Julmist v. Prime Ins. Co.

• Court: U.S. Court of Appeals — Eleventh Circuit
• Writing for the Court: Ed Carnes, Circuit Judge
• Citation: Julmist v. Prime Ins. Co., 92 F.4th 1008 (11th Cir. 2024)
• Docket Number: 22-10614
• Decision Date: 08 February 2024
• Parties: Kevin JULMIST, et al, Plaintiffs-Appellants, v. PRIME INSURANCE CO., et al, Defendants-Appellees.

92 F.4th 1008

Kevin JULMIST, et al, Plaintiffs-Appellants, v. PRIME INSURANCE CO., et al, Defendants-Appellees.

No. 22-10614

United States Court of Appeals, Eleventh Circuit

Filed: February 8, 2024

Appeal from the United States District Court for the Northern District of Georgia, D.C. Docket No. 1:21-cv-01416-SCJ

Brent Savage, Sr., Kathryn Hughes Pinckney, Savage Turner Pinckney Savage & Sprouse, Savannah, GA, for Plaintiffs-Appellants.

Brian Winfred Sprinkle, Michael J. Goldman, Hawkins Parnell & Young, LLP, ATLANTA, GA, for Defendants-Appellees.

Before Jordan, Newsom, and Ed Carnes, Circuit Judges.

Ed Carnes, Circuit Judge:

On February 19, 2013, Dr. Nedra Dodds performed a surgical liposuction procedure on April Jenkins at CJL Healthcare, LLC (the Clinic) in Georgia. Jenkins died that same day. Four months after her death, on June 20, 2013 at the same clinic, Dr. Dodds performed a surgical liposuction procedure on Erica Beaubrun, who died that night.

Initially, two lawsuits resulted from those two deaths. On August 5, 2013, Hal Jenkins, who is April's father and the administrator of her estate, filed a lawsuit in Georgia state court against the Clinic and Dodds. We'll call that the Jenkins estate lawsuit. Almost a year later, on June 16, 2014, Kevin Julmist, who is the father of Erica Beaubrun's two minor children, filed a lawsuit in Georgia state court against Dodds, the Clinic, and Opulence Aesthetic Medicine (the Clinic's doing-business-as name). To simplify things, we'll call that the Beaubrun estate lawsuit even though technically it is not.¹

The appeal before us involves the Beaubrun estate lawsuit indirectly, but it does not directly involve the claims that were brought in that lawsuit. Instead, it arises from the Clinic's assignment to the Beaubrun estate of some of the Clinic's claims against its insurance companies after a consent judgment in the amount of $60,000,000 was entered in favor of the Beaubrun estate and against the Clinic in the estate's lawsuit.

For purposes of the present lawsuit, which is a dispute about insurance coverage and its limits, the Beaubrun estate and the Clinic essentially became co-plaintiffs, advancing the same claims and asserting the same arguments against the insurers. When we refer to those two parties collectively, we'll simply call them the plaintiffs.

The lawsuit that arose from the death of Dodds' other patient at the Clinic (the Jenkins estate lawsuit) is only tangentially related to this appeal. That lawsuit is relevant only because of the effect it had on the aggregate amount of coverage available under the insurance policy that covered the Clinic and Dr. Dodds. (She is not a party to this appeal.) That insurance policy contained a diminishing limits provision.² Under that provision, the cost of defending the Clinic and Dr. Dodds from the Jenkins estate lawsuit not only diminished the $50,000 amount available for the Jenkins estate's claim to coverage, but it also diminished the total amount of coverage available under the policy, which was capped at $100,000. Likewise, under that same provision, the cost of defending the Clinic and Dr. Dodds from the Beaubrun estate lawsuit diminished the $50,000 amount available for the Beaubrun estate's claim to coverage and also diminished the $100,000 total amount of coverage available under the policy.

The bottom line for this appeal is that under the terms of the policy, the defense of the Jenkins and the Beaubrun estates' lawsuits exhausted the Clinic's insurance coverage. The policy's declarations page unambiguously specifies a $50,000 limit for any professional liability claims and a $100,000 policy aggregate limit for any and all of those claims combined. In other words, defending the Beaubrun estate lawsuit diminished the amount of coverage available for that claim, and defending both the Beaubrun and the Jenkins estates' lawsuits diminished the aggregate limit until there was no coverage left.

I. Factual Background and Procedural History

As mentioned, the Jenkins estate lawsuit was filed first. For that reason, we will first provide the highlights of its procedural history and then discuss the history of the Beaubrun estate lawsuit.

A. The Jenkins Estate Lawsuit

The Jenkins estate lawsuit was filed in August 2013, and the Clinic's insurer, Prime Insurance Co., defended the Clinic and Dodds under a reservation of rights. A couple of months after the lawsuit was filed, David McBride, who worked for Prime, tendered a settlement offer from Prime of $50,000 to the Jenkins estate, but the estate rejected that offer.

In April 2014, the Jenkins estate demanded $100,000 from Prime, which counteroffered $39,000, an amount that was $11,000 less than it had offered through McBride earlier. The reason Prime's second offer was for only $39,000 of coverage apparently was that under the diminishing limits provision, defending the Jenkins estate lawsuit had diminished the total amount available by $11,000. The Jenkins estate rejected that offer.

On May 6, 2014, Prime notified the Clinic that the policy's Professional Liability Limit of $50,000 for a single claim had been depleted defending the Jenkins estate lawsuit. And in July 2014 a Georgia state court entered an order authorizing Prime to withdraw from representing the Clinic and Dodds in the Jenkins estate lawsuit.

Dodds was dismissed as a party, and the Jenkins estate's case proceeded to trial, during which the Clinic was not represented by counsel. A default judgment was entered against the Clinic, and in December 2018 a jury awarded the Jenkins estate $60,000,000 in damages.

B. The Beaubrun Estate Lawsuit

In a letter dated June 11, 2014, Prime's counsel wrote this to counsel for the Beaubrun estate:

As you know, I represent Prime Insurance Company which insured CLJ Healthcare with respect to the above-referenced claim [referring to a claim number]. The policy is the same policy at issue in the Jenkins v. CLJ Healthcare claim. The policy has a $50,000 professional liability limit, with a $100,000 aggregate. The aggregate has been depleted by defense of the Jenkins claim. Prime hereby tenders the $50,000 professional liability limit to your client in exchange for a release of all claims against CLJ Healthcare and its employees and agents.

(It's not entirely clear why, if Prime had spent more than the $100,000 aggregate policy limit, it still offered the Beaubrun estate the $50,000 policy limit, but we have set out exactly what the June 11, 2014 letter said.)

The Beaubrun estate rejected Prime's $50,000 offer for two reasons. First, the estate believed that the policy provided $100,000 in coverage, which would mean that the offer was for less than the amount of coverage available. Second, the estate objected to the release of claims against a nurse anesthetist who allegedly failed to properly monitor Beaubrun. (That second objection is not involved in this lawsuit.)

After the Beaubrun estate rejected Prime's $50,000 offer, on June 16, 2014, the estate filed a Georgia state court lawsuit against Dodds, the Clinic, and Opulence Aesthetic Medicine (the Clinic's doing-business-as name). The lawsuit claimed that Dodds was liable for professional negligence and that the Clinic and Opulence Aesthetic Medicine were liable under a theory of respondeat superior. In the "damages," section of its complaint, the estate sought "to recover for the full value of the life of Erica Beaubrun, for her wrongful death, and all other elements of damages allowed under Georgia law." Among other things, the estate specifically sought damages for pain and suffering and for funeral expenses. It also sought attorney's fees and costs. Prime defended the named defendants in that lawsuit for a period of time.

But on January 27, 2015, Prime sent Dodds and the Clinic a letter stating that "[t]he limit of insurance available through [the] policy issued by Prime is $50,000 per claim, with an aggregate limit of $100,000." (The reference to "per claim," in context, is not to a legal claim asserted in the underlying lawsuit against the insureds but is to their claim for coverage under the policy. There was a Jenkins "claim" and a Beaubrun "claim" for coverage.) Prime's letter to Dodds and the Clinic stated that the $50,000 "per claim limit of liability" had already been "completely depleted" in providing a defense in the Beaubrun "matter." It added that the $50,000 per claim limit had also been expended "in relation to the claims of" the Jenkins estate against the defendants. The result was that the combined expenditures in defending the insureds against the two lawsuits exhausted the aggregate $100,000 policy limit. For that reason, Prime stated it was withdrawing its defense in the Beaubrun "matter."

1. The Utah Declaratory Judgments

On January 27, 2015, the same day that Prime sent its letter to the Clinic and Dodds telling them that the policy limits were exhausted, Prime filed a declaratory judgment action against them in state court in Utah, where Prime's principal place of business was. The action sought a judgment that:

(a) Prime has no obligation to provide for Dr. Dodds' and/or [the Clinic's] defense in the Jenkins or Bea[u]brun claims beyond the $50,000 Professional Liability limit applicable to each of those claims.

(b) Prime is entitled to withdraw its defense of Dr. Dodds and [the Clinic] in the Jenkins lawsuit inasmuch as it ha[d] incurred in excess of $50,000 in defending that matter.

(c) Prime is entitled to withdraw its defense of Dr. Dodds and [the Clinic] in the Bea[u]brun claim inasmuch as it ha[d] incurred in excess of $50,000 in defending that matter.

The complaint did not seek any declaratory relief based on the aggregate policy limit provision. Instead, it relied solely on the $50,000 policy limit per claim provision and sought declaratory relief based only on that provision.

Prime served Dodds and the Clinic with the complaint in the declaratory judgment action, but neither of them filed an...