Opinion ID: 803167
Heading Depth: 1
Heading Rank: 4

Heading: NCIC and ACE’s Duty to Defend and Indemnify

Text: Under Georgia law, to determine whether an insurer is obligated to defend an insured, we look to the allegations contained in the complaint to discern whether a liability covered by the policy was asserted. Atlanta Postal Credit Union v. Int’l Indem. Co., 494 S.E.2d 348, 350 (Ga. Ct. App. 1998). “[T]he issue 4 is whether a claim has been asserted which falls within the policy coverage and which the insurer has a duty to defend.” Id. The NCIC policy defines “insureds” to include “[a]nyone liable for the conduct of an ‘insured’ described above but only to the extent of that liability.” The ACE policy provides: “The Definitions, Terms, Conditions, Limitations, and Exclusions of the UNDERLYING INSURANCE [i.e., the NCIC policy], in effect at the inception date of this policy, apply to this coverage unless they are inconsistent with the provisions of this policy.” Under Georgia law, “liable for the conduct of an insured” is synonymous with vicarious liability; therefore, NCIC and ACE only have a duty to defend and indemnify CAT 5 for claims of vicarious liability. Id. at 352; Aetna Cas. & Sur. Co. v. Empire Fire & Marine Ins. Co., 442 S.E.2d 778, 781 (Ga. Ct. App. 1994). In determining whether the Sprinkles’ complaint filed in Alabama State Court alleged vicarious liability claims against CAT 5, we look to Alabama law. See Lifestar Response of Alabama, Inc. v. Admiral Ins., 17 So. 3d 200, 213 (Ala. 2009). Alabama is a notice pleading state, which requires that the complaint must “provide fair notice to adverse parties of the claim against them and the grounds upon which it rests.” Simpson v. Jones, 460 So.2d 1282, 1285 (Ala. 1984); see also Surrency v. Harbison, 489 So. 2d 1097, 1104 (Ala. 1986). 5 Although the complaint need not expressly state that CAT 5 was vicariously liable to the Sprinkles, it must at least give notice of vicarious liability. Here, no such notice was given to CAT 5. The five counts alleged against CAT 5 are for its own actions, not the actions of Johnson or any other party involved in the original case. Count one is a negligence claim based on CAT 5’s alleged non-delegable contractual duty to ensure that employees meet safety standards. Count two alleges that CAT 5 was negligent when it hired Johnson without performing a background check and that Johnson was under CAT 5’s supervision. Counts three and four allege that CAT 5 negligently trained and supervised Johnson. Finally, Count five alleges that CAT 5 negligently entrusted Johnson with a vehicle. All of these claims are allegations against CAT 5 for its own negligent actions. Therefore, the Sprinkles’ complaint does not give notice to CAT 5 that it could be held vicariously liable for any individual’s actions and summary judgment was properly granted by the district court to NCIC and ACE.2
2 CAT 5 contends that the state trial court’s decision to not grant summary judgment in favor of CAT 5 shows that the state court found that CAT 5 could be held vicariously liable. However, all that the state court’s order denying summary judgment stated in its entirety was: “After reviewing all the pleadings and hearing oral argument, this Court finds that there are genuine issues of material fact which preclude the entry of summary judgment.” Because CAT 5’s motion for summary judgment included arguments regarding vicarious and direct liability and the Sprinkles’ motion only included arguments regarding direct liability, we find the state court’s order inconclusive. 6 An insurer’s duty to defend and duty to indemnify are separate obligations, and we are not limited to only the complaint and the policy in deciding whether there is a duty to indemnify. City of Atlanta v. St. Paul Fire & Marine Ins. Co., 498 S.E.2d 782, 785 (Ga. Ct. App. 1998). However, the NCIC and ACE policies state that only parties held vicariously liable for the actions of the insured will be covered by the policies. None of the extrinsic evidence provided by the parties leads us to conclude that CAT 5 could have been held vicariously liable rather than directly liable. Therefore NCIC and ACE did not have a duty to indemnify CAT 5 in the underlying lawsuit, and we affirm the district court.