Sumitomo Marine & Fire Ins. v. So. Guar. Ins., Ga

• Decision Date: 27 September 2004
• Docket Number: No. 1:02 CV 584 CAM.,1:02 CV 584 CAM.
• Citation: 337 F.Supp.2d 1339
• Parties: SUMITOMO MARINE & FIRE INSURANCE COMPANY OF AMERICA, Plaintiff, v. SOUTHERN GUARANTY INSURANCE COMPANY OF GEORGIA and Columbia National Insurance Company, Defendants.
• Court: U.S. District Court — Northern District of Georgia

337 F.Supp.2d 1339

SUMITOMO MARINE & FIRE INSURANCE COMPANY OF AMERICA, Plaintiff, v. SOUTHERN GUARANTY INSURANCE COMPANY OF GEORGIA and Columbia National Insurance Company, Defendants.

No. 1:02 CV 584 CAM.

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

September 27, 2004.

COPYRIGHT MATERIAL OMITTED

David Hunt Wilson, Hawkins & Parnell, Atlanta, GA, Richard H. Nicolaides, Jr., Bates & Carey, Robert S. Marshall, Bates & Carey, Chicago, IL, William Henry Major, III, Hawkins & Parnell, Atlanta, GA, for Sumitomo Marine & Fire Insurance Company of America, Plaintiff.

Robert Malcolm Darroch, Mabry & McClelland, Stephanie Ellen Feingold, Mabry & McClelland, Atlanta, GA, William

Anthony Dinges, Temple Strickland Dinges & Schwartz, William D. Strickland, Temple Strickland Dinges & Schwartz, Decatur, GA, for Southern Guaranty Insurance Company of Georgia, Columbia National Insurance Company, Defendants.

ORDER

MOYE, District Judge.

The above styled action is before this court on 1) plaintiff's motion for summary judgment with respect to defendants' counterclaims [# 63]; 2) plaintiff's motion for summary judgment with respect to plaintiff's first amended complaint [# 64]; 3) defendant Southern Guaranty Insurance Company of Georgia's motion for summary judgment [# 65]; and 4) defendant Columbia National Insurance Company's motion for summary judgment [# 66].

FACTS

SMG development Associates, L.P. ("SMG") was the owner of a residential housing development in Gwinnett County, Georgia, known as the Hamilton Mill Project. (Padget Dep., at p. 18). SMG hired Arris Contracting, Inc. ("Arris") as a general contractor for infrastructure work on the Project but not for the building of any homes. (Id., at p. 10). As a condition to doing any work for SMG, SMG required all contractors, including Arris, to provide SMG with additional insured status under the contractor's policies. (Id., at pp. 21, 24). Pursuant to various contracts between Arris and SMG related to Arris's work at the Hamilton Mill Project, Arris's responsibilities included (but were not limited to) hiring subcontractors, scheduling and coordinating subcontractors' work and assuring that work was performed in compliance with all plans and specifications. Some contracts stated that SMG would indemnify Arris for "all claims, losses and liabilities resulting from damage to property ... arising out of acts or omissions of [Arris], except in cases of willful misconduct or gross negligence...." (Southern's Exhibit A). Arris's work included, among other things, clearing, grubbing and erosion control work, as well as development of streets and lots. (Padget Dep., at p. 10). Arris was not involved in the building, selling, renting or advertising of any homes or any other structures. (Hill Dep., at p. 17). Arris's work at the Hamilton Mill Project began in October of 1993. It continued through the mid-nineties.

Homeowners surrounding Hamilton Mill filed seven lawsuits between 1998 and 1999 against SMG, Arris and others.¹ (Amended Complaint, at ¶¶ 10-21; Exhibits A and B). Four of those homeowners owned property directly adjacent to Hamilton Mill along a small boundary stream, which was also adjacent to Jim Moore Road (collectively referred to herein as the "Jim Moore Road Plaintiffs"). (Id.). Three other homeowners owned property across from Jim Moore Road but along the Little Mulberry River (collectively referred to herein as the "Little Mulberry River Plaintiffs"). (Id.).

The underlying homeowner lawsuits alleged that the construction and development activities of Arris and SMG, among others, led to the property damage. (Amended Complaint, Exhibit B). The Jim Moore Road Plaintiffs alleged that, beginning in 1996, the flow of water into the boundary stream increased, the stream bed began eroding, and their property became filled with large quantities of sediment. (Id.). As a result, the Jim Moore Road Plaintiffs sued SMG, Arris and others under various theories, which ultimately concluded with verdicts awarding damages in their favor in one case and settlements in the others.² (Id.). The Little Mulberry River Plaintiffs alleged similar damages as a result of sediment deposited by the Little Mulberry River. (Id.). SMG and Arris settled the Little Mulberry River cases.

Plaintiff Sumitomo Marine & Fire Insurance Company of America ("Sumitomo") issued Commercial General Liability policies to SMG, including Policy No. PKG 3000167-07, effective December 31, 1996 through December 31, 1997, and Policy No. PKG 3000168-08, effective December 31, 1997 through December 31, 1998 (hereinafter referred to as the "Sumitomo Policies"). (Amended Complaint, at ¶ 25). Under these policies, the following are insureds: "[A]ny person (other than your employee), or any organization while acting as your real estate manager ..." (Southern's Exhibit H). Sumitomo defended and indemnified SMG under a reservation of rights for the underlying homeowner lawsuits pursuant to the above-referenced primary general liability policies. (Leskauskas Dep., at p. 23).

Defendant Southern Guaranty Insurance Company of Georgia ("Southern") issued General Liability Insurance policies to Arris, including Policy No. CPFF663, effective September 1, 1996 to September 1, 1997, which was renewed and made effective for the period of September 1, 1997 to December 31, 1997 (hereinafter referred to as the "Southern Policies"). (Criswell Dep., at pp. 17-18). Southern defended and indemnified Arris for the underlying homeowner lawsuits. (Id., at pp. 48-49, 59). Defendant Columbia National Insurance Company ("Columbia"), through its related entity and agent, Columbia Insurance Group, issued a General Liability Policy to Arris, Policy No. CMPAG 06255, effective December 31, 1997 to December 31, 1998 (hereinafter referred to as the "Columbia Policy"). (Hubbard Dep., at pp. 18-19). Columbia defended and indemnified Arris for the underlying homeowner lawsuits under this policy of insurance without reservation (Id., at p. 30). Defendants have admitted that their policies of insurance provided liability coverage to Arris for the underlying homeowner lawsuits. (Plaintiff's Statement of Undisputed Facts, at ¶ 94). Defendants' policies were countersigned by Dean Hayes. (Hayes Dep., at pp. 13, 58-60).

In addition, Dean Hayes issued the following three certificates: 1) a certificate dated December 3, 1996, which identifies the 1996 to 1997 Southern Policy; 2) a certificate dated September 5, 1997, which identifies the Southern Policy effective September 1, 1997 to September 31, 1997; and 3) a certificate dated August 25, 1999, which references the amended Southern policy period. (Hayes Dep., at pp. 74-76, 83-85). All certificates identify the "certificate holder" as SMG (hereinafter referred to as the "Southern Certificates of Insurance," the "Certificates of Insurance," or the "Certificates"). (Id., at pp. 74, 78). Hayes further included on the Certificates the following language: "Certificate Holder is named additional insured as their interest may appear." (Id., at pp. 75-78). The Certificates contained the following disclaimer language:

This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter coverage afforded by the policies below.

. . . . .

The insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such policies.

(Southern's Exhibit C). The Certificates were signed by Hayes as the authorized representative of Southern. (Id., at pp. 76, 85).

Hayes also issued a certificate of insurance identifying the Columbia Policy (hereinafter referred to as the "Columbia Certificate of Insurance," the "Certificate of Insurance," or the "Certificate"). (Id., at pp. 85-86). This Certificate also identifies the "certificate holder" as SMG and states that SMG is an additional insured. (Id.). Hayes signed this Certificate as the authorized agent of Columbia. (Id., at pp. 85-86). Like the Southern Certificate, the Columbia Certificate also expressly includes the disclaimer language quoted above. (Plaintiff's Exhibit 43). No endorsement to the Columbia Policy adding SMG as an additional insured was ever issued by Columbia. (Hayes Dep., at p. 136; O'Reilly Dep., at p. 88).

Neither Southern nor Columbia issued any endorsement to their policies that would limit, amend or condition the coverage provided to SMG. (Plaintiff's Statement of Undisputed Facts, ¶¶ 89, 93). No additional premiums were paid for SMG as an additional insured. (Hayes Dep., at p. 150).

Dean Hayes testified that it was his intent to make SMG an additional insured under both the Southern and Columbia Policies and that it is his understanding that SMG was an additional insured under both Policies. (Id., at p. 105). Hayes believes that he was authorized to prepare and issue the Certificates of Insurance.³ (Id., at p. 86). He had authority to issue the Certificates of Insurance under the agency agreements he had with defendants. (Id.). Furthermore, Hayes testified that he was not required to seek approval from Southern or Columbia before issuing the Certificates of Insurance. (Id., at p. 90). In addition, Hayes testified that he, as the authorized representative of Southern and Columbia, advised SMG that it was an additional insured under both the Southern and Columbia Policies by sending SMG copies of the Certificates of Insurance. (Id., at pp. 105-6). SMG would not have received anything else from Hayes other than the Certificates of Insurance. (Id., at p. 100).

As a matter of general practice at Hayes's insurance agency, certificates of insurance indicating that the holder is a named additional insured would be issued at the request of the insured. (Id., at p. 91). Also per customary practice, one copy of the certificate would go to the holder, one copy would go to the insurer, and one copy would go to...