Hooters of Augusta, Inc. v. American Global Insurance

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
FILED
________________________ U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
December 6, 2005
No. 04-11077
THOMAS K. KAHN
________________________ CLERK
D. C. Docket No. 02-00061-CV-1-DHB
HOOTERS OF AUGUSTA, INC.,
SAM NICHOLSON, and all other persons
or entities similarly situated,
Plaintiffs-Appellees,
versus
AMERICAN GLOBAL INSURANCE COMPANY,
Defendant-Appellant,
________________________
Appeal from the United States District Court
for the Southern District of Georgia
_________________________
(December 6, 2005)
Before EDMONDSON, Chief Judge, MARCUS and PRYOR, Circuit Judges.
PER CURIAM:
American Global Insurance Co. (“American Global”) appeals from a final
order of summary judgment entered in favor of Hooters of Augusta, Inc.,
(“Hooters”) in a dispute over an umbrella liability policy. At issue is whether the
insurance policy’s coverage of “advertising injury” obligates American Global to
pay amounts levied against Hooters for sending unsolicited fax advertisements in
violation of the federal Telephone Consumer Protection Act (“TCPA”), 47 U.S.C.
§ 227.
The district court concluded that Georgia principles of contract interpretation
compel viewing the fax advertising as a “publication” that violated “a person’s
right to privacy” for purposes of the policy’s advertising-injury coverage. After
thorough review, we agree with the district court and accordingly affirm its
summary judgment order. However, we also find that the district court erred when
it ordered American Global to pay post-judgment interest on Hooters’s outstanding
liability, and therefore vacate the portion of the judgment that ordered American
Global to pay post-judgment interest and remand for further proceedings consistent
with this opinion.
I.
The essential facts and procedural history are these: In 1995, Hooters
purchased advertising space on weekly flyers faxed to a database of Augusta
2
businesses. Sam Nicholson, an Augusta attorney, received one of the faxed copies
of Hooters’s advertisement. On June 23, 1995, Nicholson sued Hooters and sought
class certification in the Superior Court of Richmond County, Georgia; the court
granted class certification. The Nicholson class’s suit sought damages under the
TCPA, which, as codified at the time, made it unlawful “to use any telephone
facsimile machine, computer, or other device to send an unsolicited advertisement
to a telephone facsimile machine,” 47 U.S.C. § 227(b)(1)(C) (2000) (amended
2005),1 and provided a private right of action for violations of the Act, id. §
1
The relevant portion of the statute reads:
(b) Restrictions on use of automated telephone equipment
(1) Prohibitions
It shall be unlawful for any person within the United States –
(A) to make any call (other than a call made for emergency purposes or made
with the prior express consent of the called party) using any automatic telephone
dialing system or an artificial or prerecorded voice –
(i) to any emergency telephone line (including any “911” line and any
emergency line of a hospital, medical physician or service office, health
care facility, poison control center, or fire protection or law enforcement
agency);
(ii) to the telephone line of any guest room or patient room of a hospital,
health care facility, elderly home, or similar establishment; or
(iii) to any telephone number assigned to a paging service, cellular
telephone service, specialized mobile radio service, or other radio
common carrier service, or any service for which the called party is
charged for the call;
3
227(b)(3).2
On March 21, 2001, after trial, a jury returned a verdict against Hooters for
knowingly and willfully violating the TCPA, and on April 25, 2001, the trial judge
entered judgment against Hooters in the amount of $11,889,000, calculated
(B) to initiate any telephone call to any residential telephone line using an
artificial or prerecorded voice to deliver a message without the prior express
consent of the called party, unless the call is initiated for emergency purposes or
is exempted by rule or order by the Commission under paragraph (2)(B);
(C) to use any telephone facsimile machine, computer, or other device to send an
unsolicited advertisement to a telephone facsimile machine; or
(D) to use an automatic telephone dialing system in such a way that two or more
telephone lines of a multi-line business are engaged simultaneously.
...
47 U.S.C. § 227(b) (2000) (amended 2003 and 2005).
2
The statute also provides:
(3) Private right of action
A person or entity may, if otherwise permitted by the laws or rules of court of a State,
bring in an appropriate court of that State—
(A) an action based on a violation of this subsection or the regulations prescribed under
this subsection to enjoin such violation,
(B) an action to recover for actual monetary loss from such a violation, or to receive $500
in damages for each such violation, whichever is greater, or
(C) both such actions.
If the court finds that the defendant willfully or knowingly violated this subsection or the
regulations prescribed under this subsection, the court may, in its discretion, increase the
amount of the award to an amount equal to not more than 3 times the amount available
under subparagraph (B) of this paragraph.
47 U.S.C. § 227(b)(3) (2000).
4
according to statutory damages of $500 for each violation and trebled as allowed
by the TCPA. Hooters appealed the verdict, but soon thereafter, Hooters and
Nicholson, on behalf of the class, entered into a settlement agreement that lowered
Hooters’s liability to $9 million. In exchange, Hooters promised to drop its appeal
of the state court judgment, file a declaratory judgment action against American
Global and Zurich Insurance Company, and assign its claims against the insurance
carriers to the Nicholson class on request. The Superior Court approved the
settlement, and the first act in this extended litigation drama ended.
Hooters then brought this action against Zurich, American Global, and the
Nicholson class in the Superior Court of Richmond County, Georgia. Zurich and
American Global timely removed the cause to the U.S. District Court for the
Southern District of Georgia based on diversity of citizenship. The district court
realigned the parties, designating the Nicholson class as a plaintiff, and denied
Hooters’s motion for remand. Both Hooters and the Nicholson class separately
moved for summary judgment, and the defendants jointly filed a motion for
summary judgment as well.
The district court granted summary judgment in favor of Hooters and the
Nicholson class and entered final judgment in the amount of $5 million– –the
coverage amount provided for in the insurance policy– –and post-judgment interest
5
on the $6.45 million unpaid balance of Hooters’s settlement. American Global
appealed both the grant of summary judgment and the award of post-judgment
interest.
II.
We review a grant of summary judgment de novo, viewing the materials
presented and drawing all factual inferences in the light most favorable to the
non-moving party. See, e.g., Gerling Global Reinsurance Corp. of Am. v.
Gallagher, 267 F.3d 1228, 1233–34 (11th Cir. 2001). Summary judgment is
appropriate when “there is no genuine issue as to any material fact” and “the
moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c).
The movant bears the burden of demonstrating that this standard is satisfied by
presenting “pleadings, depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any,” that establish the absence of any genuine,
material factual dispute. Id.The primary issue in the case is whether the amounts Hooters owes the
Nicholson class for their TCPA claims fit within the insurance policy’s coverage
for “Advertising Injury,” defined in part as harm from “[o]ral or written
publication of material that violates a person’s right of privacy.”3 The district court
3
The coverage provision of the policy states:
6
concluded that Georgia rules of contract interpretation favored reading the policy
broadly to cover the TCPA claims. The district court determined that the TCPA’s
protections against unsolicited faxes amount to a “right of privacy” within the
meaning of the advertising-injury provision.
The text of the policy and the language of the TCPA resolve these issues in
favor of coverage when read in light of controlling Georgia law. Both parties agree
that Georgia law governs the dispute. It is by now axiomatic that Georgia law
I. Coverage
We will pay on behalf of the Insured those sums in excess of the Retained Limit that the
Insured becomes legally obligated to pay by reason of liability imposed by law or
assumed by the Insured under an Insured Contract because of Bodily Injury, Property
Damage, Personal Injury or Advertising Injury that takes place during the Policy Period
and is caused by an Occurrence happening anywhere in the world. . . .
American Global Insurance Company Policy at 1.
“Advertising Injury” is defined later:
IV. Definitions
A. Advertising Injury means injury arising solely out of your advertising activities as a
result of one or more of the following offenses:
1. Oral or written publication of material that slanders or libels a person or
organization or disparages a person’s or organization’s goods, products, or
services;
2. Oral or written publication of material that violates a person’s right of privacy;
3. Misappropriation of advertising ideas or style of doing business; or
4. Infringement of copyright, title or slogan.
Id. at 3.
7
directs courts interpreting insurance policies to ascertain the intention of the parties
by examining the contract as a whole. Ryan v. State Farm Mut. Auto. Ins. Co., 413
S.E.2d 705, 707 (Ga. 1992) (citing James v. Pennsylvania General Insurance Co.,
306 S.E.2d 422, 425 (Ga. Ct. App. 1983)). A reviewing court must consider the
ordinary and legal meaning of the words employed in the insurance contract. Id.Moreover, Georgia law teaches, ambiguous terms in the policy must be construed
in favor of the insured to provide maximum coverage, id., and when reasonable, a
court should read an insurance contract “as a layman would read it and not as it
might be analyzed by an insurance expert or an attorney,” Cont’l Ins. Co. v. Am.
Motorist Ins. Co., 542 S.E.2d 607, 610 (Ga. Ct. App. 2000) (quoting Jefferson
Insurance Co. of New York v. Dunn, 482 S.E.2d 383, 388 (Ga. Ct. App. 1997),
rev’d on other grounds, 496 S.E.2d 696 (Ga. 1998)) (internal quotation marks
omitted). These rules reflect Georgia’s judgment that the insurer, as the party with
greater control over the wording of terms in the policy, should bear the burden of
laying out the terms clearly and precisely. See James, 306 S.E.2d at 431.
American Global first argues that Hooters’s conduct violated no right of
“privacy” because a fax sent in violation of the TCPA would not constitute a
common-law tort for invasion of privacy under Georgia law. American Global’s
reading may be one reasonable interpretation, but, undeniably, it is at least as
8
reasonable to interpret “privacy” more broadly to include aspects of privacy
protected by other sources of law, including state privacy statutes and federal law.
Indeed, the statutory notion of being free from intrusive and unsolicited facsimile
transmissions is at least arguably embodied in the common law right to privacy
under Georgia law. An essential element of the right to privacy, Georgia’s courts
have recognized, is “the right ‘to be let alone,’” or “the right to seclusion or
solitude.” Yarbray v. S. Bell Tel. & Tel. Co., 409 S.E.2d 835, 836–37 (Ga. 1991).
Notably, the insurance policy contains no language explicitly limiting the scope of
the term “privacy” or, for that matter, alerting non-expert policyholders that
coverage depends on the source of law underlying the relevant privacy right.
Following the Georgia rule and interpreting ambiguous terms in favor of the
insured, we are constrained to reject American Global’s suggestion that its
construction of the meaning of privacy is the only reasonable one under Georgia
law, as opposed to a broader interpretation that encompasses violations of privacy
rights established by federal statutes such as the TCPA. We are hard pressed to say
that a layman could not reasonably read the notion of privacy as broadly as the
district court did.
American Global also suggests that the TCPA provisions at issue do not
create a statutory right of privacy, although the statute plainly creates a statutory
9
right to be free from intrusions by unsolicited faxed or telephonic advertising.
While it acknowledges, as it must, that the statute at least partly aims at protecting
some privacy interests, American Global argues that the section governing
unsolicited faxes is concerned only with the commercial impact of unsolicited
faxes, not with privacy. In support of its position, American Global says that only a
small portion of the legislative record suggests that unsolicited faxes violate
privacy.
It is worth noting that the legislative record does indeed contain suggestions
that Congress thought of unsolicited faxes as akin to intrusive telephone calls. See,
e.g., H.R. Rep. 102-317, at 5–6 (1991) (“The purpose of the bill (H.R. 1304) is to
protect residential telephone subscriber privacy rights by restricting certain
commercial solicitation and advertising uses of the telephone and related
telecommunications equipment. . . . H.R. 1304 is designed to return a measure of
control to both individual residential telephone customers and owners of facsimile
machines.”). Indeed, the findings accompanying the TCPA legislation illustrate that
Congress was expressly concerned about protecting privacy interests, including
privacy interests in places of business. See, e.g., Telephone Consumer Protection
Act of 1991, Pub. L. No. 102-243, § 2(9), 105 Stat. 2394, 2394 (“Individuals’
privacy rights, public safety interests, and commercial freedoms of speech and
10
trade must be balanced in a way that protects the privacy of individuals and permits
legitimate telemarketing practices.”); id. §2(14) (“Businesses also have
complained to the Congress and the Federal Communications Commission that
automated or prerecorded telephone calls are a nuisance, are an invasion of
privacy, and interfere with interstate commerce.”).
We refuse, however, to allow the TCPA’s legislative history to sway us too
far in either direction. Whether Congress intended the provisions against
unsolicited faxes to protect “privacy,” and how much that intention factored into
the passage of the law, is not relevant today. Georgia law unambiguously directs us
to search for the intentions of the parties to this insurance contract, not the
intentions of distant federal lawmakers. We therefore must consider the ordinary
meaning of the term “privacy,” not whatever specialized meaning the word may
have taken on in the context of the TCPA.
After thorough review, we are satisfied that the term “privacy” can be
reasonably read as extending beyond a particular, narrow and more technical
definition of privacy and encompassing a broader layperson’s notion of privacy as
protected by various provisions of state or federal law. Following the Georgia
courts’ practice of interpreting ambiguous terms in favor of greater coverage, we
conclude that facsimile transmissions in violation of the TCPA amount to
11
violations of “privacy” for the purposes of the insurance policy at issue.
Two other circuit courts of appeal appear to have reached similar
conclusions when interpreting similar insurance policies. Recently, the Eighth
Circuit held that a Missouri insurance policy that covered “private nuisance” and
“invasion of rights of privacy” covered unsolicited faxes in violation of the TCPA.
Universal Underwriters Ins. Co. v. Lou Fusz Auto. Network, Inc., 401 F.3d 876,
881, 883 (8th Cir. 2005). The insurer, the court wrote, “offers only technical and
restricted legal definitions to support its position that violations of the Act are
neither ‘private nuisances’ nor ‘invasions of privacy.’ Under Missouri law, we
cannot restrict the undefined terms in such a manner.” Id. at 882.
The Fifth Circuit also appears to have reached a similar conclusion. A
district court in the Northern District of Texas found that unsolicited faxes
amounted to “publication of material that violates a person’s right of privacy”
within the meaning of a commercial liability policy. W. Rim. Inv. Advisors, Inc. v.
Gulf Ins. Co., 269 F. Supp. 2d 836, 847 (2003), aff’d per curiam, 96 F.Appx. 960
(5th Cir. 2004). A panel of the Fifth Circuit issued an unpublished per curiam
opinion affirming the judgment for “essentially the reasons stated by the district
court.” Western Rim, 96 F. Appx. at 960 (per curiam).
American Global nevertheless contends that the Fifth Circuit’s decision in
12
Western Rim is distinguishable because it concerned a duty to defend against suit,
not the issue of the insurer’s ultimate liability. The Eighth Circuit case similarly
involved a duty to defend. But nothing in either opinion suggests that either court’s
decision turned on the possibility that the lawsuits at issue could have proceeded
under alternative theories. Indeed, in each of the two cases, advertising injury in
the form of TCPA violations was the only theory that the court considered and
found capable of triggering the duty to defend. Universal Underwriters, 401 F.3d at881–83; Western Rim, 269 F. Supp. 2d at 842–50.
American Global claims, however, that even if the TCPA protects privacy
rights, the insurance contract’s reference to “oral or written publication of material
that violates a person’s right to privacy” does not cover Hooters’s conduct because
there was no act of “publication.” American Global first says that an intrusion into
the private sphere fundamentally contradicts the very notion of “publication,”
which suggests a public act of dissemination of information. This argument simply
conflates two distinct perspectives. The act of transmitting an unsolicited fax
indeed involves a public act by the sender. But the act is thought to violate the
recipient’s privacy. There is no contradiction. The conduct by which Hooters was
found to violate the TCPA, and for which it now seeks coverage under the
insurance policy, is using a fax machine “to send an unsolicited advertisement.”
13
American Global also argues that we should interpret the term “publication”
in a narrow, legal sense, as an element of three privacy-related torts: public
disclosure of private facts, portrayal of a plaintiff in a false light, and
misappropriation. As we have noted, though, Georgia law suggests that a
reviewing court must consider both the ordinary and legal meanings of a term in an
insurance contract and, when faced with ambiguity, adopt the interpretation that
favors greater coverage. While it may be reasonable to read the terms “publication”
and “privacy” in a technical legal sense, it is at least equally plausible to read both
terms in their ordinary non-technical sense. Plainly, Georgia law directs us to adopt
the interpretation that favors greater coverage.
Hooters’s conduct amounted to an act of “publication” in the ordinary sense
of the word. American Global cites three definitions of the term “publish” found in
Webster’s Ninth New Collegiate Dictionary: “to make generally known,” “to make
public announcement,” and “to place before the public: disseminate.”4 Webster’s
Ninth New Collegiate Dictionary 952 (1984). Hooters purchased advertising space
on weekly fliers disseminated by fax to nearly 8,000 businesses. This course of
4
The definition reads:
publish . . . 1 a: to make generally known b: to make public announcement of 2 a:
to place before the public : disseminate b: to produce or release for publication; specif :
print c : to issue the work of (an author) . . . .
Webster’s Ninth New Collegiate Dictionary 952 (1984).
14
conduct squarely fits at least the third of American Global’s definitions and
arguably fits the other two as well. Notably, the dictionary that American Global
cites also includes a fourth definition of “publish” not mentioned in the appellants’
brief: “to produce or release for publication; specif[ically] : print.” Id. Hooters’s
conduct fits this definition even more closely.
As we have noted, our conclusion is altogether consonant with the
conclusions reached by the Fifth and Eighth Circuits in interpreting similar
insurance policies. Our conclusion differs, however, from decisions rendered by
the Seventh and Fourth Circuits, which have interpreted similar advertising-injury
provisions as extending only to a particular species of privacy violation– –
violations of a right to secrecy of personal information, not intrusions into a private
domain. Res. Bankshares Corp. v. St. Paul Mercury Ins. Corp., 407 F.3d 631,
640–41 (4th Cir. 2005); Am. States Ins. Co. v. Capital Assocs. of Jackson County,
Inc., 392 F.3d 939, 942–43 (7th Cir. 2004).
We do not need to discuss the Seventh and Fourth Circuit opinions at length,
since American Global does not contend that the insurance contract’s reference to
“violations of privacy” does not encompass intrusions into a person’s private
domain. Rather, American Global’s argument is that a violation of the TCPA is not
the kind of intrusion into seclusion that the policy covers. See Brief of Appellant at
15
31 (“The only means . . . by which Nicholson could have established a violation of
privacy in the context of facsimile transmissions was under the concept of an
‘intrusion into seclusion.’”); id. at 37 (“[T]he parties and the district court agreed
that the only ‘privacy’ interest arguably violated by the receipt of unauthorized
facsimiles was the result of intrusion into the recipient’s affairs.”). Because the
chief aim in contract interpretation is to discern and implement the intent of the
parties, we decline to lend the contract a meaning that neither party has suggested
it has.
There are, however, additional reasons for distinguishing the Seventh and
Fourth Circuit cases from this one. The Fourth Circuit case was decided under
Virginia law, Resource Bankshares, 407 F.3d at 636; the Seventh Circuit case,
under Illinois law, American States, 392 F.3d at 943. In addition, the Fourth
Circuit case involved a more tightly worded advertising-injury provision that
described the covered activity as “making known to any person or organization
written or spoken material that violates a person’s right to privacy.” Resource
Bankshares, 407 F.3d at 641. This wording seems to have been a significant factor
in the court’s decision. See id. at 641–42. The insurance contract in this case,
however, refers to “[o]ral or written publication” of such material, which does not
suggest the focus on secrecy that “making known” does.
16
American Global also argues that the insurance policy was restricted to
amounts identified as “damages” and that a statutory award under the TCPA does
not amount to “damages” within the meaning of the policy. The district court
correctly rejected this argument, too, noting that the policy refers to “sums . . . that
the Insured becomes legally obligated to pay by reason of liability imposed by law
or assumed by the Insured,” without excluding statutory penalties.5 American
Global points to several policy provisions referring to “damages” rather than
“sums.” These provisions, however, do not purport to narrow the insurer’s initial
obligation to pay “sums.”
Even if we were to read the word “damages” more narrowly than the word
“sums,” the most natural way to read the policy would be to assume that the policy
intends the narrower meaning only when it actually employs the term “damages.”
For example, the provision specifying that “damages that arise from the same or
related injurious material or act” fall within the same “Occurrence” would only
affect the allocation of “damages” among “Occurrences,” without affecting the
allocation of sums other than “damages,” and certainly without affecting the base
5
At trial, American Global also cited a policy exclusion for advertising injury “arising out
of the willful violation of a penal statute or ordinance.” The district court found that the TCPA
was a remedial statute, not a penal statute, and that the exclusion therefore did not apply. 272 F.
Supp. 2d at 1376. American Global has not challenged this ruling on appeal, so we have no
occasion to review it.
17
obligation to pay “sums.”
Finally, American Global cites Endorsement No. 4, a “Publishing Liability
Exclusion” that excludes “Personal Injury or Advertising Injury arising out of the
utterance or dissemination of matter published by or on behalf of the Insured.”
American Global argues that the endorsement, which took effect at the same time
as the main policy, excludes any advertising injury claim related to publishing-
related activities, including the fax campaign.
Read as broadly as American Global suggests, however, the endorsement
would completely wipe out the policy’s coverage of advertising injury, since no
readily conceivable advertising activity could take place without publishing
activities. It is not absolutely clear how Georgia law looks upon such an
endorsement. American Global argues that Georgia law would grant the
exclusionary endorsement precedence over conflicting terms in the policy, as it
would do with an endorsement adopted at a later time, see Utica Mut. Ins. Co. v.
Dunn, 129 S.E.2d 94, 96 (Ga. Ct. App. 1962) (holding that an endorsement
adopted at a later date takes precedence over the original policy terms because it
reflects a later expression of intent). Not surprisingly, Hooters argues that we
should treat the endorsement as equal with the conflicting terms in the policy and
follow the Georgia rule holding that “where one provision of the policy excludes
18
liability and another accepts liability . . . the provision most favorable to the
insured will be applied,” Welch v. Gulf Ins. Co., 190 S.E.2d 101, 103 (Ga. Ct.
App. 1972).
When an endorsement is entered at the same moment as the policy it
accompanies, rather than at a later time, and the endorsement purports to obliterate
coverage, as opposed to merely clarifying, narrowing, or modifying the terms of
coverage, we believe the approach more consistent with Georgia law is to read the
endorsement and the terms of the policy as being coequal and thus to enforce the
provision that grants coverage. Georgia rules of contract interpretation aim to
protect purchasers of insurance from misleading contracts by placing the burden on
the insurer to draft the insurance contract clearly. See James v. Pa. Gen. Ins. Co.,
306 S.E.2d 422, 431 (Ga. Ct. App. 1983) (“Since insurance policies are contracts
of adhesion penned by the insurer, when ambiguity is present, construction of the
policy is in favor of the insured, although it must not be unreasonable or strained.”)
(quoting Imperial Enterprises, Inc. v. Fireman’s Fund Insurance Co., 535 F.2d 287,
290 (5th Cir. 1972)) (internal quotation marks omitted); Alley v. Great Am. Ins.
Co., 287 S.E.2d 613, 616 (Ga. Ct. App. 1981) (“Exceptions, limitations and
exclusions to insuring agreements require a narrow construction on the theory that
the insurer, having affirmatively expressed coverage through broad promises,
19
assumes a duty to define any limitations on that coverage in clear and explicit
terms.”) (quoting Krug v. Millers’ Mut. Ins. Ass’n of Ill., 495 P.2d 949, 954 (Kan.
1972)) (internal quotation marks omitted). Through the lens of this state policy,
granting coverage and simultaneously sweeping it away through another provision
entered at the same time seems to pose the same risk to the purchaser regardless of
whether the exclusion clause appears within the insurance policy itself or within an
endorsement. We add that American Global has offered no alternative reading of
the publishing exclusion that excludes coverage for violations of the TCPA but
does not go as far as wiping out all coverage for advertising injury.
In short, because under Georgia law the policy’s coverage of advertising
injury applied to Hooters’s liabilities under the TCPA and was not nullified by
Endorsement No. 4, we affirm the district court’s order granting final summary
judgment in favor of Hooters and the Nicholson class.
III.
We conclude, however, that the district court erred when it found that the
insurance contract requires American Global to pay post-judgment interest on
Hooters’s liability, and we vacate the portion of the district court’s judgment that
awarded post-judgment interest.
The contract terms specifically mentioning post-judgment interest appear
20
under a section titled “Defense.” The policy provides that when American Global
“assume[s] the defense of any claim or suit,” American Global will pay “all
interest that accrues after entry of judgment and before we have paid, offered to
pay or deposited in court the part of the judgment that is within our applicable
Limit of Insurance.” American Global Insurance Company Policy at 1–2. The
structure and language of the policy thus suggest that American Global took on an
obligation to pay post-judgment interest only when it assumed the defense of the
associated claim.
The district court, however, reasoned that this post-judgment interest
provision could not be reconciled with the general coverage provision obligating
American Global to pay “those sums . . . that the Insured becomes legally
obligated to pay by reason of liability imposed by law.” The district court decided
to interpret the contract in favor of coverage by giving precedence to the coverage
provision and effectively disregarding the post-judgment interest provision.
Hooters of Augusta, Inc. v. Am. Global. Ins. Co., CV102-061, at 3–4 (S.D. Ga.
2004).
We disagree with the district court’s approach. Georgia law favors an
interpretation that gives effect to all provisions if such an interpretation is possible.
Boardman Petroleum, Inc. v. Federated Mut. Ins. Co., 498 S.E.2d 492, 494 (Ga.
21
1988) (“The contract is to be considered as a whole and each provision is to be
given effect and interpreted so as to harmonize with the others.”) (citing McCann
v. Glynn Lumber Co., 34 S.E.2d 839, 843 (Ga. 1945)). Disregarding provisions in
the contract should be a last resort.
A harmonious interpretation of the contract provisions is not only possible
but reasonable in this case. Both the provisions of the contract have effect if we
interpret the coverage provision as broadly establishing American Global’s general
obligations to cover Hooters’s liabilities and interpret the post-judgment interest
provision as more specifically controlling the scope of American Global’s
obligation to pay post-judgment interest. This approach also better comports with
the principle that in cases of apparent conflict, specific terms in a contract should
be interpreted to control general terms. See, e.g., Cent. Ga. Elec. Membership
Corp. v. Ga. Power Co., 121 S.E.2d 644, 646 (Ga. 1961); Broome v. Allstate Ins.
Co., 241 S.E.2d 34, 35 (Ga. Ct. App. 1977).
Georgia law thus favors interpreting the contract as imposing a duty to pay
post-judgment interest only when American Global took on the defense of the
associated claim. Because American Global did not defend Hooters from the
Nicholson class’s initial claim, American Global had an obligation to pay post-
judgment interest only if it had a duty to defend the claim and simply failed to
22
satisfy that duty.
We are convinced that American Global never had a duty to defend the
claim. The first part of the “Defense” section reads as follows:
II. Defense
A. We [American Global] shall have the right and duty to defend any
claim or suit seeking damages covered by the terms and conditions of
this policy when:
1. The applicable Limits of Insurance of the underlying policies
listed in the Schedule of Underlying Insurance and the Limits of
Insurance of any other underlying insurance providing coverage
to the Insured have been exhausted by payment of claims to
which this policy applies; or
2. Damages are sought for Bodily Injury, Property Damage,
Personal Injury or Advertising Injury covered by this policy but
not covered by any underlying insurance listed in the Schedule
of Underlying Insurance or any other underlying insurance
providing coverage to the Insured.
American Global Insurance Policy at 1 (emphasis added).
The insurance contract thus specified that American Global assumed an
obligation to defend Hooters only after Hooters’s primary coverage was exhausted.
When Hooters’s primary coverage was exhausted, it had already settled its dispute
with the Nicholson class and terminated its appeal. American Global’s contractual
duty to defend therefore never materialized. Because American Global never had a
duty to defend Hooters against the Nicholson class claim, it could not have had a
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duty to pay post-judgment interest.
IV.
Having carefully reviewed the record, the district court’s opinion, and the
arguments of the parties, we conclude that the district court committed no error
when it found that the advertising-injury provisions of the insurance contract
provide coverage for amounts owed for TCPA violations. We therefore affirm the
entry of summary judgment in favor of Hooters and the Nicholson class. However,
the district court erred when it ruled that the insurance contract required American
Global to pay post-judgment interest on all of Hooters’s outstanding liability.
AFFIRMED IN PART, VACATED IN PART, AND REMANDED.
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