Lowery v. AmGuard Ins. Co.

90 F.4th 1098

Hee Jin LOWERY, John Lowery, Individually, and as assignees of Shou &Shou, Inc., Plaintiffs-Counter Defendants-Appellees, v. AMGUARD INSURANCE COMPANY, Defendant-Counter Claimant-Appellant.

No. 22-13738

United States Court of Appeals, Eleventh Circuit

Filed: January 10, 2024

Appeal from the United States District Court for the Northern District of Georgia, D.C. Docket No. 1:20-cv-05148-TWT

David Dekle, David P. Dekle, PC, Augusta, GA, Andrew Holliday, Andrew W. Holliday, PC, Alpharetta, GA, for Plaintiffs-Counter Defendants-Appellees.

Lawrence Lee Washburn, Kyle Patrick Barrett, Wilson Elser Moskowitz Edelman & Dicker, LLP, Atlanta, GA, for Defendant-Counter Claimant-Appellant.

Before William Pryor, Chief Judge, Abudu, Circuit Judge, and Barber,^* District Judge.

William Pryor, Chief Judge:

We sua sponte vacate our original opinion and substitute in its place the following opinion.

This appeal presents a jurisdictional issue that we must address before we can resolve the merits of equitable reformation of an insurance policy under Georgia law. After Gina Lowery sustained serious injuries from a hot-soup spill at Noodle College Park, an Atlanta-area restaurant, she and her spouse sued Shou & Shou, Inc., which owned and operated the restaurant. Shou & Shou tendered the defense to and sought coverage from AmGuard Insurance Company. But AmGuard denied coverage on the ground that the policy named "Noodle, Inc."—an entity that did not exist—as insured. Shou & Shou settled the suit and assigned the Lowerys its rights under the policy. The Lowerys, as assignees, then sued AmGuard for equitable reformation of the policy. The district court granted partial summary judgment in favor of the Lowerys and later entered a final judgment. We have jurisdiction to review that judgment because the Lowerys implicitly moved for, and the district court implicitly allowed, an amendment of the complaint. And because reformation of the policy was proper under Georgia law, we affirm.

I. BACKGROUND

Shou & Shou, Inc., owned several restaurants in the Atlanta area under the trade name "Noodle." One restaurant was located on Main Street in College Park. In 2013, the Shou siblings, who owned the company, bought businessowner's insurance and workers' compensation insurance from AmGuard Insurance Company. The businessowner's policy named "Noodle, Inc." as the insured and listed its address as 3693 Main Street in College Park. The policy listed three locations at which Shou & Shou operated restaurants. Location 001 was 3693 Main Street in College Park—Noodle College Park. The workers' compensation policy was also issued to "Noodle, Inc." But the Shous never had any ownership interest in an entity by that name. Noodle, Inc. was not a corporation at all; "Noodle, Inc." was "merely a reference to the tradename" of the Noodle restaurants.

The Shous renewed the businessowner's policy through the 2018-19 policy period. Each renewal retained the same name, mailing address, and Location 001 for the insured. Shou & Shou paid all policy premiums from its operating account. In 2014, AmGuard learned during an audit of the workers' compensation policy that Shou & Shou was doing business as "Noodle" at the insured locations. AmGuard accordingly added Shou & Shou to the workers' compensation policy from its inception. But AmGuard never added Shou & Shou to the businessowner's policy.

AmGuard provided legal representation to Shou & Shou under the businessowner's policy despite the omission of its name. In 2016, Eled Addus sued several corporate and individual defendants in the Noodle chain—but not Shou & Shou—for injuries she allegedly sustained at Noodle College Park. The Shous tendered the defense to AmGuard, which accepted representation and appointed defense counsel. During that litigation, defense counsel informed AmGuard that Noodle College Park was "owned and operated by Shou & Shou, Inc." AmGuard gave defense counsel authority to substitute Shou & Shou as the proper defendant and to represent it. Defense counsel later told AmGuard again that its "insured is Shou & Shou, Inc. This company owns and operates [Noodle College Park]." Yet, when AmGuard issued the 2016-17 businessowner's policy later that year, it retained the same information for the insured, its address, and Location 001. AmGuard eventually settled the Addus suit by obtaining a release for Shou & Shou.

AmGuard also investigated a claim by Zuri Zahara Love for injuries she sustained at Noodle College Park during the 2016-17 policy's coverage period. Love sued multiple defendants in the Noodle network, including Shou & Shou. Shou & Shou again tendered the defense to AmGuard, which again accepted representation. The assigned defense counsel told AmGuard that the "company that owns [Noodle College Park] is Shou & Shou, Inc." Defense counsel filed an answer for Shou & Shou and moved to dismiss the other defendants as improper parties. AmGuard later settled the Love suit by obtaining a release for Shou & Shou.

This appeal arises from a third lawsuit. Gina Lowery bought soup at Noodle College Park during the effective dates of the 2016-17 policy. The soup seriously injured her when it spilled through its packaging into her lap. She and her husband sued Shou & Shou in state court and demanded damages for personal injuries. Shou & Shou tendered the defense to AmGuard. But this time, the insurance company denied coverage on the ground that "Shou and Shou Inc. is not a named insured" or "otherwise qualif[ied] as an insured under the policy." Shou & Shou reached a $1 million consent judgment with the Lowerys and assigned them its rights under the 2016-17 policy.

The Lowerys sued AmGuard in the district court based on diversity jurisdiction. 28 U.S.C. § 1332(a). Their amended complaint alleged three counts: count one for equitable reformation of the 2016-17 policy based on mutual mistake in not naming Shou & Shou as the insured owner of Noodle College Park; count two for breach of contract of the reformed 2016-17 policy; and count three for bad-faith refusal to defend and indemnify Shou & Shou. AmGuard filed a counterclaim seeking a declaration that Shou & Shou had no rights under the 2016-17 policy.

The parties moved for summary judgment following discovery. The Lowerys sought partial summary judgment on counts one and two of their complaint and against the counterclaim. The district court granted partial summary judgment in favor of the Lowerys. But that order did not resolve count three of the complaint.

After AmGuard asked the district court to certify its order for interlocutory review, see 28 U.S.C. § 1292(b), the Lowerys filed a "notice of intent to abandon" the bad-faith claim alleged in count three. The notice stated that the Lowerys had "elect[ed] to forego" the penalties and fees they were seeking in count three and were "abandon[ing]" that count. The Lowerys also filed a "request for final judgment" under Federal Rule of Civil Procedure 58(d). The request alleged that "[n]o further matters [we]re before the District Court for resolution" because the Lowerys had abandoned the only count not resolved by the partial summary judgment. The Lowerys asked that the partial summary judgment "be made the final judgment of the court." They argued that the district court should not certify an interlocutory appeal because the motion to certify would become moot when "final judgment [was] entered consistent with the Court's summary judgment order."

AmGuard filed a notice of non-opposition to the Lowerys' request for final judgment based on their abandonment of the remaining claim. The district court entered a "final order and judgment" the next day. It found that "no additional claims for adjudication remain[ed] pending." And it declared its order granting partial summary judgment the "final judgment of the Court."

This Court submitted jurisdictional questions to the parties. First, the Court asked whether the Lowerys' "notice of intent to abandon" count three effectively dismissed that claim of bad faith. Second, the Court asked whether the allegations in the pleadings satisfied the requirements of diversity jurisdiction.

The parties argued for jurisdiction in a joint response. They asked this Court to construe the Lowerys' notice of intent to abandon as a motion to amend their complaint to drop count three and to construe the final judgment as a grant of that motion. See FED. R. CIV. P. 15(a)(2). The jurisdictional panel agreed that the district court had diversity jurisdiction but carried the question whether count three had been resolved and whether the district court entered a final order. See 28 U.S.C. § 1291.

II. STANDARDS OF REVIEW

We review our jurisdiction de novo. Cavalieri v. Avior Airlines C.A., 25 F.4th 843, 848 (11th Cir. 2022). We also review de novo a summary judgment, drawing all inferences in the nonmoving party's favor and affirming only if there are no genuine issues of material fact. Sutton v. Wal-Mart Stores E., LP, 64 F.4th 1166, 1168 (11th Cir. 2023). We may affirm on any ground the record supports. Mata Chorwadi, Inc. v. City of Boynton Beach, 66 F.4th 1259, 1263 (11th Cir. 2023).

III. DISCUSSION

We divide our discussion into three parts. First, we explain why we have jurisdiction to hear this appeal. Next, we explain that the district court did not err by granting summary judgment in favor of the Lowerys on their claim for equitable reformation. Last, we explain that the district court did not err by granting summary judgment in favor of the Lowerys on their claim for breach of contract.

A. We Have Jurisdiction Under Section 1291.

Federal law grants us jurisdiction over appeals from "final decisions of the district courts." 28 U.S.C. § 1291. A decision ordinarily is "final" only when it adjudicates all claims of all parties to an action. Corsello v. Lincare, Inc., 276 F.3d 1229, 1230 (11th Cir. 2001). The partial summary judgment did not resolve the bad-faith claim in...