Great American Insurance Company v. Allied World Assurance Company, Inc.

USCA11 Case: 22-12496 Document: 31-1 Date Filed: 05/31/2023 Page: 1 of 11
[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-12496
Non-Argument Calendar
____________________
GREAT AMERICAN INSURANCE COMPANY,
Plaintiff-Counter Defendant-Appellee,
versus
ALLIED WORLD ASSURANCE COMPANY, INC.,
Defendant-Counter Claimant-Appellant.
____________________
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:20-cv-02984-AT
____________________
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2 Opinion of the Court 22-12496
Before JORDAN, BRANCH, and BRASHER, Circuit Judges.
PER CURIAM:
This appeal is about which of two insurance companies
must foot the bill for a settlement involving their mutual insured.
Great American Insurance Company paid out and sued Allied
World Assurance Company, alleging that because it was the um-
brella insurer and Allied World was the primary insurer, Great
American was obligated to pay only “in excess” of Allied World’s
policy agreement. The district court agreed, granting summary
judgment in Great American’s favor and awarding attorney’s fees
under O.C.G.A. § 9-11-68(e) based on Allied World’s frivolous ar-
guments.
On appeal, Allied World makes two arguments. First, it ar-
gues the district court erred by concluding Allied World’s obliga-
tion takes priority over Great American’s because its policy con-
tains an applicable “excess clause.” Second, Allied World argues at-
torney’s fees are inappropriate because its arguments were made
in good faith and not frivolous. Georgia law precludes Allied
World’s first argument. Even so, we agree that attorney’s fees are
not appropriate under O.C.G.A. § 9-11-68(e). Accordingly, we af-
firm in part and reverse in part.
I.
Tribridge Residential is a company that manages apartment
complexes. In 2014, two women were shot and killed at an
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22-12496 Opinion of the Court 3
apartment complex that Tribridge managed in Decatur, Georgia.
An ensuing lawsuit alleged Tribridge negligently failed to imple-
ment security and safety measures at the apartment complex and
created a nuisance by allowing a dangerous environment to persist.
Tribridge settled that suit with plaintiffs.
Three different insurance companies insured Tribridge.
AmTrust International Underwriters DAC, an insurance company
that issued Tribridge a primary commercial general liability policy,
paid out its policy limit toward the settlement. Then, Allied World
and Great American disagreed about which policy was the priority
coverage for the rest of the settlement.
Allied World Policy
Allied World issued Tribridge a commercial general liability
policy. The policy states Allied World “will pay those sums that the
insured becomes legally obligated to pay as damages because of
‘bodily injury’ to which this insurance applies.” Although Allied
World issued a “primary policy,” it contains an excess clause pur-
porting to render its coverage excess of other insurance when lia-
bility arises from Tribridge’s property management activities:
“With respect to [Tribridge’s] liability arising out of [its] manage-
ment of property for which [it is] acting as real estate manager, this
insurance is excess over any other . . . insurance available to you,
whether such insurance is primary or excess.”
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4 Opinion of the Court 22-12496
Great American Policy
Great American issued a “Commercial Umbrella Coverage”
policy which includes Tribridge as an additional insured. The pol-
icy covers “those sums in excess of the ‘Retained Limit’ that the
‘insured’ becomes legally obligated to pay imposed by law or . . .
because of ‘bodily injury.’” The “Retained Limit” is based on the
coverage from underlying insurance policies, including coverage
from Allied World. In particular, the policy contains a “schedule of
underlying insurance” including Allied World’s general liability
coverage. The Great American policy also includes an “other insur-
ance” clause: “If other insurance applies to a loss that is also cov-
ered by this policy, this policy will apply excess of the other insur-
ance” unless “the other insurance is specifically written to be excess
of this policy.”
* * *
Great American paid the rest of the settlement against
Tribridge and sued Allied World, seeking equitable contribution
and a declaratory judgment that its coverage obligation is not trig-
gered until Allied World’s policy limit is exhausted. The district
court granted summary judgment for Great American. Relying on
Atkinson v. Atkinson, 325 S.E.2d 206, 214 (Ga. 1985), the district
court concluded that Georgia law obligates Great American (as an
umbrella insurer) to pay only in excess of Allied World (as a pri-
mary insurer). It also awarded Great American attorney’s fees un-
der O.C.G.A. § 9-11-68(e), concluding that Allied World’s argu-
ments were frivolous considering Atkinson. This appeal followed.
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22-12496 Opinion of the Court 5
II.
Allied World raises two arguments on appeal. First, it argues
the district court erred by concluding Allied World’s obligation
takes priority over Great American’s because its policy contains an
applicable “excess clause.” Second, Allied World argues attorney’s
fees are inappropriate because its arguments were made in good
faith. We address each in turn.
A.
Allied World argues the district court erred by granting sum-
mary judgment for Great American because Great American’s in-
surance policy coverage should take priority. Specifically, Allied
World contends that the “excess clause” in its policy obligates it to
pay only after Great American.
“We review the district court’s grant of summary judgment
de novo.” Pelaez v. Gov’t Emps. Ins. Co., 13 F.4th 1243, 1249 (11th
Cir. 2021). Georgia law applies to this insurance contract dispute.
See Bryan v. Hall Chem Co., 993 F.2d 831, 834 (11th Cir. 1993) (ap-
plying Georgia’s conflict of law rules in a Georgia-based diversity
suit); Convergys Corp. v. Keener, 582 S.E.2d 84, 86−87 (Ga. 2003)
(explaining Georgia applies the law where a contract is made or
performed).
Georgia law delineates between a “primary” insurance pol-
icy—“written to provide primary coverage”—and an “umbrella”
policy—operating as “true excess over and above any type of
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6 Opinion of the Court 22-12496
primary insurance.” Atkinson, 326 S.E.2d at 214. An insured may
have coverage from multiple primary and umbrella insurers, like
Tribridge did here (i.e., Amtrust, Allied World, and Great Ameri-
can). That said, all primary coverage must be exhausted before um-
brella policy coverage is triggered. Id.
Primary policies precede umbrella policies even when the
primary policy includes an applicable “excess clause.” Id. For exam-
ple, in Atkinson v. Atkinson, two insurance companies disputed
their priority of payment related to a car crash settlement. Id. at
213. One company provided a primary liability policy, and the
other provided an umbrella policy. Id. But the primary insurance
policy included an excess clause: “any insurance we provide for a
vehicle you do not own shall be excess over any other collectible
insurance.” Id. And in Atkinson, the insured was driving a car he
did not own at the time of the accident, which the primary insurer
argued triggered its excess clause and obligated it to pay only after
the umbrella insurer. Id.
The Georgia Supreme Court disagreed. Id. at 214. The court
adopted the “prevailing rule” that “umbrella policies, almost with-
out dispute, are regarded as true excess over and above any type of
primary coverage, excess provisions arising in regular policies in
any manner, or escape clauses.” Id. (emphasis added). Even despite
the primary insurance policy’s excess clause, the court determined
the policy “was written to provide primary coverage” and should
pay before the “true excess policy . . . not written to provide pri-
mary coverage.” Id. In other words, primary policies take priority
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22-12496 Opinion of the Court 7
to umbrella policies, even when the primary policy includes an ap-
plicable excess clause. Id.
As the district court explained, excess clauses in primary in-
surance policies avoid double payment where the insured has other
primary insurance. For instance, in Atkinson, the primary policy’s
excess clause—seeking to transform the policy to “excess over any
other collectible insurance”—might allow it to follow another pri-
mary policy. But excess clauses do not allow the primary insurer to
step to the back of the line behind umbrella coverage.
The rule in Atkinson is dispositive here. Allied World’s pol-
icy provides “commercial general liability coverage” for “sums that
the insured becomes legally obligated to pay as damages because
of ‘bodily injury.’” On the other hand, Great American’s “commer-
cial umbrella coverage” policy only covers “those sums in excess
of” listed underlying insurance. See Progressive Classic Ins. Co. v.
Nationwide Mut. Fire Ins. Co., 670 S.E.2d 497, 500−01 (Ga. App.
2008) (explaining that an insurance policy was “specifically in-
tended to provide excess coverage” when it required the insured
maintain underlying insurance). As in Atkinson, the Allied World
policy is “written to provide primary coverage,” and the Great
American policy is the “true excess policy.” Atkinson, 326 S.E.2d at
214. Accordingly, Allied World’s primary policy must be exhausted
before the Great American umbrella policy applies.
The Allied World policy’s excess clause—seeking to change
its obligation when Tribridge is acting as a property manager—is
of no consequence here. The clause provides: “With respect to
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8 Opinion of the Court 22-12496
[Tribridge’s] liability arising out of [its] management of property
for which [it is] acting as real estate manager, this insurance is ex-
cess over any other . . . insurance available to you, whether such
insurance is primary or excess.” Like the excess clause in Atkinson,
which purported to make the primary insurance “excess over any
other collectible insurance,” Allied World’s excess clause does not
change its obligation vis-à-vis Great American, the umbrella in-
surer. Atkinson, 326 S.E.2d at 214. Atkinson simply forecloses Al-
lied World’s ability to jump rungs on the insurance tower. See id.
Allied World tries to distinguish Atkinson by (1) confining
its holding to excess clauses involving car ownership, or (2) based
on the language in the Great American policy. We disagree.
First, we cannot distinguish Atkinson based on the substance
of the excess clause. Instead, the Georgia Supreme Court adopted
a general “prevailing rule” that umbrella policies are excess over
“any type of primary coverage, excess provisions arising in regular
policies in any manner, or escape clauses.” Id. Atkinson gives no
indication this “prevailing rule” is confined to excess clauses involv-
ing car ownership. Id.
Second, Allied world contends the Great American policy
language takes our situation outside of Atkinson: the Great Amer-
ican policy will precede “other insurance . . . specifically written to
be excess of this policy.” Allied World’s excess clause does not fit
this criterion. The Allied World policy is included in the Great
American policy’s “underlying insurance,” making it part of the
“retained limit” and thus primary coverage before Great American.
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22-12496 Opinion of the Court 9
In sum, Allied World is first in the pecking order as the “pri-
mary insurer.” We affirm the district court’s grant of summary
judgment for Great American.
B.
Allied World argues the district court erred by awarding at-
torney’s fees. “We review a district court’s award of attorneys’ fees
for abuse of discretion.” Waters v. Int’l Precious Metals Corp., 190
F.3d 1291, 1293 (11th Cir. 1999).
Under Georgia law, O.C.G.A. § 9-11-68(e), the court may
award attorney’s fees to the prevailing party after a “verdict or
judgment is rendered” if the opposing party presented “frivolous
claims or defenses.” O.C.G.A. § 9-11-68(e). Even so, as indicated by
the statute’s title—“Written offers to settle tort claims; liability of
refusing party for attorney’s fees and expenses”—the statute ap-
plies only after the opposing party rejects a written offer to settle a
tort claim. See id. § 9-11-68(a); see also Anglin v. Smith, 853 S.E.2d
142, 144 (Ga. Ct. App. 2020).
Assuming without deciding that Section 9-11-68(e) applies to
this contract claim between two insurance companies, we cannot
say that Allied World’s defenses are “frivolous,” warranting its pay-
ment of attorney’s fees. The statute defines frivolous claims or de-
fenses as those that “lack substantial justification or that [are] not
made in good faith” and “to which there existed such a complete
absence of any justiciable issue of law or fact that it could not be
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10 Opinion of the Court 22-12496
reasonably believed a court would accept” the position. O.C.G.A.
§ 9-11-68(e)(1)(A), (B).
After a hearing, the district court determined that Allied
World pursued the litigation in good faith, but the district court
nevertheless concluded that Allied World presented frivolous de-
fenses because, in the light of Atkinson v. Atkinson, its arguments
that its excess clause changed its coverage obligations “lacked sub-
stantial justification.” Even though we agree with the district court
that Atkinson forecloses Allied World’s arguments about its order
of priority, we cannot agree that Allied World’s arguments are friv-
olous. That is, there was not “such a complete absence of any jus-
ticiable issue of law or fact that it could not be reasonably believed
a court would accept” Allied World’s position. O.C.G.A. § 9-11-
68(e)(1)(B).
We note that two district court decisions from the same dis-
trict support Allied World’s concededly good faith belief that “ex-
tension, modification, or reversal of existing law may be success-
ful.” Id. § 51-7-80(4); see ACE Prop. & Cas. Ins. Co. v. Liberty Sur-
plus Ins. Corp., No. 1:15-cv-0949-SCJ, 2018 WL 11249930, *10
(N.D. Ga. Mar. 27, 2018); Phoenix Ins. Co. v. Nationwide Prop. &
Cas. Ins. Co., No. 1:12-CV-00660-JOF, 2013 WL 11975142, *3-4
(N.D. Ga. Apr. 22, 2013). In the first case, ACE Property, the district
court read an “excess clause” to alter the priority of obligations be-
tween two excess insurers. ACE Prop. & Cas. Ins. Co., 2018 WL
11249930, at *10. Although ACE Property concerned two excess
policies, such that its analysis is not directly on point, the excess
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22-12496 Opinion of the Court 11
clause language in ACE Property resembles Allied World’s excess
clause. See id. In the second case, Phoenix, the court avoided ap-
plying Atkinson by reading Atkinson as limited to “owner/non-
owner” policies related to “automobile insurance.” Phoenix Ins.
Co., 2013 WL 11975142, *3. Although we are unwilling to distin-
guish Atkinson in the same way, this reasoning provides a good
faith basis for Allied World to raise the same argument in its favor.
See O.C.G.A. § 9-11-68(e)(1)(A).
III.
We AFFIRM summary judgment for Great American, but
we REVERSE the award of attorney’s fees.