Court Opinion

ID: 9398671
Source: CourtListenerOpinion
Date Created: 2023-05-31 20:01:40.103926+00
Date Added: 2024-06-11T17:19:35.423039
License: Public Domain

USCA11 Case: 22-12496    Document: 31-1      Date Filed: 05/31/2023   Page: 1 of 11

                                                    [DO NOT PUBLISH]
                                    In the
                 United States Court of Appeals
                         For the Eleventh Circuit

                           ____________________

                                 No. 22-12496
                           Non-Argument Calendar
                           ____________________

        GREAT AMERICAN INSURANCE COMPANY,
                                   Plaintiff-Counter Defendant-Appellee,
        versus
        ALLIED WORLD ASSURANCE COMPANY, INC.,

                                Defendant-Counter Claimant-Appellant.

                           ____________________

                  Appeal from the United States District Court
                     for the Northern District of Georgia
                      D.C. Docket No. 1:20-cv-02984-AT
                           ____________________
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        2                      Opinion of the Court                22-12496

        Before JORDAN, BRANCH, and BRASHER, Circuit Judges.
        PER CURIAM:
               This appeal is about which of two insurance companies
        must foot the bill for a settlement involving their mutual insured.
        Great American Insurance Company paid out and sued Allied
        World Assurance Company, alleging that because it was the um-
        brella insurer and Allied World was the primary insurer, Great
        American was obligated to pay only “in excess” of Allied World’s
        policy agreement. The district court agreed, granting summary
        judgment in Great American’s favor and awarding attorney’s fees
        under O.C.G.A. § 9-11-68(e) based on Allied World’s frivolous ar-
        guments.
               On appeal, Allied World makes two arguments. First, it ar-
        gues the district court erred by concluding Allied World’s obliga-
        tion takes priority over Great American’s because its policy con-
        tains an applicable “excess clause.” Second, Allied World argues at-
        torney’s fees are inappropriate because its arguments were made
        in good faith and not frivolous. Georgia law precludes Allied
        World’s first argument. Even so, we agree that attorney’s fees are
        not appropriate under O.C.G.A. § 9-11-68(e). Accordingly, we af-
        firm in part and reverse in part.
                                      I.

             Tribridge Residential is a company that manages apartment
        complexes. In 2014, two women were shot and killed at an
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        22-12496               Opinion of the Court                         3

        apartment complex that Tribridge managed in Decatur, Georgia.
        An ensuing lawsuit alleged Tribridge negligently failed to imple-
        ment security and safety measures at the apartment complex and
        created a nuisance by allowing a dangerous environment to persist.
        Tribridge settled that suit with plaintiffs.
                Three different insurance companies insured Tribridge.
        AmTrust International Underwriters DAC, an insurance company
        that issued Tribridge a primary commercial general liability policy,
        paid out its policy limit toward the settlement. Then, Allied World
        and Great American disagreed about which policy was the priority
        coverage for the rest of the settlement.
              Allied World Policy
               Allied World issued Tribridge a commercial general liability
        policy. The policy states Allied World “will pay those sums that the
        insured becomes legally obligated to pay as damages because of
        ‘bodily injury’ to which this insurance applies.” Although Allied
        World issued a “primary policy,” it contains an excess clause pur-
        porting to render its coverage excess of other insurance when lia-
        bility arises from Tribridge’s property management activities:
        “With respect to [Tribridge’s] liability arising out of [its] manage-
        ment of property for which [it is] acting as real estate manager, this
        insurance is excess over any other . . . insurance available to you,
        whether such insurance is primary or excess.”
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        4                      Opinion of the Court                 22-12496

              Great American Policy
                Great American issued a “Commercial Umbrella Coverage”
        policy which includes Tribridge as an additional insured. The pol-
        icy covers “those sums in excess of the ‘Retained Limit’ that the
        ‘insured’ becomes legally obligated to pay imposed by law or . . .
        because of ‘bodily injury.’” The “Retained Limit” is based on the
        coverage from underlying insurance policies, including coverage
        from Allied World. In particular, the policy contains a “schedule of
        underlying insurance” including Allied World’s general liability
        coverage. The Great American policy also includes an “other insur-
        ance” clause: “If other insurance applies to a loss that is also cov-
        ered by this policy, this policy will apply excess of the other insur-
        ance” unless “the other insurance is specifically written to be excess
        of this policy.”
                                   *      *      *
               Great American paid the rest of the settlement against
        Tribridge and sued Allied World, seeking equitable contribution
        and a declaratory judgment that its coverage obligation is not trig-
        gered until Allied World’s policy limit is exhausted. The district
        court granted summary judgment for Great American. Relying on
        Atkinson v. Atkinson, 325 S.E.2d 206, 214 (Ga. 1985), the district
        court concluded that Georgia law obligates Great American (as an
        umbrella insurer) to pay only in excess of Allied World (as a pri-
        mary insurer). It also awarded Great American attorney’s fees un-
        der O.C.G.A. § 9-11-68(e), concluding that Allied World’s argu-
        ments were frivolous considering Atkinson. This appeal followed.
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        22-12496               Opinion of the Court                        5

                                       II.

               Allied World raises two arguments on appeal. First, it argues
        the district court erred by concluding Allied World’s obligation
        takes priority over Great American’s because its policy contains an
        applicable “excess clause.” Second, Allied World argues attorney’s
        fees are inappropriate because its arguments were made in good
        faith. We address each in turn.
                                       A.

              Allied World argues the district court erred by granting sum-
        mary judgment for Great American because Great American’s in-
        surance policy coverage should take priority. Specifically, Allied
        World contends that the “excess clause” in its policy obligates it to
        pay only after Great American.
                “We review the district court’s grant of summary judgment
        de novo.” Pelaez v. Gov’t Emps. Ins. Co., 13 F.4th 1243, 1249 (11th
        Cir. 2021). Georgia law applies to this insurance contract dispute.
        See Bryan v. Hall Chem Co., 993 F.2d 831, 834 (11th Cir. 1993) (ap-
        plying Georgia’s conflict of law rules in a Georgia-based diversity
        suit); Convergys Corp. v. Keener, 582 S.E.2d 84, 86−87 (Ga. 2003)
        (explaining Georgia applies the law where a contract is made or
        performed).
              Georgia law delineates between a “primary” insurance pol-
        icy—“written to provide primary coverage”—and an “umbrella”
        policy—operating as “true excess over and above any type of
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        6                      Opinion of the Court                22-12496

        primary insurance.” Atkinson, 326 S.E.2d at 214. An insured may
        have coverage from multiple primary and umbrella insurers, like
        Tribridge did here (i.e., Amtrust, Allied World, and Great Ameri-
        can). That said, all primary coverage must be exhausted before um-
        brella policy coverage is triggered. Id.
               Primary policies precede umbrella policies even when the
        primary policy includes an applicable “excess clause.” Id. For exam-
        ple, in Atkinson v. Atkinson, two insurance companies disputed
        their priority of payment related to a car crash settlement. Id. at
        213. One company provided a primary liability policy, and the
        other provided an umbrella policy. Id. But the primary insurance
        policy included an excess clause: “any insurance we provide for a
        vehicle you do not own shall be excess over any other collectible
        insurance.” Id. And in Atkinson, the insured was driving a car he
        did not own at the time of the accident, which the primary insurer
        argued triggered its excess clause and obligated it to pay only after
        the umbrella insurer. Id.
               The Georgia Supreme Court disagreed. Id. at 214. The court
        adopted the “prevailing rule” that “umbrella policies, almost with-
        out dispute, are regarded as true excess over and above any type of
        primary coverage, excess provisions arising in regular policies in
        any manner, or escape clauses.” Id. (emphasis added). Even despite
        the primary insurance policy’s excess clause, the court determined
        the policy “was written to provide primary coverage” and should
        pay before the “true excess policy . . . not written to provide pri-
        mary coverage.” Id. In other words, primary policies take priority
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        22-12496               Opinion of the Court                        7

        to umbrella policies, even when the primary policy includes an ap-
        plicable excess clause. Id.
               As the district court explained, excess clauses in primary in-
        surance policies avoid double payment where the insured has other
        primary insurance. For instance, in Atkinson, the primary policy’s
        excess clause—seeking to transform the policy to “excess over any
        other collectible insurance”—might allow it to follow another pri-
        mary policy. But excess clauses do not allow the primary insurer to
        step to the back of the line behind umbrella coverage.
                The rule in Atkinson is dispositive here. Allied World’s pol-
        icy provides “commercial general liability coverage” for “sums that
        the insured becomes legally obligated to pay as damages because
        of ‘bodily injury.’” On the other hand, Great American’s “commer-
        cial umbrella coverage” policy only covers “those sums in excess
        of” listed underlying insurance. See Progressive Classic Ins. Co. v.
        Nationwide Mut. Fire Ins. Co., 670 S.E.2d 497, 500−01 (Ga. App.
        2008) (explaining that an insurance policy was “specifically in-
        tended to provide excess coverage” when it required the insured
        maintain underlying insurance). As in Atkinson, the Allied World
        policy is “written to provide primary coverage,” and the Great
        American policy is the “true excess policy.” Atkinson, 326 S.E.2d at
        214. Accordingly, Allied World’s primary policy must be exhausted
        before the Great American umbrella policy applies.
                The Allied World policy’s excess clause—seeking to change
        its obligation when Tribridge is acting as a property manager—is
        of no consequence here. The clause provides: “With respect to
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        8                       Opinion of the Court                 22-12496

        [Tribridge’s] liability arising out of [its] management of property
        for which [it is] acting as real estate manager, this insurance is ex-
        cess over any other . . . insurance available to you, whether such
        insurance is primary or excess.” Like the excess clause in Atkinson,
        which purported to make the primary insurance “excess over any
        other collectible insurance,” Allied World’s excess clause does not
        change its obligation vis-à-vis Great American, the umbrella in-
        surer. Atkinson, 326 S.E.2d at 214. Atkinson simply forecloses Al-
        lied World’s ability to jump rungs on the insurance tower. See id.
               Allied World tries to distinguish Atkinson by (1) confining
        its holding to excess clauses involving car ownership, or (2) based
        on the language in the Great American policy. We disagree.
               First, we cannot distinguish Atkinson based on the substance
        of the excess clause. Instead, the Georgia Supreme Court adopted
        a general “prevailing rule” that umbrella policies are excess over
        “any type of primary coverage, excess provisions arising in regular
        policies in any manner, or escape clauses.” Id. Atkinson gives no
        indication this “prevailing rule” is confined to excess clauses involv-
        ing car ownership. Id.
               Second, Allied world contends the Great American policy
        language takes our situation outside of Atkinson: the Great Amer-
        ican policy will precede “other insurance . . . specifically written to
        be excess of this policy.” Allied World’s excess clause does not fit
        this criterion. The Allied World policy is included in the Great
        American policy’s “underlying insurance,” making it part of the
        “retained limit” and thus primary coverage before Great American.
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        22-12496               Opinion of the Court                          9

              In sum, Allied World is first in the pecking order as the “pri-
        mary insurer.” We affirm the district court’s grant of summary
        judgment for Great American.
                                       B.

               Allied World argues the district court erred by awarding at-
        torney’s fees. “We review a district court’s award of attorneys’ fees
        for abuse of discretion.” Waters v. Int’l Precious Metals Corp., 190
        F.3d 1291, 1293 (11th Cir. 1999).
                Under Georgia law, O.C.G.A. § 9-11-68(e), the court may
        award attorney’s fees to the prevailing party after a “verdict or
        judgment is rendered” if the opposing party presented “frivolous
        claims or defenses.” O.C.G.A. § 9-11-68(e). Even so, as indicated by
        the statute’s title—“Written offers to settle tort claims; liability of
        refusing party for attorney’s fees and expenses”—the statute ap-
        plies only after the opposing party rejects a written offer to settle a
        tort claim. See id. § 9-11-68(a); see also Anglin v. Smith, 853 S.E.2d
        142, 144 (Ga. Ct. App. 2020).
               Assuming without deciding that Section 9-11-68(e) applies to
        this contract claim between two insurance companies, we cannot
        say that Allied World’s defenses are “frivolous,” warranting its pay-
        ment of attorney’s fees. The statute defines frivolous claims or de-
        fenses as those that “lack substantial justification or that [are] not
        made in good faith” and “to which there existed such a complete
        absence of any justiciable issue of law or fact that it could not be
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        10                      Opinion of the Court                 22-12496

        reasonably believed a court would accept” the position. O.C.G.A.
        § 9-11-68(e)(1)(A), (B).
                After a hearing, the district court determined that Allied
        World pursued the litigation in good faith, but the district court
        nevertheless concluded that Allied World presented frivolous de-
        fenses because, in the light of Atkinson v. Atkinson, its arguments
        that its excess clause changed its coverage obligations “lacked sub-
        stantial justification.” Even though we agree with the district court
        that Atkinson forecloses Allied World’s arguments about its order
        of priority, we cannot agree that Allied World’s arguments are friv-
        olous. That is, there was not “such a complete absence of any jus-
        ticiable issue of law or fact that it could not be reasonably believed
        a court would accept” Allied World’s position. O.C.G.A. § 9-11-
        68(e)(1)(B).
                We note that two district court decisions from the same dis-
        trict support Allied World’s concededly good faith belief that “ex-
        tension, modification, or reversal of existing law may be success-
        ful.” Id. § 51-7-80(4); see ACE Prop. & Cas. Ins. Co. v. Liberty Sur-
        plus Ins. Corp., No. 1:15-cv-0949-SCJ, 2018 WL 11249930, *10
        (N.D. Ga. Mar. 27, 2018); Phoenix Ins. Co. v. Nationwide Prop. &
        Cas. Ins. Co., No. 1:12-CV-00660-JOF, 2013 WL 11975142, *3-4
        (N.D. Ga. Apr. 22, 2013). In the first case, ACE Property, the district
        court read an “excess clause” to alter the priority of obligations be-
        tween two excess insurers. ACE Prop. & Cas. Ins. Co., 2018 WL
        11249930, at *10. Although ACE Property concerned two excess
        policies, such that its analysis is not directly on point, the excess
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        22-12496               Opinion of the Court                       11

        clause language in ACE Property resembles Allied World’s excess
        clause. See id. In the second case, Phoenix, the court avoided ap-
        plying Atkinson by reading Atkinson as limited to “owner/non-
        owner” policies related to “automobile insurance.” Phoenix Ins.
        Co., 2013 WL 11975142, *3. Although we are unwilling to distin-
        guish Atkinson in the same way, this reasoning provides a good
        faith basis for Allied World to raise the same argument in its favor.
        See O.C.G.A. § 9-11-68(e)(1)(A).
                                       III.

             We AFFIRM summary judgment for Great American, but
        we REVERSE the award of attorney’s fees.