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The insurer must defend the management company in case of a deposit



A federal appeals court has overturned a lower court ruling that an insurance company must defend an apartment management company in disputes over the return of security deposits but was deciding whether it must also protect the policyholder.

Former tenant Nichon Roberson filed a suspected class action lawsuit against Atlanta-based ECI Management LLC, alleging that the company had incorrectly withheld security deposits from current and former tenants in violation of Georgia's security laws, following Thursday's decision by the 11th US Circuit Court of Appeals in Atlanta and AEGIS Electric & Gas International Services Ltd. v ECI Management LLC, Nichon Roberson.

The mutual insurance company AEGIS appealed to the United States District Court in Atlanta for a declaration that it had no obligation to defend or protect the policyholder under its property insurance policy, which provided up to $ 1

million per claim and total. [19659002] The district court ruled that East Rutherford, New Jersey-based AEGIS, had no obligation to defend ECI and thus no obligation to do damages. A divided three-judge appellate court overturned the lower court and held that AEGIS had an obligation to defend ECI, focusing on lawyers' fees.

"We conclude that any award of attorneys' fees" under Georgia law "would constitute a potential loss" under the policy and therefore AEGIS retains its obligation to defend ECI, "it said.

However, the majority opinion said it would" an independent issue of an AEGIS must ultimately protect the ECI for any special liability that may be incurred as a result of the ongoing lawsuit against it. The alleged case for further proceedings,

The dissenting opinion states that the majority misinterpreted Georgia law.

A lawyer from AEGIS had no comment while a lawyer from ECI did not respond to a request for comment.


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