Court Opinion

ID: 4561031
Source: CourtListenerOpinion
Date Created: 2020-08-28 13:01:23.010987+00
Date Added: 2024-06-11T11:20:55.272370
License: Public Domain

Case: 19-12999   Date Filed: 08/28/2020   Page: 1 of 6

                                                      [DO NOT PUBLISH]

             IN THE UNITED STATES COURT OF APPEALS

                     FOR THE ELEVENTH CIRCUIT
                       ________________________

                             No. 19-12999
                       ________________________

                   D.C. Docket No. 1:15-cv-02961-MLB

AMY MARIE KEMPER, as assignee of
CHRISTOPHER L. BROWN,

                                                      Plaintiff - Appellant,

                                  versus

EQUITY INSURANCE COMPANY,

                                                      Defendant – Appellee.

                       ________________________

                Appeal from the United States District Court
                   for the Northern District of Georgia
                      ________________________

                             (August 28, 2020)

Before JORDAN, LAGOA, and BRASHER, Circuit Judges.
                 Case: 19-12999         Date Filed: 08/28/2020        Page: 2 of 6

PER CURIAM:

       We decide in this appeal whether Equity Insurance Company is entitled to

summary judgment on a claim that it failed to settle—negligently or in bad faith—

the demand of an injured claimant for its insured’s policy limit under Georgia law.

The district court ruled that Southern General Insurance Co. v. Wellstar, 726 S.E.2d
488 (Ga. App. 2012), provided Equity with a safe harbor that freed it from the rock-

and-a-hard-place decision of choosing between lien exposure after paying the claim

or exposure to a bad-faith lawsuit for failing to pay the claim. But there are

numerous factual issues here surrounding the issue of negligence and bad faith, even

bearing Wellstar in mind. Because we conclude that these questions should be

resolved by a jury, we reverse the district court’s grant of summary judgment in

favor of Equity, and remand for trial. 1

                                                  I

       On March 10, 2012, Christopher Brown crossed the center line of an

undivided highway in Coweta County, Georgia while driving under the influence of

1
  Many of the lingering ambiguities regarding the scope of an insurer’s duty with respect to time-
limit demands have been addressed by the Georgia Legislature in O.C.G.A. § 9-11-67.1. The new
law, passed in 2013 after the accident in this case, provides a list of terms that demand letters must
include and gives recipients of such letters the right to seek clarification regarding terms of the
demand, liens, and other relevant facts—without the request for clarification being deemed a
counteroffer. Although § 9-11-67.1 does not decide the case at hand, it provides needed guidance
to future parties embroiled in similar disputes. As a result, our opinion is of limited significance,
and we write only for the parties.
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                Case: 19-12999        Date Filed: 08/28/2020      Page: 3 of 6

drugs and alcohol and crashed into a motorcycle driven by Amy Kemper. She

survived the collision but sustained serious injuries.

       Equity, Mr. Brown’s insurer, delegated authority to Statewide to settle Ms.

Kemper’s claim. After receiving some of Ms. Kemper’s medical bills and related

documents, and concluding that those bills exceeded Mr. Brown’s $25,000 policy

limit, Statewide sent Ms. Kemper a request for updated documentation pertaining to

the accident, including all her medical bills incurred up to that point. At the hospital,

with the help of an attorney, she drafted a demand letter offering to sign a limited

release in exchange for payment of Mr. Brown’s policy limit. The letter specified

where Equity could send its check and provided a deadline. It also stated: “Please

DO NOT contact me, or my friends as this demand is very simple.” D.E. 224-11.

       After internal discussions about how to respond, Statewide sent Ms. Kemper

a check for the policy limit with a cover letter that read as follows:

       In concluding the settlement, we are entrusting that you place money in
       an escrow account in regards to any and all liens pending. This demand
       is being asserted to protect the lien’s interest and in accordance with the
       recent case law, Southern General Insurance Co. vs. WellStar Health
       System, Inc.

D.E. 224-31.2

2
 Ms. Kemper did not retain her attorney until after she had received Statewide’s response to her
demand letter, but he had offered to help her draft the demand letter for free.
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      Ms. Kemper’s attorney advised her to reject Statewide’s demand. She did so

and sued Mr. Brown in state court, ultimately obtaining a $10 million consent

judgment against him. She then sued Equity for negligence or bad faith in state court

after Mr. Brown assigned her his failure-to-settle claim, and Equity removed the case

to federal court. On the parties’ cross-motions for summary judgment, the district

court granted Equity’s motion and denied Ms. Kemper’s motion.

                                         II

      We review the district court’s grant of summary judgment de novo. In doing

so, we view the evidence and draw all reasonable inferences in favor of the non-

moving party. See Hallums v. Infinity Ins. Co., 945 F.3d 1144, 1148 (11th Cir.

2019).

                                         III

      Under Georgia law, an insurer can be held liable for the negligent or bad-faith

failure to settle a claim within a policy’s limits when it had knowledge of clear

liability and special damages exceeding that limit. See S. Gen. Ins. Co. v. Holt, 416
S.E.2d 274, 276 (Ga. 1992). An insurer deciding whether to settle or try a case must

act as an “ordinarily prudent insurer,” and may be liable if such an insurer “would

consider [that] choosing to try the case created an unreasonable risk” of unfavorable

results. See Cotton States Mut. Ins. Co. v. Brightman, 580 S.E.2d 519, 521 (Ga.

2003) (citing U.S. Fid. & Guar. Co. v. Evans, 156 S.E.2d 809, 811 (Ga. App.), aff’d,

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158 S.E.2d 243 (Ga. 1967)). Generally, a jury must decide the issue of negligent or

bad-faith failure to settle. See Holt, 416 S.E.2d at 276.

      In Wellstar, the Georgia Court of Appeals created a “safe harbor” for insurers

who may be faced with failure-to-settle claims. The safe harbor applies when

“(1) the insurer promptly acts to settle a case involving clear liability and special

damages in excess of the applicable policy limits, and (2) the sole reason for the

parties’ inability to reach a settlement is the plaintiff’s unreasonable refusal to assure

the satisfaction of any outstanding hospital liens.” Wellstar, 726 S.E.2d at 493.

      Applying the Wellstar safe harbor standard, we conclude that there are simply

too many disputed issues related to the failure-to-settle claim to grant summary

judgment in favor of Equity. Here are just a few of the facts that support Ms.

Kemper’s position that Equity acted in negligence or bad faith: (1) Statewide’s

outside counsel noted that Ms. Kemper was a state employee with likely insurance

coverage for her medical bills, so there was no reasonable basis to fear liens or claims

from her medical providers; (2) counsel nevertheless conducted a lien search and did

not find any outstanding liens against Ms. Kemper; (3) Statewide’s claim director

stated that he would have conferred with counsel about including the escrow demand

in its letter, and counsel explained that he had thought the demand was a bad idea

because Wellstar likely did not apply as it had involved known liens; (4) the claim

director could not identify how contacting Ms. Kemper would have helped Statewide

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settle the claim, even absent her communications ban; (5) Statewide’s adjuster did

not know how Ms. Kemper could comply with the escrow demand; (6) Statewide’s

demand letter referred to “any and all liens pending” and was not limited to medical

liens; and (7) the escrow demand was not limited in time, as it provided no express

end point at which Ms. Kemper would be able to remove the funds from escrow.

      Taken in the light most favorable to Ms. Kemper, the record does not lead to

the inexorable conclusion that the Wellstar safe harbor applies. The parties disagree

about whether Equity’s/Statewide’s response to Mr. Kemper’s demand was

reasonable under the circumstances, whether the escrow demand was narrowly

tailored, whether Ms. Kemper’s ban on communications was an unreasonable refusal

to assure satisfaction of a known lien, and whether this communication ban was the

“sole” reason for the parties’ inability to reach a settlement.

                                          IV

      We express no view about Ms. Kemper’s likelihood of success at trial. We

hold only that the record contains sufficient evidence to permit a reasonable jury to

return a verdict in her favor. We reverse the grant of summary judgment in favor of

Equity and remand for trial.

      REVERSED AND REMANDED.

                                           6