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Georgia Department of Administrative Services v. McCoy

Court of Appeals of Georgia

March 16, 2017

GEORGIA DEPARTMENT OF ADMINISTRATIVE SERVICES
v.
McCOY.

          Branch, Judge.

         This insurance coverage action concerns whether the Department of Administrative Services ("DOAS"), as the administrator of the State Employee Liability Trust Fund, is liable under its General Liability Agreement (the "GLA") for actions taken by a covered person outside the scope of employment. Because the trial court erred in concluding that the GLA was ambiguous with regard to such coverage, we reverse the trial court's decision to deny DOAS's motion for summary judgment and to enter judgment in favor of McCoy.

         The facts necessary to the current appeal are not in dispute; more detailed facts are set forth in an earlier appeal in the same action. See McCoy v. Ga. Dept. of Admin. Svcs., 326 Ga.App. 853 (755 S.E.2d 362) (2014). In the underlying suit, McCoy alleged that in retaliation for questioning the defendants' illegal scheme to misuse their employment at the Rabun County office of the Department of Family and Children Services ("DFCS") for personal financial gain, McCoy, who was also a DFCS employee, was arrested and later fired based on falsified evidence and fabricated charges that she committed reckless conduct in the handling of her own cases. Id. In response, McCoy filed suit against two DFCS employees, including Nicole Allen, [1] as well as other defendants, asserting three claims: (1) violation of Georgia's RICO Act - based on predicate acts of forgery, perjury, computer forgery, theft by deception, and tampering with evidence; (2) malicious prosecution; and (3) intentional infliction of emotional distress. McCoy also sought punitive damages. McCoy did not provide ante litem notice to the State or name the State or DFCS as a party defendant.

         After filing suit, McCoy sent a letter and a copy of the complaint to DOAS giving notice that a suit had been filed against two individuals who had been employed by DFCS for acts that occurred "during the time they were employed by [DFCS], " and requesting information about insurance coverage that "could conceivably apply." On April 7, 2009, following a default judgment against several defendants, including Allen, a jury awarded McCoy $1, 243, 113.45, trebled under the RICO statutes for a total of $3, 729, 340.35 in actual damages; $100, 000 in attorney fees; and $32, 000, 000 in punitive damages. The superior court entered judgment in those amounts but only on the claims of malicious prosecution and RICO.

         McCoy then sent a letter to DOAS requesting the policy limits under the GLA on the ground that DOAS breached its contractual duties to defend and to contribute to the judgment against Allen who, as a DFCS employee, was a covered person under the GLA. McCoy, 326 Ga.App. at 854. DOAS refused, and McCoy, with new counsel, filed the present coverage action against DOAS, asserting that DOAS breached its contractual duties to defend and to contribute to the judgment against covered parties under the GLA. McCoy asserted in the coverage complaint that she had brought the underlying action against the defendant DFCS employees based on torts they committed while acting "during and in the course and scope of their employment" at DFCS.

         Early in the coverage litigation, the trial court dismissed McCoy's suit on the ground that a suit against DOAS was barred by sovereign immunity, and McCoy appealed. Id. at 853. On appeal, this Court concluded that although McCoy was not a party or a third-party beneficiary to the GLA, she had standing to enforce the GLA as a judgment creditor of Allen, a covered party, and that McCoy therefore "stands in the shoes" of Allen, the insured, with regard to coverage. Id. at 856-858. Accordingly, this Court reversed the dismissal but made clear that it was not deciding any issues of coverage under the GLA for the underlying claims. Id. at 858. This Court did note, however, that McCoy brought the underlying claims against the DFCS employees "for acts committed in the course and scope of their employment." Id. at 853. McCoy did not move for reconsideration of this finding or appeal to the Supreme Court.

         On remand, DOAS moved for summary judgment on the ground that the GLA did not cover the claims against Allen because either Allen was acting within the scope of her employment and therefore was immune from liability or Allen was acting outside the scope of her employment and therefore the GLA provided no coverage. In her response, McCoy argued that the underlying suit was not brought against the State under the Georgia Tort Claims Act ("GTCA"); rather she brought her claims against Allen in her individual capacity for torts committed outside the course and scope of employment.

         The trial court denied DOAS's motion and, finding no remaining issues of fact, entered judgment in favor of McCoy, thereby awarding her the policy limits under the GLA. The court began by finding that the underlying case "was filed against the employees in their individual capacity, as no ante litem notice was sent[2] and no allegation was made that the employees committed the acts complained of in the course and scope of their employment." The court did find, however, that DOAS received sufficient notice of the underlying suit for the purpose of insurance coverage.

         The court then held that the GLA was ambiguous regarding whether it provided coverage for McCoy's claim of malicious prosecution, that the ambiguity must be construed in favor of McCoy, and that therefore the GLA covered the claims McCoy made against Allen as a matter of law even though the GLA provides that it does not cover occurrences outside the scope of employment. On the RICO claim, the court held that given that McCoy filed the underlying suit against the DFCS defendants individually, questions of sovereign immunity and official immunity were moot; in other words, the court apparently held that DOAS was liable for the RICO award against Allen up to the policy limits. Finally, the court awarded post-judgment interest to McCoy from the date of the default judgment in the underlying action. The court then entered judgment against DOAS for the applicable policy limits of $1 million plus post-judgment interest. DOAS appeals these rulings. McCoy has not cross-appealed any aspect of the ruling.

         Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9-11-56 (c). We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant. Home Builders Assn. of Savannah v. Chatham County, 276 Ga. 243, 245 (1) (577 S.E.2d 564) (2003).

         DOAS contends the trial court erred in finding that the GLA is ambiguous. DOAS argues that the GLA unambiguously provides that there is no coverage for acts outside of the scope of employment and that the GLA therefore provides no coverage for any of McCoy's claims against Allen in the underlying suit. We agree.

         (a) The legal background to the issue raised in this action concerns the sovereign immunity of the State and the official immunity of state officials and employees as set forth in the Constitution of the State of Georgia, together with the modification of those immunities under the Georgia Tort Claims Act.[3] The Georgia Constitution extends sovereign immunity to the State and all of its departments and agencies, but, except as specifically provided in the GTCA, it allows suits against state officers and employees for negligent performance of their ministerial functions and for actions taken with malice or actual intent to injure in the performance of their official functions[4]; otherwise, state officers and employees have immunity under the Georgia Constitution for the performance or nonperformance of their official functions. Ga. Const. Art. I, Sec. II, Par. IX (d). The Georgia Constitution also provides that the legislature may waive elements of the state's sovereign immunity by way of the GTCA and provides procedures for claims against "the state and its departments, agencies, officers, and employees." Id. (a) & (e).

         With the passage of the GTCA, the state waived some of its immunity but expanded state officer and employee immunity. Under that Act and subject to certain exceptions and limitations, [5] the State waived its sovereign immunity "for the torts of state officers and employees while acting within the scope of their official duties." OCGA § 50-21-23 (a). Thus, subject to the statutory exceptions, the State has opened itself up to liability for the acts of its officers and employees acting within the scope of their employment even if the officer or employee may have personal immunity from suit under the Constitution. See Riddle v. Ashe, 269 Ga. 65, 66 (2) (495 S.E.2d 287) (1998) ("While a state actor is immune from suit if acting within the scope of his or her official duties, the GTCA does allow recourse against the state for the same conduct, if certain conditions have been satisfied.") (citation omitted).[6] Finally, to assert a claim against a state government entity under the GTCA, the plaintiff must provide ante litem notice to the State. See OCGA § 50-21-26.

         But under the same circumstances, i.e., for the torts of state officers and employees while acting within the scope of their official duties, the GTCA provides that suits against the state officers and employees are not allowed. OCGA §§ 50-21-23 (a), 50-21-25 (a) ("A state officer or employee who commits a tort while acting within the scope of his or her official duties or employment is not subject to lawsuit or liability therefor."); see also Howard v. Miller, 222 Ga.App. 868, 871-872 (1) (c) (476 S.E.2d 636) (1996) (GTCA "provides individual immunity for state employees . . . arising from the performance or nonperformance of their official duties or functions) (punctuation and emphasis omitted). As held by the Supreme Court, under the GTCA state officers and employees are exempt from liability "for any torts committed while acting within the scope of their official duties or employment" "without any exception for malicious acts." Ridley v. Johns, 274 Ga. 241, 242 (552 S.E.2d 853) (2001). Thus the GTCA extended immunity for state officers and employees to all actions taken within the scope of their official duties or employment. See id. The GTCA also makes clear, however, that the State has no liability for, and has established no immunity for, state officers or employees engaged in conduct "not within the scope of their official duties or employment." OCGA §§ 50-21-23 (a), 50-21-25 (a).

         Finally, the GTCA provides that it is "the exclusive remedy for any tort committed by a state officer or employee" within the scope of his or her official duties or employment. OCGA § ...


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