Onley v. Nationwide Mut. Fire Ins. Co.

WILLA ONLEY, individually and on behalf of all those similarly situated, Plaintiff, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendant.

CIVIL ACTION NO. 5:19-cv-141 (MTT)

UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA MACON DIVISION

January 28, 2020

ORDER

Defendant Nationwide Mutual Fire Insurance Company moves for partial summary judgment. For the following reasons, that motion (Doc. 22) is DENIED.

I. BACKGROUND

On April 18, 2018, Plaintiff Willa Onley's home suffered water damage. Docs. 1 ¶ 22; 13 ¶ 22. Her insurer, Nationwide, allegedly adjusted the claim and authorized repairs but did not assess the loss to determine whether her house had suffered diminished market value due to stigma. Docs. 1 ¶¶ 23-27; 13 ¶¶ 23-27. In Georgia, diminished value is a covered component of a property loss absent an effective exclusion. Docs. 1 ¶¶ 23-27; 13 ¶¶ 23-27; see Royal Capital Dev. LLC v. Md. Cas. Co., 291 Ga. 262, 728 S.E.2d 234 (2012). Onley brought suit on behalf of herself and a putative class of similarly situated persons for Nationwide's alleged failure to assess for diminished value and failure to pay for diminished value. Doc. 1.

The parties proposed a two-phase discovery period, with the pre-certification phase ending in April 2020. However, Nationwide in its answer contended that it issued a policy endorsement excluding coverage for diminished value. See Doc. 13 ¶ 27. The Court noted that if the endorsement was effective, that would likely dispose of the case, so the Court ordered the parties to consider "[w]hether the issue of the effectiveness of the exclusion should be resolved first and, if so, whether discovery is needed on that issue." Doc. 17 at 1. The parties decided to address the endorsement's validity before conducting discovery on other issues. See generally Doc. 20. Nationwide then filed a procedurally vague "Dispositive Motion" based only on the argument that the endorsement modified Onley's policy to exclude diminished value coverage. Doc. 22.

II. DISCUSSION

A. Standard

Nationwide does not identify the procedural basis for its motion. However, because the parties have conducted limited discovery, the Court treats the motion as one for partial summary judgment on the issue of the effect of the endorsement. A court must 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 not genuine unless, based on the evidence presented, "'a reasonable jury could return a verdict for the nonmoving party.'" Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir. 2002) (quoting United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991)); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The only issue raised by themotion is whether Onley's policy excluded diminished value coverage for the April 18, 2018 loss.

B. Analysis

Nationwide issued Onley's policy in July 2000 and renewed it annually. Doc. 22-1 ¶¶ 3, 5. For purposes of this motion, the parties agree that up until July 2, 2014, the policy covered diminished value. Doc. 22 at 6 n.4. On July 2, 2014, Nationwide issued a renewal policy for the period from July 31, 2014 to July 31, 2015. "This renewal policy incorporated, for the first time, an endorsement entitled 'Endorsement H-6182-C—Amendatory endorsement (Georgia)' ('H-6182-C')." Doc. 22-1 ¶ 7. That endorsement purported to exclude diminished value from covered property losses under the policy. Id. ¶ 8. At the time of the renewal, Nationwide sent Onley a one-time notice stating that the renewed policy contained

Amendatory Endorsement H-6182-C[,] which states that your policy does not provide coverage for reduction in value of your property as a result of a covered loss. The courts refer to this type of damage as "Diminution in Value."

Id. ¶¶ 9-10. Subsequent versions of the policy retained endorsement H-6182-C, but not the notice. Id. ¶¶ 12-13.

At the time of the renewal, Georgia law defined "renewal" to mean a policy "superseding at the end of the policy period a policy previously issued and delivered by the same insurer and providing no less than the coverage contained in the superseded policy." O.C.G.A. § 33-24-46(b)(4) (2014-2018) (emphasis added). The statute also required that "No insurer shall refuse to renew a policy to which this Code section applies unless a written notice of nonrenewal is mailed or delivered in person to the named insured." O.C.G.A. § 33-24-46. In effect, an insurer could either (i) renew apolicy, maintaining the same level of a coverage as before; or (ii) reduce coverage by nonrenewing and issuing a new policy, which required a notice of nonrenewal. For purposes of the motion, Nationwide admits that the endorsement, if effective, would have reduced Onley's coverage. Docs. 22 at 6 n.4; 24 at 2 ("for purposes of this Motion, Nationwide assumes, arguendo, that it violated the Statute by failing to provide a notice of nonrenewal.").

Nationwide argues that it both renewed the policy and reduced coverage. But under the statute, Nationwide could not do both. By definition, "renewal" meant "providing no less than the coverage contained in the superseded policy." O.C.G.A. § 33-24-46(b)(4) (2014-2018). Nationwide's statement that "the Policy was not 'nonrenewed'" is inconsistent with its contention that the endorsement reduced coverage by excluding diminished value. Doc. 22 at 12, 6 n.4. Nationwide must choose a position: either the 2014-2015 policy was a "renewal" under the statute and thus covered diminished value, or the policy was a "nonrenewal" under statute because it reduced coverage. It cannot be both.

Onley takes the position that the 2014-2015 policy was a renewal, and the Court agrees. First, Onley notes that the policy described itself as a renewal policy. See, e.g., Doc. 22-1 at 178. Second, although Nationwide might have attempted to reduce coverage by nonrenewing the policy, that attempt failed. That is because Nationwide did not send a notice of nonrenewal, and absent such a notice, the policy was renewed. Because it was renewed, the policy retained the same coverage as the superseded policy. See Strickland Gen. Agency v. Puritan Ins. Co., 184 Ga. App. 286, 287, 361 S.E.2d 186, 187 (1987) ("The trial court further held that under the terms of the subjectpolicy itself, as well as under the controlling statute, the insurer is required to give the insured at least thirty days' written notice of nonrenewal; otherwise, the policy is automatically renewed. . . . We agree with the trial court's analysis of the situation."). Simply put, Nationwide's 2014-2015 renewal policy did not reduce Onley's coverage.

By analogy, if a statute provides that an insurer can only cancel a policy by sending a compliant notice of cancellation which meets certain conditions, and the insurer sends a noncompliant notice of cancellation, then the insurer simply failed to cancel the policy. Pa. Nat. Mut. Cas. Ins. Co. v. Person, 164 Ga. App. 488, 489, 297 S.E.2d 80, 82 (1982) ("failure to adhere to the requirements results in noncancellation of the policy."); see also Reynolds v. Infinity Gen. Ins. Co., 287 Ga. 86, 91, 694 S.E.2d 337, 340 (2010) ("until the statutory notice requirements are met, the policy remains in effect."). Similarly, Nationwide's failure to give notice of nonrenewal results in the renewal of the policy.

The Court stated its position in response to a similar argument by the insurer in Thompson v. State Farm Fire & Cas. Co.:

[The insurer] cannot have it both ways; either [the endorsement] reduced coverage or it did not. And if [the insurer] did not want to renew coverage for diminished value, both O.C.G.A. § 33-24-46 and [the insurer's] policies required notice that the policy was not to be renewed as originally written. Whatever [the insurer's] notice did, it did not do this. Accordingly, the renewal policies are indeed renewals of the old policies and therefore cover diminished value.

264 F. Supp. 3d 1302, 1312-13 (M.D. Ga. 2017) (citations omitted). Despite Nationwide's argument that it can "have it both ways," the 2014-2015 policy was clearly a renewal, and therefore, by definition, it covered diminished value. As did subsequentrenewal policies, including the 2017-2018 policy that was in effect at the time of Onley's loss.

Even if the Court accepted Nationwide's contention that the endorsement reduced coverage—and, by necessary implication, that it nonrenewed Onley's policy in 2014—Nationwide's argument would still fail. If the endorsement reduced coverage, then Nationwide's statement to Onley that it was merely renewing her 2014 policy was a false representation. Doc. 22-1 at 178. In describing the new policy as a "renewal," Nationwide represented that the policy offered the same level of coverage as the old policy. Such a misrepresentation is not a "merely technical" violation, but instead goes to Onley's reasons for entering the contract.¹

In sum, the Court views the 2014-2015 policy as a renewal, and thus the endorsement was never effective. But even if the 2014-2015 were viewed as a nonrenewal, the endorsement would not be enforceable, because Nationwide misrepresented the scope of coverage.

Nonetheless, the Court will address Nationwide's arguments at greater length. Nationwide's arguments all rest on the flawed premise that the 2014-2015 policy both was a renewal and reduced Onley's coverage. Again, that position is self-contradictory because the statute defines a renewal policy as one that does not reduce coverage. Although Nationwide's arguments are creative, they do not ever adequately address that statutory definition.

First, Nationwide mistakenly argues that O.C.G.A. § 33-24-12(a) expresses a "strong public policy" in favor of enforcing endorsements in insurance policies. It does not. Instead, the statute simply states that one invalid...