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Villa Sonoma At Perimeter Summit Condominium Association, Inc. v. Commercial Industrial Building Owners Alliance, Inc.

Court of Appeals of Georgia, Fifth Division

March 7, 2019


          MCFADDEN, P. J., RICKMAN and MARKLE, JJ.


         This is an appeal from the trial court's orders dismissing, for failure to state a claim, a complaint brought by Villa Sonoma at Perimeter Summit Condominium Association, Inc. a/k/a Villa Sonoma Condominium Association, Inc. ("Villa Sonoma") against various defendants associated with commercial property insurance that Villa Sonoma obtained to cover a condominium complex it operated. Villa Sonoma made a claim for insurance benefits after the complex sustained significant fire and water damage. It argues that it was harmed by a delay in the eventual payment of its claim and that the delay occurred or was exacerbated by the structure of the insurance program at issue, which Villa Sonoma argues had been misrepresented to it when it obtained the insurance. In eight separate counts, Villa Sonoma asserted direct and derivative claims falling into two general categories: claims relating to an alleged violation of OCGA § 33-4-6 for bad faith handling of the insurance claim, and claims relating to alleged fraud or negligent misrepresentation regarding the insurance program. (Although Villa Sonoma's complaint could also be read to assert additional claims relating to the alleged illegality of the insurance program, Villa Sonoma expressly states in its appellate brief that it is not asserting such additional claims.)

         As detailed below, we find no error in the trial court's dismissal of the counts related to statutory bad faith, because Villa Sonoma cannot introduce evidence within the framework of its complaint to show that it made a proper demand for payment of its insurance claim as required by OCGA § 33-4-6. So we affirm the trial court's judgment as to the bad-faith-based counts.

         However, dismissal is premature as to the counts related to allegations of fraud and misrepresentation. While we agree with the defendants that Villa Sonoma's complaint did not make these allegations with sufficient particularity, the appropriate remedy is to require a more definite statement. So we reverse the trial court's judgment as to the fraud-based counts and misrepresentation-based counts, and we remand the case with direction that the trial court treat the motions to dismiss those counts as motions for more definite statement.

         1. Applicable legal standards and overview of complaint.

         A trial court may dismiss a complaint under OCGA § 9-11-12 (b) (6) for failure to state a claim "where [the] complaint lacks any legal basis for recovery." Auto-Owners Ins. Co. v. Tracy, 344 Ga.App. 53, 54 (806 S.E.2d 653) (2017) (citation and punctuation omitted). This occurs if

(1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. If, within the framework of the complaint, evidence may be introduced which will sustain a grant of the relief sought by the claimant, the complaint is sufficient and a motion to dismiss should be denied. In deciding a motion to dismiss, all pleadings are to be construed most favorably to the party who filed them, and all doubts regarding such pleadings must be resolved in the filing party's favor.

Anderson v. Flake, 267 Ga. 498, 501 (2) (480 S.E.2d 10) (1997) (citations omitted). For the purpose of this determination, documents attached to and incorporated into the pleadings are considered to be a part of them. Montia v. First-Citizens Bank & Trust Co., 341 Ga.App. 867, 868-869 (801 S.E.2d 907) (2017). This court reviews a trial court's ruling on a motion to dismiss de novo, viewing as true all well-pleaded material allegations in the complaint. Auto-Owners Ins. Co., supra. However, "we are under no obligation to adopt a party's legal conclusions based on these facts." Id. (citation and punctuation omitted).

         So viewed, the allegations in Villa Sonoma's second amended complaint (the subject of the motions to dismiss) stated that in 2013 Villa Sonoma entered into an agreement for property insurance on a condominium complex it operated. A document evidencing that agreement, titled "Evidence of Commercial Property Insurance," and a copy of an insurance policy were attached to and made a part of one of the defendants' answers. (In its complaint, Villa Sonoma describes these materials as the insurance agreement.) The Evidence of Commercial Property Insurance document identified Villa Sonoma as the "Insured," defendant Commercial Industrial Building Owners Alliance, Inc. d/b/a CIBA Insurance Services ("CIBA") as the "Producer" (a term defined by Black's Law Dictionary (10th ed. 2014) as an insurance agent or insurance broker), and "Basic Residential Property - A" as the "Program" (hereinafter, "the program"). In the space on that document reserved for the name and address of the insurance company, it referred to an attached appendix containing a schedule of insurance companies participating in the program. That schedule listed defendant Great Lakes Reinsurance SE f/k/a Great Lakes Reinsurance (UK) PC ("Great Lakes") as the primary insurance company under the program and numerous other defendants (hereinafter, the "participating carrier defendants"[1]) as excess insurance companies under the program.

         Villa Sonoma alleged in its complaint that the insurance program was illegal. It alleged that, under the program and pursuant to separate agreements between certain of the defendants, CIBA functioned as an unauthorized property insurer and "surreptitiously undertook indemnity and insurance obligations to . . . Villa Sonoma." It alleged that the nature of CIBA's role and indemnification and insurance responsibilities and the nature of the indemnification and insurance responsibilities of the participating carrier defendants were misrepresented to it when it decided to obtain the insurance.

         On March 20, 2014, a fire damaged a portion of the roof of a building in the condominium complex, and the building also sustained extensive water damage. Villa Sonoma made a claim for this damage with defendant Claims Adjusting Group, Inc. ("CAG"), which Villa Sonoma alleged to be a subsidiary or affiliate of CIBA responsible for assessing and handling its claim. Villa Sonoma alleged that it was harmed when the defendants failed to pay that claim promptly.

         Specifically, Villa Sonoma alleged that in the months following the March 20, 2014 fire, it received some payments on its claim but that consultants hired by CIBA or CAG to determine its loss produced flawed estimates as part of an effort by CIBA and CAG to intentionally undervalue and delay paying the claim. Consequently, on October 1, 2014, Villa Sonoma retained a public adjusting firm to assist in the adjustment process and produce an estimate of its loss.

         On January 16, 2015, Villa Sonoma's legal counsel sent a letter to CIBA and CAG, in their capacities as agents for Great Lakes and certain other defendants it jointly describes as the "insurance defendants."[2] The January 16, 2015 letter demanded that Great Lakes pay it $4, 510, 752.24 to settle its insurance claim. A copy of this demand letter is attached to and incorporated into Great Lakes's answer. Over the course of the year following the January 16, 2015 demand, CIBA's and CAG's consultants continued to provide Villa Sonoma with estimates of its loss; Villa Sonoma's public adjuster continued to provide estimates; CIBA, CAG, and two other defendants (jointly described by Villa Sonoma as the "claims handling defendants"[3]) hired an additional consultant which inspected the property jointly with the public adjuster, reviewed the public adjuster's estimates of the loss, and provided its own ...

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