Fireman's Fund v. Univ. Of Georgia Athletic

• Decision Date: 09 November 2007
• Docket Number: No. A07A1227.,A07A1227.
• Citation: 654 S.E.2d 207,288 Ga.App. 355
• Parties: FIREMAN'S FUND INSURANCE COMPANY v. UNIVERSITY OF GEORGIA ATHLETIC ASSOCIATION, INC.
• Court: Georgia Court of Appeals

654 S.E.2d 207

288 Ga.App. 355

FIREMAN'S FUND INSURANCE COMPANY v. UNIVERSITY OF GEORGIA ATHLETIC ASSOCIATION, INC.

No. A07A1227.

Court of Appeals of Georgia.

November 9, 2007.

Blasingame, Burch, Garrard & Ashley, Matthew A. Moseley, Thomas F. Hollingsworth III, M. Steven Heath, Athens, for appellant.

Thurbert E. Baker, Attorney General, G. Michael Banick, Assistant Attorney General, Forrester & Brim, Weymon H. Forrester, James E. Brim III, Carlock, Copeland, Semler & Stair, Thomas S. Carlock, Boyd B. Newton, J. Hue Henry, Gainesville, for appellee.

ELLINGTON, Judge.

The Superior Court of Athens-Clarke County granted the motion for summary judgment filed by the insured, University of Georgia Athletic Association, Inc. ("the Association"), in this insurance coverage dispute. The insurer, Fireman's Fund Insurance Company, appeals, contending that it has no duty to defend because the claims at issue come within the ambit of both a "failure to effect or maintain insurance" exclusion and a "bodily injury" exclusion. For the reasons that follow, we affirm.

Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56(c). A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.

(Citations and footnotes omitted.) BBL-McCarthy, LLC v. Baldwin Paving Co., 285 Ga.App. 494-495, 646 S.E.2d 682 (2007). "An insurer's duty to defend is determined by comparing the allegations of the complaint with the provisions of the policy." (Citation and punctuation omitted.) Nationwide Mut. Fire Ins. Co. v. City of Rome, 268 Ga.App. 320(2), 601 S.E.2d 810 (2004). Where a policy imposes a duty to defend even if the allegations are groundless, false or fraudulent, courts look to the allegations of the complaint "to determine whether a liability covered by the policy is asserted." (Citations and punctuation omitted; emphasis in original.) Penn-America Ins. Co. v. Disabled American Veterans, Inc., 268 Ga. 564, 565, 490 S.E.2d 374 (1997). Thus, an insurer is obligated to defend even where

the allegations of the complaint against the insured are ambiguous or incomplete with respect to the issue of insurance coverage. To excuse the duty to defend[,] the petition must unambiguously exclude coverage under the policy, and thus, the duty to defend exists if the claim potentially comes within the policy. Where the claim is one of potential coverage, doubt as to liability and insurer's duty to defend should be resolved in favor of the insured.

(Citations and punctuation omitted.) Id. at 565-566, 490 S.E.2d 374.

Under Georgia law,

contracts of insurance are interpreted by ordinary rules of contract construction. . . . Where the terms are clear and unambiguous, and capable of only one reasonable interpretation, the court is to look to the contract alone to ascertain the parties' intent. The contract is to be considered as a whole and each provision is to be given effect and interpreted so as to harmonize with the others.

(Citations omitted.) Boardman Petroleum v. Federated Mut. Ins. Co., 269 Ga. 326, 327-328, 498 S.E.2d 492 (1998). "However, if a provision of an insurance contract is susceptible of two or more constructions, even when the multiple constructions are all logical and reasonable, it is ambiguous, and the statutory rules of contract construction will be applied." (Citation omitted.) Hurst v. Grange Mut. Cas. Co., 266 Ga. 712, 716(4), 470 S.E.2d 659 (1996). See OCGA § 13-2-2 (rules of interpretation). When a provision of an insurance contract is ambiguous, "[t]hree well known rules" apply in the construction of the contract:

[a]ny ambiguities in the contract are strictly construed against the insurer as drafter of the document; any exclusion from coverage sought to be invoked by the insurer is likewise strictly construed; and [the] insurance contract[is] to be read in accordance with the reasonable expectations of the insured where possible.

(Citations omitted.) Richards v. Hanover Ins. Co., 250 Ga. 613, 615(1), 299 S.E.2d 561 (1983).¹

The underlying complaint filed by Decory Bryant against Hoke Wilder and the Association, which triggered the Association's claim to Fireman's Fund, alleges the following facts. In the fall of 2003, the Association employed Wilder as its Assistant Athletic Director for Standards and New Sports Programs. In that capacity, Wilder was responsible for coordinating the Association's Exceptional Student-Athlete Disability Insurance program. His duties included explaining the insurance program to eligible athletes, requesting disability insurance quotes for athletes interested in the insurance program, and submitting signed "Request to Place Coverage" forms to a designated insurance broker. The broker's receipt of a signed coverage request form would bind the coverage described in the quote, subject to termination if the broker did not receive timely payment of the premium or the required medical examination report.

That fall, junior Bryant, who played football for the University of Georgia, became eligible for the disability insurance. On Tuesday, October 21, 2003, Bryant told Wilder that he wanted the disability policy. Wilder told Bryant that the papers for him to sign would be at his locker by the end of the next day. At Wilder's request, ESIX Entertainment and Sports Insurance Experts solicited quotes for the coverage. On Thursday, October 23, ESIX sent an e-mail to Wilder with a quote of $5,103 from Lloyd's of London for a disability policy that would pay $500,000 in the event Bryant became permanently disabled from playing football. On Friday, October 24, Wilder mailed ESIX a letter, saying, "Let's bind coverage on Decory Bryant." Wilder did not, however, include a coverage request form signed by Bryant, as required to bind coverage.

On Saturday, October 25, Bryant suffered a serious spinal injury while playing for his team and, as a result, is disabled for life from playing any contact sports. Representatives of the Association presented Bryant with a coverage request form to sign for the first time on October 29, 2003. After receiving the form, ESIX informed Wilder that, in the absence of proof that Bryant had reviewed the quote and signed a coverage request form prior to his injury, Lloyd's of London refused to backdate the coverage to October 23.

On December 17, 2004, Bryant filed an action against Wilder and the Association asserting claims based on theories of breach of fiduciary duties, breach of contract, and negligence for damages attributable to his lack of the disability insurance he requested. Bryant seeks compensatory damages for the amount of coverage that would have been available to him had he been insured under the Lloyd's of London policy he requested, as well as punitive damages and attorney fees. The Association notified its liability carrier, Fireman's Fund, of the claim and requested defense and indemnification.

After Fireman's Fund refused to provide Wilder and the Association a defense in Bryant's action, the Association filed this third-party action, seeking a determination that Bryant's claim is covered by the Association's "Non-Profit Organization Liability Insurance Policy" issued by Fireman's Fund for the policy period of March 17, 2004 to March 17, 2005.² Under the policy, "Insured" is defined to include the Association, any director, officer, or employee of the Association and any volunteer acting with the consent of the Association. The policy provides, "Insuring Agreement: We will pay on behalf of the Insured all Loss for which the Insured shall be legally obligated to pay resulting from a Claim that is made against the Insured for a Wrongful Act, provided that the Claim is first made during the Policy Period." "Wrongful Act" is defined as "any actual or alleged negligent act, error or omission, misleading statement, or breach of duty committed by the Insured in the performance of duties on behalf of" the Association.

Among other exclusions, the policy excludes coverage for any claim "[a]lleging, based upon or attributable to, arising out of, in consequence of or in any way related to the Insured's failure to effect or maintain insurance." In addition, the policy excludes coverage for any claim "[a]lleging, based upon or attributable to, arising out of, in consequence of or in any way related to any Bodily Injury, provided, however, this exclusion shall not apply to an Employment Practices Claim for emotional distress, mental anguish or humiliation." "Bodily Injury" is defined to include "sickness, injury, disease or death of any person."

Under the policy, Fireman's Fund has the right and duty to defend the insured, "even if any of the allegations are groundless, false or fraudulent."

Fireman's Fund filed a motion to dismiss the Association's action for failure to state a claim, and the Association filed a motion for summary judgment. The trial court concluded that neither the "failure to effect or maintain insurance" exclusion nor the "bodily injury" exclusion unambiguously excluded coverage for Bryant's claim under the Association's liability policy, granted the Association's motion for summary judgment and denied Fireman's Fund's motion to dismiss.

1. Fireman's Fund contends that the term "failure to effect ... insurance" is unambiguous and means the failure to accomplish, to produce as a result, to procure, or to place insurance. Fireman's Fund contends that Bryant's claim arises out of Wilder's and the Association's failure to procure disability insurance for Bryant after agreeing to do so. As a result, Fireman's Fund contends, coverage is barred by the failure to effect and maintain insurance exclusion. The Association contends, on the other hand, that the quoted language is ambiguous and that,...