Labmd, Inc. v. Admiral Ins. Co.

• Decision Date: 24 September 2013
• Docket Number: No. A13A1557.,A13A1557.
• Citation: 749 S.E.2d 11,323 Ga.App. 906
• Parties: LABMD, INC. v. ADMIRAL INSURANCE COMPANY.
• Court: Georgia Court of Appeals

323 Ga.App. 906

749 S.E.2d 11

LABMD, INC.

v.ADMIRAL INSURANCE COMPANY.

No. A13A1557.

Court of Appeals of Georgia.

Sept. 24, 2013.

Kathy R. Bess, for Appellant.

Jonathan Jay Kandel, Philip Wade Savrin, Atlanta, for Appellee.

BARNES, Presiding Judge.

This case involves a dispute over whether Appellee Admiral Insurance Company owed a duty to defend Dr. Adnan Tabrez Savera in an underlying lawsuit that Appellant LabMD, Inc. filed against Dr. Savera. Admiral filed the instant declaratory judgment action, seeking a declaration that it owed a duty to defend Dr. Savera under an insurance policy that Admiral had issued to LabMD as the named insured. The trial court granted summary judgment to Admiral on both its declaratory judgment claim and LabMD's counterclaims. On appeal, LabMD contends that the trial court erred in granting summary judgment to Admiral and in denying its motion to compel certain depositions. Admiral, however, has filed a motion to dismiss the appeal in which it argues that the questions raised by LabMD have become moot, depriving this Court of jurisdiction. For the reasons discussed below, we agree with Admiral that the questions raised by LabMD are moot. Accordingly, Admiral's motion is granted, and the appeal is dismissed.

The record reflects that Dr. Savera was employed by LabMD as its Medical Director and Chief Genitourinary Pathologist. An employment dispute ensued, and LabMD sued Dr. Savera for breach of fiduciary duty and other claims (the “underlying lawsuit”).

Dr. Savera tendered the underlying lawsuit to Admiral based on an insurance policy that Admiral had issued to LabMD. He contended that he was an “insured” under the terms of the policy with respect to the claims asserted against him by LabMD in the underlying lawsuit, and that, as a result, Admiral had a duty to defend him in that litigation.

Admiral agreed to defend Dr. Savera in the underlying lawsuit pursuant to a reservation of rights. LabMD then accused Admiral of having a conflict of interest and breaching its fiduciary duties owed to LabMD as the named insured under the policy. In response, Admiral filed this action, seeking a declaratory judgment that the insurance policy required it to defend Dr. Savera in the underlying lawsuit. LabMD answered and denied that Dr. Savera was owed a defense under the policy. LabMD later filed an amended answer in which it asserted several counterclaims, including that Admiral had breached its fiduciary duties owed to LabMD and had breached the insurance contract by agreeing to defend Dr. Savera.

During the course of the declaratory judgment action, a discovery dispute arose between Admiral and LabMD over the deposition of certain witnesses. Ultimately, LabMD filed a motion to compel the depositions of several Admiral employees and its Rule 30(b)(6) representative. The trial court denied the motion to compel.

Admiral filed a motion for summary judgment on its declaratory judgment claim, arguing that it owed a duty to defend Dr. Savera in the underlying lawsuit as a matter of law. Additionally, Admiral argued that LabMD's counterclaims were procedurally improper because LabMD failed to seek leave of court to file them after filing its initial answer. Admiral further argued that the counterclaims failed on the merits as a matter of law. The trial court agreed with Admiral and granted summary judgment in its favor, leading to this appeal by LabMD.

After LabMD filed its notice of appeal, the underlying lawsuit between LabMD and Dr. Savera was tried before a jury. At the end of the trial, the jury returned a verdict in favor of Dr. Savera.¹ During the trial of the underlying lawsuit, Admiral provided a defense to Dr. Savera, and the applicable liability limit on the insurance policy was exhausted by the costs of the defense.

1. On appeal in the present case, LabMD contends that the trial court erred in granting summary judgment in favor of Admiral on its declaratory judgment claim. According to LabMD, Admiral did not owe a duty to defend Dr. Savera in the underlying lawsuit under the plain terms of the insurance policy. However, all issues relating to the grant of Admiral's declaratory judgment claim are now moot.

“A case is moot when its resolution would amount to the determination of an abstract question not arising upon existing facts or rights [.]” (Citation and punctuation omitted; emphasis in original.) Scarbrough Group v. Worley, 290 Ga. 234, 236, 719 S.E.2d 430 (2011). Furthermore, in the context of a declaratory judgment action, a claim becomes moot “where the rights of the parties have already accrued and there is no risk to the petitioner of future undirected action.” McRae, Stegall, Peek, Harman, Smith & Manning v. Ga. Farm Bureau Mut. Ins. Co., 316 Ga.App. 526, 530, 729 S.E.2d 649 (2012). In other words, a declaratory judgment action cannot simply confirm actions already taken by an insurer, see Norfolk & Dedham Mut. Fire Ins. Co. v. Jones, 124 Ga.App. 761, 764(2), 186 S.E.2d 119 (1971), and, consequently, a declaratory judgment action regarding an insurer's duty to defend can be rendered moot where the underlying liability lawsuit has proceeded to judgment. See, e.g., Morgan v. Guaranty Nat. Co., 268 Ga. 343, 344–346, 489 S.E.2d 803 (1997). “Regardless of when an action reaches that posture, it is still an action which presents no justiciable controversy because the issue (whether to defend) has become dead or academic.” Empire Fire & Marine Ins. Co. v. Metro Courier Corp., 234 Ga.App. 670, 673(1)(c), 507 S.E.2d 525 (1998). See Clarke v. City of Atlanta, 231 Ga. 84, 84–85, 200 S.E.2d 264 (1973) (dismissing appeal of declaratory judgment action that became moot during pendency of the appeal).

Here, as previously indicated, Admiral has submitted evidence that it provided a defense to Dr. Savera in the underlying lawsuit that has now proceeded to judgment, and that the applicable liability limit on the insurance policy has been exhausted by the costs of the defense. LabMD does not dispute ...