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Southern Trust Insurance Co. v. Mountain Express Oil Co.

Court of Appeals of Georgia, Fourth Division

June 5, 2019


          DOYLE, P. J., COOMER and MARKLE, JJ.

          MARKLE, JUDGE.

         Southern Trust Insurance Co. ("Southern Trust") appeals from the trial court's order denying its motion for summary judgment and granting summary judgment to Mountain Express Oil Co. ("MEX") in this insurance coverage dispute. After a thorough review of the record, and for the reasons that follow, we affirm.

Summary judgment is proper if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. . . . Summary judgments enjoy no presumption of correctness on appeal, and an appellate court must satisfy itself de novo that the requirements of OCGA § 9-11-56 (c) have been met. In our de novo review of the grant of a motion for summary judgment, we must view the evidence, and all reasonable inferences drawn therefrom, in the light most favorable to the nonmovant.

         (Citations and punctuation omitted.) Cowart v. Widener, 287 Ga. 622, 623-624 (1) (a) (697 S.E.2d 779) (2010); OCGA § 9-11-56 (c).

         So viewed, the record shows that Southern Trust issued a commercial insurance policy ("the Policy") to MEX that was in effect during the relevant time period. Per the terms of the Policy, Southern Trust would

pay those sums that the insured becomes legally obligated to pay as damages because of "personal and advertising injury" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "personal and advertising injury" to which this insurance does not apply.

(Emphasis supplied). "Personal and advertising injury" is defined in the Policy to include libel and slander claims.

         In August 2014, Empire Petroleum filed a civil action against MEX for, among other claims, breach of contract, injunctive relief, and libel or slander.[1] MEX "immediately" engaged two law firms - Bondurant, Mixson, and Elmore ("Bondurant") and James Johnston - to represent it. On September 24, 2014, MEX called its insurance agent and verbally reported the lawsuit. On October 9, 2014, Bondurant filed MEX's answer to the Empire suit, and, the following day, MEX notified Southern Trust's insurance agent in writing of the pending lawsuit.[2]

         By letter dated December 29, 2014, Southern Trust notified MEX that its investigation showed that the Policy did not cover the allegations in the complaint for the non-libel/slander claims, and it denied coverage and a defense for those claims. It further advised that it was reserving its rights under the Policy with respect to the libel/slander claims and had retained the Swift Currie firm ("Swift Currie") to handle the defense of the libel/slander claims.

         Because MEX had already hired two other firms to handle the suit, and the discovery process was underway, MEX and Southern Trust agreed that MEX could continue using its lawyers, and Southern Trust would reimburse the attorneys at the rates it would normally pay Swift Currie.

         On January 28, 2015, MEX sent Southern Trust a letter disputing Southern Trust's conclusion that the Policy did not provide coverage for the non-libel/slander claims, stating that it believed the Policy "does provide coverage, indemnification and defense to MEX . . . for all matters as set forth in the claim." MEX further wrote, "we believe that the coverage includes the indemnification and defense to MEX . . . for the allegations of libel and slander." Although the letter gave written notice of MEX's objections, MEX acknowledged a possible compromise, to be drafted by Southern Trust, allowing the Bondurant firm to continue handling the defense with reimbursement from Southern Trust at Swift Currie's rates.

         The parties attempted to memorialize this payment agreement in writing, but no agreement was ever signed. Nevertheless, between March and July 2015, Southern Trust reimbursed MEX $40, 360 in legal costs for work Bondurant performed related to the libel/ slander claim. As long as the fee invoice identified the costs as pertaining to the libel/slander claim, Southern Trust made the payment. This arrangement continued over the next several months, and during this time, MEX submitted to Southern Trust only the bills related to the libel/slander claim, and paid for the other claims separately.

         The Empire lawsuit settled in October 2016. Later that month, MEX submitted a demand letter to Southern Trust seeking payment of the entire amount of its litigation expenses, minus the amount Southern Trust had already paid, for a total of $728, 773. MEX later amended the demand for additional expenses, for a revised total of $1, 197, 148.82. Thereafter, MEX filed the instant suit against Southern Trust for breach of ...

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