ACCC Insurance Company v. Tammy Renee Carter , 349 F. App'x 492 ( 2009 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
Oct. 20, 2009
No. 09-13019 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket Nos. 09-00230-CV-WSD-1
09-00548-CV-WSD
ACCC INSURANCE COMPANY,
f.k.a. American Century Casualty Company,
Plaintiff-Appellee,
versus
TAMMY RENEE CARTER,
MELISSA P. AVERY DUMAS,
Individually and as Administrator of the
Estate of John Claire Dumas,
CAMILLE J. DUMAS,
Defendants-Appellants,
MARK MCMASTERS,
Defendant.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(October 20, 2009)
Before CARNES, WILSON and PRYOR, Circuit Judges.
PER CURIAM:
Melissa Dumas and Camille Dumas Watson appeal the judgment in favor of
American Century Casualty Company. The Dumases sought to recover as
assignees of Tammy Carter for the alleged negligence and bad faith of American
Century in settling the Dumases’ claim against Carter. The district court entered a
judgment declaring that American Century was not required to obtain a release of
liability for Carter. We affirm.
I. BACKGROUND
Tammy Carter drove her car off a road in Decatur, Georgia, and struck and
killed John Dumas. Carter later pleaded guilty to driving under the influence of
alcohol and homicide by vehicle. At the time of the accident, Carter was insured
by American Century through an automobile policy that provided coverage for
bodily injuries of $25,000 per person and $50,000 per accident. Dumas’s
surviving spouse, Melissa, and daughter, Camille, sought to recover from Carter,
and American Century assigned McMasters, an insurance adjuster, to resolve their
claim.
The Dumases mailed to McMasters a settlement demand for Carter’s policy
limit of $25,000. The demand stated that, “In consideration for payment [of] [the]
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policy limits,” the Dumases agreed to “sign a release of American Century
Casualty Insurance Company, its heirs, assigns and affiliates, for the claims arising
by virtue of the injuries to and death of John C. Dumas.” The Dumases stated that
they refused “to release Ms. Carter in exchange for the payment of her limits under
[the] policy” and “[t]hey [would] execute no release that directly or indirectly
release[d] Ms. Carter.” The Dumases explained that they “simply [sought] to
exhaust the funds available through [the] policy, thereby releasing [American
Century] from liability, while reserving any claims they may have against Ms.
Carter.” The Dumases demanded that American Century “specifically stipulate [in
the release] that [the Dumas family] reserve[d] all claims they have or might have
against . . . Tammy Renee Carter, her heirs or assigns.”
McMasters “agree[d] to the terms of [the] demand” without contacting
Carter or making a counteroffer. American Century tendered to the Dumases a
$25,000 check and an agreement to release both American Century and Carter.
The Dumases refused to execute the agreement and wrote to American Century
that they refused to release Carter. The Dumases explained that “acceptance of
[their] demand [did] not actually make much of a difference for American Century.
. . . [because] [they] [were] not going to release Ms. Carter no matter whether the
payment [was] made or not.” American Century asserted that McMasters had
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agreed to the demand by mistake, and the Dumases sued American Century to
enforce the terms of the settlement agreement. American Century agreed to pay
the Dumases $25,000, and the Dumases dismissed their lawsuit.
The Dumases filed a complaint in a Georgia court alleging that Carter had
caused the wrongful death of John Dumas. American Century retained counsel to
represent Carter and defended her in the lawsuit for over a year. In the meantime,
the Dumases offered to settle with Carter in exchange for her consent to a
judgment and her assignment of her potential claims against American Century.
Under the terms of the offer, the Dumases retained the right to collect from Carter
if the lawsuit against American Century was unsuccessful, but Carter refused the
offer. The Dumases and Carter later agreed to a settlement in which Carter
consented to a four million dollar judgment and assigned to the Dumases her
potential claims against American Century and the Dumases relinquished their
right to collect from Carter.
American Century filed a complaint in federal court seeking a declaration
that it was not liable to the Dumases as assignees of Carter. American Century
alleged that Carter had breached her contractual duty as an insured to cooperate to
resolve a claim. American Century also alleged that Carter had colluded with the
Dumases to manufacture a claim against American Century.
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The Dumases filed a complaint in a Georgia court that alleged American
Century and McMasters had acted negligently and in bad faith by accepting the
demand of the Dumases without requiring them to relinquish all claims against
Carter. The Dumases sought as damages the difference between the consent
judgment and Carter’s policy limit.
American Century and McMasters removed the action filed by the Dumases
to federal court based on diversity of citizenship. 28 U.S.C. § 1332. American
Casualty and McMasters moved to dismiss McMasters and alleged that the
Dumases had fraudulently joined McMasters to defeat diversity jurisdiction. The
district court dismissed McMasters.
The district court consolidated the actions by American Century and the
Dumases, and the parties agreed to submit a stipulation of facts to resolve the
corresponding duties of American Century and Carter. The district court entered a
judgment in favor of American Century. The district court concluded that
American Century did not act in bad faith by failing to obtain a release for Carter
because the Dumases had made clear they would not settle with Carter for the
limits of her policy.
II. STANDARD OF REVIEW
We review the decision to proceed with a declaratory judgment action for
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abuse of discretion. Guideone Elite Ins. Co. v. Old Cutler Presbyterian Church,
Inc., 420 F.3d 1317, 1324 (11th Cir. 2005). “[W]hen employing an abuse of
discretion standard, we will leave undisturbed a district court’s ruling unless we
find that the district court has made a clear error of judgment, or has applied the
wrong legal standard.” Id. at 1325.
III. DISCUSSION
The Dumases argue that American Century misused the process for
obtaining a declaratory judgment by preempting a tort claim that should be
resolved by a Georgia court, but we disagree. The district court was obliged to
resolve an actual controversy within its jurisdiction. 28 U.S.C. § 2201; Scott-Burr
Stores Corp. v. Wilcox, 194 F.2d 989, 990 (5th Cir. 1952).
We find no error in the judgment of the district court. American Century did
not act in bad faith by failing to obtain a release for Carter, unless she could have
settled with the Dumases within the policy limits and American Century “knew or
reasonably should have known[] of this fact.” Delancy v. St. Paul Fire & Marine
Ins. Co., 947 F.2d 1536, 1550 (11th Cir. 1991) (citing Cotton States Mut. Ins. Co.
v. Fields, 106 Ga. App. 740, 741–42, 128 S.E.2d 358, 359 (1962), and Alexander
Underwriters Gen. Agency, Inc. v. Lovett, 182 Ga. App. 769, 773, 357 S.E.2d 258,
262 (1987)). The Dumases told American Century on two occasions that it would
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not release Carter of liability, regardless of whether American Century paid the
policy limit.
IV. CONCLUSION
The judgment in favor of American Century is AFFIRMED.
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