Garmany v. Mission Ins. Co.
| Decision Date | 01 April 1986 |
| Docket Number | No. 85-8199,85-8199 |
| Citation | 785 F.2d 941 |
| Parties | Joanna GARMANY, by and through her next friends, et al., Plaintiffs-Appellants, v. MISSION INSURANCE COMPANY, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Michael J. Goldman, Atlanta, Ga., for plaintiffs-appellants.
Howard M. Lessinger, Atlanta, Ga., for defendant-appellee.
Appeal from the United States District Court for the Northern District of Georgia.
ON PETITION FOR REHEARING
Before RONEY and ANDERSON, Circuit Judges, and MORGAN, Senior Circuit Judge.
The sole issue for determination in this appeal is the starting point of automobile insurance coverage under the umbrella insurance policy at issue in this case. The district court determined that the excess coverage available under that insurance policy in these circumstances commenced at the fixed threshold of $500,000. In our original opinion reported at 776 F.2d 981 (11th Cir.1985), we affirmed in all respects. On petition for rehearing, we again affirm the district court's finding as to the fixed threshold, but remand for reapplication of that finding to the facts of this case.
This case arises out of the tragic circumstances of an automobile accident occurring near Thomson, Georgia in 1980. On July 19, 1980, James Hamilton sought and received permission to test drive a used automobile that was owned and offered for sale by Hutchinson Motor Co. (Hutchco). Sometime during the test drive while Hamilton was driving, the vehicle struck another vehicle carrying several of the appellants in this case. One child was killed and three other occupants of the automobile were injured.
The numerous injured parties brought suit in Superior Court of the State of Georgia against Hutchco and James Hamilton. The suits alleged negligence on the part of Hamilton and negligent entrustment as to Hutchco, contending that Hamilton was intoxicated at the time of the accident, a fact known to Hutchco's salesman who nonetheless allowed Hamilton to drive the automobile. At the time of the accident in question, Hutchco carried two relevant insurance policies. Hutchco was insured under a "primary" policy issued by third-party defendant Fireman's Fund Insurance Company, as well as under a so-called "excess" or "umbrella" policy written by defendant Mission Insurance Company. It is undisputed that Hamilton, the driver of the vehicle, had no insurance of his own and Under the Fireman's Fund primary policy, Hutchco and its employees received "underlying" or primary coverage up to $500,000. Other persons, such as permissive users of Hutchco vehicles like Hamilton, received no coverage whatsoever, unless they had no available insurance of their own, in which case the Fireman's Fund policy provided insurance coverage only to extent required by law at that time ($10,000 per person and $20,000 per accident). The umbrella policy issued by Mission contained an upper liability limit of $1,000,000, and the point at which this policy commenced coverage is the issue presented for resolution in this appeal.
that he was insured under these two policies.
The appellants brought suit in state court, but prior to trial, Fireman's Fund paid the plaintiffs $200,000 in exchange for covenants not to sue the dealership, Hutchco. These settlements, which left Hamilton as the only remaining defendant, were entered into over Mission's objections. The first two of the state court trials resulted in judgments totaling $450,000 against the driver. At that point, Fireman's Fund tendered $20,000 into the registry of the court on behalf of the driver, Hamilton, and withdrew from his further representation. The third trial, at which Hamilton was represented by Mission, resulted in a $92,809.50 judgment against him, bringing the total judgments against Hamilton to $542,809.50.
The plaintiff/appellants then brought suit in state court against Mission to recover on their judgments. Mission timely removed the action based upon diversity of citizenship. After conducting discovery, the parties filed cross motions for summary judgment arguing that the sole matter for resolution was purely a matter of law as to the point at which the Mission insurance policy would be interpreted as beginning coverage as to Hamilton. The district court found that the umbrella policy contained a threshold point of $500,000 for beginning coverage. Mission then tendered that portion of the judgments exceeding $500,000 to the plaintiffs, and the district court entered partial final judgment pursuant to Fed.R.Civ.P. 54(b), as a counterclaim by Mission against Fireman's Fund and the appellants remained pending.
An order granting a motion for summary judgment is subject to independent review by this court. Morrison v. Washington County, Ala., 700 F.2d 678, 682 (11th Cir.), cert. denied, 464 U.S. 864, 104 S.Ct. 195, 78 L.Ed.2d 171 (1983). Although summary judgment should only be entered in the absence of any genuine issues of material fact, Sweat v. Miller Brewing Co., 708 F.2d 655, 656 (11th Cir.1983), here the parties have stipulated to the underlying facts. Our task in this case, therefore, is to determine whether the lower court erred in determining that the threshold point--the point at which coverage commenced--under the Mission umbrella policy was $500,000 under the circumstances of this case.
The Mission "excess" insurance policy in this case states that the insurance company shall be liable for the ultimate net loss in "excess of either ... the limits of the underlying insurances as set out in the attached schedule ... or $10,000 in respect of each occurrence not covered by said underlying insurances." 1 The attached schedule Appellants urge two main arguments on appeal. First, they contend that when Mission issued its umbrella policy, it was aware of the contents of the underlying Fireman's Fund policy. 3 As such, when Mission included the "permissive user" clause in the umbrella policy, it should have been aware that persons in that category would receive only minimum coverage under the primary policy. Therefore, if Mission sought to limit its exposure in such circumstances by creating a gap in coverage between the $20,000 minimum coverage in the primary policy and the $500,000 threshold point of the umbrella policy, it was obligated to make that limitation of liability unambiguous and clear. Appellants consequently contend that the umbrella policy is ambiguous in this regard and must be construed against Mission, or alternatively, that as a matter of public policy full coverage should be extended here because Mission had knowledge of the gap and insurance policies should be construed to afford coverage to innocent parties. The appellants' second theory is that Hamilton was "not covered" by underlying We start our inquiry with the premise that the issue at hand is a matter of construction of the Mission umbrella policy, and that numerous general principles of insurance contract construction aid our task. As the appellants point out, ambiguities in an insurance contract must be construed strongly against the carrier, and an insurance policy must be construed to provide coverage unless "the contrary clearly appears." Travelers Indemnity Co. v. Whalley Constr. Co., 160 Ga.App. 438, 441, 287 S.E.2d 226 (1981). "Any reasonable doubt as to uncertain language will be resolved against the insurer." Nationwide Mutual Fire Ins. Co. v. Collins, 136 Ga.App. 671, 676, 222 S.E.2d 828 (1975). "The test is not what the insurer intended its words to mean, but what a reasonable person in the position of the insured would understand them to mean." Id. at 675, 222 S.E.2d 828. As a matter of public policy, it is generally recognized that insurance policies are to be "liberally construed for the protections not only of the insured..., but also the innocent plaintiff who was injured." Float-Away Door Co. v. Continental Casualty Co., 372 F.2d 701, 705 (5th Cir.1966), cert. denied, 389 U.S. 823, 88 S.Ct. 58, 19 L.Ed.2d 76 (1967), quoting Eggerding v. Bicknell, 20 N.J. 106, 118 A.2d 820 (1955).
describes the Fireman's Fund policy as an underlying insurance with a limit of liability defined as "Combined Single Limit (Bodily Injury Liability and Property Damage Liability) $500,000 each occurrence." 2 As stated earlier, the insurance coverage extended to Hamilton as a permissive user of Hutchco's vehicle was only to the extent that he had no insurance of his own, and then only up to the minimum required under Georgia law, $10,000 per person and $20,000 per accident. The issue on appeal here, therefore, is whether the insurance coverage provided Hamilton under the Mission policy commences at the $500,000 level as stated in the schedule describing the Fireman's Fund policy, or at $20,000, which is the amount of coverage actually provided to Hamilton under the Fireman's Fund policy
insurance as set out in the schedule of insurance, therefore entitling him to "first dollar" coverage under the umbrella policy. This argument recognizes that Hamilton received minimum coverage under the primary policy as an uninsured motorist. But appellants urge that inasmuch as he did not receive the full $500,000 limits coverage under the Fireman's Fund policy, as described in the schedule of underlying insurance, Hamilton should be considered as "not covered" under the primary policy as the term is used in the umbrella policy
We further note, however, that under Georgia law in attempting to ascertain the intentions of the parties, insurance contracts are governed by the ordinary rules of construction applicable to other contracts. Golden v. National Life & Accident Ins. Co., 189 Ga. 79, 87, 5 S.E.2d 198 (1939). The contract must be examined "as a whole" in attempting to construe any portion thereof. Collins, 136 Ga.App. at 675, 222 S.E.2d 828, quoting Cotton States...
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