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Ameris Bank v. Lexington Insurance Co.

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

September 21, 2017

AMERIS BANK, as assignee of the Federal Deposit Insurance Corporation, receiver of Darby Bank and Trust Co., Plaintiff,
v.
LEXINGTON INSURANCE COMPANY, Defendant and Third-Party Plaintiff,
v.
COASTAL BIOFUELS, INC., Third-Party Defendant.

          ORDER

          WILLIAM T. MOORE, JR., JUDGE.

         Before the Court are Third-Party Plaintiff Lexington Insurance Company's (Doc. 92) and Third-Party Defendant Coastal Biofuels, Inc.'s (Doc. 46) Motions for Summary Judgment. For the following reasons, Third-Party Defendant Coastal Biofuels, Inc.'s motion is GRANTED and Third-Party Plaintiff Lexington Insurance Company's motion is DENIED. As a result, Third-Party Plaintiff Lexington Insurance Company's complaint is DISMISSED. The Clerk of Court is DIRECTED to close this case.

         BACKGROUND

         The material facts of this case are not in dispute. This case stems from Third-Party Plaintiff Lexington Insurance Company's ("Lexington") failure to properly pay the proceeds of an insurance policy issued by Plaintiff Lexington to Third-Party Defendant Coastal Biofuels ("Coastal").[1] In October 2009, Defendant Coastal entered into a leasing agreement[2] with Darby Bank for pieces of heavy equipment. (Doc. 92, Attach. 1 at 2.) As part of the agreement, Darby Bank required Defendant Coastal to insure the equipment and identify Darby Bank as a mortgagee. (Id.) To meet this requirement, Defendant Coastal purchased from Plaintiff Lexington policy number 43924991, which listed Defendant Coastal as the named insured and Darby Bank as a mortgagee. (Id.; Doc. 16, Ex. B at 1-2.) Specifically, Item 6 of the policy's declarations page recognized the policy's mortgage clause and stated that "[l]oss, if any shall be payable to: Darby Bank, Attn: K Rossiter." (Doc. 16, Ex. B at 1.) The policy's mortgage clause provided that "[l]oss or damage, if any, under this policy shall be payable to the mortgagee (s), as scheduled on this policy, as their interest(s) may appear." (Id. at 4 7.)

         On October 13, 2009, a fire destroyed the equipment. (Doc. 92, Attach. 1 at 2.) In response, Defendant Coastal filed a claim on the policy. (Id.) Plaintiff Lexington engaged an independent contractor-Mr. Curtis Cramer-to adjust Defendant Coastal's claim. (Id.) Mr. Cramer spoke via phone with an unknown and unnamed individual at Darby Bank who informed him that "Darby did not possess any liens and all payments were current." (Id. at 2-3.) Based on this information, Plaintiff Lexington paid to Defendant Coastal policy proceeds in the amount of $1, 145, 245.58, of which $568, 000.00 was for the value of the equipment. (Id.) Plaintiff Lexington took possession of the equipment, ultimately disposing of it due to the lack of any salvage value. (Id.)

         At the time of the fire, Defendant Coastal owed Darby Bank $507, 269.00 under the terms of the lease agreement. (Doc. 42 at 3.) While Defendant Coastal purchased replacement equipment with the policy proceeds (Doc. 92, Attach. 1 at 3), it failed to notify Darby Bank that the equipment had been destroyed (Doc. 42 at 3) . For a period of time, Defendant Coastal continued to make the required payments under the terms of the lease agreement. (Doc. 92, Attach. 1 at 4.) However, Defendant Coastal ultimately defaulted on the agreement with $318, 448.00 in remaining lease payments. (Id.)

         In November 2010, the Georgia Department of Banking and Finance closed Darby Bank and appointed the Federal Deposit Insurance Corporation ("FDIC") as receiver. (Id. at 3.) Ameris Bank subsequently entered into a Purchase and Assumption Agreement with the FDIC and acquired Darby Bank's assets. (Id.) On September 30, 2013, Ameris Bank filed suit against Plaintiff Lexington in the State Court of Chatham County. (Doc. 1, Ex. 1.) Defendant Lexington invoked this Court's diversity jurisdiction and removed this case pursuant to 18 U.S.C. § 1332. (Id.) Plaintiff Lexington filed a third-party complaint against Defendant Coastal for indemnification, alleging Defendant Coastal wrongfully converted the insurance proceeds. (Doc. 17.) On September 25, 2015, this Court granted in part Ameris Bank's Motion for Summary Judgment and concluded that Plaintiff Lexington was liable for its breach of the insurance contract because they failed to pay the insured value of the equipment to Darby Bank as the mortgagee. (Doc. 82 at 1.) In light of that ruling, both Plaintiff Lexington and Defendant Coastal seek summary judgment with i i respect to Plaintiff Lexington's crossclaim for indemnification.

         In its Motion for Summary Judgment, Plaintiff Lexington argues that it is entitled to equitable indemnity from Defendant Coastal based on the wrongful conversion of the insurance proceeds. (Doc. 92, Attach. 1 at 5-8.) In addition, Plaintiff Lexington reasons that it is entitled to relief under a theory of unjust enrichment. (Id.) Finally, Plaintiff Lexington maintains that the voluntary payment doctrine does not bar its recovery in this case. (Id. at 8-12.)

         For its part, Defendant Coastal maintains that Plaintiff Lexington's claim for equitable indemnity lacks merit because Plaintiff Lexington has failed to identify any underlying tortious action by Defendant Coastal. (Doc, 95 at 13-15.) Also, Defendant Coastal argues that unjust enrichment is inapplicable in this case because the relationship between the parties was governed by a valid contract of insurance. (Doc. 46 at 22-23.) Finally, Defendant Coastal contends that Georgia's voluntary payment doctrine precludes Plaintiff Lexington from recovering the disputed insurance proceeds. (Id. at 15-21.)

         ANALYSIS

         I. SUMMARY JUDGMENT STANDARD

         According to Fed.R.Civ.P. 56(a), "[a] party may move for summary judgment, identifying each claim or defense-or the part of each claim of defense-on which summary judgment is sought." Such a motion must be granted "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." Id. The "purpose of summary judgment is to 'pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.' " Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986} (quoting Fed.R.Civ.P. 56 advisory committee notes).

         Summary judgment is appropriate when the nonmovant "fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The substantive law governing the action determines whether an element is ...


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