United States District Court, N.D. Georgia, Atlanta Division
OPINION AND ORDER
Michael L. Brown, United States District Judge.
C & H Liquor Store, Inc. (“C&H”) claims
Defendant Harleysville Preferred Insurance Company
(“Harleysville”) breached a commercial insurance
policy by refusing to pay C&H for various forms of
property damage and lost income after a fire damaged his
business. Harleysville moved for summary judgment. (Dkt. 27.)
The Court grants in part and denies in part that motion.
Factual and Procedural Background
operates a liquor store out of a building that it leases.
(Dkt. 39 ¶ 2.) A fire erupted at the business in June
2014, destroying the right side of the building, causing
smoke damage to the left side, and forcing C&H to close
from June 29, 2014, through mid-August of that year.
(Id. ¶ 4.)
was insured under a policy issued by Harleysville. (Dkt. 27-3
¶ 1.) The policy covered various kinds of damage to the
business and its property. (See Dkt. 28-4.) The
policy had a limit of $400, 000, meaning Harleysville would
pay no more than that for losses and damages arising from a
single occurrence. (Id. at 6.) It provided coverage
above that amount, however, for specific other losses and
expenses. Section I, provision A.5.a(4), for example,
provided another $10, 000 in coverage for debris removal
expenses. (Id. at 34.) That provision specifically
stated that the $10, 000 benefit was on top of the $400, 000
policy limit. (Id.) Other provisions made additional
coverage above the policy limit available for expenses
arising from extended business interruption and extra
expenses incurred during a period of restoration.
(Id. at 37, 38.) Yet another provision made clear
that certain expenses like fire department service charges
and pollutant clean up and removal expenses were not subject
to the $400, 000 policy limit. (Id. at 50.)
notified Harleysville of the fire and submitted claims for
business personal property, debris removal, and lost business
income. (Dkt. 27-3 ¶ 3.) In July and August 2014,
Harleysville paid C&H $400, 000 as the policy limit for
the lost business property, including the damage to the
store’s contents and improvements and emergency
services. (Dkts. 27-2 at 5, 19; 27-3 ¶ 4.) In September
2014, C&H asked Harleysville to pay invoices for security
services and restoration work, smoke clean up, emergency
repairs, and other work performed on the store. (Dkt. 39 at
4, 6–27.) Harleysville reviewed the invoices and paid
C&H $10, 000 - the policy limit for debris removal.
(Dkts. 27-2 at 5, 19; 27-3 ¶ 4.)
2014, Harleysville requested documents from C&H,
including (1) a summary of monthly revenues from January 2012
through June 2014, (2) daily revenues from June 1 through 29,
2014, (3) monthly profit and loss statements from January
2013 through the time of the request and going forward, and
(4) C&H’s 2012 and 2013 federal income tax returns.
(Dkts. 27-2 at 3; 27-3 ¶¶ 5–6.) Harleysville
sought this information to assess any later claim for ongoing
business losses, a loss not subject to the $400, 000 policy
limit in some cases. In September 2014, C&H said it had
provided the requested information but was not ready to
settle its claim for ongoing business losses. (Dkts. 34-1 at
86; 39 at 32.) In late 2014 and early 2015, Harleysville
repeatedly requested that C&H provide information
supporting its business income claim. (Dkt. 27-2 at 5, 8, 10,
14, 16.) Harleysville warned C&H that it would close the
file and assume C&H no longer intended to pursue such a
claim if C&H did not respond by November 2014, later
extending the deadline to March 19, 2015, and eventually
April 19, 2015. (Id. at 8, 14, 20.) C&H never
responded, and Harleysville closed the lost business income
claim in April 2015. (Dkt. 28-1 ¶ 8.)
sued Harleysville in the State Court of Fulton County,
Georgia, in June 2016, alleging a single claim for breach of
contract. (Dkt. 1-1 at 3–6.) Harleysville removed the
action to federal court and, after discovery, moved for
summary judgment. (Dkts. 1, 27.) C&H opposed that motion.
judgment is appropriate when “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.”
Fed.R.Civ.P. 56(a). “No genuine issue of material fact
exists if a party has failed to ‘make a showing
sufficient to establish the existence of an element . . . on
which that party will bear the burden of proof at
trial.’ ” AFL-CIO v. City of Miami, 637
F.3d 1178, 1186–87 (11th Cir. 2011) (quoting
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)).
An issue is genuine when the evidence is such that a
reasonable jury could return a verdict for the nonmovant.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
moving party bears the initial responsibility of asserting
the basis for his motion. See Celotex Corp., 477
U.S. at 323. The movant is not, however, required to negate
the non-movant’s claim. Instead, the moving party may
meet his burden by “‘showing’-that is,
pointing to the district court-that there is an absence of
evidence to support the nonmoving party’s case.”
Id. at 325. After the moving party has carried its
burden, the non-moving party must present competent evidence
that there is a genuine issue for trial. Id. at 324.
Court views all evidence and factual inferences in a light
most favorable to the non-moving party. See Samples v.
City of Atlanta, 846 F.2d 1328, 1330 (11th Cir. 1988).
But the mere existence of some alleged factual dispute
between the parties will not defeat an otherwise properly
supported motion for summary judgment. Anderson, 477
U.S. at 248. “The requirement is that there be no
genuine issue of material fact.”
Id. The essential question is “whether the
evidence presents a sufficient disagreement to require
submission to a jury or whether it is so one-sided that one
party must prevail as a matter of law.” Id. at
insurance policy is simply a contract, the provisions of
which should be construed as any other type of
contract.” RLI Ins. v. Highlands on Ponce,
LLC, 635 S.E.2d 168, 170–71 (Ga.Ct.App. 2006)
(quoting Hunnicutt v. S. Farm Bureau Life Ins. Co.,
351 S.E.2d 638, 640 (Ga. 1987). Courts must consider an
insurance policy as a whole, give effect to each provision,
and interpret each provision to harmonize with each other.
See ALEA London Ltd. V. Woodcock, 649 S.E.2d 740,
745 (Ga.Ct.App. 2007); see also Ga. Code Ann. §
13-2-2(4) (“the whole contract should be looked to in
arriving at the construction of any part”).
“Construction of the contract, at the outset, is a
question of law for the court.” Id. at 171
(citing Deep Six, Inc. v. Abernathy, 538 S.E.2d 886,
888 (Ga.Ct.App. 2000)). “The court undertakes a
three-step process in the construction of the contract, the
first of which is to determine if the instrument’s
language is clear and unambiguous.” Id.
(citing Woody’s Steaks v. Pastoria, 584 S.E.2d
41, 43 (Ga.Ct.App. 2003)). If the language is unambiguous,
the court simply enforces the contract according to the
terms, and looks to the contract alone for the meaning.
[I]f the contract is ambiguous in some respect, the court
must apply the rules of contract construction to resolve the
ambiguity. Finally, if the ambiguity remains after applying
the rules of construction, the issue of what the ambiguous
language means and what the parties intended must be resolved
by a jury.
CareAmercia, Inc. v. S. Care Corp., 494 S.E.2d 720,
722 (Ga.Ct.App. 1997). Georgia courts have defined
“ambiguity” as duplicity, indistinctness, an
uncertainty of meaning or expression used in a written
instrument, and found that it also signifies doubtful or
uncertain nature or being open to various interpretations.
See RLI Ins., 635 S.E.2d at 171; Early v.
Kent, 108 S.E.2d 708, 709 (Ga. 1959). Ambiguities in an
insurance contract are strictly construed against an insurer,
and any exclusions from coverage are likewise strictly
construed. ALEA London Ltd., 649 S.E.2d at
745 (quoting Guar. Nat. Ins. Co. v. Brock, 474
S.E.2d 46, 49 (Ga.Ct.App. 1996)). And, where possible,
insurance contracts should be read in accordance with an
insured’s reasonable expectations. Id.
elements for a breach of contract claim in Georgia are the
(1) breach and the (2) resultant damages (3) to the party who
has the right to complain about the contract being
broken.” SAWS at Seven Hills, LLC v. Forestar
Realty, Inc., 805 S.E.2d 270, 274 (Ga.Ct.App. 2017)
(quoting Dewrell Sacks, LLP v. Chi. Title Ins. Co.,
749 S.E.2d 802, 806 (Ga.Ct.App. 2013)). The parties dispute
the first two elements.
outset, the parties dispute what evidence the Court should
consider in deciding the summary judgment motion.
Harleysville objects to any consideration of damages
calculations provided by C&H’s owner, Tea Mo, in an
affidavit he filed in opposing summary judgment;
C&H’s sales summaries attached as an exhibit to
that affidavit; and C&H’s First Amended Response to
First Interrogatories. (Dkts. 36-1; 39 ¶¶
6–8, pp. 28–31; 40 at 1–2, 5, 8, 10). The
sales records, and the discussion of the records in Mr.
Mo’s affidavit, C&H’s statement of facts, and
its amended discovery responses, show C&H’s sales
from January 2013 through June 2015 and provide an estimate
of C&H’s business loss during the twelve months
following the fire. (Dkts. 36-1; 39 ¶¶ 6–8,
claims C&H did not produce these documents and
information during discovery. (Dkt. 40 at 1–2, 5, 8,
10.) It claims C&H first provided this information in
response to Harleysville’s motion for summary judgment
and the Court should not consider it. C&H admits it did
not produce this information during discovery but says its
failure should be excused. (Dkt. 37 at 9.)
says C&H violated Rules 26 and 37 of the Federal Rules of
Civil Procedure. Rule 26(a)(1)(A)(ii) provides
Except as exempted by Rule 26(a)(1)(B) or as otherwise
stipulated or ordered by the court, a party must, without
awaiting a discovery request, provide to the other parties: a
copy-or a description by category and location-of all
documents, electronically stored information, and tangible
things that the disclosing party has in its possession,
custody, or control and may use to support its claims or
defenses, unless the use would be solely for impeachment . .
also must supplement their Rule 26 disclosures at appropriate
intervals. See Fed. R. Civ. P. 26(e)(1). Parties who
fail to satisfy these disclosure and supplementation
requirements are prohibited, under Rule 37(c)(1), from using
the undisclosed evidence “at trial, at a hearing, or on
a motion, ” unless the failure is harmless.
Fed.R.Civ.P. 37(c)(1); see also Cooley v. Great
S. Wood Preserving, 138 Fed.Appx. 149, 161 (11th Cir.
2005). The “burden rests upon the non-producing party
to demonstrate that its actions were substantially justified
or harmless.” United States v.
Batchelor-Robjohns, No. 03–20164–CIV, 2005
WL 1761429, at *2 (S.D. Fla. June 3, 2005); see also
Mitchell v. Ford Motor Co., 318 Fed.Appx. 821, 824 (11th
discovery, Harleysville asked C&H to identify all damages
it sought to recover under its breach of contract claim.
(Dkt. 34-2 at 9.) C&H responded that it would supplement
its response to provide the actual damages it suffered from
its business loss. (Id.) C&H did not do so until
it responded to Harleysville’s motion for summary
judgment almost two months after the discovery period
ended. (Dkts. 36-1 at 9; 40 at 1–2.)
Harleysville argues C&H should have produced such
documents and information in its Rule 26 disclosures.
See Fed. R. Civ. P. 26(a)(1)(A)(ii). Harleysville
also contends that, even now, C&H has produced no
underlying receipts or documents to support the information
in its sales summaries. Harleysville further argues that
under Georgia insurance law, C&H should have provided
this information in response to its repeated inquires during
its initial investigation of C&H’s claims.
counters that it provided many financial documents in its
response to Harleysville’s request for production of
documents. (Dkt. 37 at 9.) The record shows C&H produced
2012–June 2014 sales summaries, tax returns from 2012
and 2013, and 2013–June 2014 financial statements.
(Dkt. 34-1 at 8, 90–106, 108–119.) But none of
these documents provided any information about
C&H’s business losses
after the fire occurred in June
2014. C&H also never filed with the Court any initial
disclosures under Rule 26(a) or supplemental disclosures
under Rule 26(e). Harleysville thus had no opportunity during
discovery to analyze C&H’s records from after the
fire or conduct additional document discovery about ongoing
business losses. Harleysville also had no opportunity to
depose any of C&H’s representatives about its
alleged business losses. C&H has failed to explain its
failure to disclose timely this information and cannot now
cure its error.
these circumstances, C&H’s failure to disclose or
produce this evidence was neither harmless nor substantially
justified. As Harleysville notes, it was both unfair and
prejudicial for C&H to produce records supporting its
claim for business loss only after forcing Harleysville to
defend this lawsuit, after the close of discovery, and in
response to summary judgment briefing. Mr. Mo. asserts in his
affidavit that C&H’s sales summaries from July 2014
through June 2015 were “made at or near [that] time,
” yet C&H delayed providing the information to
Harleysville for more than two years. (Dkt. 39 ¶ 6.)
argues it was justified in failing to provide the information
and documents because Harleysville never complained that
C&H needed to update its discovery responses or noticed
the deposition of any of its representatives. (Dkt. 37 at
10–11.) But C&H had to produce the evidence to
support its claims during discovery period and to comply with
the Federal Rules of Civil Procedure. C&H also argues
that its “failure” was harmless, because it has
amended its ...