Court Opinion

ID: 68065
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:28:40+00
Date Added: 2024-06-11T17:21:04.787526
License: Public Domain

[DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS
                                                                               FILED
                            FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
                              ________________________ ELEVENTH CIRCUIT
                                                                          July 22, 2009
                                    No. 08-15008                        THOMAS K. KAHN
                              ________________________                       CLERK

                        D. C. Docket No. 08-01474-CV-TWT-1

TERRY EUGENE HARDEN,
individually and on behalf of all other persons
situated,
ARTHUR CHAMBERS,
individually and on behalf of all other persons
situated,

                                                                      Plaintiffs-Appellants,

                                           versus

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,

                                                                       Defendant-Appellee.

                              ________________________

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

                                       (July 22, 2009)

Before BLACK and MARCUS, Circuit Judges, and BUCKLEW,* District Judge.

       *
         Honorable Susan C. Bucklew, United States District Judge for the Middle District of
Florida, sitting by designation.
PER CURIAM:

      Terry Eugene Harden (“Harden”) and Arthur Chambers (“Chambers”)

appeal from the dismissal of their breach of contract suit brought against State

Farm Mutual Automobile Insurance Company (“State Farm”). They also move for

certification of a question of law to the Supreme Court of Georgia, to determine

whether Georgia precedent in Dees v. Logan, 653 S.E.2d 735 (Ga. 2007) prohibits

State Farm from asserting set-offs in the payment of uninsured motorist personal

injury claims. In particular, they argue that their failure to meet the condition

precedent imposed by Ga. Code Ann. § 33-7-11, requiring the insured to first

obtain a judgment of liability against the uninsured motorist before bringing suit

against the insurer, does not apply to their breach of contract action, and that the

district court erred by not certifying their question to the Supreme Court of

Georgia. After thorough review, we affirm.

                                           I.

      The relevant facts and procedural history are straightforward. Harden and

Chambers independently obtained automobile insurance with State Farm; both men

carried plans that included uninsured motorist and medical payment coverage, and

each respectively paid all premiums and fulfilled all contractual obligations.

      On October 5, 2007, while driving a covered motor vehicle, Harden was

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injured in a collision with an uninsured motorist. Harden claimed personal injury

damages under his policy, and State Farm offered to settle the claim for $250,

which was later increased to $750. As part of the offer, State Farm asserted that if

it settled the claim, it would be entitled to a set-off (credit) in the amount of $2,000

under the medical payment coverage portion of the policy. Harden did not accept

the settlement payment, nor did he first file suit against the uninsured motorist to

obtain judgment, nor, finally, did he pursue any other legal claim against the

uninsured motorist.

      On November 28, 2004, while driving a covered motor vehicle, Chambers,

in an unrelated accident, was injured in a collision with an uninsured motorist.

Chambers similarly claimed personal injury damages under his policy with State

Farm. Unlike Harden, Chambers filed suit against the uninsured motorist to obtain

a judgment of liability for the accident, a condition precedent under Ga. Code Ann.

§ 33-7-11 to pursuing collection of uninsured motorist benefits from his insurer,

State Farm. Just as with Harden, State Farm offered to settle Chambers’ claim for

$1,000 but asserted, as part of the offer, that if it paid Chambers, it would be

entitled to a set-off in the amount of $2,652 under the medical payment coverage

portion of the policy. Unlike Harden, Chambers accepted the settlement from State

Farm with full knowledge of this set-off arrangement, and dismissed his suit

                                            3
against the uninsured motorist with prejudice.

      On March 18, 2008, Harden and Chambers filed a putative class action

complaint against State Farm in Georgia Superior Court on behalf of themselves

and persons similarly situated, alleging breach of their insurance contract. In

relevant part, the complaint alleged that:

             13.    On October 5, 2007, Mr. Harden, while driving a
                    motor vehicle insured under the Harden policy,
                    was injured in a collision with an uninsured
                    motorist (as defined by Georgia law).

             14.    Mr. Harden made a proper and timely claim for
                    personal injury damages in accordance with the
                    UM coverage provisions of the Harden policy.
                    After being fully apprised of the nature and extent
                    of Mr. Harden’s injuries and his damages,
                    including medical expenses, State Farm offered to
                    settle Mr. Harden’s claim for $250, which offer
                    was later increased to $750.

             15.    In evaluating and offering to settle Mr. Harden’s
                    UM personal injury claim, State Farm asserted that
                    it was entitled to a set-off or credit for med-pay
                    benefits paid on account of Mr. Harden’s injuries
                    under the Harden policy, in the amount of $2,000.
                    Under Georgia law, State Farm is not entitled to
                    assert or take a credit or set-off for any additional
                    benefits received by a UM policyholder on account
                    of personal injuries.

                    ....

             24.    On November 28, 2004, Mr. Chambers, while
                    driving a motor vehicle insured under the

                                             4
                    Chambers policy, was injured in a collision with an
                    uninsured motorist (as defined by Georgia law)

             25.    Mr. [Chambers] made a proper and timely claim
                    for personal injury damages in accordance with the
                    UM coverage provisions of the [Chambers] policy.
                    After being fully apprised of the nature and extent
                    of Mr. [Chambers’] injuries and his damages,
                    including medical expenses, State Farm offered to
                    settle Mr. [Chambers’] claim for $1,000, which
                    offer was accepted by Mr. Chambers

             26.    In evaluating and offering to settle Mr. Chambers’
                    UM personal injury claim, State Farm asserted that
                    it was entitled to a set-off or credit for med-pay
                    benefits paid on account of Mr. Chambers’ injuries
                    under the Chambers policy, in the amount of
                    $2,652

             27.    State Farm’s assertion of a right to a set-off or
                    credit against Mr. Chambers’s personal injury UM
                    claim in an amount equal to the med-pay benefits
                    paid under the [Chambers] policy, and the failure
                    by State Farm to pay or offer to pay Mr. Chambers
                    for all personal injury damages he sustained under
                    the UM coverage provisions of the [Chambers]
                    policy, constitute breaches of State Farm’s
                    contractual obligations.

(Compl. at 4-6) (emphasis added). Notably, the complaint specified nothing

further about settlement negotiations, nor about Harden or Chambers’ reliance on

State Farm’s offers to settle.

      Essentially, then, Harden and Chambers alleged that, under Georgia law,

State Farm was prohibited from reducing uninsured motorist benefits owed to

                                         5
policyholders for personal injuries by the amount of benefits paid by other sources,

such as medical payment benefits; and that State Farm’s practices therefore

violated controlling Georgia precedent in Dees v. Logan, 653 S.E.2d 735 (Ga.

2007). Harden and Chambers sought to recover monetary damages in the amount

of the set-off credits that State Farm deducted from their claims, as well as

injunctive and declaratory relief, and legal and attorney’s fees pursuant to Ga.

Code Ann. § 13-6-11.

      State Farm timely removed the case to the United States District Court for

the Northern District of Georgia, and, on April 25, 2008, filed a motion to dismiss

pursuant to Fed. R. Civ. P. 12(b)(6), alleging that Harden and Chambers had

improperly brought a direct action against State Farm without first obtaining a

judgment against the alleged uninsured motorists, pursuant to the requirements of

Georgia’s insurance law embodied in Ga. Code Ann. § 33-7-11. Soon thereafter,

Harden and Chambers moved to certify the following question to the Supreme

Court of Georgia:

             Whether, under the holding of Dees v. Logan, 282 Ga.
             815 (Ga. 2007), an uninsured motorist carrier may reduce
             uninsured motorist personal injury benefits by the
             amount of automobile medical payments coverage
             received by a policyholder on account of the same
             injuries.

The district court granted State Farm’s motion to dismiss, concluding that both

                                           6
claims were barred by Ga. Code Ann. § 33-7-11 because neither Harden nor

Chambers had obtained judgment against the alleged uninsured motorists involved

in their accidents before bringing the direct action against State Farm, and the

complaint did not otherwise allege that State Farm had waived the condition

precedent. The district court did not rule on the motion for certification.

      This appeal timely ensued.

                                           II.

      We review de novo a district court's grant of a Rule 12(b)(6) motion to

dismiss for failure to state a claim, “accepting the allegations in the complaint as

true and construing them in the light most favorable to the plaintiff.” Mills v.

Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir. 2008) (quoting Castro v. Sec'y

of Homeland Sec., 472 F.3d 1334, 1336 (11th Cir. 2006)). The factual allegations

in a complaint need not be detailed but “must be enough to raise a right to relief

above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555

(2007). “Stated differently, the factual allegations in a complaint must ‘possess

enough heft’ to set forth ‘a plausible entitlement to relief.’” Fin. Sec. Assur., Inc. v.

Stephens, Inc., 500 F.3d 1276, 1282 (11th Cir. 2007) (quoting Twombly, 550 U.S.

at 557, 559).

      “Where there is doubt in the interpretation of state law, a federal court may

                                            7
certify the question to the state supreme court to avoid making unnecessary Erie

guesses and to offer the state court the opportunity to interpret or change existing

law.” Union Planters Bank, N.A. v. New York, 436 F.3d 1305, 1306 (11th Cir.

2006) (quotation marks and citation omitted). Federal district courts may also

certify open questions of law under the Georgia state constitution and relevant state

statutes to the Supreme Court of Georgia. 1983 Ga. Const. art. VI, § 6, ¶ IV; Ga.

Code Ann. § 15-2-9; Ga. Sup. Ct. R. 46-48. However, the decision to certify a

question is discretionary. Escareno v. Noltina Crucible and Refractory Corp., 139

F.3d 1456, 1461 (11th Cir. 1998).

       Under Ga. Code Ann. § 33-7-11,1 also known as the Uninsured Motorist

Act, all automobile insurance polices issued in Georgia must contain uninsured

motorist protection unless the coverage is rejected by the insured. The Georgia

courts, however, have “interpreted the Uninsured Motorist Act to require, as a

condition precedent to a suit against the insurance carrier, that the insured first sue

       1
           The Uninsured Motorist Act provides, in part, that

                [n]o automobile liability policy or motor vehicle liability policy
                shall be issued or delivered . . . unless it contains an endorsement
                or provisions undertaking to pay the insured damages for bodily
                injury, loss of consortium or death of an insured or for injury to or
                destruction of property of an insured . . . sustained from the owner
                or operator of an uninsured motor vehicle.

Ga. Code Ann. § 33-7-11(a)(1).

                                                  8
and recover a judgment against the uninsured motorist, whether known, or

unknown.” Cohen et al. v. Allstate Ins. Co., 626 S.E.2d 628, 631 (Ga. Ct. App.

2006) (quoting Walker v. Ga. Farm Bureau Mut. Ins. Co., 429 S.E.2d 289, 291

(Ga. Ct. App. 1993)). “A judgment against the tortfeasor, even if it is a nominal

one, is still necessary before the plaintiff may recover from the [uninsured

motorist] carrier. A determination must be made ‘of the uninsured motorist's tort

liability before a [UM carrier] can be held accountable on its contractual obligation

to its insured.’” Cohen, 626 S.E.2d at 632 (quoting State Farm Mut. Auto. Ins. Co.

v. Noble, 430 S.E.2d 804, 805 (Ga. Ct. App. 1993)); Butler v. Gary, 633 S.E.2d

614, 618 (Ga. Ct. App. 2006) (same).2

       Here, it is undisputed that neither of the appellants have obtained a judgment

against the uninsured motorists involved in their accidents. Harden never

attempted to sue the uninsured motorist involved in his accident, and Chambers

dismissed his complaint against the uninsured motorist when he settled his claim

       2
         There are several instances where Georgia state courts have allowed policyholders to
bring suit against an insurer without first fulfilling the statutory precondition, but these cases
involved a request for a declaratory judgment only, or a pure interpretation of insurance
coverage -- in neither instance was there a request for monetary relief by the insured. See State
Farm Mut. Auto. Ins. Co. v. Lorenz, 413 S.E.2d 782 (Ga. Ct. App. 1991) (policyholder permitted
to bring suit against insurer for declaratory judgment to determine whether she could stack
coverage, without fulfilling precondition); Zilka v. State Farm Mut. Auto. Ins. Co., 662 S.E.2d
777 (Ga. Ct. App. 2008) (policyholder permitted to bring breach of contract suit against insurer
without first obtaining judgment against uninsured motorist, to determine solely whether
coverage of policy had lapsed under the contract).

                                                9
with State Farm. Under controlling Georgia law, therefore, both Harden and

Chambers are barred from bringing this direct action claim against State Farm.

      Moreover, neither Harden nor Chambers has pled the possibility that State

Farm waived the condition precedent under Ga. Code Ann. § 33-7-11. Under

Georgia law, the condition precedent imposed by Ga. Code Ann. § 33-7-11 may be

waived in certain circumstances “where the insurer has led the insured to believe

that the insured will be paid without suit by its actions in negotiating for settlement

or direct promises to pay.” Jones v. Cotton States Mut. Ins. Co., 363 S.E.2d 303,

306 (Ga. Ct. App. 1987) (quotation marks and citation omitted); see also Matia v.

Carpet Transp., Inc., 888 F.2d 118, 121 (11th Cir. 1989) (noting that under Georgia

law, when an insurance company “tells its insured that the insured need not satisfy

the policy's provisions concerning a condition precedent to recovery, the insurer

waives that condition precedent.”).

      Thus, for example, if an insurance company leads a policyholder to believe

that it will pay on a claim without requiring the policyholder to engage in any legal

action, under Georgia law the insurer may be estopped from later invoking the

condition precedent -- especially if the statements or actions by the insurer caused

the policyholder to forfeit the ability to bring suit within the time frame provided

by the statute, or to dismiss a pending suit with prejudice. See Nat'l Indem. Co. v.

                                           10
Berry, 221 S.E.2d 624, 631 (Ga. Ct. App. 1975) (noting that an insurer will be

estopped from invoking the condition precedent if it has led an insured to believe

that payment would be forthcoming without any legal action); Gen. Ins. Co. of

Am. v. Lee Chocolate Co., 103 S.E.2d 632, 634 (Ga. Ct. App. 1958) (recognizing

cases of waiver where the insurer purposefully misled the policyholder).

      In this case, however, even construing the pleadings in a light most

favorable to Harden and Chambers, we are still constrained to conclude that there

are no facts pled in this complaint that assert or even implicitly suggest any waiver

of the condition precedent imposed by Ga. Code Ann. § 33-7-11. The complaint

does not assert, nor even imply any back-and-forth bargaining on State Farm's

behalf that suggests the possibility that State Farm affirmatively and deceptively

led Harden into believing no legal action was necessary against the uninsured

motorist. Nor does Harden aver anything at all indicating that there were constant

or repeated assurances that a lawsuit was unnecessary, and that the insurance

provider was ready to settle according to the policyholder’s terms. Rather, the

portion of the complaint relating to Harden's claim simply says:

             After being fully appraised of the nature and extent of
             Mr. Harden's injuries and his damages, including medical
             expenses, State Farm offered to settle Mr. Harden's claim
             for $250, which offer was later increased to $750.

(Compl. at 4) (emphasis added).

                                          11
      The offer of settlement from State Farm indicated that it would pay Harden’s

claim without further litigation. But Harden has alleged nothing that could even

remotely lead one to believe that there was any kind of fraudulent conduct that

might require estoppel, or permit a finding of waiver. Plainly, under Georgia law,

the “[m]ere negotiation for settlement . . . is not that type of conduct designed to

lull the claimant into a false sense of security so as to constitute a waiver of the

limitation defense.” Allstate Ins. Co. v. Sutton, 658 S.E.2d 909, 913 (Ga. Ct. App.

2008) (quoting Ga. Farm Bureau Mut. Ins. Co. v. Pawlowski, 643 S.E.2d 239, 241

(Ga. Ct. App. 2007)).

      Finally, we observe that Harden did not accept the settlement offer, and still

had an abundance of time to file suit against the uninsured motorist involved in his

accident. He was in no way prejudiced by the offer of settlement, and we cannot

say based on the allegations in this complaint that State Farm was charged with

having done anything that would constitute a waiver of the condition precedent of

§ 33-7-11.

      The only difference in the facts pled between Chambers and Harden is that

Chambers initially commenced suit against the uninsured motorist, but dropped it,

after accepting State Farm’s settlement offer. Again, however, there is not even

the slightest suggestion in the complaint that State Farm waived the condition

                                           12
precedent (which, after all, required first obtaining a judgment against the

uninsured motorist), nor that State Farm misled Chambers in any way. Rather,

Chambers seems to challenge the terms of the settlement agreement itself -- even

though the complaint plainly says that Chambers entered in the agreement knowing

that State Farm intended on asserting a set-off for medical payments already

received. Again, nothing has been pled that suggests any exception under Georgia

law from the condition precedent.

      Because the appellants have not satisfied the statutory condition precedent of

Ga. Code Ann. § 33-7-11, nor pled that State Farm somehow waived the condition

precedent, or purposefully misled them, we affirm the district court’s dismissal of

the claim. We, therefore, find it unnecessary to certify any question about the

nature of State Farm’s set-off to the Supreme Court of Georgia.

      AFFIRMED.

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