the tenant’s 

remedy, and we, as a federal court sitting in diversity, should respect its 

determination. See Dimmitt v. City of Clearwater, 985 F.2d 1565, 1572 (11th Cir. 

1993) (“[A]s a federal court, we must be particularly reluctant to rewrite the terms 

of a state statute.” (emphasis omitted)).

A practical analysis of the treble-damages clause in O.C.G.A. § 44-7-35(c) 

also confirms that this reading is right. That clause says that Roberson will receive 

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an award of “three times the sum improperly withheld” if ECI intentionally 

withheld the security deposit. See O.C.G.A. § 44-7-35(c). Said differently, ECI 

becomes statutorily liable for damages three times the amount of the security 

deposit withheld if it engaged in intentional misconduct. We wouldn’t say, in that 

event, that a third of the treble-damages award constitutes a “return” of the security 

deposit. We would simply say that ECI is liable for treble damages. 

Also consider Roberson’s potential judgment. If Roberson establishes that 

ECI wrongfully withheld a security deposit, but that it did so only negligently, the 

judgment in the case will not say “Judgment for Plaintiff, return X dollars.” The 

judgment will say “Judgment for Plaintiff in the amount of X dollars”—an amount 

recoverable from anywhere, from any asset that a judgment creditor might reach. 

That distinction makes all the difference here, as it underscores that O.C.G.A. 

§ 44-7-35(c) provides only a statutory remedy for damages, and so the return 

carve-out does not apply.

The majority responds to these points in a footnote. See Majority Op. at 20 

n.7. It argues that I “fail[] to recognize” that the policy’s definition of “loss” 

includes only “compensatory monetary amount[s].” It follows then, says the 

majority, that the loss carve-outs merely “exclude a subset” of “compensatory 

monetary amount[s],” and thus the policy’s definition of “return” can apply to an 

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award of compensatory damages in the amount of “the sum erroneously withheld.” 

For three reasons, that argument is simply wrong.

First off, the carve-outs do not “exclude a subset” of what would typically 

constitute “compensatory monetary amount[s].” The third carve-out, for example, 

excludes coverage for “punitive, exemplary, treble damages or any other damages 

resulting from the multiplication of compensatory damages.” Punitive damages 

are not compensatory. See Bogle v. McClure, 332 F.3d 1347, 1362 (11th Cir. 

2003). Neither are exemplary damages. See BMW of N. Am., Inc. v. Gore, 517 

U.S. 559, 580 (1996). So the majority’s basic premise is wrong—the carve-outs do 

not remove from “loss” what was once included. They merely remove all doubt 

that the policy excludes some classes of liability from coverage.

Second, the majority’s argument fails even if we accept its flawed reasoning. 

Its premise forgets that the return carve-out, at most, excludes only specific 

remedies through which the insured pays for liability. For instance, even if the 

remedy of disgorgement could compensate the tenant for its missing security 

deposit, the policy’s disgorgement carve-out would bar coverage only because it 

bars sums paid through the remedy of disgorgement. So too with the return carveout: If the statute ordered a return of the security deposit to compensate the tenant 

for its loss, the carve-out would bar coverage. But O.C.G.A. § 44-7-35(c) does not 

order a return of the deposit. It orders the landlord to pay damages in the amount 

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of the security deposit withheld to compensate the tenant for its loss. Simply put, 

the return carve-out does not bar coverage for “compensatory monetary amount[s]” 

paid through the remedy of a damages award. Because O.C.G.A. § 44-7-35(c) 

compensates the tenant with a damages award, the carve-out can’t apply even 

under the majority’s view.

Third, even if there were reasonable debate about whether the policy’s 

definition of “return” covers a statute that awards damages in the amount of a sum 

erroneously withheld, Georgia law doubly compels us to decide that debate for the 

insured. Under Georgia law, we must construe policy exclusions narrowly, Alley 

v. Great Am. Ins. Co., 287 S.E.2d 613, 616 (Ga. App. 1981), and we must construe 

ambiguous terms in favor of coverage, Hays v. Georgia Farm Bureau Mut. Ins. 

Co., 722 S.E.2d 923, 926 (Ga. App. 2012). Few would say that applying the return 

carve-out to O.C.G.A. § 44-7-35(c) is a clear-cut call; for it to apply, one must 

accept that a statutory damages award is really a returned security deposit. That 

logic requires some imagination at best, rendering the exclusion ambiguous at 

least. And when faced with an ambiguous policy exclusion, Georgia law tells us to 

give the tie to the insured. See Alley, 287 S.E.2d at 616; Hays, 722 S.E.2d at 926. 

I would follow that instruction.

To close, I’ll note that though the majority’s mistake may not matter today, 

it will almost definitely matter tomorrow, at the indemnity phase. The reason that 

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it doesn’t matter now is that we have held that AEGIS has a duty to defend because 

the policy covers Roberson’s claim for attorney’s fees. As a result, AEGIS must 

defend the entire suit, no matter if the policy provides a defense for the merits of 

Roberson’s claim. But if Roberson wins at trial and ECI becomes liable for 

statutory damages in the amount of the withheld security deposit, the majority’s 

determination that the return carve-out bars coverage will relieve AEGIS of its 

duty to indemnify ECI for the loss. That will leave ECI on the hook for classaction damages, despite clear coverage under its insurance policy. 

I respectfully dissent.

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