I Mt. Hawley Insurance Company v. East Perimeter Pointe Apartments, Miranda Wilder, Constance Irions, Adrian Johnson, Lexington Insurance Company, Ventron Management, LLC, No. 19-13824, United States Court of Appeal for Eleventh Circuit (May 27, 2021) apply Georgia's law on breach of insurance policy requirements for rapid loss reporting.
The Eleventh Circle, which acknowledges that the Georgian courts have always invoked lex loci contractus to settle contractual disputes involving the statutory law of a foreign state, this maximum has also stipulated that the Georgian courts apply their Community law to supremacy. exclude all other states. In this case, the district court found that this dispute over insurance cover rested with Community law; as an Erie-bound district court in Georgia, it thus decided that the insurance's two-year delay in notifying its insurers of an event blocked coverage as a matter of general Georgia law.
This federal case arose. from two state lawsuits filed to recover damages for an assault and murder of an apartment complex owned by East Perimeter Pointe Apartments, LP in Decatur, Georgia. Both lawsuits allege that East Perimeter and Ventron Management, LLC, the company contracted by East Perimeter to provide property management services for the complex, neglected to provide security so that they are liable for damages. One is trying to recover personal injuries and damages for Marcus Wilder's wrongful death, and the other is seeking personal injury due to an attack suffered by Adrian Johnson.
Within hours of learning of the shooting, a manager of the apartment complex. wrote and emailed an incident report to Ventron's attorney general and registered agent, Michael Scaljon. Thirteen days later, Ventron received a letter from Evon Williams, the lawyer hired to represent disputes in the state's trial for Wilder's murder. In that letter, Williams requested insurance information, "a copy of all applicable insurance with declaration pages" and that Ventron would "forward our request for information to all relevant insurance companies."
Mt. The Hawley Insurance Company had issued a commercial general liability insurance policy and the Lexington Insurance Company had issued a commercial umbrella liability policy that apparently covered the apartment complex. Despite Williams' letter, however, it took about two years before East Perimeter or Ventron notified any insurance company of the murder and the assault.
Mt. Hawley Policy provides that "[i] in the event of any event that could lead to a claim for damages against this insurance, the insured will immediately report such event and cooperate fully with the following claims adjuster: RLI ADJUSTMENT COMPANY."
Despite this, the clear language from both the approval provision and the standard provision, Mt. Hawley was first notified two days after Johnson filed his state lawsuit, even though the assault and murder occurred almost two years earlier.
Lexington issued Skinner Select an umbrella policy for excessive coverage. Lexington, as Mt. Hawley, understood that Skinner Select did not own East Perimeter's apartment complex, but that it was just a channel through which owners and managers of commercial properties buy insurance. Similar to Mt. Hawley Policy, Lexington Policy also includes a section for "Obligations in the Event of an Occurrence, Claim or Suit."
Choice of Law
East Perimeter and Ventron (as well as plaintiffs Miranda Wilder, Constance Irions and Adrian Johnson) argue that California law should govern this mood. In California, an insurance violation of the notice provisions does not exclude coverage unless the violation materially damages the insurer. [ Campbell v . Allstate Ins . Co ., 384 P.2d 155, 156 (Cal. 1963); Abrams v . Is . Fid . & Cas . Co ., 195 P.2d 797 (Cal. 1948).]
California's rule of notice prejudice requires the insurer to prove that the policyholder's late notice of a claim has materially affected its ability to investigate and negotiate on payment for the insured's claim. With California's general policy providing strong benefits to insured persons due to technical forfeiture of coverage, California law places a heavy burden on insurance companies trying to defend themselves against coverage based on the insurance's breach of a notice.
In contrast, Mt. Hawley and Lexington argued that Georgia's law governs insurance policy disputes. Unlike California law, Georgia law does not require an insurance company to prove that it is harmed by an insured breach of a notice. Under Georgia law, "when an insurance policy includes a notice of termination as a precondition for coverage, and when the insured unreasonably does not meet the notification requirement, the insurer is not obligated to provide a defense or coverage." Forshee v . Emps . Mut . Cas . Co ., 711 S.E.2d 28, 31 (Ga. Ct. App. 2011).
Georgia's legal requirements to determine which state's law to apply. Since 1847, Georgia has used the rule lex loci contractus to govern contracts. The rule stipulates that contracts, as well as insurance policies, must be governed with regard to their nature, validity and interpretation according to the law at the place where they are made. Under Georgia law, an insurance contract is drawn up, not where it was performed but where it was delivered – where the last act necessary to complete the contract was made.
The Supreme Court of Georgia has made it clear that lex loci contractus only allows courts in Georgia to consider the law of a foreign state when it comes to its statutes or court decisions on those statutes. When Georgia's Supreme Court adopted lex loci contractus as its choice of law, the prevailing view at the time was that there is a common law that can be properly distinguished by wise judges, not several common laws. through which judges adjudicate for their various jurisdictions.
If the law applicable to a contract dispute by a Georgia court or federal court in Georgia is created in law, then the general law declared by the courts of Georgia must govern. Since there is no statute in California that directly governs the outcome of this insurance coverage dispute, the district court correctly applied Georgia, not California, law.
The Mt. The Hawley Policy has two important conditions: an approval provision and a standard policy provision. The approval provision states that “[i] in the event of any event that may lead to a claim against this insurance, the insured will immediately report such event and cooperate fully with it. . . requirements for adjustment companies [.] ”The standard provision states that“ You must ensure that we are notified as soon as practicable of an “event” or a crime that may lead to a claim. “Almost identical to the standard provision within Mt. Hawley Policy, the Lexington policy states that "You must ensure that we are notified as soon as practicable of any" event "that may result in a claim or" cost "under this policy."
Based on these provisions, Mt. Hawley and Lexington claim that East Perimeter and Ventron failed to report in good time the events that occurred in the apartment complex. Note regulations, such as those found in Mt. Hawley and Lexington Policy, "must be followed, in the absence of a justification." Plantation Pipeline Co . v . Royal Indem . Co ., 537 S.E.2d 165, 169 (Ga. Ct. App. 2000). And the notice provisions in both insurances are conditions that precede the coverage.
With regard to the insured's compliance with notice provisions, Georgia's case law is firm. Insurance companies are not obliged to defend an insured or provide coverage if the insured does not unreasonably fulfill a conditional condition. This law is drastically different from California law, which requires insurance companies to show that a message-related crime caused significant damage to their ability to investigate or negotiate a claim. Given Georgia's law, East Perimeter and Ventron were required to announce Wilder's assassination and Johnson's attacks with reasonable care and within a reasonable time given the circumstances.
Mt. Hawley was not notified of the shooting until November 13, 2017, 23 months after the incident and Johnson's assault over 23 months before Mt. Hawley was notified. As for Lexington, 26 months passed before it was notified. As the Lexington policy required notices of incidents that "could" lead to its involvement, the district court did not err in concluding that "in the light of the circumstances" the long delays in this case were unreasonable under Georgia law.
The Eleventh Circuit therefore concluded that neither Mt. Hawley or Lexington has an obligation to provide defense or coverage to East Perimeter or Ventron for these incidents.
Since there was no right to apply the rule of notice of prejudice in Georgia, the conclusions of the eleventh circle were entirely reasonable. Although Georgia adopted the Prejudice Notice, a two-year delay in reporting an incorrect death and serious physical injury for two years, it was difficult, if not impossible, to make a fair and complete investigation of the allegations and the possible trial would deprive insured persons. the right to defense or damages from the insurers.
© 2021 – Barry Zalma
Barry Zalma, Esq., CFE, now limits his practice to employment as an insurance consultant specializing in insurance coverage, handling insurance claims, fraud and insurance fraud almost equally for insurers and policyholders . He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
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