Opinion ID: 4552152
Heading Depth: 2
Heading Rank: 1

Heading: AEGIS’s Complaint

Text: 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.” 10 Case: 19-11114 Date Filed: 07/30/2020 Page: 11 of 32 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 11 Case: 19-11114 Date Filed: 07/30/2020 Page: 12 of 32 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.