Hudson Specialty Ins. Co. v. Snappy Slappy LLC

• Decision Date: 30 August 2018
• Docket Number: CIVIL ACTION NO. 5:18-cv-00104-TES
• Parties: HUDSON SPECIALTY INSURANCE CO., Plaintiff, v. SNAPPY SLAPPY LLC d/b/a JUS ONE MORE, Defendant.
• Court: U.S. District Court — Middle District of Georgia

HUDSON SPECIALTY INSURANCE CO., Plaintiff, v. SNAPPY SLAPPY LLC d/b/a JUS ONE MORE, Defendant.

CIVIL ACTION NO. 5:18-cv-00104-TES

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA MACON DIVISION

August 30, 2018

ORDER DENYING PLAINTIFF'S MOTION FOR JUDGMENT ON THE PLEADINGS

Before the Court for consideration is Plaintiff's Motion for Judgment on the Pleadings [Doc. 10]. In its motion, Plaintiff contends that it is entitled to a declaratory judgment on the grounds that an exclusionary clause within Defendant's insurance policy bars coverage. See 28 U.S.C. § 2201. After review and careful consideration of the parties' arguments, the Court denies Plaintiff's Motion for Judgment on the Pleadings.

FACTUAL BACKGROUND

Plaintiff, Hudson Specialty Insurance Co., seeks a judgment declaring that it is not obligated to defend or indemnify its insured, Defendant Jus One More, against claims arising out of a fatal shooting on Defendant's premises. On March 30, 2016, Plaintiff issued Commercial General Liability Policy HSGM03448 (hereinafter "Policy") to Defendant, providing insurance coverage for the period of March 20, 2016 to March 30, 2017. See [Doc. 1, at 5]. The Policy provides that Plaintiff "will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' . . . to which this insurance applies. [Plaintiff] will have the right and duty to defend the insured against any 'suit' seeking those damages." [Doc. 1-2, at 7]. The Policy further states that "[t]his insurance applies to 'bodily injury' . . . only if: the 'bodily injury' . . . is caused by an 'occurrence' that takes place in the 'coverage territory'[.]" [Id.]. The "Definitions" section of the Policy defines "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." [Id., at 20]. Finally, the Policy contains an endorsement changing the Policy so that "[t]his insurance does not apply to 'bodily injury' . . . arising out of the manufacture, importation, sales, distribution, gunsmithing, ownership, maintenance or use of firearms or weapons" (hereinafter "Firearms Exclusion"). [Id., at 39]. Thus, the Policy provides Defendant with liability coverage for damages resulting from bodily injury occurring during the policy period, subject to the Firearms Exclusion.

On August 28, 2017, Claimant Carol Slocumb filed a wrongful death action against Jus One More, alleging that, her son, Jabrial Adams was shot and killed by a fellow business invitee at Jus One More. [Doc. 1, at 3]. Claimant further contends that Defendant's negligent security practices were the proximate cause of Adams' death and seeks damages relating to pain and suffering, burial expenses, and the value of Adams' life. [Id., at 3-4].

Thereafter, Defendant notified Plaintiff of her wrongful death action and provided Plaintiff with a copy of the complaint. [Id., at 10]. Plaintiff responded that the Policy barred coverage for Claimant's lawsuit pursuant to, among other things, the Firearms Exclusion. [Id.]. Defendant disputed this policy interpretation, and Plaintiff filed the instant action seeking a declaratory judgment proclaiming that Plaintiff is not obligated to defend or indemnify Defendant from Claimant's suit because it involves the use of a firearm. [Id., at 11].

STANDARD OF REVIEW

Plaintiff moves for judgment on the pleadings pursuant to Rule 12(c), which provides that "[a]fter the pleadings are closed—but early enough not to delay trial—a party may move for judgment on the pleadings." Fed. R. Civ. P. 12(c); [Doc. 10, at 2]. Such judgments are appropriate when the pleadings present no disputed material facts, and the movant is entitled to judgment as a matter of law. Douglas Asphalt Co. v. Qore, Inc., 541 F.3d 1269, 1273 (11th Cir. 2008). In ruling on Plaintiff's motion, the Court accepts as true the facts set forth in the Complaint [Doc. 1],¹ construing them in the light most favorable to the non-moving party. See id. With the foregoing standard in mind, the Court rules as follows:

DISCUSSION

In this diversity action, Georgia's substantive law governs the interpretation of the policy. Travelers Prop. Cas. Co. v. Kan. City Landsmen, LLC, 592 F. App'x 876, 881 (11th Cir. 2015) (noting that Georgia's choice of law rules dictate that insurance contracts are interpreted under the laws of the place where the contract is made, which is at the place where they are delivered). The narrow question before the Court is whether the Firearms Exclusion, as written in the Policy, shields Plaintiff from any duty to defend or indemnify its insured resulting from the underlying case in the State Court of Houston County. See [Doc. 1-1]. In its motion, Plaintiff contends that the Firearms Exclusion unequivocally bars insurance coverage for Claimant's action on the grounds that "losses associated with the use of a firearm are not covered." [Doc. 10-1, at 7]. The Court rejects this argument on the well-guided premise that insurance agreements are contracts subject to the ordinary interpretive principles of contract law. See Bradham v. Randolph Trucking Co., Inc., 775 F. Supp. 395, 397 (M.D. Ga. 1991) (citing Wood v. State Farm Ins. Co., 245 S.E.2d 876, 878 (Ga. Ct. App. 1978). Contract interpretation, moreover, "is a question of law for the court." Ga. Code Ann. § 13-2-1.

To begin, the Court examines the agreement's language and makes a "determination as to whether the language is clear and unambiguous." Id. (internal quotations omitted). If the language is clear and unambiguous, the Court enforces the agreement according to its terms. Id.; see also Club Libra, Inc. v. R.L. King Props LLC, 751 S.E.2d 418, 419 (Ga. Ct. App. 2013). However, an "[a]mbiguity exists when more than more reasonable construction may be placed upon the language of an agreement." Estate of Pitts v. City of Atlanta, 746 S.E.2d 698, 702 (Ga. Ct. App. 2013); see also Greenberg Farrow Architecture, Inc. v. JMLS 1422, 791 S.E.2d 635, 639 (Ga. Ct. App. 2016) (defining ambiguity as "an uncertainty of meaning or expression used in a written instrument"). Furthermore, Georgia law sets a low threshold for establishing ambiguity in an insurance policy. See St. Paul Mercury Ins. Co. v. F.D.I.C., 774 F.3d 702, 709 (11th Cir. 2014). And, the presence or absence of ambiguity in a contract is a question of law. See Unifund Fin. Corp. v. Donaghue, 653 S.E.2d 513, 515-16 (Ga. Ct. App. 2007).

Additional legal principles govern insurance agreements executed in Georgia. To start, insurance providers who seek to invoke a policy exclusion carry the burden of proving its applicability in a given case. See State Farm Fire & Cas. Co. v. Moss, 790 S.E.2d 831, 834 (Ga. Ct. App. 2016). Any such exclusions from coverage are to be interpreted narrowly, in favor of the insured. See St. Paul Mercury Ins. Co. v. F.D.I.C., 774 F.3d 702, 709 (11th Cir. 2014); Ga. Farm. Bureau Mut. Ins. Co. v. Smith, 784 S.E.2d 422, 424 (Ga. 2016); Barrett v. Nat'l Union Fire Ins. Co. of Pittsburgh, 696 S.E.2d 326, 331 (Ga. Ct. App. 2010). Finally, as contracts of adhesion, insurance agreements should be read as if by a layman; thus, "the test [for interpretation] 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." Lee v. Mercury Ins. Co. of Ga., 808 S.E.2d 116, 123 (Ga. Ct. App. 2017). If a provision of an insurance policy is susceptible of two or more constructions (as is the case here) and each construction is logical and reasonable, the language in the policy is ambiguous. Id. When drafting an insurance policy, the insurer carries the burden of using clear and precise language. Id. at 122.

After review of the Policy, the Court finds that the Firearms Exclusion is not "clear and unambiguous," because the exclusion does not limit or specify to whom it applies. Y.C. Dev. Inc. v. Norton, 806 S.E.2d 662, 666; see [Doc. 1-2, at 39]. For example, under one reasonable interpretation, the exclusion could be read to mean that only the insured's use of "firearms" is included. [Doc. 1-2, at 39]. Under an equally reasonable interpretation, however, the exclusion could be read to deny coverage for "bodily injury" resulting from any use of "firearms," including a third party as described in the underlying Houston County case. [Id.].

Finally, when a provision of an insurance policy is ambiguous, Georgia law provides that the provision will be "construed against the party preparing it and in favor of coverage." Lee, 808 S.E.2d at 123 (emphasis added). Accordingly, by applying this constructive canon, Court concludes that the Firearms Exclusion does not bar coverage.

CONCLUSION

Plaintiff's motion seeks declaratory relief on one ground and solely "relie[s] on the...