Federated Rural Elec. Ins. v. R.D. Moody & Assocs.
| Decision Date | 29 September 2005 |
| Docket Number | No. 5:03-CV-247 (WDO).,5:03-CV-247 (WDO). |
| Citation | 391 F.Supp.2d 1228 |
| Parties | FEDERATED RURAL ELECTRIC INSURANCE EXCHANGE, Plaintiff v. R.D. MOODY & ASSOCIATES, INC. and Mastec North America, Defendants. |
| Court | U.S. District Court — Middle District of Georgia |
D. Gregory Michell, Atlanta, GA, for Plaintiff.
Jerry A. Lumley, Macon, GA, for Defendants.
This case arose out of an accident that occurred on May 27, 2000 when Thomas Smith came into contact with a downed power line owned by Plaintiff Washington Electric Membership Corporation ("WEMC") and constructed by Defendant R.D. Moody & Associates ("Moody"). Smith sustained serious injuries from the accident and eventually died of those injuries. Mr. Smith's widow sued WEMC and its engineering firm for her husband's injuries and death. That case was settled with Plaintiff Federated Rural Electric Insurance Exchange ("Federated"), paying $6,500,000 on behalf of WEMC and the engineering firm paying $500,000. Defendant Moody was not a part of that case or the settlement. WEMC thereafter filed this case against Defendants Moody and MasTec for indemnification and contribution. Moody constructed the power lines and utility poles in question and MasTec is Moody's successor in interest, as a result of a June 1998 merger. WEMC alleges that Moody negligently constructed the power lines and utility poles. The matter is now before the Court on Defendants' motion for summary judgment in which the Defendants assert the following:
1. The Florida Insurance Guaranty Act ("FIGA") bars this action as it prohibits member insurers from suing the insureds of other member insurers that have been declared insolvent.
2. One of the contracts pursuant to which Moody constructed the poles provided that all risks and obligations Moody may owe to WEMC with respect to personal injuries were terminated when Moody delivered possession and control of the poles to WEMC.
3. Federated is barred from bringing the claims in this case against Moody and MasTec because WEMC and Moody agreed in their contracts to shift all risk of liability to their insurance policies.
4. Moody ceased to exist as a corporation upon its merger into MasTec, nearly two years before the incident involving Mr. Smith.
Summary Judgment is appropriate when the pleadings, depositions and affidavits submitted by the parties show no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c). The Supreme Court has explained that the moving party's burden may be discharged "by `showing' — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In Celotex, the Court held that summary judgment is appropriate against
A party who fails to make a showing sufficient to establish the existence of an element essential to that party's case and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial. The moving party is "entitled to judgment as a matter of law" because the nonmoving party has failed to make a sufficient showing on an essential element of her case with respect to which she has the burden of proof.
The first issue that must be decided is what law should govern this action. WEMC is a Georgia corporation that provides electrical services in Washington County, Georgia. Federated is a Kansas corporation according to the policy.1 Although WEMC initially filed this suit, Federated was later substituted for WEMC as the proper Plaintiff since Federated paid the settlement money to Mrs. Smith on behalf of WEMC. Moody was a Florida corporation. MasTec is a Florida corporation and is the successor in interest to Moody as a result of the 1998 merger.
Because this case is before the Court on diversity jurisdiction,2 this Court must apply Georgia's choice of law principles. Briggs & Stratton Corp. v. Royal Globe Ins. Co., 64 F.Supp.2d 1340, 1342 (M.D.Ga.1999). Georgia courts resolve choice-of-law issues Federal Ins. Co. v. National Distributing Co., Inc., 203 Ga.App. 763, 417 S.E.2d 671, 673 (1992) (citation omitted). "With regard to insurance contracts, Georgia law provides that the last act essential to the completion of the contract is delivery; consequently, insurance contracts are considered made at the place where the contract is delivered." Johnson v. Occidental Fire and Cas. Co. of North, 954 F.2d 1581, 1584 (11th Cir.1992) (citing Iowa State Travelers Mutual Assn. v. Cadwell, 113 Ga.App. 128, 147 S.E.2d 461 (1966); Avemco Insurance Co. v. Rollins, 380 F.Supp. 869 (N.D.Ga.), aff'd, 500 F.2d 1182 (1974)). Where a "contract is executed in a foreign state and contains nothing to indicate that it was intended to be construed as a Georgia contract, it will be treated as a contract of the foreign state, and governed by its laws, unless the foreign state's laws are contrary to the public policy of this state." National General Ins. Co. v. United Services Auto., 224 Ga.App. 821, 482 S.E.2d 727, 729 (1997). "Under the rule of lex loci delicti, tort cases are governed by the substantive law of the state where the tort was committed." Federal Ins. Co., 417 S.E.2d at 673. "Under the rule of lex fori, procedural or remedial questions are governed by the law of the forum, the state in which the action is brought." Id. Georgia's choice of law rules permit federal courts to apply another state's statutes in a case before the court on diversity. Briggs, 64 F.Supp.2d at 1343. Parties may also by contract stipulate that the laws of another jurisdiction will govern a particular transaction. Mills v. Berlex Laboratories, Inc., 235 Ga.App. 873, 510 S.E.2d 621, 623 n. 1 (1999). Finally, "Where a provision in a policy is susceptible to two or more constructions the court will adopt that construction which is most favorable to the insured." Briggs, 64 F.Supp.2d at 1345.
In the case at bar, Georgia law could apply because the contracts between WEMC and Moody involved construction of power lines and poles in Washington County, Georgia. The underlying tort — Moody's allegedly negligent construction of the poles — happened in Georgia. However, Moody argues that the law of Florida applies to the question of whether this suit may be brought at all based on Federated and Reliance, Moody's insurer, being member insurers of Florida's insolvency pool and thus subject to FIGA.3
Pursuant to the FIGA, a "covered claim" "means an unpaid claim,... which arises out of, and is within the coverage, and not in excess of, the applicable limits of an insurance policy to which this part applies, issued by an insurer, if such insurer becomes an insolvent insurer and the claimant or insured is a resident of this state at the time of the insured event or the property from which the claim arises is permanently located in this state." F.S.A. § 631.54(3). A "covered claim" does not include an amount due an insurer sought directly through a third party as subrogation, contribution or indemnification. Id. at (3)(a). Finally, "Member insurers shall have no right of subrogation, contribution, indemnification, or otherwise, sought directly or indirectly through a third party, against the insured of any insolvent member." Id. at (3)(b).
This case involves a "covered claim" pursuant to FIGA because the alleged tort and contract involve insureds (Moody and MasTec) who were insured by policies issued by an insurer (Reliance) that has been declared insolvent and the claimant (Federated) and the insureds were residents of Florida at the time of the insured event (the allegedly negligent construction of the poles).4 Reliance was declared insolvent by the Commonwealth Court of Pennsylvania on October 9, 2001. Although it would seem that the exclusion for amounts due an insurer through subrogation, contribution or indemnification would operate to exclude the claims in this case from FIGA, FIGA clearly mandates that member insurers
Federated argues that even if FIGA applies, there has been no "claim" filed that would trigger the application of FIGA to this case. Federated is incorrect. First, "the duty of the Florida Insurance Guaranty Association (FIGA) to defend a claim against an insured party is identical to that of the insolvent insurer, and, as such, is triggered when the complaint alleges facts that fairly and potentially bring the action within policy coverage." Jones v. Florida Ins. Guar. Ass'n, Inc., 908 So.2d 435, 438 (Fla.2005). Therefore, for the purposes of this case, a "claim" was filed when Federated filed this suit against Moody, an insured of Reliance, a member insurer that has been declared insolvent. Second, this is supported by...
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Federated Rural Elec. v. R.D. Moody & Associates
...granting MasTec and Moody's motion for summary judgment on the basis of the FIGA defense. See Federated Rural Elec. Ins. Exch. v. R.D. Moody & Assocs., Inc., 391 F.Supp.2d 1228 (M.D.Ga.2005). After acknowledging that he was bound to apply Georgia's choice of law rules in this diversity case......