Florida Intern. Indem. Co. v. City of Metter, Ga., 90-8302

• Decision Date: 06 February 1992
• Docket Number: No. 90-8302,90-8302
• Citation: 952 F.2d 1297
• Parties: FLORIDA INTERNATIONAL INDEMNITY COMPANY, Plaintiff-Appellee, v. The CITY OF METTER, GEORGIA, Defendant-Appellee, The Metter/Candler County Recreation Department, Myron Colley, Defendants, Juanita Googe, Individually and as Temporary Administratrix of the Estate of Kenneth Harold Googe, Deceased, Harold Googe, Jr., Shirley Diane Sparks, Andrew Ray Googe, Howard Michael Googe and Linda Kay Googe, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1297

952 F.2d 1297

FLORIDA INTERNATIONAL INDEMNITY COMPANY, Plaintiff-Appellee, v. The CITY OF METTER, GEORGIA, Defendant-Appellee The Metter/Candler County Recreation Department, Myron Colley, Defendants Juanita Googe, Individually and as Temporary Administratrix of the Estate of Kenneth Harold Googe, Deceased, Harold Googe, Jr., Shirley Diane Sparks, Andrew Ray Googe, Howard Michael Googe and Linda Kay Googe, Defendants-Appellants.

No. 90-8302.

United States Court of Appeals Eleventh Circuit.

Feb. 6, 1992.

Michael K. Gardner, Barnard M. Portman, Paul H. Felser, Savannah, Ga., for Googe.

D. Campbell Bowman, Jr., Stanley M. Karsman, Savannah, Ga., for Florida Intern. Indem. Co.

Glen A. Cheney, Cheney & Cheney, Reidsville, Ga., for City of Metter, Candler County Recreation Dept.

Appeal from the United States District Court for the Southern District of Georgia; Dudley H. Bowen, Jr., District Judge.

Before ANDERSON, Circuit Judge, and TUTTLE and CLARK ^*, Senior Circuit Judges.

CLARK, Senior Circuit Judge:

The resolution of this appeal requires us to certify two questions of law to the Supreme Court of Georgia concerning the standing of persons injured by municipalities to sue for reformation of municipal liability insurance contracts. Before reaching this issue, we will dispose of the other issues raised by this case.

The City of Metter owned a pool that the Metter/Candler County Recreation Department operated and in which a boy, Kenneth Harold Googe, was drowned in June 1986. Googe's survivors sued the City of Metter, claiming that a lifeguard, Myron Colley, was negligent in leaving his station and was the proximate cause of the injury.

The Georgia courts eventually held that the City was not liable, because the Recreation Department was not its agent and the pool was not a joint operation between the City and the Recreation Department. The complaint was then amended to include the Recreation Department, which the Georgia courts found not liable under the doctrine of sovereign immunity, unless the Recreation Department was insured.

Florida International Indemnity Company had issued a policy to the City for insurance coverage between October 30, 1985 and September 30, 1986. Florida International, a non-resident of Georgia, sought a declaratory judgment in federal court that it was not liable to indemnify the Recreation Department for its negligence, if any, for the drowning because the City was the only named insured under the policy. ¹ The City filed a response supporting Florida International's position. ²

The district court found that the Recreation Department was not covered under the terms of the policy and that Googe's survivors could not have the contract reformed to include the Recreation Department.

Googe's survivors have raised three issues in this appeal: (1) Whether a case or controversy was presented by Florida International's declaratory judgment action? (2) Whether the district court erred in failing to find that the Recreation Department qualified as an "other insured" under the terms and conditions of the policy? (3) Whether the district court erred in failing to reform the insurance contract to cover the Recreation Department and Myron Colley? We find that the third issue requires us to certify certain questions to the Supreme Court of Georgia. Before framing the certificate, we dispose of the first two issues. After receipt of the answers to the certified questions, assuming the Supreme Court of Georgia accepts the questions, no other issues will be before this court.

I.

The essence of the first issue is that, because Florida International sued the City and the Recreation Department, and the City and the Recreation Department did not oppose the suit, the case was not sufficiently adversarial. However, at the time the suit was filed the Georgia courts had not yet found the Recreation Department to be conditionally immune from suit, and Googe's survivors successfully intervened and opposed Florida International based on their own adverse interests. The district court properly took jurisdiction. ³

II.

The Googe survivors next argue that the insurance contract covered the Recreation Department, as the contract states, "Each of the following is an insured under this insurance to the extent set forth below: ... (d) any person (other than an employee of the named insured) or organization while acting as real estate manager for the named insured...." They contend that, while the Recreation Department was not managing all of the City's real estate, it clearly was managing the real estate of the pool grounds.

The contractual language cited by Googe's survivors may be relevant to the question of whether the parties to the contract intended to insure the operations of the swimming pool. However, an examination of the pleadings before the district court indicates that this issue was not raised below. The claim is therefore waived. ⁴

III.

CERTIFICATION FROM THE UNITED STATES COURT OF APPEALS FOR

THE ELEVENTH CIRCUIT TO THE SUPREME COURT OF

GEORGIA PURSUANT TO ARTICLE VI, SECTION

VI, PARAGRAPH IV OF THE

GEORGIA CONSTITUTION.

TO THE SUPREME COURT OF GEORGIA AND ITS HONORABLE JUSTICES:

It appears to the United States Court of Appeals for the Eleventh Circuit that this case involves questions of Georgia law that are determinative of the cause but unanswered by controlling precedent of the Supreme Court of Georgia or any other Georgia appellate court. We therefore certify the questions for resolution by the Supreme Court of Georgia.

A. STYLE OF THE CASE

The style of the case in which this certificate is made is as follows: Florida International Indemnity Company, Plaintiff-Appellee, versus The City of Metter, Georgia, Defendant-Appellee, The Metter/Candler County Recreation Department, Myron Colley, Defendants, Juanita Googe, Individually and as Temporary Administratrix of the Estate of Kenneth Harold Googe, Deceased, Harold Googe, Jr., Shirley Diane Sparks, Andrew Ray Googe, Howard Michael Googe, and Linda Kay Googe, Defendants-Appellants, Case No. 90-8302, filed in the United States Court of Appeals for the Eleventh Circuit, on appeal from the United States District Court for the Southern District of Georgia.

B. STATEMENT OF ADDITIONAL RELEVANT FACTS

In addition to the facts set out above concerning the coverage of the swimming pool, we note that the City requested coverage for the pool and disclosed that the pool was operated jointly with the Metter/Candler County Recreation Department. Florida International's underwriter stated that he intended to cover the pool when he wrote the policy and that Florida International collected a premium for insuring the pool. ⁵ Prior to the issuance of the policy in question, the Recreation Department had maintained a separate liability insurance policy, but the coverage was apparently dropped when the City received its coverage from Florida International. The executive secretary of the Recreation Department stated that her understanding was that the Recreation Department and the pool were covered by the City's policy. ⁶ After Kenneth Googe's drowning, Florida International set up a reserve fund to cover the loss and paid money totaling $1,759.00 into the reserve. ⁷

Georgia law provides that "[a]n honest mistake of the law as to the effect of an instrument on the part of both contracting parties, when the mistake operates as a gross injustice to one and gives an unconscionable advantage to the other, may be relieved in equity." ⁸ The district court found that there was a mutual mistake in this case. The district court wrote,

The Googe defendants claim that it was the intent of the parties at the time the contract of insurance was entered into that the risks attendant to operating the pool where Kenneth Googe drowned be covered under the policy. The Googe defendants have presented substantial evidence that such was the case.... It appears that at the time the parties entered into the insurance contract they believed that the pool was a joint operation between the City, which owned the facilities, and the Department, which operated them. It further appears that the plaintiff charged and collected (without hesitation) a premium based upon the risk attendant to the pool's operation. Both the deposition of the underwriter and the City's application for insurance indicate this. ⁹

However, the district court refused to reform the contract, finding that Googe's survivors were not parties to the contract, and thus no party suffered a "gross injustice" under the Georgia statute.

C. REASONS FOR CERTIFICATION

Although no case is clearly on point, our understanding of Georgia's third-party beneficiary doctrine leads us to believe that Googe's survivors may have sufficient standing to ask for reformation of the contract.

Georgia courts have long followed a general policy of forbidding suits against insurers by parties who are not at least third-party beneficiaries of insurance contracts, that is, non-parties to insurance contracts who hold legally enforceable rights thereunder. ¹⁰ It is arguable that a suit by injured persons such as the Googe plaintiffs against liability insurance companies for recovery come within the scope of Georgia's holdings with respect to intended third party beneficiaries. ¹¹ This policy is justified by the rationale that injured persons receive only an "incidental benefit" from the payment of claims by tortfeasors' insurance companies, as opposed to payment by tortfeasors themselves. ¹²

However, when a judgment against the insured already has been achieved, an injured person may sue the tortfeasor's insurance company directly. ¹³ The Georgia courts have also allowed suit directly against liability insurers in the case of certain kinds of mandatory liability insurance, reasoning that third-party beneficiary rights have been created in the public. ¹⁴ An enigma is created by the unique facts of this case combined with...