Court Opinion

ID: 9888877
Source: CourtListenerOpinion
Date Created: 2023-10-06 20:00:37.282018+00
Date Added: 2024-06-11T12:32:47.024775
License: Public Domain

USCA11 Case: 22-13738     Document: 35-1      Date Filed: 10/06/2023   Page: 1 of 15

                                                              [PUBLISH]
                                     In the
                 United States Court of Appeals
                          For the Eleventh Circuit

                            ____________________

                                  No. 22-13738
                            ____________________

        HEE JIN LOWERY,
        JOHN LOWERY,
        Individually, and as assignees of Shou &
        Shou, Inc.,
                                 Plaintiﬀs-Counter Defendants-Appellees,
        versus
        AMGUARD INSURANCE COMPANY,

                                 Defendant-Counter Claimant-Appellant.

                            ____________________

                  Appeal from the United States District Court
                     for the Northern District of Georgia
                     D.C. Docket No. 1:20-cv-05148-TWT
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        2                           Opinion of the Court                  22-13738

                                 ____________________

        Before WILLIAM PRYOR, Chief Judge, ABUDU, Circuit Judge, and
        BARBER,* District Judge.
        WILLIAM PRYOR, Chief Judge:
               This appeal presents a jurisdictional issue that we must ad-
        dress before we can resolve the merits of equitable reformation of
        an insurance policy under Georgia law. After Gina Lowery sus-
        tained serious injuries from a hot-soup spill at Noodle College Park,
        an Atlanta-area restaurant, she and her spouse sued Shou & Shou,
        Inc., which owned and operated the restaurant. Shou & Shou ten-
        dered the defense to and sought coverage from AmGuard Insur-
        ance Company. But AmGuard denied coverage on the ground that
        the policy named “Noodle, Inc.”—an entity that did not exist—as
        insured. Shou & Shou settled the suit and assigned the Lowerys its
        rights under the policy. The Lowerys, as assignees, then sued Am-
        Guard for equitable reformation of the policy. The district court
        granted partial summary judgment in favor of the Lowerys and
        later entered a final judgment. We have jurisdiction to review that
        judgment because the Lowerys filed a written notice abandoning
        their remaining claim without objection. And because reformation
        of the policy was proper under Georgia law, we affirm.

        * Honorable Thomas P. Barber, United States District Judge for the Middle
        District of Florida, sitting by designation.
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        22-13738              Opinion of the Court                        3

                                I. BACKGROUND
                Shou & Shou, Inc., owned several restaurants in the Atlanta
        area under the trade name “Noodle.” One restaurant was located
        on Main Street in College Park. In 2013, the Shou siblings, who
        owned the company, bought businessowner’s insurance and work-
        ers’ compensation insurance from AmGuard Insurance Company.
        The businessowner’s policy named “Noodle, Inc.” as the insured
        and listed its address as 3693 Main Street in College Park. The pol-
        icy listed three locations at which Shou & Shou operated restau-
        rants. Location 001 was 3693 Main Street in College Park—Noodle
        College Park. The workers’ compensation policy was also issued to
        “Noodle, Inc.” But the Shous never had any ownership interest in
        an entity by that name. Noodle, Inc. was not a corporation at all;
        “Noodle, Inc.” was “merely a reference to the tradename” of the
        Noodle restaurants.
               The Shous renewed the businessowner’s policy through the
        2018–19 policy period. Each renewal retained the same name, mail-
        ing address, and Location 001 for the insured. Shou & Shou paid all
        policy premiums from its operating account. In 2014, AmGuard
        learned during an audit of the workers’ compensation policy that
        Shou & Shou was doing business as “Noodle” at the insured loca-
        tions. AmGuard accordingly added Shou & Shou to the workers’
        compensation policy from its inception. But AmGuard never
        added Shou & Shou to the businessowner’s policy.
               AmGuard provided legal representation to Shou & Shou un-
        der the businessowner’s policy despite the omission of its name. In
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        4                     Opinion of the Court                22-13738

        2016, Eled Addus sued several corporate and individual defendants
        in the Noodle chain—but not Shou & Shou—for injuries she alleg-
        edly sustained at Noodle College Park. The Shous tendered the de-
        fense to AmGuard, which accepted representation and appointed
        defense counsel. During that litigation, defense counsel informed
        AmGuard that Noodle College Park was “owned and operated by
        Shou & Shou, Inc.” AmGuard gave defense counsel authority to
        substitute Shou & Shou as the proper defendant and to represent
        it. Defense counsel later told AmGuard again that its “insured is
        Shou & Shou, Inc. This company owns and operates [Noodle Col-
        lege Park].” Yet, when AmGuard issued the 2016–17 busi-
        nessowner’s policy later that year, it retained the same information
        for the insured, its address, and Location 001. AmGuard eventually
        settled the Addus suit by obtaining a release for Shou & Shou.
               AmGuard also investigated a claim by Zuri Zahara Love for
        injuries she sustained at Noodle College Park during the 2016–17
        policy’s coverage period. Love sued multiple defendants in the
        Noodle network, including Shou & Shou. Shou & Shou again ten-
        dered the defense to AmGuard, which again accepted representa-
        tion. The assigned defense counsel told AmGuard that the “com-
        pany that owns [Noodle College Park] is Shou & Shou, Inc.” De-
        fense counsel filed an answer for Shou & Shou and moved to dis-
        miss the other defendants as improper parties. AmGuard later set-
        tled the Love suit by obtaining a release for Shou & Shou.
              This appeal arises from a third lawsuit. Gina Lowery bought
        soup at Noodle College Park during the effective dates of the 2016–
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        22-13738              Opinion of the Court                        5

        17 policy. The soup seriously injured her when it spilled through
        its packaging into her lap. She and her husband sued Shou & Shou
        in state court and demanded damages for personal injuries. Shou
        & Shou tendered the defense to AmGuard. But this time, the insur-
        ance company denied coverage on the ground that “Shou and Shou
        Inc. is not a named insured” or “otherwise qualif[ied] as an insured
        under the policy.” Shou & Shou reached a $1 million consent judg-
        ment with the Lowerys and assigned them its rights under the
        2016–17 policy.
               The Lowerys sued AmGuard in the district court based on
        diversity jurisdiction. 28 U.S.C. § 1332(a). Their amended com-
        plaint alleged three counts: count one for equitable reformation of
        the 2016–17 policy based on mutual mistake in not naming Shou &
        Shou as the insured owner of Noodle College Park; count two for
        breach of contract of the reformed 2016–17 policy; and count three
        for bad-faith refusal to defend and indemnify Shou & Shou. Am-
        Guard filed a counterclaim seeking a declaration that Shou & Shou
        had no rights under the 2016–17 policy.
                The parties moved for summary judgment following discov-
        ery. The Lowerys sought partial summary judgment on counts one
        and two of their complaint and against the counterclaim. The dis-
        trict court granted partial summary judgment in favor of the Low-
        erys. But that order did not resolve count three of the complaint.
               After AmGuard asked the district court to certify its order
        for interlocutory review, see 28 U.S.C. § 1292(b), the Lowerys filed
        a “notice of intent to abandon” the bad-faith claim alleged in count
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        6                      Opinion of the Court                22-13738

        three. The notice stated that the Lowerys had “elect[ed] to forego”
        the penalties and fees they were seeking in count three and were
        “abandon[ing]” that count. The Lowerys also filed a “request for
        final judgment” under Federal Rule of Civil Procedure 58(d). The
        request alleged that “[n]o further matters [we]re before the District
        Court for resolution” because the Lowerys had abandoned the
        only count not resolved by the partial summary judgment. The
        Lowerys asked that the partial summary judgment “be made the
        final judgment of the court.” They argued that the district court
        should not certify an interlocutory appeal because the motion to
        certify would become moot when “final judgment [was] entered
        consistent with the Court’s summary judgment order.”
               AmGuard filed a notice of non-opposition to the Lowerys’
        request for final judgment based on their abandonment of the re-
        maining claim. The district court entered a “final order and judg-
        ment” the next day. It found that “no additional claims for adjudi-
        cation remain[ed] pending.” And it declared its order granting par-
        tial summary judgment the “final judgment of the Court.”
                This Court submitted jurisdictional questions to the parties.
        First, the Court asked whether the Lowerys’ “notice of intent to
        abandon” count three effectively dismissed that claim of bad faith.
        Second, the Court asked whether the allegations in the pleadings
        satisfied the requirements of diversity jurisdiction.
               The parties argued for jurisdiction in a joint response. The
        jurisdictional panel agreed that the district court had diversity
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        22-13738               Opinion of the Court                          7

        jurisdiction but carried the question whether count three had been
        resolved and whether the district court entered a final order.
                          II. STANDARDS OF REVIEW
               We review our jurisdiction de novo. Cavalieri v. Avior Airlines
        C.A., 25 F.4th 843, 848 (11th Cir. 2022). We also review de novo a
        summary judgment, drawing all inferences in the nonmoving
        party’s favor and affirming only if there are no genuine issues of
        material fact. Sutton v. Wal-Mart Stores E., LP, 64 F.4th 1166, 1168
        (11th Cir. 2023) (citation omitted). We may affirm on any ground
        the record supports. Mata Chorwadi, Inc. v. City of Boynton Beach, 66
        F.4th 1259, 1263 (11th Cir. 2023).
                                 III. DISCUSSION
               We divide our discussion into three parts. First, we explain
        why we have jurisdiction to hear this appeal. Next, we explain that
        the district court did not err by granting summary judgment in fa-
        vor of the Lowerys on their claim for equitable reformation. Last,
        we explain that the district court did not err by granting summary
        judgment in favor of the Lowerys on their claim for breach of con-
        tract.
                     A. We Have Jurisdiction Under Section 1291.
               Federal law grants us jurisdiction over appeals from “final
        decisions of the district courts.” 28 U.S.C. § 1291. A decision ordi-
        narily is “final” only when it adjudicates all claims of all parties to
        an action. Corsello v. Lincare, Inc., 276 F.3d 1229, 1230 (11th Cir.
        2001). The partial summary judgment did not resolve the bad-faith
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        8                      Opinion of the Court                  22-13738

        claim in count three. But the district court rendered that partial
        summary judgment “final” under Rules 54 and 58 after the Low-
        erys filed their notice to abandon count three.
                Our precedent establishes that the Lowerys resolved count
        three by abandoning it. A party may “abandon[]” a claim “in re-
        sponse to questioning by the trial judge.” Mid City Mgmt. Corp. v.
        Loewi Realty Corp., 643 F.2d 386, 388 n.2 (5th Cir. 1981). And a writ-
        ten notice abandoning a claim without objection by the opposing
        party accomplishes the same thing. After a party, without objec-
        tion, abandons the only remaining claim, a district court may enter
        a final judgment for our exercise of appellate jurisdiction under sec-
        tion 1291. See id. Because the Lowerys expressly abandoned the
        only claim that the partial summary judgment did not resolve, the
        district court correctly found that “no additional claims for adjudi-
        cation remain[ed] pending.”
         B. The District Court Correctly Equitably Reformed the 2016–17 Policy
                      to Insure the True Owner of the Restaurant.
               The Lowerys sought equitable reformation of the 2016–17
        policy based on mutual mistake, which under Georgia law is “an
        action intended to ‘do equity’ among the interested parties by
        changing completed transactions to reflect true intentions.” Chero-
        kee Nat. Life Ins. Co. v. Coastal Bank of Ga., 238 S.E.2d 866, 869 (Ga.
        1977). A mistake of fact can be an “unintentional act, omission, or
        error” owing to “ignorance, surprise,” or “misplaced confidence.”
        GA. CODE § 23-2-21(a). A mutual mistake is one “shared by” the
        parties, Ledford v. Smith, 618 S.E.2d 627, 637 (Ga. Ct. App. 2005)
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        22-13738               Opinion of the Court                          9

        (citation omitted), but the parties’ mistakes need not be “exactly
        the same,” Bank of Am. v. Cuneo, 770 S.E.2d 48, 54 (Ga. Ct. App.
        2015). Georgia courts have defined mutual mistake at a high level
        of generality to accomplish the basic objective the parties set out to
        achieve. See, e.g., Curry v. Curry, 473 S.E.2d 760, 761 (Ga. 1996)
        (granting reformation when the parties to a deed intended to con-
        vey a home lot); Occidental Fire & Cas. of N.C. v. Goodman, 793
        S.E.2d 606, 609 (Ga. Ct. App. 2016) (granting reformation when the
        parties intended to insure a restaurant and bar). Awareness of the
        correct name of the party seeking reformation is not necessary for
        the mistake to be common to both parties. See Occidental, 793
        S.E.2d at 609.
                Reformation is proper only when the party seeking it proves
        mutual mistake with “clear, unequivocal, and decisive” evidence.
        GA. CODE § 23-2-21(c). But the mistake need not be “admitted by
        both parties.” Ga. Farm Bureau Mut. Ins. Co. v. Wall, 249 S.E.2d 588,
        590–91 (Ga. 1978). A court can reform an instrument even if the
        opposing party asserts in an affidavit that it did not share the claim-
        ant’s intent. See Cuneo, 770 S.E.2d at 54.
               We focus our analysis on the 2016–17 policy, not the original
        2013–14 contract. A claim for reformation arises when the parties
        “labored under the same misconception . . . at the time of the exe-
        cution of the instrument.” Fox v. Washburn, 449 S.E.2d 513, 514 (Ga.
        1994) (citation and internal quotation marks omitted). The Low-
        erys correctly seek reformation of the 2016–17 policy because that
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        10                     Opinion of the Court                  22-13738

        was the policy in force when Lowery sustained her injury at Noo-
        dle College Park.
                AmGuard cites Infinity General Insurance Co. v. Litton to sup-
        port its argument that we should focus our analysis on the original
        policy, but AmGuard misreads that decision. 707 S.E.2d 885 (Ga.
        Ct. App. 2011). Litton never discussed equitable reformation. It
        stands only for the proposition that a policy is a “renewal,” not a
        “new contract,” when “its terms . . . carr[y] forward the same obli-
        gation[s]” as an earlier policy. Id. at 888–89. The parties do not dis-
        pute that the 2016–17 policy is, as it says on its face, a “[r]enewal”
        of the original policy. It does not follow that the 2016–17 policy is
        not the proper instrument for our analysis. The 2016–17 policy
        does not expressly “void” its predecessor policies. See Brannen v.
        Gulf Life Ins. Co., 410 S.E.2d 763, 764 (Ga. Ct. App. 1991) (finding
        that a “duplicate” policy was the proper instrument for the analysis
        of mistake when it “clearly and unequivocally” voided an earlier
        policy).
               AmGuard also argues that the district court erred by consid-
        ering events after the execution of the relevant policy, but we disa-
        gree. Courts may consult the parties’ “subsequent conduct” as “ev-
        idence of their true intent.” First Chatham Bank v. Liberty Cap., LLC,
        755 S.E.2d 219, 224 (Ga. Ct. App. 2014). The “actual conduct of
        both parties” following contract formation is probative evidence of
        mutual mistake. Fox, 449 S.E.2d at 514.
               A mutual mistake in naming the insured owner of a restau-
        rant provides a basis for equitable reformation. In Occidental Fire, a
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        22-13738               Opinion of the Court                         11

        limited liability company bought a bar and restaurant business. See
        793 S.E.2d at 608. The individual member of the company then
        signed a commercial insurance application for the restaurant that
        identified the restaurant and its former owner as the insured. Id. The
        member later accepted an insurance proposal listing the former
        owner as the insured. Id. Then the estate of a patron who had been
        stabbed to death in the restaurant sued the company for wrongful
        death. The company sought defense and indemnification under the
        policy. But the insurer denied coverage on the ground that the en-
        tity “was not listed as, and did not come within the definition of,
        an insured under the policy.” Id. After the restaurant settled the suit
        and assigned its policy rights to the estate, the estate obtained a
        reformation of the policy. Id. at 608. The Georgia Court of Appeals
        held that the insurer failed to explain why either party to the policy
        “would have intended for [it] to provide . . . coverage to the prior
        owner who no longer had any interest in the business, rather than
        the actual current owner.” Id. at 609. The insurer “relied on” a mis-
        taken application when it issued the policy and “labored under the
        same misconception that the name of the insured should be the
        prior corporate owner’s name.” Id.
               Occidental controls this appeal. AmGuard insists that it could
        not have shared Shou & Shou’s mistake because it did not know
        the “identit[y]” of the intended insured and could not have in-
        tended to “name” Shou & Shou as an insured. But Georgia law
        does not demand that degree of specificity in defining a mutual mis-
        take. Nothing in Occidental suggests that the insurer knew or had
        reason to know the identity or name of the limited liability
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        12                    Opinion of the Court                22-13738

        corporation. The mistake was that the insured should be an entity
        other than the true owner. And the mutual mistake here is identi-
        cal: the 2016–17 policy insured a fictional entity with no insurable
        interest instead of the owner of the business that the policy was
        meant to insure, and the insurer reaped premiums even as the
        owner was denied coverage. As in Occidental, the parties could not
        have intended that outcome.
                AmGuard argues that Occidental is “materially distinguisha-
        ble” on three grounds, but each argument misses the mark. First,
        AmGuard contends that the 2016–17 policy was not issued to a
        prior owner of the insured business. But nothing in Occidental sug-
        gests the materiality of the fact that the mistaken insured was the
        prior owner of the bar and restaurant. What mattered was that the
        mistaken insured was not the “current owner”—that is, the true
        owner. Id. at 609 (emphasis added). Second, AmGuard asserts that
        the policy “did provide coverage”— to “Noodle Life” and for “var-
        ious propert[ies]” owned by the Shous—and so was “not issued to
        an entity with no insurable interest.” But the record contains no
        evidence that the policy insured “Noodle Life.” The original policy
        and the 2016–17 policy were both issued to “Noodle, Inc.” And the
        parties agree that “Noodle, Inc. was not an actual corporation” dur-
        ing the coverage period and could have “no insurable interest.”
        Third, AmGuard argues that because the Shous “own several enti-
        ties,” no evidence “suggest[s] that the parties would have intended
        to solely insure Shou & Shou as opposed to Noodle [Inc.].” On the
        contrary, no evidence refutes the Lowerys’ consistent assertion
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        22-13738               Opinion of the Court                        13

        that the Shous intended to insure the owner of Noodle College
        Park—Shou & Shou.
                 Lee v. American Central Insurance Co., on which AmGuard re-
        lies, is inapposite. 530 S.E.2d 727 (Ga. Ct. App. 1999). The plaintiff
        in Lee sought reformation of an insurance policy to which he was
        not a party and that never mentioned his name. Id. at 729. The
        court of appeals explained that the insurer “was not informed” that
        the plaintiff owned the property, that the policy never mentioned
        the plaintiff, and that the plaintiff “did not conduct business” with
        the insurer “related to the policy.” Id. at 730. AmGuard, in contrast,
        was informed that Shou & Shou owned Noodle College Park, and
        Shou & Shou did conduct business with AmGuard under the pol-
        icy. AmGuard’s appointed defense counsel in the Addus suit told
        AmGuard, “[y]our insured is Shou & Shou, Inc. This company
        owns and operates [Noodle College Park].” Defense counsel in the
        Love suit told AmGuard substantially the same thing. Shou & Shou
        paid all premiums for the policy and its predecessor policies out of
        its operating account. AmGuard also settled the Addus and Love
        suits by obtaining releases in favor of Shou & Shou. And AmGuard,
        in evaluating policy renewal and premium rates for “Noodle, Inc.,”
        considered prior claims it had handled for Shou & Shou at Noodle
        College Park.
              Reformation of the policy does not prejudice AmGuard. Alt-
        hough AmGuard contends that reformation would be prejudicial
        because it would require insuring Shou & Shou, an entity it “never
        agreed” or “intended” to insure, the same could be said of the
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        14                     Opinion of the Court                   22-13738

        insurer in Occidental. See 793 S.E.2d at 609. AmGuard also argues
        that the policy charged premiums reflecting the risks it judged
        “commensurate with insuring a single business entity” and that re-
        forming the policy to “add” Shou & Shou would entail insuring
        “multiple entities.” But the Lowerys seek only to substitute Shou
        & Shou for “Noodle, Inc.,” a nonexistent entity; reformation would
        not change the “number of entities to be insured.” And though Am-
        Guard considers it “obviously prejudicial” to be “exposed” to the
        $1 million consent judgment in the Lowerys’ state suit, the Georgia
        court rejected that argument in materially identical circumstances
        in Occidental, see 793 S.E.2d at 609. Other Georgia courts too have
        rejected prejudice arguments grounded in financial loss when the
        contract is otherwise reformable. See, e.g., Brannen, 410 S.E.2d at
        763–65.
                 C. The Lowerys’ Claim of Breach of Contract Merges
                           with Reformation of the Policy.
                The district court also did not err by granting summary judg-
        ment in favor of the Lowerys on their claim of breach of contract.
        A claim for equitable reformation and a claim for damages flowing
        from breach of the reformed contract are “only one claim for re-
        lief.” Wall, 249 S.E.2d at 590. Reformation relates back to the date
        of the policy’s execution. Aames Funding Corp. v. Henderson, 620
        S.E.2d 503, 506 (Ga. Ct. App. 2005). Because the district court cor-
        rectly reformed the 2016–17 policy to substitute in Shou & Shou as
        the insured, the policy required AmGuard to defend and indemnify
        Shou & Shou in the Lowerys’ state suit. See Occidental, 793 S.E.2d
        at 609.
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        22-13738            Opinion of the Court                   15

                             IV. CONCLUSION
              We AFFIRM the judgment in favor of the Lowerys.