Court Opinion

ID: 807843
Source: CourtListenerOpinion
Date Created: 2012-09-04 15:11:58+00
Date Added: 2024-06-11T11:11:43.994540
License: Public Domain

Case: 11-16169   Date Filed: 09/04/2012   Page: 1 of 21

                                                           [DO NOT PUBLISH]

              IN THE UNITED STATES COURT OF APPEALS

                      FOR THE ELEVENTH CIRCUIT
                       ________________________

                              No. 11-16169
                        ________________________

                    D.C. Docket No. 1:10-cv-00131-TCB

STATE FARM FIRE AND CASUALTY COMPANY,

                                       Plaintiff - Counter Defendant - Appellee,

                                   versus

KING SPORTS, INC., et al.,

                                                                      Defendants,

ROGER CLEVELAND GOLF COMPANY, INC.,

                                     Defendant - Counter Claimant - Appellant.

                       ________________________

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

                             (September 4, 2012)
               Case: 11-16169       Date Filed: 09/04/2012      Page: 2 of 21

Before JORDAN and HILL, Circuit Judges, and HOOD,* District Judge.

HOOD, District Judge:

       Roger Cleveland Golf Company, Inc. (“Cleveland Golf”), appeals the

district court’s decision to grant summary judgment in favor of State Farm Fire &

Casualty Company (“State Farm”) with respect to State Farm’s declaratory

judgment action and Cleveland Golf’s counterclaims. Among other things, State

Farm sought and obtained a declaration that it need not afford coverage to its

insured, Kings Sports, Inc. (“King Sports”), with respect to a lawsuit brought by

and a judgment obtained by Cleveland Golf because both King Sports and its

owner, Jui-Chen “Jimmy” Chang, failed to abide by, satisfy, comply with, or fulfill

the duties imposed on them by the policy’s “general conditions,” including an

obligation to cooperate in the defense of claims made against them. We affirm the

decision of the district court for the reasons stated below.

                                              I.

       King Sports advertised and sold golf clubs online. The company identified

Chang as the owner and primary contact in an application, completed in English,

for a business liability policy made to State Farm in 2001. State Farm issued the

*
 The Honorable Joseph M. Hood, United States District Judge for the Eastern District of
Kentucky, sitting by designation.

                                              2
               Case: 11-16169       Date Filed: 09/04/2012       Page: 3 of 21

policy, written in English, to King Sports and insured that entity from December

14, 2002, through December 14, 2008.

       In 2007, King Sports was sued for alleged trademark infringement of golf

clubs and accessories by Nike and Callaway Golf. Those claims were defended by

and settled through the efforts of counsel hired by State Farm for under $20,000

each within months of their filing.1

       In June 2008, Cleveland Golf sent King Sports a cease-and-desist letter,

alleging that King Sports was violating Cleveland Golf’s trademarks by

advertising and selling golf clubs that looked like clubs manufactured by but

which were not, in fact, manufactured by or with the permission of Cleveland

Golf. On July 2, 2008, State Farm sent King Sports a reservation-of-rights letter

informing King Sports that State Farm reserved its right to not defend or

indemnify King Sports with respect to Cleveland Golf’s claims under certain

policy exclusions.

       Eventually, when no resolution of the dispute was reached, Cleveland Golf

filed suit against King Sports in the district court on August 18, 2009. In the

Complaint, Cleveland Golf averred direct trademark infringement, unfair

1
 State Farm never shared the information obtained during the defense of the Nike and Calloway
matters, which included recorded statements and written discovery, with Attorney Bruce
Hedrick, who was retained to represent King Sports in the defense of the suit by Cleveland Golf.

                                               3
             Case: 11-16169     Date Filed: 09/04/2012   Page: 4 of 21

competition, false advertising, trade dress infringement, trademark dilution,

trademark counterfeiting, unfair and deceptive trade practices, violations of the

Georgia anti-dilution statute, and common-law trademark infringement. The

Complaint was eventually amended to include averments against Chang.

      State Farm attempted to contact Chang and King Sports about the suit by

phone, on August 20, 2009, only to learn that the number it had been provided was

no longer in service. State Farm sent correspondence requesting contact from its

insured on August 20, 2009, and again on September 2, 2009. State Farm

eventually learned that Chang was out of the country and unreachable. State Farm

also learned that his son, Ike Chang, who had assisted State Farm in

communicating with King Sports and Jimmy Chang with respect to the Nike and

Calloway disputes, was out of state and unwilling to assist in the defense of the

Cleveland Golf case. State Farm again sent King Sports and Chang a letter on

November 6, 2009, requesting contact about the claim and advising that failure to

communicate or cooperate could result in a denial of coverage. Other letters

requesting that Chang or King Sports contact State Farm were sent on November

12, 2009, and February 4, February 19, March 25, April 1, April 5, April 16, May

26, June 22, June 25, July 20, August 16, and September 2, 2010, but no response

was received. In addition to the letters, phone calls were made on multiple

                                         4
               Case: 11-16169    Date Filed: 09/04/2012   Page: 5 of 21

occasions by State Farm representatives to all known phone numbers, and email

messages were sent as well. In the midst of State Farm’s efforts to contact its

insured by mail, on November 6, 2009, a State Farm claim representative visited

Kings Sports’ business address only to find the space vacant.

      State Farm personnel then searched the Internet in an attempt to obtain

working contact information for Chang and King Sports, even turning to its own

internal investigation division to search for names, addresses, and phone numbers

that would allow State Farm to contact Chang and King Sports, but had no

success. No response was received with respect to messages left at a phone

number which was discovered and thought to be connected with King Sports, nor

was any response received in response to a personal visit by a State Farm

representative to or correspondence left at an address which was receiving other

mail intended for King Sports.

      While King Sports received at least some of State Farm’s letters concerning

Cleveland Golf’s claim, State Farm never received a substantive response or any

of the information it requested from Chang or King Sports. Thus, State Farm

could never get King Sports’ “version of what happened” with respect to the

allegations.

                                          5
                Case: 11-16169       Date Filed: 09/04/2012        Page: 6 of 21

       In the meanwhile, the lawsuit filed by Cleveland Golf was still pending, and

State Farm retained attorney Bruce Hedrick to represent King Sports and Chang.

In a November 2009, letter addressed to Jimmy Chang and King Sports and

received by King Sports, State Farm again made a reservation of rights, outlined

King Sports’ duty to cooperate in the investigation and defense of Cleveland

Golf’s lawsuit, and then advised the insureds that it had retained Hedrick as

counsel for King Sports and Chang. By that point, Hedrick had already contacted

counsel for Cleveland Golf, leaving a November 2, 2009, voicemail message

which stated, in part:

               ...what State Farm has told me, they’re not going to pay
               that but about to just move forward with the dec action
               because the Insured is not cooperating with them and
               unfortunately, at the moment, not cooperating with me to
               enable me to file an answer. 2

[DE 119 at 00:36-00:51.]

       For Hedrick, defending Chang and King Sports would prove to be no easy

task. During the months that Hedrick worked on the case, he repeatedly attempted

to contact King Sports and Chang through telephone calls, text messages, email,

2
 Jill Reina, State Farm’s corporate designee, has testified that it was too early at that date to
determine whether King Sports or Chang had adequately cooperated or not. Cleveland Golf
points out that, ordinarily, State Farm representatives would “split the file,” with one
representative maintaining the file on the issue of defense and another on the issue of coverage.
In this case, until mid-December 2009, State Farm agent Latasha Williams was the sole claims
representative working on this case.

                                                 6
              Case: 11-16169     Date Filed: 09/04/2012   Page: 7 of 21

and regular mail, requesting a response each time. While he did hear from Chang

on at least two occasions and Andy Lee, an employee of King Sports, on multiple

occasions, Hedrick spent the better part of his time and effort trying to get his

clients to contact him about the litigation, with little success. Even when he did

receive communications, no one ever provided information to Hedrick that would

allow him to respond to the substantive allegations in the Complaint.

       After obtaining numerous extensions of time from the court, Hedrick

finally filed an answer in the underlying suit on behalf of King Sports and Chang

on January 15, 2010 – an answer that he felt was inadequate and had deficiencies

that were due to his inability to communicate with his clients about the case.

Then, in February 2010, Lee told Hedrick that he was no longer affiliated with

King Sports and that he did not want Hedrick to communicate with him further.

Lee understood that King Sports and Chang’s insurance coverage could be in

jeopardy if the insured parties did not communicate with Hedrick. Lee passed

along the email to others at King Sports but he did not, however, provide an

alternate contact at King Sports with whom Hedrick could communicate, despite

Hedrick’s request for that information. Hedrick heard nothing further from Chang

or anyone at King Sports.

                                          7
               Case: 11-16169       Date Filed: 09/04/2012      Page: 8 of 21

       Hedrick filed a Notice of Intention to File Motion for Withdrawal on

February 12, 2010, and a Motion to Withdraw as Attorney for King Sports and

Chang on March 9, 2010. On March 10, 2010, Cleveland Golf also sent King

Sports and Chang an email, in Mandarin and English, explaining that a failure to

cooperate and communicate with Hedrick could jeopardize insurance coverage

under the policy issued by State Farm.3 Counsel for Cleveland Golf included a

message from Hedrick informing King Sports and Chang that if they wanted

Hedrick to represent them they needed to contact him immediately. The message

supplied all of Hedrick’s contact information, including his email address, direct

office phone number, general office phone number, and personal cell phone

number.

       Neither Hedrick nor State Farm heard from Lee, Chang or King Sports in

response to the email from Cleveland Golf’s counsel. Ultimately, the Motion to

Withdraw was granted over Cleveland Golf’s objection on March 30, 2010.

Although the Motion for Withdrawal was silent as to the reasons for Hedrick’s

request for relief, he later testified that he sought to withdraw due to his clients’

complete lack of cooperation.

3
  State Farm also sent to King Sports, at Hedrick’s request, correspondence in Mandarin which
provided Hedrick’s contact information and requesting that contact be made with him.

                                               8
                Case: 11-16169       Date Filed: 09/04/2012       Page: 9 of 21

       Strangely enough, Lee was still in communication with Cleveland Golf, and

he entered into a “Settlement Agreement” with Cleveland Golf agreeing to a

$1,000,000 judgment, which he executed as the “owner” of King Sports.4

Cleveland Golf agreed not to pursue King Sports for the amount of the judgment,

agreeing that it would, instead, seek to collect the amount from State Farm, and

King Sports assigned any claims it might have against State Farm to Cleveland

Golf under its insurance policy.

       As it happened, neither King Sports, Chang, nor Cleveland Golf informed

State Farm of the Settlement Agreement, nor did anyone obtain State Farm’s

consent to it. Cleveland Golf understood that approval of any settlement was

required under the terms of the insurance policy in order for coverage to apply.

On July 15, 2010, the district court entered a consent judgment in favor of

Cleveland Golf and against King Sports in the amount of $1,000,000, in

accordance with the settlement agreement.

       Meanwhile, on January 15, 2010, State Farm filed a complaint in the district

court, seeking a declaratory judgment against King Sports and Cleveland Golf.

4
  When State Farm learned of these settlement discussions, it sent Chang and King Sports yet
another letter on June 25, 2010, reiterating its request that they contact State Farm immediately
and pointing out that portion of the insurance policy which provided that, “[e]xcept at their own
cost, no insureds will voluntarily make a payment, assume any obligation or incur any expense,
other than for first aid, without our consent.” [DE 106-1 at 84-85.]

                                                9
             Case: 11-16169     Date Filed: 09/04/2012   Page: 10 of 21

State Farm later amended its complaint to seek relief against Chang, King Sports,

Inc., and Cleveland Golf, including a declaration that it owed no coverage

whatsoever to King Sports and/or Chang because both failed to abide by, satisfy,

comply with or fulfill the duties imposed on them pursuant to the policy’s “general

conditions,” specifically their obligation to cooperate in the defense of the case,

and that, by extension, Cleveland Golf could not recover against it. Cleveland

Golf answered the second amended complaint on October 26, 2010, averring in a

counterclaim, as the assignee of King Sports and a putative third-party beneficiary

of State Farm and King Sports’ contract of insurance, that State Farm had

breached its duty to defend King Sports with respect to the suit by and between

Cleveland Golf and King Sports and to indemnify King Sports for sums it was

legally obligated to pay Cleveland Golf as a result of the consent judgment entered

into by Cleveland Golf and King Sports.

                                          II.

      We review a district court’s decision to grant summary judgment de novo

and utilize the same standard for review as utilized by the district court. Perry v.

Sec’y Florida Dept. of Corr., 664 F.3d 1359 (11th Cir. 2011); Miccosukee Tribe of

Indians of Fla. v. United States, 566 F.3d 1257, 1264 (11th Cir. 2009). Summary

judgment is proper when no genuine issue as to any material fact is present and the

                                          10
             Case: 11-16169     Date Filed: 09/04/2012   Page: 11 of 21

moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The

movant carries the initial burden and must show that there is “an absence of

evidence to support the nonmoving party’s case.” Celotex Corp. v. Catrett, 477
U.S. 317, 325 (1986).

      “Only when that burden has been met does the burden shift to the

non-moving party to demonstrate that there is indeed a material issue of fact that

precludes summary judgment.” Clark v. Coats & Clark, Inc., 929 F.2d 604, 608

(11th Cir. 1991). The nonmovant is then required to “go beyond the pleadings”

and present competent evidence in the form of affidavits, depositions, admissions,

and the like, designating “specific facts showing that there is a genuine issue for

trial.” Celotex, 477 U.S. at 324. “The mere existence of a scintilla of evidence”

supporting the nonmovant’s case is insufficient to defeat a motion for summary

judgment. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 252 (1986). Resolving

all doubts in favor of the nonmoving party, the Court must determine “whether a

fair-minded jury could return a verdict for the plaintiff on the evidence presented.”

Id.

                                         III.

      Cleveland Golf’s argument on appeal turns on the idea that State Farm

orchestrated King Sports and Chang’s failure to cooperate by not seeking their

                                         11
             Case: 11-16169     Date Filed: 09/04/2012   Page: 12 of 21

cooperation in good faith with respect to the defense of Cleveland Golf’s lawsuit.

The undisputed evidence, however, demonstrates that State Farm made at least a

reasonable effort to obtain King Sports and Chang’s cooperation, and we conclude

that no fair minded jury could conclude from that evidence that State Farm or

Hedrick acted other than diligently and in good faith in their respective efforts to

secure information from King Sports and Chang and to provide a defense of the

lawsuit filed by Cleveland Golf. Because King Sports and Chang then failed to

cooperate in the defense of that lawsuit, notwithstanding State Farm’s efforts,

recovery on the policy is appropriately foreclosed for King Sports, Chang, and, by

extension, Cleveland Golf. Summary judgment was properly granted in favor of

State Farm by the district court.

      Under Georgia law, “[i]nsurance is a matter of contract[,] and rules

governing construction of contracts are applicable to insurance contracts.” Wilson

v. S. Gen. Ins. Co., 349 S.E.2d 544, 545 (Ga. Ct. App. 1986) (quoting Nationwide

Mut. Ins. Co. v. Ware, 231 S.E.2d 556, 559 (Ga. Ct. App. 1976)). Thus, “terms in

an insurance policy are given their ordinary and customary meaning.” Stagl v.

Assurance Co. of Am., 539 S.E.2d 173, 175 (Ga. Ct. App. 2000) (citing Boardman

Petroleum v. Federated Mut. Ins. Co., 498 S.E.2d 492 (Ga. 1998)). When a duty

to cooperate is included in a contract,

                                          12
             Case: 11-16169      Date Filed: 09/04/2012    Page: 13 of 21

             The insured is obligated to assist in good faith in making
             every legitimate defense to a suit for damages. If he
             refuses to give the information which the insurer needs
             in establishing the defense, or absents himself so that his
             testimony at the trial cannot be obtained, recovery on the
             policy should be denied, if the insurer acts with good
             faith and diligence.

H.Y. Akers & Sons, Inc. v. St. Louis Fire & Marine Ins. Co., 172 S.E.2d 355, 359

(Ga. Ct. App. 1969).

      Thus, an insurer may “claim its relief of obligation to make payment when

the insured fails to cooperate” in a material fashion. Id. at 358; see also S. Mut.

Ins. Co. v. Mason, 445 S.E.2d 569, 572 (Ga. Ct. App. 1994) (“It is well established

that the insured has a duty to cooperate with his insurer in all aspects of a lawsuit

and to make a full, fair, complete, and truthful disclosure of all facts relating to the

[incident].”) (quoting Hurston v. Ga. Farm Bureau Mut. Ins. Co., 250 S.E.2d 886,

888 (Ga. Ct. App. 1978))); Wolverine Ins. Co. v. Sorrough, 177 S.E.2d 819, 820

(Ga. Ct. App. 1970) (“The cooperation clause in a liability insurance policy is a

material condition of liability, and a breach of it by one who is insured ... relieves

the insurer of any obligation to defend a damage action against the insured.”); St.

Paul Fire & Marine Ins. Co. v. Gordon, 158 S.E.2d 278, 279 (Ga. Ct. App. 1967)

(“insured does have an obligation to co-operate with his insurer in the

investigation of accidents, the securing of evidence, giving notice of the accident

                                           13
             Case: 11-16169      Date Filed: 09/04/2012    Page: 14 of 21

and of claims or suits brought against him arising out of it, in attending court,

assisting as he can at the trial, and in making full, fair, complete and truthful

disclosures of the facts known to him relative to the accident when called upon to

do so”).

      While the question of an insurer’s bad faith or lack thereof is a question of

fact reserved to the finder of fact in many situations, the issue can be decided as a

matter of law where there is no evidence of bad faith, as is the case in the matter

before us. See Wolverine Ins., 177 S.E.2d at 820; cf. State Farm Mut. Auto. Ins.

Co. v. Ainsworth, 402 S.E.2d 759, 765-66 (Ga. Ct. App. 1991) (citing Strickland

v. Am. Home Assur. Co., 367 S.E.2d 241, 242 (Ga. Ct. App. 1988); comparing

Int’l Indem. Co. v. Collins, 367 S.E.2d 786 (Ga. 1988)) (holding that trial court

properly denied summary judgment on issue of whether insurer denied coverage in

bad faith because there was evidence of insurer’s delay in obtaining required

information and informing others of necessity of prompt provision of information

or other proof); State Farm Mut. Auto Ins. Co. v. Acheson, 355 S.E.2d 128, 129

(Ga. Ct. App. 1987) (citing Binns v. Metro. Atlanta Rapid Transit Auth., 301
S.E.2d 877, 878 (Ga. 1983); Ga. Farm Bureau Mut. Ins. Co. v. Matthews, 254
S.E.2d 413 (Ga. Ct. App. 1979)) (holding that district court erred in dismissing

insured’s request for penalties and attorneys fees against insurer where record did

                                          14
             Case: 11-16169     Date Filed: 09/04/2012    Page: 15 of 21

not support finding that there was no evidence of bad faith or that issue of liability

was so close as to require a finding of good faith). If the evidence shows that

there was no bad faith on the part of the insurer with respect to obtaining the

cooperation of the insured, judgment as a matter of law is then appropriate if the

evidence demonstrates that an insured breached its contractual duty to cooperate in

the investigation and defense of a claim. See Allstate Ins. Co. v. Hamler, 545
S.E.2d 12, 15 (Ga. Ct. App. 2001) (holding that trial court erred when it denied

insurer’s motion for summary judgment where insured breached contract of

insurance when it provided some information but failed to provide material

information relevant to insurer’s investigation of claim); Diamonds & Denims,

Inc. v. First of Ga. Ins. Co., 417 S.E.2d 440, 442 (Ga. Ct. App. 1992) (citing Saft

America, Inc. v. Ins. Co. of N.A., 271 S.E.2d 641 (1980); St. Paul Fire & Marine

Ins., 158 S.E.2d 278) (“[T]he insurer’s failure to act with diligence and good faith

in securing the necessary information also will preclude the grant of summary

judgment to the insurer on the issue of the insured’s compliance with policy

prerequisites.”); cf. Hurston v. Ga. Farm Bureau Mut. Ins. Co., 250 S.E.2d 886,

888 (Ga. Ct. App. 1978) (“[I]f the facts as either stipulated or shown by the

evidence demand a finding of a breach of the [cooperation] clause by the insured,

a verdict should either be directed or entered for the insurance company.”).

                                          15
             Case: 11-16169     Date Filed: 09/04/2012    Page: 16 of 21

      Cleveland Golf argues that evidence has been presented from which a

reasonable juror could conclude that State Farm failed to act in good faith and

with diligence in securing King Sports’ cooperation in defending the matter and

that, as a result, the district court erred when it concluded that recovery on the

policy was not available in the absence of the insureds’ cooperation. We disagree.

      Cleveland Golf points first to Attorney Hedrick’s voicemail left for its

counsel on November 3, 2009, shortly after Hedrick was retained to represent

King Sports, in which he indicated that his client was not cooperating with its

insurer or him and that the insurer was not sure it would pay on any claim if there

was a lack of cooperation. Cleveland argues that this message was particularly

meaningful for two reasons: (1) because Hedrick’s voicemail was left after State

Farm’s coverage counsel had advised that the claims it faced in an identical suit

were “virtually indefensible, and that significant potentially covered damages

could be awarded” and (2) because both Hedrick and State Farm’s corporate

representative agreed, during testimony in the present case, that it was too early at

that point to determine whether the insured had cooperated or not.

      From this evidence, it is clear that State Farm and Hedrick were concerned

about whether the insureds would cooperate from the earliest stages of the

litigation, but we are not persuaded that this is evidence from which a reasonable

                                          16
              Case: 11-16169    Date Filed: 09/04/2012   Page: 17 of 21

juror could conclude that State Farm or Hedrick were acting to secure a lack of

cooperation from King Sports or Chang or to otherwise act in bad faith. Notably,

the facts are not contrary to nor do they take away the conclusions that may be

naturally drawn from State Farm’s efforts over the course of nearly two years and

Hedrick’s repeated efforts over a period of more than six months – by letter, phone

call, email, and personal visit to the physical headquarters of King Sports – to

contact and gain the cooperation of King Sports and Chang once Cleveland Golf

gave notice of its claims and, subsequently, filed its lawsuit. A reasonable juror

could only conclude that State Farm and, in turn, Hedrick were diligently seeking

a response and the cooperation of King Sports and Chang. Further, no one,

including a reasonable juror, would be surprised to learn that State Farm and

Hedrick had these concerns in light of the lack of substantive communications

about the lawsuit received by Hedrick from Lee, who was Hedrick’s only contact

at King Sports, including Lee’s purported disassociation with King Sports during

the course of the litigation.

      Cleveland Golf also argues that a jury could conclude that State Farm did

not seek in good faith to provide a defense to King Sports and Chang because

State Farm did not “split” the coverage and defense files with respect to its lawsuit

against King Sports and Chang; did not provide Hedrick with information

                                         17
             Case: 11-16169     Date Filed: 09/04/2012    Page: 18 of 21

gathered in prior, similar lawsuits against the insured; and did not advise Hedrick

that the individuals associated with King Sports spoke Mandarin Chinese as a

“first language,” not English. Again, we disagree.

      In the first instance, even if we assume that State Farm had an ethical duty

to “split” the file, there is no evidence that any specific information and, notably,

no privileged information was ever shared between coverage counsel and Hedrick

or that the failure to split the file caused State Farm or Hedrick to abdicate their

obligation to seek the insured’s cooperation in good faith. Neither has Cleveland

Golf identified any legal basis for the idea that State Farm was required to provide

information from other cases to Hedrick nor any suggestion as to how sharing that

information might have improved State Farm and Hedrick’s chances of obtaining

King Sports or Chang’s cooperation. As to State Farm’s supposedly meaningful

failure to disclose its clients’ preference for communication in Mandarin Chinese,

the contract of insurance is in English, and Cleveland Golf has not identified any

contractual obligation between the insurer or insured to communicate in Mandarin

Chinese. Further, Hedrick communicated with Lee in English, and it appears that

Lee understood him. Hedrick also had correspondence translated into Mandarin

Chinese, to no apparent avail, for there is no evidence that receiving

correspondence in Mandarin rather than in English prompted his clients to provide

                                          18
             Case: 11-16169     Date Filed: 09/04/2012      Page: 19 of 21

him any information or to otherwise cooperate with him or State Farm in the

investigation or defense of the suit. In other words, we are not persuaded that a

reasonable juror could conclude from this evidence that State Farm acted in bad

faith when it sought to secure its insureds’ cooperation.

      Frankly, the evidence presented in this case leaves no one wondering

whether State Farm might have done something differently or taken just one more

step and secured the insured’s cooperation. Thus, factually, this case is

distinguishable from Wolverine Ins. Co. v. Sourrough, in which the Georgia Court

of Appeals concluded that there was an issue of fact for the jury as to whether the

insurer had made a reasonable effort to obtain its insured’s cooperation. 177 S.E.
2d at 821. Wolverine Insurance had difficulty obtaining the cooperation of its

insured with respect to the investigation of a motor vehicle collision and,

ultimately, sent a registered letter outlining its unsuccessful efforts, requesting

cooperation, and explaining that coverage could be disclaimed if cooperation was

not forthcoming. Id. at 820-21. Unlike the present case, however, the insured in

Wolverine accepted the letter and made an appointment by telephone with the

insurance company’s adjuster, agreeing to meet him at his office. Id. at 821. As it

happened, when the insured went to the office, the adjuster was out. Id. Although

he was asked to call back and make another appointment, the insured did not. Id.

                                          19
             Case: 11-16169     Date Filed: 09/04/2012    Page: 20 of 21

So, the adjuster tried to call the insured at his home only to learn from his wife that

the insured was at work. Id. The adjuster telephoned the insured’s workplace and

was told when the insured would get off of work and where he was working. Id.

Wolverine Insurance never got the details about the accident that it wanted,

though, because the insured and the adjuster never managed to get together for the

exchange of that information. Id.

      By contrast, the undisputed material facts demonstrate that State Farm and

Hedrick made repeated efforts to secure the insured’s cooperation in defending the

claim of Cleveland Golf. Multiple letters, telephone calls, personal visits, email

correspondence, and text messages were employed to invite the insureds’

cooperation. State Farm even sought new ways to contact Chang and others at

King Sports when old addresses and phone numbers were no longer useful for

contacting them. At the end of the day, no matter what State Farm and Hedrick

did, no cooperation was forthcoming. There is no point in the story of State Farm

and Hedrick’s efforts where one wonders whether one of them “dropped the ball”

when it came to seeking the insureds’ cooperation. Rather, their reasonable efforts

to reach King Sports and Chang and to communicate the need to cooperate in the

investigation and defense of Cleveland Golf’s claims were never met with

anything but silence as to issues of substance. There is no evidence of bad faith,

                                          20
               Case: 11-16169        Date Filed: 09/04/2012        Page: 21 of 21

only King Sports and Chang’s utter failure to cooperate in the defense of that

underlying suit. Thus, as a matter of law, State Farm is relieved of any obligation

of coverage with respect to Cleveland Golf’s action against King Sports and

Chang, and by extension, any obligation to King Sports’ assignee, Cleveland

Golf.5 See H.Y. Akers & Sons, 172 S.E.2d at 359 (citing Indemnity Ins. Co. of

North America v. Smith, 78 A.2d 461, 463 (Md. 1951)) (“The judgment creditor,

who sues on a policy indemnifying the insured against claims for damages, stands

in the shoes of the insured and is chargeable like the insured with any breach of

conditions on which liability depended.”).

       Accordingly, we AFFIRM the decision of the district court.

5
  Having reached the conclusion that State Farm was relieved of any obligation of coverage with
respect to Cleveland Golf’s claim due to its insureds’ failure to cooperate in the investigation and
defense of that lawsuit, we do not reach the issue of whether King Sports, Chang, and Cleveland
Golf’s failure to seek State Farm’s approval of the Settlement Agreement would have precluded
recovery under the contract of insurance, in any event.

                                                21