Mt. Hawley Ins. Co. v. E. Perimeter Pointe Apartments

• Decision Date: 01 April 2022
• Docket Number: Civil Action 1:20-CV-3529-TWT
• Parties: MT. HAWLEY INSURANCE COMPANY, Plaintiff, v. EAST PERIMETER POINTE APARTMENTS LP, Defendant.
• Court: U.S. District Court — Northern District of Georgia

MT. HAWLEY INSURANCE COMPANY, Plaintiff,
v.
EAST PERIMETER POINTE APARTMENTS LP, Defendant.

Civil Action No. 1:20-CV-3529-TWT

United States District Court, N.D. Georgia, Atlanta Division

April 1, 2022

OPINION AND ORDER

THOMAS W. THRASH, JR. United States District Judge.

This is a declaratory judgment action. It is before the Court on the Defendant's Motion to Dismiss the Amended Complaint [Doc. 25]. For the reasons set forth below, the Defendant's Motion to Dismiss the Amended Complaint [Doc. 25] is GRANTED in part and DENIED in part.

I. Background

On December 26, 2015, assailants assaulted Adrian Johnson and murdered Marcus Wilder at the East Perimeter Pointe Apartments in Decatur, Georgia. (Am. Compl. ¶¶ 37-38.) As a result of these violent crimes, Mr. Johnson and Mr. Wilder's family filed suits against the Defendant, East Perimeter Pointe Apartments LP (“East Perimeter”) and nonparty Ventron Management, LLC (“Ventron”). (Id. ¶¶ 31, 33.) At the time of the attacks, East Perimeter owned the East Perimeter Pointe Apartments, and Ventron served as East Perimeter's property manager and agent. (Id. ¶¶ 39-41.) These suits

1

allege that the Defendant and Ventron negligently managed and secured the premises and were liable for the attacks. (Id. ¶ 36.)

Although there is some dispute as to whether the Defendant is a named insured, the Plaintiff, Mt. Hawley Insurance Company (“Mt. Hawley”), issued the relevant insurance policy in this case-Commercial General Liability Policy No. SLO0001472 (“the Policy”). (Id. ¶ 42.) The Policy states in part:

We will pay those sums that the insured becomes legally obligated to pay as damages because of “bodily injury” or “property damage” to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for “bodily injury” or “property damage” to which this insurance does not apply. . . . No. other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments- Coverage A and B

(Id. ¶ 45.) The Policy requires that “[n]o insured will, except at that insured's own cost, voluntarily make a payment, assume any obligation, or incur any expense, other than for first aid, without [the Plaintiff's] consent. (Id. ¶ 47.)

Further, the Policy includes a “Self-Insured Retention Endorsement.” (Am. Compl., Ex. C, at 70-71.) Under this Endorsement, Mt. Hawley's obligation to pay “claim expenses”-defined as “all reasonable and necessary expenses incurred in the . . . defense of any ‘claim' or ‘suit'”-only applies to expenses in excess of the retention amount of $25, 000. (Id.) The Endorsement goes on to note that:

We may at our sole election upon receipt or notice of any “occurrence” or “claim”, or at any time thereafter, require you to

2

pay over and deposit with us all or part of the Retention Amount, to be held and applied per the terms of this Policy

(Id., Ex. C, at 71.)

After it was notified of the Wilder and Johnson suits, the Plaintiff agreed to defend the Defendant and Ventron under a reservation of rights. (Id. ¶¶ 49, 51.) The Plaintiff hired the Hawkins Parnell firm to defend the Defendant and Ventron. (Id. ¶ 55.) This reservation of rights allegedly allowed the Plaintiff to file a declaratory judgment action to determine coverage and to seek reimbursement from the Defendant for defense costs in the event no coverage was found. (Id. ¶ 56.) The Defendant accepted the Plaintiff's defense under this reservation of rights. (Id. ¶ 57.)

Shortly after agreeing to defend the Defendant and Ventron in the Johnson and Wilder suits, the Plaintiff filed its first declaratory action in this Court, “seeking a declaration that it owed no insurance coverage obligations to East Perimeter and Ventron in connection with the claims asserted against them in the Wilder Lawsuit and Johnson Lawsuit.” (Id. ¶ 58.) In that case, this Court granted the Plaintiff summary judgment, concluding “that East Perimeter was obligated . . . to provide notice of these events, and that it unreasonably failed to do so.” Mt. Hawley Ins. Co. v. E. Perimeter Pointe Apartments, LP, 409 F.Supp.3d 1319, 1332 (N.D.Ga. 2019). The Eleventh Circuit affirmed this Court's ruling after the Plaintiff filed this suit, finding that the Plaintiff did not “have a duty to provide a defense of coverage to East

3

Perimeter or Ventron for these incidents.” Mt. Hawley Ins. Co. v. E. Perimeter Pointe Apartments , 861 Fed.Appx. 270 (11th Cir. 2021).

The Plaintiff's first declaratory action was filed on January 25, 2018. The Defendant filed its initial Answer, Affirmative Defenses, and Counterclaims on April 9, 2018, and an amended version on April 30, 2018. (Compl. ¶¶ 58, 60-61.) On April 13, 2018, the Defendant's coverage counsel wrote the Plaintiff to inform it of an unspecified conflict that prevented Hawkins Parnell from representing the Defendant and Ventron. (Id. ¶ 69.) The Defendant and Ventron requested new counsel at the Plaintiff's expense. (Id.) On June 14, 2018, the Defendant and Ventron's coverage counsel again wrote the Plaintiff, notifying the Plaintiff and its coverage counsel that the Defendant and Ventron had to hire independent counsel and that the Plaintiff was required to cover those costs. (Id. ¶ 72.) In response, the Plaintiff's coverage counsel disputed the existence of a conflict, noted it was defending East Perimeter and Ventron under a reservation of rights, and claimed it was not responsible for any fees to law firms other than Hawkins Parnell. (Id. ¶ 73.) Throughout the pendency of the first declaratory action and its appeal, the Plaintiff continued to provide defense counsel to the Defendant and Ventron. (Id. ¶ 74.) In February 2020, the Defendant informed the Plaintiff that it had selected Alston & Bird to defend it in the Wilder and Johnson lawsuits, which the Plaintiff acknowledged while noting it would not pay for additional counsel. (Id. ¶¶ 75-76.) In March 2020, the Defendant and Ventron informed the

4

Plaintiff of the specific conflict that they argued precluded Hawkins Parnell's participation in their defense. (Id. ¶ 77.) As a result, Hawkins Parnell recommended that the defense of the Defendant and Ventron be split and that it resign from its role as their defense counsel absent their consent to defend one of them. (Id. ¶ 78.) Neither the Defendant nor Ventron consented, and the Plaintiff appointed new counsel for both Ventron and the Defendant. (Id. ¶ 79.) However, the Defendant refused to work with its new counsel appointed by the Plaintiff, instead continuing to work with Alston & Bird. (Id. ¶¶ 81-82.)

Ultimately, the Defendant and Ventron settled the Johnson and Wilder lawsuits. (Id. ¶ 83.) In letters sent on July 17 and August 7, 2020, the Defendant's coverage counsel sent the Plaintiff invoices totaling $245, 000.50 that it had paid for Alston & Bird's services and requested reimbursement under O.C.G.A. § 33-4-6. (Id. ¶¶ 84-85.) The Plaintiff disputed this obligation in an August 12, 2020 letter and sought declaratory relief that it had no obligation to reimburse the Defendant for any of the legal expenses incurred without its consent. (Id. ¶ 84.) A month later, the Defendant filed a lawsuit in Illinois state court seeking reimbursement for its independent counsel fees and bad-faith penalties under Georgia law. (Id. ¶¶ 91-92.) Though the Amended Complaint alleges that this case is no longer pending, the Court takes judicial notice of filings indicating the case has been reopened. (Compare Id. ¶ 101, with Def.'s Reply Br. in Supp. of Def.'s Mot. to Dismiss, Ex. A, at 2.) Meanwhile, in the case here, the Defendant moved to dismiss the Plaintiff's declaratory

5

judgment claim, which the Court did without prejudice. (See Aug. 25, 2021 Order, at 13.) The Plaintiff filed an Amended Complaint with a declaratory judgment claim and an additional claim for reimbursement, which the Defendant again seeks to dismiss.

II. Legal Standard

A complaint should be dismissed under Rule 12(b)(6) only where it appears that the facts alleged fail to state a “plausible” claim for relief. Ashcroft v. Iqbal, 129 S.Ct. 1937, 1949 (2009); Fed.R.Civ.P. 12(b)(6). A complaint may survive a motion to dismiss for failure to state a claim, however, even if it is “improbable” that a plaintiff would be able to prove those facts; even if the possibility of recovery is extremely “remote and unlikely.” Bell...