Atl. Specialty Ins. Co. v. City of Coll. Park

357 Ga.App. 556

851 S.E.2d 189

ATLANTIC SPECIALTY INSURANCE COMPANY

v.CITY OF COLLEGE PARK et al.

A20A1104

Court of Appeals of Georgia.

November 2, 2020

Lewis Brisbois Bisgaard & Smith, Seth Michael Friedman, Christopher Cody Meeks, Atlanta, for Appellant.

The Summerville Firm, J. Darren Summerville, Anna G. Cross, Maxwell K. Thelen ; Cash Krugler & Fredericks, Alwyn R. Fredericks ; Cruser Mitchell Novitz Sanchez Gaston & Zimet, Karen E. Woodward, for Appellees.

Coomer, Judge.

Joi Partridge,¹ Floyd Costner,² and Douglas Partridge³ (hereinafter, "Plaintiffs") filed a wrongful death action against the City of College Park (hereinafter "the City") for the deaths of Dorothy Wright, Cameron Costner, and Layla Partridge (collectively, the "Decedents") after their vehicle was struck by an unknown driver who was being pursued by College Park police. The City's insurer, Atlantic Speciality Insurance Company (hereinafter, "Atlantic") intervened in the underlying action for the limited purpose of litigating the limits of Atlantic's insurance policy (the "policy") with the City. Atlantic filed a motion for partial summary judgment asking the trial court to find as a matter of law that the policy limits are $700,000 for Plaintiffs’ claims against the City. The trial court denied Atlantic's motion and held that as a matter of law the policy limits available in the underlying wrongful death action are $5 million. Atlantic appeals and argues that the terms of the insurance policy explicitly preserve the City's sovereign immunity for claims for any amount in excess of the statutory limits prescribed by OCGA § 36-92-2.⁴ Finding no error, we affirm.

Summary judgment is appropriate when no genuine issues of material fact remain and the moving party is entitled to judgment as a matter of law. On appeal, we review a trial court's grant or denial of summary judgment de novo, construing the evidence and all reasonable inferences therefrom in the light most favorable to the nonmoving party.

Calloway v. City of Warner Robins , 336 Ga. App. 714, 714, 783 S.E.2d 175 (2016) (citations and punctuation omitted). So viewed, it is undisputed from the record that on January 31, 2016, an automobile that was being chased by the City's police officers collided with the automobile in which the Decedents were riding, killing the occupants ("the accident"). Plaintiffs filed the underlying wrongful death action against the City alleging, among other things, that the recklessness of the City's police officers was the proximate cause of the accident. At the time of the accident, the City had an insurance policy issued by Atlantic that included business auto and excess liability coverage. The policy's declarations pages provide that the limits of the policy are $1 million under the business auto coverage, and $4 million under the excess liability coverage. Notably, both the business auto and excess liability coverages contained endorsements entitled "Georgia Changes - Protection of Immunity" (collectively, the "Endorsements"). The Endorsements provide, in pertinent part, as follows:

BUSINESS AUTO COVERAGE FORM

...

A. Change in Liability Coverage

The following is added to A. Coverage under SECTION II - LIABILITY COVERAGE

We have no duty to pay damages or any "covered pollution cost or expense" on your behalf under this policy unless the defenses of sovereign and governmental immunity are inapplicable to you.

B. Changes in Conditions

The following is added to SECTION IV - BUSINESS AUTO CONDITIONS

This policy and any coverages associated therewith does not constitute, nor reflect an intent by you, to waive or forego any defenses of sovereign and governmental immunity available to any insured, whether based upon statute(s), common law or otherwise, including Georgia Code Section 36-33-1, or any amendments.

...

EXCESS LIABILITY COVERAGE FORM

The following is added to SECTION I - COVERAGE

A. INSURING AGREEMENT - EXCESS LIABILITY

We have no duty to pay "damages" on your behalf under this policy unless the defenses of sovereign and governmental immunity are inapplicable to you.

The following is added to SECTION V - CONDITIONS

This policy and any coverages associated therewith does not constitute, nor reflect an intent by you, to waive or forego any defenses of sovereign and governmental immunity available to any insured, whether based upon statute(s), common law or otherwise, including Georgia Code Section 36-33-1, or any amendments.

Plaintiffs filed a motion for partial summary judgment on the City's defense of sovereign immunity and seeking a declaration from the trial court that the City waived immunity up to its $5 million policy limits. Atlantic then filed a declaratory action in the United States District Court for the Northern District of Georgia asking the district court to declare that the limits of the policy at issue are $700,000 for the claims made by Plaintiffs in the underlying action. In light of this filing, the trial court deferred ruling on Plaintiffs’ motion in the state proceedings pending the outcome of the federal declaratory action. The federal declaratory action was subsequently dismissed without reaching the merits; however, the opinion noted that "[f]inding that a local government and its insurer can contract around the legislative waiver in OCGA § 36-92-2 would have far-reaching implications for all future insurance contracts between local government entities and insurers in Georgia." Atlantic Specialty Ins. Co. v. City of College Park , 319 F.Supp.3d 1287, 1294 (III) (N.D. Ga. 2018).

Following the dismissal of the federal declaratory action, Plaintiffs filed a renewed motion for partial summary judgment. Atlantic filed a motion to intervene in the state court action for the limited purpose of litigating the limits of the policy. The trial court entered an order granting Atlantic's motion to intervene. The City responded to Plaintiffs’ renewed motion by reasserting its right to sovereign immunity for any liability in excess of its insurance coverage but taking no position on the amount of coverage available for Plaintiffs’ claims. Atlantic filed its own motion for partial summary judgment as to the policy limits, asserting once again that they are $700,000. Following a hearing on the dueling motions, the trial court issued a lengthy order in which it denied Plaintiffs’ motion for partial summary judgment for lack of standing, and denied Atlantic's motion for partial summary judgment, finding as a matter of law the limits of the policy issued to the City are $5,000,000. This appeal followed.⁵

1. Statutory Scheme.

Under Georgia law, municipal corporations are protected by sovereign immunity pursuant Article IX, Section II, Paragraph IX of the Constitution of the State of Georgia, unless that immunity is waived by the General Assembly. See Ga. Const. of 1983, Art. I, Sec. II, Par. IX (e). Particularly, with regard to municipal corporations, our General Assembly has enacted OCGA § 36-33-1, which reiterates that "it is the public policy of the State of Georgia that there is no waiver of the sovereign immunity of municipal corporations of the state and such municipal corporations shall be immune from liability for damages." OCGA § 36-33-1 (a). The same statute, however, also provides for a narrow waiver of a municipal corporation's sovereign immunity, expressly providing that "[a] municipal corporation shall not waive its immunity by the purchase of liability insurance, except as provided in Code Section 33-24-51 or 36-92-2, or unless the policy of insurance issued covers an occurrence for which the defense of sovereign immunity is available, and then only to the extent of the limits of such insurance policy."

OCGA § 33-24-51 authorizes the purchase of liability insurance by local governments "for damages on account of bodily injury or death resulting from bodily injury to any person or for damage to property of any person, or for both arising by reason of ownership, maintenance, operation, or use of any motor vehicle by the municipal corporation[.]" OCGA § 33-24-51 (a). Subsection (b) of the same Code section provides in pertinent part that "[t]he sovereign immunity of local government entities for a loss arising out of claims for the negligent use of a covered motor vehicle is waived as provided in Code Section 36-92-2 [,]" and that neither the local government entity nor its insurer "shall plead governmental immunity as a defense;" the local government entity and its insurer "may make only those defenses which could be made if the insured were a private person." OCGA § 33-24-51 (b).

Along the same line, OCGA § 36-92-2 provides that "[t]he sovereign immunity of local government entities for a loss arising out of claims for the negligent use of a covered motor vehicle is waived up to [certain] limits" as outlined in the statute. OCGA § 32-92-2 (a).⁶ "The waiver provided by this chapter shall be increased to the extent that ... [t]he local government entity purchases commercial liability insurance in an amount in excess of the waiver set forth in this Code section." OCGA § 36-92-2 (d) (3). In Gates v. Glass , 291 Ga. 350, 352-353, 729 S.E.2d 361 (2012), our Supreme Court gave the following explanation of the statutory scheme with regards to waiver of sovereign immunity under this Code section:

An examination of OCGA § 36-92-1 et seq., as well as the earlier and revised versions of OCGA § 33-24-51 (a) and (b), demonstrates an intent on the part of the legislature to create a two-tier scheme within which local governments are deemed to have waived sovereign immunity with regard to accidents arising from the operation of their motor vehicles. The first tier, established under OCGA § 36-92-1 et seq., requires local entities to waive sovereign immunity—up to certain prescribed limits—for incidents involving motor vehicles regardless of whether they procure automobile liability insurance. The second tier, enacted by OCGA § 33-24-51 (b), and as revised in 2002,

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