Harden v. State Farm Mutual Automobile Insurance , 339 F. App'x 897 ( 2009 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
July 22, 2009
No. 08-15008 THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 08-01474-CV-TWT-1
TERRY EUGENE HARDEN,
individually and on behalf of all other persons
situated,
ARTHUR CHAMBERS,
individually and on behalf of all other persons
situated,
Plaintiffs-Appellants,
versus
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(July 22, 2009)
Before BLACK and MARCUS, Circuit Judges, and BUCKLEW,* District Judge.
*
Honorable Susan C. Bucklew, United States District Judge for the Middle District of
Florida, sitting by designation.
PER CURIAM:
Terry Eugene Harden (“Harden”) and Arthur Chambers (“Chambers”)
appeal from the dismissal of their breach of contract suit brought against State
Farm Mutual Automobile Insurance Company (“State Farm”). They also move for
certification of a question of law to the Supreme Court of Georgia, to determine
whether Georgia precedent in Dees v. Logan, 653 S.E.2d 735 (Ga. 2007) prohibits
State Farm from asserting set-offs in the payment of uninsured motorist personal
injury claims. In particular, they argue that their failure to meet the condition
precedent imposed by Ga. Code Ann. § 33-7-11, requiring the insured to first
obtain a judgment of liability against the uninsured motorist before bringing suit
against the insurer, does not apply to their breach of contract action, and that the
district court erred by not certifying their question to the Supreme Court of
Georgia. After thorough review, we affirm.
I.
The relevant facts and procedural history are straightforward. Harden and
Chambers independently obtained automobile insurance with State Farm; both men
carried plans that included uninsured motorist and medical payment coverage, and
each respectively paid all premiums and fulfilled all contractual obligations.
On October 5, 2007, while driving a covered motor vehicle, Harden was
2
injured in a collision with an uninsured motorist. Harden claimed personal injury
damages under his policy, and State Farm offered to settle the claim for $250,
which was later increased to $750. As part of the offer, State Farm asserted that if
it settled the claim, it would be entitled to a set-off (credit) in the amount of $2,000
under the medical payment coverage portion of the policy. Harden did not accept
the settlement payment, nor did he first file suit against the uninsured motorist to
obtain judgment, nor, finally, did he pursue any other legal claim against the
uninsured motorist.
On November 28, 2004, while driving a covered motor vehicle, Chambers,
in an unrelated accident, was injured in a collision with an uninsured motorist.
Chambers similarly claimed personal injury damages under his policy with State
Farm. Unlike Harden, Chambers filed suit against the uninsured motorist to obtain
a judgment of liability for the accident, a condition precedent under Ga. Code Ann.
§ 33-7-11 to pursuing collection of uninsured motorist benefits from his insurer,
State Farm. Just as with Harden, State Farm offered to settle Chambers’ claim for
$1,000 but asserted, as part of the offer, that if it paid Chambers, it would be
entitled to a set-off in the amount of $2,652 under the medical payment coverage
portion of the policy. Unlike Harden, Chambers accepted the settlement from State
Farm with full knowledge of this set-off arrangement, and dismissed his suit
3
against the uninsured motorist with prejudice.
On March 18, 2008, Harden and Chambers filed a putative class action
complaint against State Farm in Georgia Superior Court on behalf of themselves
and persons similarly situated, alleging breach of their insurance contract. In
relevant part, the complaint alleged that:
13. On October 5, 2007, Mr. Harden, while driving a
motor vehicle insured under the Harden policy,
was injured in a collision with an uninsured
motorist (as defined by Georgia law).
14. Mr. Harden made a proper and timely claim for
personal injury damages in accordance with the
UM coverage provisions of the Harden policy.
After being fully apprised of the nature and extent
of Mr. Harden’s injuries and his damages,
including medical expenses, State Farm offered to
settle Mr. Harden’s claim for $250, which offer
was later increased to $750.
15. In evaluating and offering to settle Mr. Harden’s
UM personal injury claim, State Farm asserted that
it was entitled to a set-off or credit for med-pay
benefits paid on account of Mr. Harden’s injuries
under the Harden policy, in the amount of $2,000.
Under Georgia law, State Farm is not entitled to
assert or take a credit or set-off for any additional
benefits received by a UM policyholder on account
of personal injuries.
....
24. On November 28, 2004, Mr. Chambers, while
driving a motor vehicle insured under the
4
Chambers policy, was injured in a collision with an
uninsured motorist (as defined by Georgia law)
25. Mr. [Chambers] made a proper and timely claim
for personal injury damages in accordance with the
UM coverage provisions of the [Chambers] policy.
After being fully apprised of the nature and extent
of Mr. [Chambers’] injuries and his damages,
including medical expenses, State Farm offered to
settle Mr. [Chambers’] claim for $1,000, which
offer was accepted by Mr. Chambers
26. In evaluating and offering to settle Mr. Chambers’
UM personal injury claim, State Farm asserted that
it was entitled to a set-off or credit for med-pay
benefits paid on account of Mr. Chambers’ injuries
under the Chambers policy, in the amount of
$2,652
27. State Farm’s assertion of a right to a set-off or
credit against Mr. Chambers’s personal injury UM
claim in an amount equal to the med-pay benefits
paid under the [Chambers] policy, and the failure
by State Farm to pay or offer to pay Mr. Chambers
for all personal injury damages he sustained under
the UM coverage provisions of the [Chambers]
policy, constitute breaches of State Farm’s
contractual obligations.
(Compl. at 4-6) (emphasis added). Notably, the complaint specified nothing
further about settlement negotiations, nor about Harden or Chambers’ reliance on
State Farm’s offers to settle.
Essentially, then, Harden and Chambers alleged that, under Georgia law,
State Farm was prohibited from reducing uninsured motorist benefits owed to
5
policyholders for personal injuries by the amount of benefits paid by other sources,
such as medical payment benefits; and that State Farm’s practices therefore
violated controlling Georgia precedent in Dees v. Logan, 653 S.E.2d 735 (Ga.
2007). Harden and Chambers sought to recover monetary damages in the amount
of the set-off credits that State Farm deducted from their claims, as well as
injunctive and declaratory relief, and legal and attorney’s fees pursuant to Ga.
Code Ann. § 13-6-11.
State Farm timely removed the case to the United States District Court for
the Northern District of Georgia, and, on April 25, 2008, filed a motion to dismiss
pursuant to Fed. R. Civ. P. 12(b)(6), alleging that Harden and Chambers had
improperly brought a direct action against State Farm without first obtaining a
judgment against the alleged uninsured motorists, pursuant to the requirements of
Georgia’s insurance law embodied in Ga. Code Ann. § 33-7-11. Soon thereafter,
Harden and Chambers moved to certify the following question to the Supreme
Court of Georgia:
Whether, under the holding of Dees v. Logan, 282 Ga.
815 (Ga. 2007), an uninsured motorist carrier may reduce
uninsured motorist personal injury benefits by the
amount of automobile medical payments coverage
received by a policyholder on account of the same
injuries.
The district court granted State Farm’s motion to dismiss, concluding that both
6
claims were barred by Ga. Code Ann. § 33-7-11 because neither Harden nor
Chambers had obtained judgment against the alleged uninsured motorists involved
in their accidents before bringing the direct action against State Farm, and the
complaint did not otherwise allege that State Farm had waived the condition
precedent. The district court did not rule on the motion for certification.
This appeal timely ensued.
II.
We review de novo a district court's grant of a Rule 12(b)(6) motion to
dismiss for failure to state a claim, “accepting the allegations in the complaint as
true and construing them in the light most favorable to the plaintiff.” Mills v.
Foremost Ins. Co., 511 F.3d 1300, 1303 (11th Cir. 2008) (quoting Castro v. Sec'y
of Homeland Sec., 472 F.3d 1334, 1336 (11th Cir. 2006)). The factual allegations
in a complaint need not be detailed but “must be enough to raise a right to relief
above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555
(2007). “Stated differently, the factual allegations in a complaint must ‘possess
enough heft’ to set forth ‘a plausible entitlement to relief.’” Fin. Sec. Assur., Inc. v.
Stephens, Inc., 500 F.3d 1276, 1282 (11th Cir. 2007) (quoting Twombly, 550 U.S.
at 557, 559).
“Where there is doubt in the interpretation of state law, a federal court may
7
certify the question to the state supreme court to avoid making unnecessary Erie
guesses and to offer the state court the opportunity to interpret or change existing
law.” Union Planters Bank, N.A. v. New York, 436 F.3d 1305, 1306 (11th Cir.
2006) (quotation marks and citation omitted). Federal district courts may also
certify open questions of law under the Georgia state constitution and relevant state
statutes to the Supreme Court of Georgia. 1983 Ga. Const. art. VI, § 6, ¶ IV; Ga.
Code Ann. § 15-2-9; Ga. Sup. Ct. R. 46-48. However, the decision to certify a
question is discretionary. Escareno v. Noltina Crucible and Refractory Corp., 139
F.3d 1456, 1461 (11th Cir. 1998).
Under Ga. Code Ann. § 33-7-11,1 also known as the Uninsured Motorist
Act, all automobile insurance polices issued in Georgia must contain uninsured
motorist protection unless the coverage is rejected by the insured. The Georgia
courts, however, have “interpreted the Uninsured Motorist Act to require, as a
condition precedent to a suit against the insurance carrier, that the insured first sue
1
The Uninsured Motorist Act provides, in part, that
[n]o automobile liability policy or motor vehicle liability policy
shall be issued or delivered . . . unless it contains an endorsement
or provisions undertaking to pay the insured damages for bodily
injury, loss of consortium or death of an insured or for injury to or
destruction of property of an insured . . . sustained from the owner
or operator of an uninsured motor vehicle.
Ga. Code Ann. § 33-7-11(a)(1).
8
and recover a judgment against the uninsured motorist, whether known, or
unknown.” Cohen et al. v. Allstate Ins. Co., 626 S.E.2d 628, 631 (Ga. Ct. App.
2006) (quoting Walker v. Ga. Farm Bureau Mut. Ins. Co., 429 S.E.2d 289, 291
(Ga. Ct. App. 1993)). “A judgment against the tortfeasor, even if it is a nominal
one, is still necessary before the plaintiff may recover from the [uninsured
motorist] carrier. A determination must be made ‘of the uninsured motorist's tort
liability before a [UM carrier] can be held accountable on its contractual obligation
to its insured.’” Cohen, 626 S.E.2d at 632 (quoting State Farm Mut. Auto. Ins. Co.
v. Noble, 430 S.E.2d 804, 805 (Ga. Ct. App. 1993)); Butler v. Gary, 633 S.E.2d
614, 618 (Ga. Ct. App. 2006) (same).2
Here, it is undisputed that neither of the appellants have obtained a judgment
against the uninsured motorists involved in their accidents. Harden never
attempted to sue the uninsured motorist involved in his accident, and Chambers
dismissed his complaint against the uninsured motorist when he settled his claim
2
There are several instances where Georgia state courts have allowed policyholders to
bring suit against an insurer without first fulfilling the statutory precondition, but these cases
involved a request for a declaratory judgment only, or a pure interpretation of insurance
coverage -- in neither instance was there a request for monetary relief by the insured. See State
Farm Mut. Auto. Ins. Co. v. Lorenz, 413 S.E.2d 782 (Ga. Ct. App. 1991) (policyholder permitted
to bring suit against insurer for declaratory judgment to determine whether she could stack
coverage, without fulfilling precondition); Zilka v. State Farm Mut. Auto. Ins. Co., 662 S.E.2d
777 (Ga. Ct. App. 2008) (policyholder permitted to bring breach of contract suit against insurer
without first obtaining judgment against uninsured motorist, to determine solely whether
coverage of policy had lapsed under the contract).
9
with State Farm. Under controlling Georgia law, therefore, both Harden and
Chambers are barred from bringing this direct action claim against State Farm.
Moreover, neither Harden nor Chambers has pled the possibility that State
Farm waived the condition precedent under Ga. Code Ann. § 33-7-11. Under
Georgia law, the condition precedent imposed by Ga. Code Ann. § 33-7-11 may be
waived in certain circumstances “where the insurer has led the insured to believe
that the insured will be paid without suit by its actions in negotiating for settlement
or direct promises to pay.” Jones v. Cotton States Mut. Ins. Co., 363 S.E.2d 303,
306 (Ga. Ct. App. 1987) (quotation marks and citation omitted); see also Matia v.
Carpet Transp., Inc., 888 F.2d 118, 121 (11th Cir. 1989) (noting that under Georgia
law, when an insurance company “tells its insured that the insured need not satisfy
the policy's provisions concerning a condition precedent to recovery, the insurer
waives that condition precedent.”).
Thus, for example, if an insurance company leads a policyholder to believe
that it will pay on a claim without requiring the policyholder to engage in any legal
action, under Georgia law the insurer may be estopped from later invoking the
condition precedent -- especially if the statements or actions by the insurer caused
the policyholder to forfeit the ability to bring suit within the time frame provided
by the statute, or to dismiss a pending suit with prejudice. See Nat'l Indem. Co. v.
10
Berry, 221 S.E.2d 624, 631 (Ga. Ct. App. 1975) (noting that an insurer will be
estopped from invoking the condition precedent if it has led an insured to believe
that payment would be forthcoming without any legal action); Gen. Ins. Co. of
Am. v. Lee Chocolate Co., 103 S.E.2d 632, 634 (Ga. Ct. App. 1958) (recognizing
cases of waiver where the insurer purposefully misled the policyholder).
In this case, however, even construing the pleadings in a light most
favorable to Harden and Chambers, we are still constrained to conclude that there
are no facts pled in this complaint that assert or even implicitly suggest any waiver
of the condition precedent imposed by Ga. Code Ann. § 33-7-11. The complaint
does not assert, nor even imply any back-and-forth bargaining on State Farm's
behalf that suggests the possibility that State Farm affirmatively and deceptively
led Harden into believing no legal action was necessary against the uninsured
motorist. Nor does Harden aver anything at all indicating that there were constant
or repeated assurances that a lawsuit was unnecessary, and that the insurance
provider was ready to settle according to the policyholder’s terms. Rather, the
portion of the complaint relating to Harden's claim simply says:
After being fully appraised of the nature and extent of
Mr. Harden's injuries and his damages, including medical
expenses, State Farm offered to settle Mr. Harden's claim
for $250, which offer was later increased to $750.
(Compl. at 4) (emphasis added).
11
The offer of settlement from State Farm indicated that it would pay Harden’s
claim without further litigation. But Harden has alleged nothing that could even
remotely lead one to believe that there was any kind of fraudulent conduct that
might require estoppel, or permit a finding of waiver. Plainly, under Georgia law,
the “[m]ere negotiation for settlement . . . is not that type of conduct designed to
lull the claimant into a false sense of security so as to constitute a waiver of the
limitation defense.” Allstate Ins. Co. v. Sutton, 658 S.E.2d 909, 913 (Ga. Ct. App.
2008) (quoting Ga. Farm Bureau Mut. Ins. Co. v. Pawlowski, 643 S.E.2d 239, 241
(Ga. Ct. App. 2007)).
Finally, we observe that Harden did not accept the settlement offer, and still
had an abundance of time to file suit against the uninsured motorist involved in his
accident. He was in no way prejudiced by the offer of settlement, and we cannot
say based on the allegations in this complaint that State Farm was charged with
having done anything that would constitute a waiver of the condition precedent of
§ 33-7-11.
The only difference in the facts pled between Chambers and Harden is that
Chambers initially commenced suit against the uninsured motorist, but dropped it,
after accepting State Farm’s settlement offer. Again, however, there is not even
the slightest suggestion in the complaint that State Farm waived the condition
12
precedent (which, after all, required first obtaining a judgment against the
uninsured motorist), nor that State Farm misled Chambers in any way. Rather,
Chambers seems to challenge the terms of the settlement agreement itself -- even
though the complaint plainly says that Chambers entered in the agreement knowing
that State Farm intended on asserting a set-off for medical payments already
received. Again, nothing has been pled that suggests any exception under Georgia
law from the condition precedent.
Because the appellants have not satisfied the statutory condition precedent of
Ga. Code Ann. § 33-7-11, nor pled that State Farm somehow waived the condition
precedent, or purposefully misled them, we affirm the district court’s dismissal of
the claim. We, therefore, find it unnecessary to certify any question about the
nature of State Farm’s set-off to the Supreme Court of Georgia.
AFFIRMED.
13