USCA11 Case: 19-14697 Document: 33-1 Date Filed: 02/27/2023 Page: 1 of 9
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 19-14697
Non-Argument Calendar
____________________
CENTURY COMMUNITIES OF GEORGIA, LLC,
Plaintiff-Appellant,
versus
SELECTIVE WAY INSURANCE COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:18-cv-05267-ODE
____________________
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2 Opinion of the Court 19-14697
Before WILSON, LAGOA, and MARCUS, Circuit Judges.
PER CURIAM:
Century Communities of Georgia, LLC (“Century”) appeals
from the district court’s order granting summary judgment in favor
of insurer Selective Way Insurance Company (“Selective”), in a
coverage dispute raising claims under Georgia law for breach of
contract and for bad faith arising out of Selective’s failure to defend
Century in a tort lawsuit involving property damage at one of its
housing developments. On appeal, Century argues that the district
court erred by allowing Selective to rely on a defense to coverage
that it failed to raise in its initial letter denying coverage. After care-
ful review, we affirm.
I.
The relevant background is this. Century owns land in
Sugar Hill, Georgia. In 2016, Century began turning the property
into a residential subdivision and entered into a subcontractor
agreement with Magnum Contracting, LLC (“Magnum”), where-
by Magnum would provide site work services for the project. Cen-
tury says that in the subcontractor agreement, Magnum agreed to
add Century as an additional insured on Magnum’s Commercial
General Liability Policy (the “Policy”) with its insurer, Selective.
In 2017, legal action was filed against Century, Magnum,
and others under the case captioned David R. Bowen, et al. v. Cen-
tury Communities of Georgia, LLC, et al., in the Superior Court of
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19-14697 Opinion of the Court 3
Gwinnett County, Georgia (the “Bowen suit”). The plaintiffs in
the Bowen suit alleged that “the grading of the subdivision prop-
erty prior to the implementation of an erosion control program
was the cause of [a] runoff of water, sediment, silt, mud, and other
pollutants onto their property.”
On August 3, 2018, Century demanded defense and indem-
nification of the underlying Bowen suit by Magnum pursuant to
the Policy issued by Selective. On September 11, 2018, Selective
denied coverage without asserting a reservation of rights. Selective
provided two reasons for its decision to decline Century’s demand:
(1) Selective was unclear whether “the property damage alleged by
the Bowens was caused by Magnum’s work” and (2) “the com-
plaint includes allegations against all defendants.” On September
13, 2018, Century responded to Selective’s September 11 denial let-
ter to explain its belief that (1) “Selective had a duty to defend Cen-
tury”; (2) “Selective’s alleged defenses to coverage lacked factual
and legal merit”; and (3) “Selective’s actions constituted bad faith
under O.C.G.A. § 33-4-6.”
Century filed this action on November 16, 2018, bringing
claims under Georgia law for breach of Selective’s contractual duty
to defend and bad faith. In its answer, Selective admitted to provid-
ing only two reasons for denying coverage in its September 11 let-
ter, but went on to list several other reasons for denying coverage,
one being the Policy’s Pollution Exclusion. The Pollution Exclu-
sion excludes from coverage “property damage arising out of the
actual, alleged or threatened discharge, dispersal, seepage,
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4 Opinion of the Court 19-14697
migration, release or escape of pollutants.” The Policy defines
“pollutant” as “any solid, liquid, gaseous, or thermal irritant or con-
taminant, including smoke, vapor, soot, fumes, acids, alkalis,
chemicals and waste. Waste includes materials to be recycled, re-
conditioned or reclaimed.”
When Selective filed a motion for summary judgment in this
suit and argued, among other things, that it had no duty to defend
based on the Policy’s Pollution Exclusion, Century responded that
Selective had waived its ability to assert the Pollution Exclusion as
a defense by not including it as a reason for denial in its denial letter.
The district court disagreed and held, under Georgia law, that “[a]
party may . . . assert a defense not listed in its denial letter, subject
to the doctrines of waiver and estoppel.” It then found that Selec-
tive did not waive the defense because Century had sufficient no-
tice of it. As for whether the Pollution Exclusion applied, the dis-
trict court said that “[b]ecause ‘water runoff, sediment, silt, and
other pollutants’ are considered pollutants under the terms of the
Selective Policy, property damage resulting therefrom is excluded
from coverage.” Since Century had no coverage under the Policy,
the district court granted summary judgment in favor of Selective
on Century’s breach of the duty to defend and bad-faith claims.
This timely appeal follows.
II.
We review a district court’s grant of summary judgment de
novo, viewing the evidence in the light most favorable to the party
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19-14697 Opinion of the Court 5
opposing the motion. Looney v. Moore,
886 F.3d 1058, 1062 (11th
Cir. 2018). Summary judgment is appropriate where “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). To deter-
mine whether a factual dispute is genuine, we must consider
whether “the evidence is such that a reasonable jury could return
a verdict for the nonmoving party.” Peppers v. Cobb County,
835
F.3d 1289, 1295 (11th Cir. 2016) (quotations omitted). “[W]e may
affirm on any ground supported by the record, regardless of
whether that ground was relied upon or even considered below.”
Aaron Priv. Clinic Mgmt. LLC v. Berry,
912 F.3d 1330, 1335 (11th
Cir. 2019) (quotations omitted).
III.
The dispute in this appeal centers on whether Selective
waived its ability to assert the Pollution Exclusion in the Policy as
a defense against coverage by not including it as a reason for denial
in its initial letter denying coverage. Based on our recent interpre-
tation of Georgia case law, we conclude that Selective retained the
ability to rely on the Pollution Exclusion to deny coverage.
Under Georgia law, “[a]n insurer’s duty to defend turns on
the language of the insurance contract and the allegations of the
complaint asserted against the insured.” City of Atlanta v. St. Paul
Fire & Marine Ins. Co.,
498 S.E.2d 782, 784 (Ga. Ct. App. 1998).
While “an insurer must provide a defense against any complaint
that, if successful, might potentially or arguably fall within the pol-
icy’s coverage,” there is no duty to defend against allegations
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6 Opinion of the Court 19-14697
expressly excluded under the insurer’s policy. Elan Pharmaceutical
Research Corporation v. Employers Insurance of Wausau,
144 F.3d
1372, 1375 (11th Cir. 1998); Penn-Am. Ins. Co. v. Disabled Am. Vet-
erans, Inc.,
490 S.E.2d 374, 376 (Ga. 1997) (holding that there is no
duty to defend when a policy exclusion unambiguously applies).
Whether Selective could rely on the Pollution Exclusion to
deny coverage -- and thereby refuse to defend Century in the
Bowen suit -- even though Selective neglected to mention the ex-
clusion in its original letter denying coverage, touches on some re-
cent developments in the case law. In Georgia, “[t]he longstanding
general rule is that neither waiver nor estoppel can be used to cre-
ate liability not created by an insurance contract and not assumed
by the insurer under the terms of the policy.” Andrews v. Georgia
Farm Bureau Mut. Ins. Co.,
487 S.E.2d 3, 4 (Ga. Ct. App. 1987).
However, broad language in a 2012 case of the Georgia Supreme
Court may have called that rule into question. See Hoover v.
Maxum Indem. Co.,
730 S.E.2d 413 (Ga. 2012).
In Hoover, the Georgia Supreme Court addressed whether
an insurer could deny coverage while still reserving its right to ar-
gue a defense based on untimely notice. The court outlined three
options for an insurer when a lawsuit is pending against its insured:
(1) “the insurer can defend the claim, thereby waiving its policy de-
fenses and claims of non-coverage”; (2) “the insurer can deny cov-
erage and refuse to defend, leaving policy defenses open for future
litigation”; or (3) “the insurer can defend under a reservation of
rights.”
Id. at 416. The court was clear, however, that the insurer
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19-14697 Opinion of the Court 7
“cannot both deny a claim outright and attempt to reserve the right
to assert a different defense in the future.”
Id. Having found the
insurer’s purported reservation of rights improper in that case, the
court in Hoover then addressed the issue of waiver and found that
the insurer’s “continued failure to fairly inform [the insured] of its
intention to raise a defense related to untimely notice” meant that
it had waived the defense.
Id. at 418.
In district court, the parties to this appeal disputed the mean-
ing of Hoover and whether it mandates waiver if an insurer does
not raise a defense in its denial letter. The parties appeared to agree
that there were three possible interpretations of its meaning: (1)
after Hoover, all defenses not asserted in an insurer’s denial letter
are waived or estopped; (2) Hoover did not change existing Geor-
gia law that waiver or estoppel cannot create coverage that does
not exist under the policy; or (3) after Hoover, the failure to include
a defense in a denial letter does not render it automatically waived,
but rather leaves the question of whether to consider the defense
open for future litigation. The district court adopted the third in-
terpretation and held that Selective did not waive the Pollution Ex-
clusion because Century had sufficient notice of it.
Since the district court ruled in this case, however, our
Court has addressed Hoover and its implications. See AEGIS Elec.
& Gas Int’l Servs. Ltd. v. ECI Mgm’t LLC,
967 F.3d 1216 (11th Cir.
2020). There, an insurer brought an action to determine whether
it had a duty to defend or indemnify its insured in an underlying
state court lawsuit brought by a former tenant, alleging that the
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8 Opinion of the Court 19-14697
insured had wrongfully withheld the security deposits of current
and former tenants. Among other things, the insured argued that
the insurer had waived the policy’s “disgorgement and return” ex-
clusions -- provisions that carved out certain types of relief from the
definition of “loss” -- by failing to initially raise them as bases for
denying coverage, but we disagreed.
Id. at 1226 n.8. We found
that “there is no indication in Hoover that the Georgia Supreme
Court intended to upend the longstanding rule that an insurer can-
not waive coverage defenses.”
Id. In so holding, we said that “the
specific defense at issue in Hoover was [untimely notice, which is]
a policy defense of the sort Georgia courts have long held is subject
to waiver.”
Id. Because “the disgorgement and return carve-outs
are properly characterized as coverage defenses,” we held that the
insurer had not waived those defenses in that case.
Id.
Thus, our Court interpreted Hoover to make a distinction
between “policy defenses” and “coverage defenses.” A “policy de-
fense” is one under which an insurer denies coverage based on the
insured’s failure to fulfill a procedural condition of the insurance
policy. See Sargent v. Allstate Ins. Co.,
303 S.E.2d 43, 45–46 (Ga.
Ct. App. 1983). Examples of policy defenses that may be waived
include conditions as to other insurance, conditions requiring proof
of loss, and conditions requiring timely written notice.
Id. A “cov-
erage defense,” by contrast, is an assertion that the insurance policy
does not cover the specific injury in question, see Andrews, 487
S.E.2d at 4, and includes provisions like exclusions for damage from
firearms or due to an insured’s defective workmanship. While
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19-14697 Opinion of the Court 9
policy defenses may be subject to waiver, coverage defenses are
not. See AEGIS Elec. & Gas, 967 F.3d at 1226 n.8.
In this case, the alleged property damage in the underlying
tort suit, Bowen, resulted from “the discharge of water runoff, sed-
iment, silt, and other pollutants.” As Selective argues, and Century
has never disputed, this damage squarely falls under the Pollution
Exclusion in the Policy, which excludes from coverage “property
damage arising out of the actual, alleged or threatened discharge,
dispersal, seepage, migration, release or escape of pollutants,” with
“pollutants” defined as “any solid, liquid, gaseous, or thermal irri-
tant or contaminant, including smoke, vapor, soot, fumes, acids,
alkalis, chemicals and waste.” The Pollution Exclusion -- which, in
its simplest terms, allows Selective to argue that the insurance pol-
icy does not cover the specific injury in question -- thereby amounts
to a “coverage defense.” And so even though Selective did not in-
clude the Pollution Exclusion as a reason for denial in its denial let-
ter, Selective did not waive it as a defense against coverage in the
instant suit. See AEGIS Elec. & Gas, 967 F.3d at 1226 n.8.
Accordingly, the district court did not err by allowing Selec-
tive to rely on the Pollution Exclusion after failing to disclose it in
its denial letter, and we affirm the district court’s grant of summary
judgment in favor of Selective.
AFFIRMED.
