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Storey v. Owners Insurance Co.

United States District Court, N.D. Georgia, Atlanta Division

February 16, 2018

JOHN W. STOREY and SUZANNE L. STOREY, as Administrators of the Estate of JOHN JARED STOREY, Plaintiffs,
v.
OWNERS INSURANCE COMPANY, AUTO-OWNERS INSURANCE COMPANY, and FRANCINA SWINTON, Defendants.

          OPINION AND ORDER

          WILLIAM S. DUFFEY, JR. UNITED STATES DISTRICT JUDGE

         This matter is before the Court on Plaintiffs John W. Storey and Suzanne L. Storey (“Plaintiffs”) Motion to Remand [13]; Defendant Francina Swinton's (“Ms. Swinton”) Motion to Dismiss Francina Swinton as an Improperly Named Party [3] (the “Swinton Motion”); and Defendants Owners Insurance Company (“Owners”) and Auto-Owners Insurance Company's (“Auto-Owners, ” together with Owners, the “Insurers”) Joint Motion to Dismiss [4] (the “Insurers' Motion to Dismiss”).

         I. BACKGROUND

         A. Facts

         Plaintiff John W. Storey and Suzanne L. Storey are the surviving parents and administrators of the estate of their son, John Jared Storey. John Jared Storey suffered severe injuries on March 9, 2014, when he was injured while attempting to perform a jump with a motorized bike at Marietta Motorsports, Inc. (“Marietta Motorsports”). (Complaint [1.1] “Compl.” ¶ 9). John Jared Storey died from his injuries on December 10, 2015. (Id. ¶ 37).

         Plaintiffs made demands on Marietta Motorsports and Owners and Auto-Owners for compensation for negligently performing work on John Jared Story's motorbike prior to the accident. The Insurers issued liability insurance coverage to Marietta Motorsports. The parties entered into settlement negotiations. When they began, a claims adjustor for Owners represented to Plaintiffs that Owners did not cover the March 9, 2014, incident. (Id. ¶¶ 17-21). Later in the negotiations, the Insurers identified and disclosed to Plaintiffs the existence of a Commercial General Liability Policy (“CGL Policy”) and a Garage Liability Policy (“Garage Policy”), each with limits of $1, 000, 000.

         After Plaintiffs made their settlement demand, they learned from counsel to Marietta Motorsports about the possible existence of a General Commercial Umbrella Policy (“Umbrella Policy”). (Id. ¶ 30). When Plaintiffs asked about the Umbrella Policy, the Insurers' counsel stated in an October 16, 2015, email there was an Umbrella Policy, but that it “was canceled before this accident.” ([13.4]). The Insurers' counsel gave Plaintiffs a copy of the Umbrella Policy, and a copy of the policy cancelation document. (Compl. ¶ 32).

         After this representation was made Plaintiffs decided to settle the case. Because Plaintiff agreed to the settlement amount based on their understanding of the insurance policy coverage available they requested a representation from the Insurers under oath that coverage under the Umbrella Policy was not available. In response, on or about December 2, 2015, Ms. Swinton, in her capacity as the underwriting manager for the Insurers, executed an affidavit stating that the Umbrella Policy was canceled prior to the accident, rendering the additional $1 million layer of coverage unavailable. ([13.2] (the “Swinton Affidavit”)). The Swinton Affidavit states that, other than the Garage Policy and the CGL Policy, “there were no other insurance policies in force or effect at the time of the Subject Incident.” (Id. ¶ 5). The Affidavit further states, “While [Owners] issued a Commercial Umbrella Insurance Policy to Marietta Motorsports . . . with an original policy period of October 16, 2013 to October 16, 2014, this Umbrella policy was canceled effective January 31, 2014.” (Id.). The Affidavit concludes, “I understand that the information provided herein is being provided to Claimants and/or their Counsel, who are relying on the truth and accuracy of these statements.” (Id. ¶ 6).

         On or about February 19, 2016, Plaintiffs and Marietta Motorsports entered into a settlement based on payment of the limits of Marietta Motorsports's liability insurance. ([13.1] (the “Settlement Agreement”)). The Settlement Agreement includes a general release of Marietta Motorsports, which states: “[Plaintiffs] fully, finally, and forever completely release Marietta Motorsports . . . together with [its] insurers . . . from any and all claims, demands, damages, costs, settlements, expenses, awards, liability, judgments, actions, causes of action, or claims of liability or responsibility of any kind whatsoever which [Plaintiffs] now have, may have, has had, or may hereafter have at any time in the future” arising out of the accident. (Id. ¶ 1). The Settlement Agreement further provides that “$1, 000, 000 is the only coverage provided by Owners/Auto-Owners for this claim as set forth in the attached [Swinton Affidavit] and Releasees have expressly relied on this affidavit from Owners/Auto-Owners in entering into this settlement agreement.” (Id. ¶ 19).[1]

         Plaintiffs allege as false the representation in the Swinton Affidavit that the Umbrella Policy was canceled before the accident. Plaintiffs allege further that the Insurers and Ms. Swinton fraudulently induced Plaintiffs to settle their claims for an amount less than what they would have accepted if Plaintiffs had known that the Umbrella Policy was not canceled before the accident. Plaintiffs allege that Marietta Motorsports did not request cancelation of the Umbrella Policy, did not sign the cancelation, and that coverage under the Umbrella Policy was available to cover the accident. To support this position, Plaintiffs submitted the Declaration of Paul Wright, CEO of Marietta Motorsports ([13.3] “Wright Decl.”). In it Mr. Wright states: “The ‘Signature of Named Insured' referenced in attached cancelation request . . . for the commercial umbrella policy . . . is not my signature, and I did not authorize anyone to sign this request on my behalf or on behalf of Marietta Motorsports.” (Wright Decl. ¶ 5).

         B. Procedural History

         On March 6, 2017, Plaintiffs filed their complaint in the State Court of Gwinnett County, Georgia against the Insurers and Ms. Swinton (17-C-01208-S6) [1.1]. Plaintiffs assert claims against the Defendants for violation of the Georgia Racketeering Influenced and Corrupt Organizations (“RICO”) Act; negligent misrepresentation; fraud and deceit under O.C.G.A.§ 51-6-2; and attorney's fees.

         On April 6, 2017, the Insurers filed their Notice of Removal [1], under 28 U.S.C. §§ 1332 and 1441. The Insurers allege that this Court may exercise diversity jurisdiction over this action because Ms. Swinton, a citizen of Georgia, was fraudulently joined by Plaintiffs to defeat diversity jurisdiction.

         On April 7, 2017, Ms. Swinton filed her Motion to Dismiss [3] on the grounds she was improperly ...


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