Court Opinion

ID: 798737
Source: CourtListenerOpinion
Date Created: 2012-04-26 12:47:02+00
Date Added: 2024-06-11T17:59:46.384922
License: Public Domain

[DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                       FOR THE ELEVENTH CIRCUIT
                        ________________________                    FILED
                                                           U.S. COURT OF APPEALS
                               No. 11-14078                  ELEVENTH CIRCUIT
                                                                 APRIL 25, 2012
                           Non-Argument Calendar
                                                                  JOHN LEY
                         ________________________
                                                                   CLERK

                      D.C. Docket No. 7:09-cv-00118-HL

CONE FINANCIAL GROUP, INC.,

                                             Plaintiff-Counter Defendant-Appellant,

                                    versus

EMPLOYERS INSURANCE COMPANY OF WAUSAU,

                                             Defendant-Counter Claimant-Appellee.

                         ________________________

                  Appeal from the United States District Court
                      for the Middle District of Georgia
                        ________________________
                               (April 25, 2012)

Before MARCUS, MARTIN and COX, Circuit Judges.

PER CURIAM:

      Employers Insurance Company of Wausau (“Wausau”) issued Cone Financial

Group, Inc. (“Cone”) a Workers Compensation and Employers Liability Insurance

Policy (the “Policy”). The Policy contained a high deductible endorsement. Under
the endorsement, Cone remained financially responsible for individual claims below

the Policy’s $250,000 deductible. When Wausau paid claims below the deductible,

Cone would reimburse Wausau for amounts paid on these claims. Under the Policy,

Wausau received a fee for handling these claims. The amount of the fee varied

depending upon the aggregate amount of the claims. According to the complaint,

Wausau received a higher fee by approving greater payments to claimants rather than

closely scrutinizing claims. While the policy was in effect, Wausau administered

forty claims for benefits. Because none of these claims met the high deductible, Cone

was financially responsible to pay the claims. Wausau billed Cone for $275,000 in

claims service fees.

       Count One of Cone’s complaint alleges that Wausau’s claims handling

procedure breached the insurance contract. It asserts that Wausau breached its implied

duty to act in the best interest of Cone as it administered workers compensation

claims. Alternatively, this count alleges Wausau breached its independent fiduciary

duty to act in the best interest of Cone. After filing its answer to the complaint,

Wausau filed a motion for a judgment on the pleadings on the first count of the

complaint. The district court granted the motion, reasoning that Georgia law1 does not

       1
          The parties do not dispute the district court’s conclusion that Georgia law governs this
diversity case.

                                                2
recognize a breach of contract claim based on the breach of either an implied or

fiduciary duty of good faith.

      In response to the court’s entry of judgment on Count One of Cone’s original

complaint, Cone filed a motion to amend the complaint to add new claims for Bad

Faith/Negligent Claims Handing and a claim for Breach of Fiduciary Duty/Improper

Claims Handling. The court denied Cone’s motion to add these counts. It held that

an amendment would be futile because the counts would not withstand a Rule 12(b)(6)

motion to dismiss. Cone now appeals, challenging both the district court’s grant of

Wausau’s motion for judgment on the pleadings and the court’s denial of Cone’s

motion for leave to amend its complaint. We affirm.

      “We review de novo the grant of judgment on the pleadings by the district

court.” Hardy v. Regions Mortg., Inc., 449 F.3d 1357, 1359 (11th Cir. 2006) (citing

Moore v. Liberty Nat’l Life Ins. Co., 267 F.3d 1209, 1213 (11th Cir. 2001)). We

accept the facts as stated in the plaintiff’s complaint as true and view them in the light

most favorable to the plaintiff. Id. “If upon reviewing the pleadings it is clear that the

plaintiff would not be entitled to relief under any set of facts that could be proved

consistent with the allegations, the court should dismiss the complaint.” Horsley v.

Rivera, 292 F.3d 695, 700 (11th Cir. 2002) (citing White v. Lemacks, 183 F.3d 1253,

1255 (11th Cir. 1999)).

                                            3
      When the district court granted Wausau’s motion for judgment on the

pleadings, it concluded that Georgia does not recognize an independent cause of

action for breach of good faith and fair dealing. Then, it found that Cone’s complaint

did not allege the breach of any express term of the contract. The court continued by

explaining that fiduciary duties between an insurer and insured only arise when the

insurer is defending or settling a third-party tort claim on the behalf of the insured.

Given that the circumstances of this case did not create this fiduciary duty, the court

rejected Cone’s claim of breach of a fiduciary duty.

      On appeal, Cone does little to rebut the district court’s reasoning. Instead, Cone

argues that Wausau owed Cone a duty of good faith and fair dealing that could be

implied from the contract, arose from the industry standard of care for claims

handling, or derived from the doctrine of necessary implication. None of these

arguments respond to the fundamental flaw the district court found with Cone’s

original complaint. The complaint as drafted states an independent breach-of-contract

cause of action for breach of the duty of good faith. The district court decided

Georgia law does not recognize this claim.

      We agree with the district court’s analysis of Georgia law on this issue. See

Alan’s of Atlanta, Inc. v. Minolta Corp., 903 F.2d 1414, 1429 (11th Cir. 1990)

(holding that Georgia law does not recognize claim for breach of implied covenant of

                                           4
good faith); Onbrand Media v. Codex Consulting, Inc., 687 S.E.2d 168, 174 (Ga. Ct.

App. 2009) (citations omitted) (stating that implied covenant of good faith does not

provide independent basis of liability). Cone’s complaint does not allege Wausau

breached an express term of the insurance contact but instead relies on the breach of

the implied duty of good faith. This is not a proper ground for a breach of contract

claim under Georgia law. Therefore, we hold that the district court did not err by

granting Wausau’s motion for judgment on the pleadings as to Count One of Cone’s

complaint.

      “We generally review the denial of a motion to amend a complaint for an abuse

of discretion, but we review questions of law de novo.” Coventry First, LLC v.

McCarty, 605 F.3d 865, 869 (11th Cir. 2010) (quoting Williams v. Bd. of Regents of

Univ. Sys. of Ga., 477 F.3d 1282, 1291 (11th Cir. 2007)). “[W]e review de novo a

decision that a particular amendment to the complaint would be futile.” Cockrell v.

Sparks, 510 F.3d 1307, 1310 (11th Cir. 2007) (citing Harris v. Ivax Corp., 182 F.3d
799, 802 (11th Cir. 1999)). If the complaint as amended would still be properly

dismissed, then granting leave to amend is futile. Id. (citing Hall v. United Ins. Co.

of Am., 367 F.3d 1255, 1263 (11th Cir. 2004)).

                                          5
       Cone’s arguments on appeal address the district court’s denial of leave to

amend to add Counts One and Two of the proposed amended complaint.2 Count One

of the proposed amended complaint alleges that Wausau owed Cone a duty to act in

Cone’s best interest. We agree with the district court that this count is simply an

attempt to revive Count One that the district court dismissed on Wausau’s motion for

a judgment on the pleadings. Therefore, this amendment would be futile and the

district court did not abuse its discretion by denying Cone’s request to add this count.

       Count Two of the proposed amended complaint alleges Wausau was Cone’s

agent and it breached its fiduciary duty to Cone. Cone fails to cite a single case

applying Georgia law that recognizes a fiduciary duty in these circumstances based

on this agency theory. While an insurer has a duty to act in good faith when the

insurance company is defending or settling a third-party tort claim, Thomas v. Atlanta

Cas. Co., 558 S.E.2d 432, 439 (Ga. Ct. App. 2001), those circumstances are not

present in this case. Like the first count, an amendment to add this count would also

have been futile because it fails to state a claim for relief. The district court did not

err by denying Cone’s motion for leave to amend.

       2
         To the extent Cone challenges the district court’s disposition of the other counts in its
proposed amended complaint, it has waived this issue. See Greenbriar, Ltd. v. City of Alabaster,
881 F.2d 1570, 1573 n.6 (11th Cir. 1989).

                                                6
AFFIRMED.

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