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Renaissance Recovery Solutions, LLC v. Monroe Guaranty Insurance Co.

United States District Court, S.D. Georgia, Augusta Division

September 12, 2017

RENAISSANCE RECOVERY SOLUTIONS, LLC, UNITED STATES FIRE INSURANCE COMPANY, and INTERSTATE FIRE AND CASUALTY COMPANY, Plaintiffs,
v.
MONROE GUARANTY INSURANCE COMPANY and FCCI INSURANCE COMPANY, Defendants.

          ORDER

          J. RANDAL HALL CHIEF JUDGE.

         When the Court last visited this case a little over a year ago, it left unresolved several issues necessary to a final decision. These issues included (1) whether Georgia or Michigan law applied to the insurance policies in dispute, and (2) under the applicable state law, which insurer (s) bear(s) the responsibility for paying the nearly $2, 5 million of disputed insurance obligations. With the Court's permission, the parties each filed summary judgment motions addressing these issues. After reviewing the briefs, the Court finds that Georgia law governs the insurance contracts in dispute and Plaintiffs and Defendants each bear some responsibility for paying the disputed coverage expenses. Thus, the Court GRANTS IN PART and DENIES IN PART the pending motions for summary judgment. (Docs. 70 & 7 6.)

         I. Background

         In 2009, Michael Brown killed William Jacobs while attempting to repossess a truck owned by Jacob's business partner, Joseph Clements. The incident sparked two lawsuits in the Superior Court of Columbia County, Georgia: Clements and Jacobs. Each suit named the same four defendants: Nuvell National Auto Finance, LLC ("Nuvell") (the repossessing lender); Renaissance Recovery Solutions, LLC ("RRS") (the company Nuvell contracted with to conduct the repossession); Renovo Services, LLC ("Renovo") (the company RRS subcontracted with to perform the repossession); and Michael Brown (the repossession man Renovo contracted with to physically obtain the car). In Clements, Mrs. Clements, who witnessed the incident alongside her husband, brought suit individually and on behalf of her deceased husband. Clements settled for $450, 000. In Jacobs, Mrs. Jacobs brought suit individually and on behalf of her deceased husband. All four defendants admitted to liability prior to trial, and a jury awarded damages of $2.5 million. The Superior Court entered judgment against all four defendants jointly and severally.

         While the Jacobs case was proceeding, however, a dispute arose concerning insurance coverage. United States Fire Insurance Company ("U.S. Fire") and Interstate First and Casualty Company ("Interstate") - Plaintiffs in this litigation - insured all four tortfeasors in the Jacobs and Clements cases: Brown, Nuvell, Renovo, and RRS. Monroe Guaranty Insurance Company ("Monroe") and FCCI Insurance Company ("FCCI") -Defendants in this litigation - insured only two of the tortfeasors in the Jacobs and Clements cases: RRS (directly) and Nuvell (through an indemnification agreement between Nuvell and RRS) . Monroe and FCCI declined to provide coverage to RRS during the Jacobs litigation. In response, RRS filed a third-party complaint against Monroe in Jacobs claiming Monroe was contractually obligated to defend it and that Monroe's refusal to defend constituted bad faith.

         A month prior to trial, the state trial court severed the third-party complaint from the Jacobs case. Once severed, the trial court entered summary judgment against RRS on the issues of coverage and bad faith. On appeal, the Georgia Court of Appeals reversed and held that Monroe had to provide coverage to RRS.

         On remand, the trial court allowed RRS to add FCCI as an additional third-party defendant. It also allowed RRS to join U.S. Fire and Interstate as third-party plaintiffs. Monroe then removed the action to this Court invoking diversity jurisdiction.

         At issue in this case is a dispute over which insurers are responsible for paying the costs of the judgment arising out of the Jacobs litigation. Plaintiffs paid for both the defense of all four tortfeasors as well as the damages entered against them. Defendants refused to take any part in the litigation concerning their insured parties and claim they had no responsibility to pay for any portion of the damages.

         Previously, this Court denied in part and granted in part various portions of two motions for summary judgment filed by Plaintiffs. (Doc. 65.) In that Order, the Court made several rulings: (1) the FCCI policy covered RRS (and thus Nuvell); (2) the state court verdict finding all tortfeasors jointly and severally liable could not be disturbed even if it was entered in contravention of Georgia's apportionment statute; (3) Plaintiffs were entitled to statutory interest under M.C.L. § 500.2006; and (4) Plaintiffs are not entitled to attorneys' fees under Georgia law. The Court also noted several unresolved questions: (1) What state's law governed the U.S. Fire and Interstate policies delivered to tortfeaser Renovo? (2) What state's law applies to resolve the issues of priority and allocation presented by the multiple policies and insureds? and (3) How does the applicable state law resolve the issues of priority and allocation?

         In response to this Court's order, the parties filed dueling summary judgment motions. Having reviewed the parties' briefs, the Court now resolves the remaining disputes. The central question before the Court being: Do Defendants owe any money to Plaintiffs, and, if so, how much?

         II. Standard of Review

         Summary judgment is appropriate only if "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). Facts are "material" if they could affect the outcome of the suit under the governing substantive law, and a dispute is genuine "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The Court must view factual disputes in the light most favorable to the non-moving party, Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986), and must draw "all justifiable inferences in [the non-moving party's] favor." United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991) (en banc) (internal punctuation and citations omitted). The Court should not weigh the evidence or determine credibility. Anderson, 477 U.S. at 255.

         The moving party has the initial burden of showing the Court, by reference to materials on file, the basis for the motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Because the standard for summary judgment mirrors that of a directed verdict, the initial burden of proof required by either party depends on who carries the burden of proof at trial. Id. at 323. When the movant does not carry the burden of proof at trial, it may satisfy its initial burden in one of two ways - by negating an essential element of the non-movant's case or by showing that there is no evidence to prove a fact necessary to the non-movant's case. See Clark v. Coats & Clark, Inc., 929 F.2d 604, 606-08 (11th Cir. 1991) (explaining Adickes v. S.H. Kress & Co., 398 U.S. 144 (1970) and Celotex Corp. v. Catrett, 477 U.S. 317 (1986)). The movant cannot meet its initial burden by merely declaring that the non-moving party cannot meet its burden at trial. Clark, 929 F.2d at 608.

         If - and only if - the movant carries its initial burden, the non-movant must "demonstrate that there is indeed a material issue of fact that precludes summary judgment." Id. When the non-movant bears the burden of proof at trial, the non-movant must tailor its response to the method by which the movant I carried its initial burden. If the movant presented evidence affirmatively negating a material fact, the non-movant "must respond with evidence sufficient to withstand a directed verdict motion at trial on the material fact sought to be negated." Fitzpatrick, 2 F.3d at 1116. If the movant shows an absence of evidence on a material fact, the non-movant must either show that the record contains evidence that was "overlooked or ignored" by the movant or "come forward with additional evidence sufficient to withstand a directed verdict motion at trial based on the alleged evidentiary deficiency." Id. at 1117. The non- movant cannot carry its burden by relying on the pleadings or by repeating conclusory allegations contained in the complaint. See Morris v. Ross, 663 F.2d 1032, 1033-34 (11th Cir. 1981). Rather, the non-movant must respond with affidavits or as otherwise provided by Federal Rule of Civil Procedure 56.

         In this action, the Clerk of the Court gave each opposing party notice of the motions for summary judgment and informed them of the summary judgment rules, the right to file affidavits or other materials in opposition, and the consequences of default. (Docs. 75, 77.) Therefore, the notice requirements of Griffith v. Wainwright, 772 F.2d 822, 825 (11th Cir. 1985) (per curiam), are satisfied. The time for filing materials in opposition has expired, and the motions are now ripe for consideration.

         III. Discussion

         The Court divides this opinion into two sections. In the first section, the Court addresses Defendants' argument that the Court must allocate the $2.5 million of damages among RRS, Nuvell, Renovo, and Brown as the insured tortfeasors before it allocates responsibility for payment among U.S. Fire, Monroe, Interstate, and FCCI as the insurers. In the second section, the Court explains which state's law governs the dispute between Plaintiffs and Defendants as insurers and determines who owes whom and in what amount.

         A.

         The parties have arrived at an impasse on the fundamental character and goal of the present action. Plaintiffs view this action as only the allocation of a fixed amount of damages between co-insurers. Defendants, on the other hand, view this action as the allocation of damages among four tortfeasors (Nuvell, Brown, Renovo, and RRS) which will then determine the fixed amount of damages to be allocated between four co-insurers (Plaintiffs and Defendants).

         Defendants aim to distinguish between the amount of money owed by their insured and the amount of money owed to their insured. Because Defendants insured only two of the tortfeasors in the underlying litigation, while Plaintiffs insured all four, Defendants argue that apportioning damages between the tortfeasors could drastically alter the amount of damages they are obligated to pay as insurers. Thus, before the Court I i allocates coverage expenses between Plaintiffs and Defendants as co-insurers of RRS and Nuvell, Defendants ask this Court to first determine the size of the coverage expenses incurred by RRS and Nuvell by apportioning damages between RRS, Nuvell, Renovo, and Brown. The Court declines Defendants' request.

         The joint and several verdict issued by the state trial court in Jacobs requires this Court to assume that each tortfeaser is equally liable for the entire judgment assessed against them. See Eidson v. Maddox, 24 S.E.2d 895, 897-98 (Ga. 1943)(noting that once a joint and several verdict is entered, regardless of any differing degrees of negligence, the defendants are "equally liable to the plaintiffs and equally bound to discharge the several judgments'7) . All tortfeasors in this case have the ability, thanks to insurance, to satisfy the judgment against them. Thus, each tortfeaser should theoretically pay 25% of the $2.5 million judgment. Because the only tortfeasors insured by Defendants were Nuvell and RRS, Defendants would pay, at most, 50% of the judgment. But, if the Court were, after reviewing the evidence and holding an evidentiary hearing, to allocate liability between the tortfeasors such that each tortfeaser was liable for its share of fault in causing the accident, the result might look much different. For example, Brown, being the tortfeaser most closely related to the harm, might be assigned 85% of the fault, with the remaining 15% of the fault distributed equally among the three remaining torfeasors. Under this apportionment, Nuvell and RRS would be liable for only 10% of the total judgment. Therefore, their insurers, Defendants, would only be responsible for covering, at most, 10% of the judgment. The result: a sizeable savings by Defendants.

         Georgia law, however, does not allow this Court to apportion liability between RRS, Nuvell, Renovo, and Brown. The Court is left then only to apportion coverage expenses between Monroe, U.S. Fire, Interstate, and FCCI as the insurers of RRS, Nuvell, Renovo, and Brown. The Court will now explain why that is so.

         1.

         When Defendants ask the Court to apportion damages between RRS, Nuvell, Renovo, and Brown, they are asking the Court to sustain a contribution action. Contribution is "the right of one who has discharged a common liability or burden to recover of another also liable the aliquot portion which he ought to pay or bear." Eidson, 24 S.E.2d at 897; see Arrow Exterminators, Inc. v. Zurich Am. Ins. Co., 136 F.Supp.2d 1340, 1352 (N.D.Ga. 2001) . Contribution is a remedial action, thus it is governed by Georgia law. Allstate Ins. Co. v. Duncan, 462 S.E.2d 638, 640 (Ga.Ct.App. 1995). Under Georgia law, however, Defendants have no right to seek a contribution action between RRS, Nuvell, Renovo, and Brown.

         Defendants have no right to seek contribution because the Georgia General Assembly largely, if not entirely, abolished such a right when it mandated that triers of fact apportion liability and damages among multiple tortfeasors at the trial stage of litigation. In 2005, the Georgia General Assembly enacted comprehensive tort reform by passing Senate Bill 3. Thomas A. Eaton, Who Owes How Much? Developments in Apportionment and Joint and Several Liability Under Q.C.G.A. § 51-12-33, 64 Mercer L. Rev. 15, 18 (2012) . A primary goal of S.B. 3 was eliminating joint and several liability. Emily Ruth Boness, The Effect (Or Noneffect) of the 2005 Amendments to O.C.G.A. Sections 51-12-31 and 51-12-33 on Joint Liability in Georgia, 44 Ga. L. Rev. 215, 229 (2009). To accomplish this goal, S.B. 3 revised § 51-12-33 of the Georgia Code. Id. Prior to S.B. 3, § 51-12-33 merely allowed juries to apportion fault and damages among multiple tortfeasors:

Where an action is brought against more than one person for injury to person or property and the plaintiff is himself to some degree responsible for the injury or damages claimed, the trier of fact, in its determination of the total amount of damages to be awarded, if any, may apportion its award of damages among the persons who are liable and whose degree of fault is greater than that of the injured party according to the degree of fault of each person. Damages, if apportioned by the trier of fact as provided in this Code section, shall be the liability of each person against whom they are awarded, shall not be a joint liablity among the persons liable, and shall not be subject to any right of contribution.

(emphasis added). After S.B. 3, however, § 51-12-33 required juries to apportion fault and damages among multiple tortfeasors:

(a) Where an action is brought against one or more persons for injury to person or property and the plaintiff is to some degree responsible for the injury or damages claimed, the trier of fact, in its determination of the total amount of damages to be awarded, if any, shall determine the percentage of fault of the plaintiff and the judge shall reduce the amount of damages otherwise awarded to the plaintiff in proportion to his or her percentage of fault.
(b) Where an action is brought against more than one persons for injury to person or property, the trier of fact, in its determination of the total amount of damages to be awarded, if any, shall after a reduction of damages pursuant to subsection (a) of this Code section, if any, apportion its award of damages among the persons who are liable according to the percentage of fault of each person. Damages apportioned by the trier of fact as provided in this Code section shall be the liability of each person against whom ...

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