St. Paul Mercury Ins. Co. v. Miller

• Decision Date: 19 August 2013
• Docket Number: Civil Action No. 2:12–CV–0225–RWS.
• Citation: 968 F.Supp.2d 1236
• Parties: ST. PAUL MERCURY INSURANCE COMPANY, Plaintiff, v. Charles M. MILLER, et al., Defendants.
• Court: U.S. District Court — Northern District of Georgia

968 F.Supp.2d 1236

ST. PAUL MERCURY INSURANCE COMPANY, Plaintiff,

v.Charles M. MILLER, et al., Defendants.

Civil Action No. 2:12–CV–0225–RWS.

United States District Court,

N.D. Georgia,

Gainesville Division.

Aug. 19, 2013.

Jeffrey J. Ward, Loss, Judge & Ward, LLP, Richard W. Boone, Jr., Thomas James Judge, Thompson, Loss & Judge, LLP, Washington, DC, David A. Harris, Gregory R. Veal, Bovis, Kyle, Burch & Medlin, LLC, Atlanta, GA, for Plaintiff.

Ellen Parker McCarley, Julie Ann Lierly, Kilpatrick Townsend & Stockton, LLP, Atlanta, GA, Andrew M. Reidy, Catherine J. Serafin, Kristin C. Davis, Dickstein Shapiro, LLP, Washington, DC, Sarah D. Pelley, Steven L. Hoard, Mullin Hoard & Brown, Amarillo, TX, J. Douglas Stewart, Sr., Stewart Melvin & Frost, Gainesville, GA, for Defendants.

ORDER

RICHARD W. STORY, District Judge.

Introduction and Background

Plaintiff instituted the instant action seeking a declaration that it is under no duty to pay for the defense of or to indemnify Defendants Charles Miller and Trent Fricks in an underlying lawsuit against them under the terms of a directors and officers liability insurance policy. The background of the case is as follows: Miller and Fricks worked at Community Bank & Trust of Cornelia, Georgia (CB & T). Fricks was involved in approving certain loans. Miller supervised Fricks. CB & T failed, and Defendant the Federal Deposit Insurance Corporation (FDIC) took over the bank as receiver and sued Fricks in this Court for his role in improperly approving loans and also sued Miller for his negligent supervision of Fricks. Federal Deposit Insurance Corp. v. Charles M Miller, et al., No. 2:12–CV–00042–WCO (N.D.Ga.) (the underlying action). That action remains pending.

Plaintiff agreed to provide Miller and Fricks the costs of defense of the underlying action under a reservation of rights and initiated this action against Miller, Fricks and the FDIC, asserting that it is under no duty to provide for the defense of or to indemnify Miller and Fricks in the underlying action.

Now pending before the Court are several motions that reflect one of the fundamental disagreements by the parties about this case. Plaintiff has filed a motion for summary judgment, [Doc. 23], in which it contends that under the unambiguous terms of the policy, there is no coverage for the underlying action. Defendants, notably the FDIC, have responded by arguing, inter alia, that further discovery is needed before this Court considers Plaintiff's substantive arguments. The FDIC has filed a motion to extend discovery, [Doc. 80], and, complains that Plaintiff has not been sufficiently forthcoming in response to its discovery requests.

For its part, Plaintiff asserts that under Georgia insurance law, discovery is not needed because if the terms of the insurance policy are unambiguous, this Court's inquiry into whether coverage exists is therefore limited to the terms of the policy and the claims raised in the underlying complaint.

At a recent hearing, [see Doc. 87], held in an effort to resolve the discovery dispute, Plaintiff again argued that further discovery is not necessary while the FDIC contended that it is entitled to a seemingly vast amount of electronic information from Plaintiff. This Court initially directed the parties to submit their arguments related to the FDIC's discovery request. Upon further reflection and a review of Georgia law, however, this Court has determined that discovery in this type of case is often not necessary, and judicial efficiency demands consideration of the question of whether the policy is ambiguous such that parol evidence is admissible to determine the parameters of Plaintiff's liability.

After careful consideration of the parties' arguments and the relevant law, this Court now concludes that, in material part, the policy is not ambiguous, that any ambiguity in the policy can be resolved without resort to parol evidence, that Defendants are thus not entitled to further discovery, and that, because Plaintiff's motion for summary judgment has been fully briefed by the parties, this Court should rule on that motion as well, ultimately concluding that Plaintiff has no duty under the policy to pay to defend or to indemnify Defendants.

Discussion

A. Whether the Policy is Ambiguous such that Further Discovery is Necessary

Under Georgia law,

insurance is a matter of contract, and the parties to an insurance policy are bound by its plain and unambiguous terms. Thus, when faced with a conflict over coverage, a trial court must first determine, as a matter of law, whether the relevant policy language is ambiguous. A policy which is susceptible to two reasonable meanings is not ambiguous if the trial court can resolve the conflicting interpretations by applying the rules of contract construction. Where a term of a policy of insurance is susceptible to two or more reasonable constructions, and the resulting ambiguity cannot be resolved, the term will be strictly construed against the insurer as the drafter and in favor of the insured. If a policy exclusion is unambiguous, however, it must be given effect even if beneficial to the insurer and detrimental to the insured. We will not strain to extend coverage where none was contracted or intended.

Hays v. Georgia Farm Bureau Mut. Ins. Co., 314 Ga.App. 110, 722 S.E.2d 923, 925–926 (2012) (citations, quotations, alterations and punctuation omitted). In other words, even if the policy is ambiguous, liability can be determined without resort to matters outside the four corners of the policy simply by first applying the rules of construction and, if that fails, construing the ambiguity against the insurer, a result which should give Defendants no reason to complain. Conceivably, contract language could be so ambiguous that it could have several possible meanings, in which case resort to parol evidence might be necessary. However, in this case, the ambiguity, if it exists, would yield only two possible outcomes: coverage or no coverage. If this Court concludes that the language is ambiguous, that means there is coverage and Defendants win. As a result, it is clear that further discovery is not necessary.

Moreover, in considering the type of discovery that Defendants seek—Plaintiff's internal information and communications—this Court is not at all convinced that the requests could lead to the discovery of admissible evidence. What the FDIC wants to discover—e.g., what Plaintiff's agents and employees thought about the language of the policy, what they thought about Plaintiff's potential liability in this case, how Plaintiff reacted to similar facts in different cases, what the drafters of the policy were thinking, and the issues of underwriting, reserves, and reinsurance—none of these issues matter to the outcome of this case. What matters is this Court's legal interpretation of the language of the policy. To put it another way, considering, for example, what one of Plaintiff's agents might have written in an email about his interpretation of the policy would be akin to considering expert legal opinion which is inadmissible under Fed.R.Evid. 702. See Plantation Pipeline Co. v. Continental Cas. Co., 2008 WL 4737163 at *7 (N.D.Ga.2008) (citing cases for the proposition that the legal effect of the terms of an insurance policy is left for the court to determine and a witness' opinion about the meaning of contract term is immaterial). To the degree that the FDIC asserts that Plaintiff's internal documents will provide insight into the intent of the parties, “we do not consider any extrinsic evidence of the parties' intent when the contract language is unambiguous.” Simpson v. Pendergast, 290 Ga.App. 293, 659 S.E.2d 716, 720 (2008).

B. Plaintiff's Motion for Summary Judgment

Having determined that further discovery is not necessary in this case, this Court will turn to Plaintiff's summary judgment motion. Under the Federal Rules, summary judgment shall be granted “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “The moving party bears ‘the initial responsibility of informing the ... court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.’ ” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir.2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) (internal quotations omitted)). Where the moving party makes such a showing, the burden shifts to the non-movant, who must go beyond the pleadings and present affirmative evidence to show that a genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In resolving a motion for summary judgment, the court must view all evidence and draw all reasonable inferences in the light most favorable to the non-moving party. Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294, 1296 (11th Cir.2002). However, this Court is bound only to draw those inferences which are reasonable. “Where the record taken as a whole could not lead a rational trier of fact to find for the non-moving party, there is no genuine issue for trial.” Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir.1997) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986)). “If the evidence is merely colorable, or is not significantly probative, summary judgment may be granted.” Anderson, 477 U.S. at 249–50, 106 S.Ct. 2505 (internal citations omitted); see also Matsushita, 475 U.S. at 586, 106 S.Ct. 1348 (once the moving party has met its burden under Rule 56(a), the nonmoving party “must do more than simply show there is some metaphysical...