N. River Ins. Co. v. Gibson Technical Servs., Inc.

• Decision Date: 29 December 2014
• Docket Number: Civil Action File No. 1:13–CV–1505–MHS.
• Citation: 116 F.Supp.3d 1370
• Parties: NORTH RIVER INSURANCE COMPANY, Plaintiff, v. GIBSON TECHNICAL SERVICES, INC., Defendant and Third–Party Plaintiff, v. BB & T Insurance Services, Inc., Third–Party Defendant.
• Court: U.S. District Court — Northern District of Georgia

116 F.Supp.3d 1370

NORTH RIVER INSURANCE COMPANY, Plaintiff,

v.GIBSON TECHNICAL SERVICES, INC., Defendant and Third–Party Plaintiff,

v.BB & T Insurance Services, Inc., Third–Party Defendant.

Civil Action File No. 1:13–CV–1505–MHS.

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

Signed Dec. 29, 2014.

Kim M. Jackson, Bovis, Kyle, Burch & Medlin, LLC, Matthew George McLaughlin, McLaughlin & Loring, Atlanta, GA, for Plaintiff.

George E. Duncan, Jr., Dennis Corry Porter & Smith, LLP, Atlanta, GA, for Defendant and Third–Party Plaintiff.

Joel G. Pieper, John Gregory Perry, Womble Carlyle Sandridge & Rice, LLP, Atlanta, GA, for Third–Party Defendant.

ORDER

MARVIN H. SHOOB, Senior District Judge.

Before the Court are North River Insurance Company's (North River) and Gibson Technical Services, Inc.'s (Gibson) cross-motions for summary judgment and BB & T Insurance Services, Inc.'s (BB & T) motion for summary judgment. The Court's rulings and conclusions are set forth below.

Introduction

The following facts are not in dispute, unless noted otherwise. Gibson is a telecommunications systems contractor. During 2007, it contracted with Comcast to perform services in Florida. Gibson subcontracted with Pheckvision, Inc. (Pheckvision), which subcontracted with Boz Cable Services, LLC. (Boz), to perform the work for Comcast.

BB & T is an independent insurance agency that has worked with Gibson since 2004–05. It helped Gibson with its placement in a self-insured, captive insurance program, Affinity, which provided primary commercial general liability coverage. Affinity used Gallagher Basset, a third-party administrator, and Gibson reported its claims for primary automobile and commercial general liability coverages to Gallagher Basset. In 2005, BB & T placed Gibson's excess coverage with North River, a Crum and Forster

Company. North River issued to Gibson an umbrella liability policy with an aggregate limit of five million dollars. In relevant part, the policy agreement imposed the following requirements:

G. Duties in the Event of Occurrence, Claim or Suit

1. You must see to it that we are notified of any "Occurrence" which may result in a claim or "Suit" under this policy. To the extent possible notice should include:

a. How, when and where the "Occurrence" took place;

b. The name and address of any injured persons and witnesses; and

c. The nature and location of any injury or damage arising out of the "Occurrence."

...

2. If a claim is made or "Suit" is brought against any insured that is likely to involve this policy, you must:

a. Immediately record the specifics of the claim or "Suit" and the date received; and

b. See to it that we are notified as soon as practicable....

...

3. You and any other involved Insureds must:

a. immediately send us copies of any demands, notices, summonses or legal papers received in connection with any claim or "Suit."

...

Doc. 74–7.

Each year, BB & T entered into written "Brokerage Service Agreements" with Gibson. Among other things, the agreements required BB & T to provide the following risk management services to Gibson:

A. Work with the Client to assess the Client's risks;

B. Work with the Client to design and develop the Client's insurance program;

C. Keep the Client informed of significant changes and/or trends in the insurance marketplace and provide the Client with an annual forecast of market conditions;

D. Meet regularly, on a prescheduled basis with the Client's key people designated by the Client to discuss strategy and open items;

E. Review Client's loss control programs for adequacy and effectiveness....

On June 23, 2007, Boz's employee, Eric Bozorth (Bozorth), when traveling home from work, struck a car with four passengers in St. Lucie County, Florida. The accident caused serious injuries to the passengers, premature birth, and a subsequent death of Gretchen Dawson's infant child. Shortly thereafter, Gibson learned that Bozorth was hurt in an accident, but did not investigate it further.

Nine months after the accident, the Dawson and the Steffen families sued Bozorth, Boz, and Comcast.¹ On June 24, 2008, Comcast's counsel, Rudd & Diamond, P.A., sent a certified letter to Gibson demanding defense and indemnity, and enclosed the police report of the accident and the complaint. Comcast's counsel Peter Diamond also demanded that Gibson inform its insurance and excess insurance carriers about the lawsuit. Gibson's Chief Financial Officer, Robert Moore, who was overseeing the claim, instructed BB & T not to notify either of its insurance carriers because the lawsuit involved a subcontractor of a subcontractor. According to Moore, his understanding was that Pheckvision's insurance would be handling the matter, although he did not personally speak with Pheckvision or Gibson's project manager in Florida. According to Moore, "[s]omeone from [Gibson] may have talked to [Pheckvision] to find out about the accident."

Moore depo. at 31. The contract between Pheckvision and Gibson, specifying Pheckvision's obligations, was never located. Moore acknowledged that in 2008 he realized that Gibson could be added as a defendant to the lawsuit. However, Gibson did not seek legal advice in 2008, and no one at Gibson looked at the umbrella policy contract until the spring of 2013.

On October 8, 2008, Comcast's counsel sent another letter to Gibson demanding indemnity and defense. He also sent this letter to BB & T and Affinity. Gibson and BB & T dispute who, and under what circumstances, reported Comcast's demand to Gallagher Bassett on October 15, 2008. However, it appears that Kenneth Borders, Gibson's fleet safety manager, reported the claim after Moore asked him to do so. Apparently Moore made this decision after consulting with a BB & T representative. Moore did not give any documents to Borders and provided only "information to indemnify Comcast and the date of the incident." Borders depo. at 13. Borders reported the claim via an on-line system. After reporting the claim, Borders "was just trying to figure out when and where" the accident occurred. Id. He asked Jim O'Dell, Gibson's project manager in Florida, to provide the details about the accident. However, the accident description that Borders received from O'Dell's subordinate "was a little fuzzy" and "missing words," and "[i]t was [in] broken English." Id. at 13–14. Borders also communicated with Pheckvision in an effort to locate the indemnity agreement.

At Gallagher Bassett, the claim was assigned to Tammy Morrison, Gallagher Bassett's Senior Claims Representative. On October 21, 2008, Morrison created a claim report establishing a $5,000 reserve for coverage of counsel's costs, and an indemnity reserve of $1,000. She noted that Gibson's liability was doubtful. For three years, indemnity reserves remained at the token levels but the expense reserves for attorney fees continued to grow. However, Gallagher Bassett reports of zero liability were based on Gibson's representations that Pheckvision would absolve it from liability.

Because of its relationship with Gibson, BB & T would have warned Gibson in writing if it thought that Gibson was violating terms of its insurance policies. Each year, BB & T prepared and submitted the applications for excess insurance coverage on behalf of Gibson. The renewal applications asked for a description of any claims or occurrences over $10,000. In the application process, North River's underwriter asked BB & T to provide the details of any losses valued at over $25,000. BB & T did not notify North River about the underlying claim even when the expense reserves estimated by Gallagher Bassett increased well beyond these sums over the years.

At some point, Moore asked Borders to obtain an indemnity contract between Gibson and Pheckvision. However, on January 9, 2009, Borders informed Morrison at Gallagher Bassett that he could not find the contract, but advised her that "they [would] be okay when it comes out [that] the driver was on his way home, in his own personal truck, outside of their service area when the accident occurred." Id. at 22.

In July 2009, Gibson and Pheckvision were added to the lawsuit. On July 14, 2009, Gibson retained legal counsel, John Luvrey with the Conroy Simberg law firm. On July 21, Luvrey sent a letter to Moore advising, among other things, to "immediately give notice to the excess carrier." Doc. 75–1, Exh. 69. Gibson disregarded counsel's advice. However, in relation to this litigation, Luvrey submitted a sworn affidavit stating that he provided the same initial advice to all his clients because it was "good practice for clients to follow." Doc. 75–1 at 3. Luvrey further stated that prior to sending that letter, he had not analyzed Gibson's exposure. On August 6, 2009, Luvrey produced a more detailed report, where he opined that Gibson's exposure was low, recommended defending the case, but noted that the damages could range between three to five million dollars.

On October 16, 2012, the court denied Comcast's motion for summary judgment, and Gibson's motion was denied one month later. North River learned about the accident and the underlying lawsuit from Comcast's counsel on November 16, 2012. BB & T also reported the claim to North River. In June 2013, the case was settled, and North River contributed two million dollars to the settlement in exchange for the right to litigate the current case.

North River seeks declaratory judgment against Gibson. The parties filed cross motions for summary judgment. In addition, BB & T filed a motion for summary judgment against Gibson.

Parties' Contentions

A. North River's Motion for Summary Judgment

North River claims that Gibson failed to timely notify it about the accident, Comcast's indemnity claim, and the lawsuit, in violation of the policy provisions. According to North River, Gibson was required to notify it as soon as reasonably possible, which Gibson failed to do. It further contends that Gibson's excuses for not providing a timely notice are objectively...