Lima Delta Co. v. Global RI-022 Aerospace, Inc.

• Decision Date: 12 July 2016
• Docket Number: A16A0643
• Citation: 338 Ga.App. 40,789 S.E.2d 230
• Parties: Lima Delta Company et al. v. Global RI–022 Aerospace, Inc.
• Court: Georgia Court of Appeals

338 Ga.App. 40

789 S.E.2d 230

Lima Delta Company et al.

v.Global RI–022 Aerospace, Inc.

A16A0643

Court of Appeals of Georgia.

July 12, 2016

Samuel Solomon Woodhouse III, Gary Linn Evans, George Andrew Coats, for Appellant.

James Errol Singer, Hon. Leah Ward Sears, Atlanta, Jeffrey W. Moryan, for Appellee.

Rickman, Judge.

Global Aerospace, Inc. issued a broad horizon aviation insurance policy to Lima Delta Company, TridentAS,¹ and Socikat² to insure a Gulfstream G–IV aircraft (the “Policy”). The aircraft crashed while landing in the Democratic Republic of the Congo (the “DRC”) on February 12, 2012. Approximately three months later, Global filed an action against the named insureds and other entities, seeking rescission based on alleged misrepresentations and fraud regarding where the aircraft would be based, ownership of the aircraft, and the primary use of the aircraft, and, alternatively, a declaratory judgment that no coverage existed for the accident because the pilots did not have the qualifications required by the Policy. Lima Delta, Trident, and Socikat filed a motion to dismiss for lack of personal jurisdiction. The trial court denied the motion, and this Court affirmed the trial court's decision in Lima Delta Co. v. Global Aerospace, Inc. , 325 Ga.App. 76, 752 S.E.2d 135 (2013).

Lima Delta, Trident, and Socikat answered the complaint and filed a counterclaim for breach of contract, which they later amended.

Following extensive and highly combative discovery,³ Global filed a motion for summary judgment on all counts of its complaint and Lima Delta, Trident, and Socikat filed a motion seeking summary judgment on Global's complaint and their counterclaim. The trial court granted Global's motion in part, concluding that Global had grounds to rescind the Policy based on the insureds' misrepresentations and omissions and that Global was entitled to a declaratory judgment that the Policy did not cover the accident based on non-compliance with the Policy's open pilot warranty provision.⁴ The trial court denied the motion filed by Lima Delta, Trident, and Socikat. On appeal, Lima Delta, Trident, and Socikat contend that the trial court erred by (1) granting Global's motion for summary judgment, (2) granting Global's motion to strike their amended counterclaim, and (3) denying their motion to apply Delaware law. For reasons that follow, we affirm.

Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” OCGA § 9–11–56 (c). “A de novo standard of review applies to an appeal from a grant of summary judgment, and we view the evidence, and all reasonable conclusions and inferences drawn from it, in the light most favorable to the nonmovant.” (Citation omitted.) Burkett v. Liberty Mut. Fire Ins. Co. , 278 Ga.App. 681, 681–682, 629 S.E.2d 558 (2006).

So viewed, the evidence shows that Trident, a company based in Delaware, is in the business of buying and selling aircraft and providing support to its customers and their aircraft. Trident bought the G–IV on behalf of Socikat, a mining company based in the DRC. The G–IV was then transferred to Lima Delta, a Delaware corporation, as owner trustee, and Socikat remained the beneficial owner of the aircraft. Trident obtained insurance for the aircraft through Wells Fargo Insurance Services, Trident's broker.

Initially, the aircraft was insured by another insurance carrier. One of Trident's co-owners, Dan Piraino, subsequently contacted Lauren Hanes, an account manager at Wells Fargo and informed her that the aircraft needed coverage for the European Union. When Hanes learned that the existing carrier could not provide the necessary coverage, she contacted Global and a third insurance carrier about a new policy for the aircraft. Wells Fargo worked with Global to obtain the Policy for Trident and the other named insureds. The Policy covered the period from June 22, 2011 to June 22, 2012.

The Policy contains an open pilot warranty provision, which states that the “policy shall not apply while a scheduled aircraft is in flight unless operated by any appropriately rated two pilot flight crew,” including a pilot in command and a second in command, both of whom are required to have “completed the manufacturer's recommended ground and flight training school for the applicable make and model aircraft within the preceding twelve (12) months of any date he or she acts as pilot in command [or second in command].” Under the Policy, “flight” means, “as respects a fixed wing aircraft, from the time commencing with the actual takeoff run until the aircraft has completed its landing roll.”

1. Lima Delta, Trident, and Socikat contend that the trial court erred by concluding that the open pilot warranty provision should be treated as an exclusion despite its location in the Declarations section of the Policy rather than the Exclusions section. They argue that the location of the provision creates an ambiguity that must be construed against Global as the insurer.

Insurance policies are construed in favor of the insured and against the insurance company. Insurance in Georgia is a matter of contract and the parties to the contract of insurance are bound by its plain and unambiguous terms, and, when the words in an insurance policy are plain and obvious, they must be given their literal meaning. Further, insurance contracts are interpreted by ordinary rules of contract construction and exclusions are to be strictly construed. Also, an insurance policy is simply a contract, which should be construed as any other type of contract. The construction of an unambiguous contract is a question of law for the court.

(Citations and punctuation omitted.) State Farm Fire & Cas. Co. v. Goodman , 259 Ga.App. 62, 63–64, 576 S.E.2d 49 (2002).

Here, the open pilot warranty provision of the Policy is clear—the Policy will not apply while a scheduled aircraft is in flight unless both the pilot in command and the second in command have completed the manufacturer's recommended ground and flight training school for the applicable make and model aircraft within the 12 months preceding the date of the flight. It is undisputed that one of the pilots on the February 12, 2012 flight had not completed the required training within the 12 months preceding the date of the flight. Trident's co-owners testified that they contacted Hanes at Wells Fargo and requested a waiver of this requirement so that both pilots could train together, and that Hanes said that she had taken care of it. But Trident has not pointed to any document showing that Global agreed to any such waiver or extension of the training requirement, and the Policy specifically provides that its terms “can be amended or waived only by endorsement issued ... by Global Aerospace, Inc. and made a part of this policy.” No such endorsement was made a part of the Policy.

Despite the plain language of the Policy, the insureds take issue with the fact that the open pilot warranty provision is located in the Declarations section of the Policy and is not specifically labeled an “exclusion.” We have previously upheld as valid pilot clauses requiring pilots to have certain training and experience that were located in the declarations section of an aviation policy. See Howell v. U.S. Fire Ins. Co. , 185 Ga.App. 154, 157, 363 S.E.2d 560 (1987) (pilot clause of policy declaration that required pilots to be graduates of the aircraft manufacturer's ground and flight training school was valid); see also Ranger Ins. Co. v. Columbus–Muscogee Aviation, Inc. , 130 Ga.App. 742, 744, 204 S.E.2d 474 (1974) (pilot clause in policy declarations that required valid medical certificate was valid requirement and pilot's failure to comply warranted summary judgment for insurer). And the insureds have failed to cite any case that supports their position that the location of the provision creates an ambiguity, where, as here, the terms of the policy provision at issue are clear and unambiguous.

Citing OCGA § 33–24–30 (c), the insureds also argue that Global was required to include “conspicuous notice” that the Policy contained exclusions related to pilot certification or experience. The conspicuous notice requirement, however, is only applicable to policies issued on or renewed after July 1, 2015. Ga. L. 2015, p. 824, § 2. Because the Policy was issued in 2012, we need not determine whether the Policy language provided the conspicuous notice contemplated by the statute.

We conclude that summary judgment was properly granted to Global because, at the time of the accident, one of the pilots had not completed the manufacturer's recommended ground and flight training school for the applicable make and model aircraft within the 12 months preceding the date of the flight, as required by the plain language of the Policy.⁵ See Howell , 185 Ga.App. at 157 (3), 363 S.E.2d 560 ; see also Grigsby v. Houston Fire & Cas. Ins. Co. , 113 Ga.App. 572, 573, 148 S.E.2d 925 (1966) (loss was not within the coverage of the policy when insured aircraft was operated by pilot who had failed to make required number of takeoffs and landings within 90 days preceding flight and did not have valid medical certificate, as required for policy to apply).⁶

2. Lima Delta, Trident, and Socikat contend that the trial court erred by granting Global's motion to strike their amended counterclaim for bad faith penalties and attorney fees. The trial court granted the motion based on its determination that Global had grounds to deny coverage under the Policy provisions and to rescind the Policy due to material misrepresentations and omissions. Given our holding in Division 1 that the Policy did not apply to the accident, we affirm the trial court's ruling on Global's motion to strike the amended counterclaim.

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