ACE Am. Ins. Co. v. Hernandez-Ortiz

428 F.Supp.3d 1355

ACE AMERICAN INSURANCE COMPANY, Plaintiff,

v.Erika HERNANDEZ-ORTIZ, individually and as Administrator of the Estate of Rafael Menchaca-Delgado, Deceased; and John Doe, Defendants.

Case No. 1:16-cv-02988

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

Signed November 25, 2019

Alycen A. Moss, Cozen O'Connor, Atlanta, GA, for Plaintiff.

Michael D. Goodman, Barry Goodman, Goodman & Goodman, LLP, Atlanta, GA, for Defendants.

ORDER

MICHAEL L. BROWN, UNITED STATES DISTRICT JUDGE

Plaintiff ACE American Insurance Company ("ACE" or "AAIC") seeks a declaratory judgment that an insurance policy it issued to a landscaping company did not provide uninsured motorist coverage for Rafael Menchaca-Delgado, a former employee of that company represented in this case by Defendant Erika Hernandez-Ortiz. Both Plaintiff and Defendant move for summary judgment. (Dkts. 35; 39.) The Court grants Plaintiff's motion and denies Defendant's motion.

I. Background

This case arises from the death of Mr. Menchaca-Delgado in a car accident in 2014. Mr. Menchaca-Delgado worked for a company known as ValleyCrest and was riding in a ValleyCrest vehicle at the time of the accident. His widow, Defendant Hernandez-Ortiz, believed the accident was caused by the negligence of an unidentified driver of another vehicle. (Dkt. 1 ¶ 15.) She sued the unidentified driver in the State Court of Clayton County, obtaining a default judgment of $4,000,212.00. (See Dkts. 6-1; 6-2 at 2; 6-4.)

At the time of the 2014 accident, ValleyCrest had automobile insurance from Plaintiff ACE. The primary issue before the Court is whether ValleyCrest had uninsured motorist coverage against which Defendant could make a claim on her own behalf and on behalf of her husband's estate.

Georgia law does not require individuals or companies to purchase uninsured motorist ("UM") coverage. A purchaser of insurance can reject UM coverage but must do so in writing. GA. CODE ANN. § 33-7-11(a)(3). Absent such a rejection, Georgia provides that an insurance policy must include UM coverage of $25,000, unless the policy's limit is larger, and then the policy's limit is the default coverage. § 33-7-11(a)(1)(A) ; see McGraw v. IDS Prop. & Cas. Ins. Co. , 323 Ga.App. 408, 744 S.E.2d 891, 893 (2013) ("[ Georgia Code Annotated Section 33-7-11(a)(1)(B) ] was intended to make a policy's liability limits the default provision for UM coverage, unless an insured affirmatively elects UM coverage in a lesser amount.").

It is undisputed that ACE began providing automobile insurance to ValleyCrest in 2009. (Dkt. 39-3 at 8.) ValleyCrest renewed its policy each year after that, specifically for the years 2010–2011, 2011–2012, 2012–2013, and 2013–2014, the last being the relevant year. (Dkts. 30-1; 30-2; 30-3; 30-4.) Each of these renewal policies included $2 million in coverage. (Id. )

For each policy, ACE sent ValleyCrest a form entitled "Georgia Uninsured Motorist Coverage Selection/Rejection" that allowed it to select or reject UM coverage. (Dkt. 29-2.) If it elected UM coverage, ValleyCrest had two more options: it could purchase UM coverage added to its At-Fault liability limits or it could reject the "added" coverage and instead purchase UM coverage reduced by its At-Fault liability limits. (Id. at 3.) If ValleyCrest selected to purchase UM coverage (either in addition to its At-Fault limits or reduced by its At-Fault limits), it was then required to indicate the amount of UM coverage it wanted. The form included a table that allowed it to select coverage equal to its liability coverage or some other amount.¹

Roger Plotkin, ValleyCrest's Vice President of Risk Management, completed this form each year. The parties agree that ValleyCrest properly rejected UM coverage in the first year. (Dkt. 36-1 at 97:23–98:13.) When Mr. Plotkin filled out the form in each of the later years, including 2013–2014, he signed both the second option, which accepts coverage reduced by At-Fault limits, and the third option, which rejects all coverage. (Dkts. 29-2 at 4, 6; 30-2 at 6, 8; 30-3 at 6, 8; 30-4 at 5, 7.) For each renewal, Plotkin did not fill out the table accompanying the second option. In other words, to the extent his selection of the second option evidenced his intent to select UM coverage, he did not indicate the amount he intended ValleyCrest to purchase. (Dkts. 29-2 at 5; 30-2 at 7; 30-3 at 7; 30-4 at 6.) In his affidavit, Plotkin testified that signing the second option was a mistake. (Dkt. 41-1 ¶¶ 6–7.) He thought he was rejecting UM coverage entirely. (Id. )

ACE sued Defendant Ortiz, seeking a declaratory judgment that it had not provided ValleyCrest UM coverage at the time of the accident. (Dkt. 1.) Defendant Ortiz asserted a counter-claim, seeking damages based on ACE's alleged bad faith failure to pay her claim in violation of Section 33-7-11 of the Georgia Code, as well as statutory penalties and attorneys' fees. (Dkt. 6.) Both parties move for summary judgment. (Dkts. 35; 39.) In the event the Court finds UM coverage, ACE also moves to have the Court modify the contract.

II. Standard of Review

Rule 56 of the Federal Rules of Civil Procedure provides that a court "shall grant summary judgment 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).

A factual dispute is genuine if the evidence would allow a reasonable jury to find for the nonmoving party. Anderson v. Liberty Lobby, Inc. , 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it is "a legal element of the claim under the applicable substantive law which might affect the outcome of the case." Allen v. Tyson Foods, Inc. , 121 F.3d 642, 646 (11th Cir. 1997).

The party moving for summary judgment bears the initial burden of showing a court, by reference to materials in the record, that there is no genuine dispute as to any material fact that should be decided at trial. Hickson Corp. v. N. Crossarm Co. , 357 F.3d 1256, 1260 (11th Cir. 2004) (citing Celotex Corp. v. Catrett , 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986) ). A moving party meets this burden merely by " ‘showing’—that is, pointing out to the district court—that there is an absence of evidence to support the nonmoving party's case." Celotex , 477 U.S. at 325, 106 S.Ct. 2548. The movant, however, need not negate the other party's claim. Id. at 323, 106 S.Ct. 2548. In determining whether the moving party has met this burden, a court must view the evidence and all factual inferences in the light most favorable to the party opposing the motion. Johnson v. Clifton , 74 F.3d 1087, 1090 (11th Cir. 1996).

Once the movant has adequately supported its motion, the nonmoving party then has the burden of showing that summary judgment is improper by coming forward with specific facts showing a genuine dispute. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). Ultimately, there is no "genuine [dispute] for trial" when the record as a whole could not lead a rational trier of fact to find for the nonmoving party. Id. But "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson , 477 U.S. at 247–48, 106 S.Ct. 2505. The court, however, resolves all reasonable doubts in the favor of the non-movant. Fitzpatrick v. City of Atlanta , 2 F.3d 1112, 1115 (11th Cir. 1993).

III. Analysis

A. Contract Interpretation

The parties dispute whether ACE contracted to provide UM coverage. Courts interpret insurance contracts and can appropriately grant summary judgment. See Goldeagle Ventures, LLC v. Covington Specialty Ins. Co. , 349 Ga.App. 446, 825 S.E.2d 881, 884 (2019) ("[W]e note that insurance in Georgia is a matter of contract, and this Court has long held that such contract disputes are well suited for adjudication by summary judgment because construction of a contract is ordinarily a matter of law for the court.") (quoting S. Tr. Ins. Co. v. Cravey , 345 Ga.App. 697, 814 S.E.2d 802, 804 (2018) ). The central rule of contract interpretation is to find the parties' intent. GA. CODE ANN. § 13-2-3 ("The cardinal rule of construction is to ascertain the intention of the parties."). To do so, the Court starts with the contract's plain meaning. See Goldeagle Ventures, LLC , 825 S.E.2d at 884. If unambiguous, the Court applies that meaning. See id. But if the contract is ambiguous, that is, its provisions are susceptible to more than one meaning, the Court uses the rules of contract construction to resolve the ambiguity. See id. ; First Acceptance Ins. Co. of Georgia, Inc. v. Hughes , 305 Ga. 489, 826 S.E.2d 71, 75 (2019) ("Ambiguity is defined as duplicity, indistinctness, an uncertainty of meaning or expression used in a written instrument, and also signifies of doubtful or uncertain nature; wanting clearness or definiteness; difficult to comprehend or distinguish; of doubtful purport; open to various interpretations."). And if the contract is still ambiguous after the Court applies the rules of construction, the Court can examine extrinsic evidence. See Grange Mut. Cas. Co. v. Snipes , 298 Ga.App. 405, 680 S.E.2d 438, 440–41 (2009).

The Court finds the UM selection/rejection form ambiguous. According to the contract's provisions, ValleyCrest, acting through Mr. Plotkin, rejected UM coverage. Mr. Plotkin selected option three which read "I reject Uninsured Motorist Coverage entirely." Mr. Plotkin initialed this selection, signed his name and dated it. This alone would be a rejection of UM coverage.

Plotkin, however, also initialed the section stating that ValleyCrest "reject[ed]" UM coverage in addition to At-Fault liability limits but "select[ed]" UM coverage reduced by its At-Fault liability limits. Plotkin thus both selected...