Hee Jin Lowery, et al v. AmGuard Insurance Company

[PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-13738
____________________
HEE JIN LOWERY,
JOHN LOWERY,
Individually, and as assignees of Shou &
Shou, Inc.,
Plaintiffs-Counter Defendants-Appellees,
versus
AMGUARD INSURANCE COMPANY,
Defendant-Counter Claimant-Appellant.
____________________
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:20-cv-05148-TWT
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2 Opinion of the Court 22-13738
____________________
Before W ILLIAM P RYOR , Chief Judge, A BUDU , Circuit Judge, and
BARBER ,* District Judge.
W ILLIAM P RYOR , Chief Judge:
We sua sponte vacate our original opinion and substitute in
its place the following opinion.
This appeal presents a jurisdictional issue that we must ad-
dress before we can resolve the merits of equitable reformation of
an insurance policy under Georgia law. After Gina Lowery sus-
tained serious injuries from a hot-soup spill at Noodle College
Park, an Atlanta-area restaurant, she and her spouse sued Shou &
Shou, Inc., which owned and operated the restaurant. Shou &
Shou tendered the defense to and sought coverage from AmGuard
Insurance Company. But AmGuard denied coverage on the ground
that the policy named “Noodle, Inc.”—an entity that did not ex-
ist—as insured. Shou & Shou settled the suit and assigned the Low-
erys its rights under the policy. The Lowerys, as assignees, then
sued AmGuard for equitable reformation of the policy. The district
court granted partial summary judgment in favor of the Lowerys
and later entered a final judgment. We have jurisdiction to review
that judgment because the Lowerys implicitly moved for, and the
district court implicitly allowed, an amendment of the complaint.
* Honorable Thomas P. Barber, United States District Judge for the Middle
District of Florida, sitting by designation.
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3 Opinion of the Court 22-13738
And because reformation of the policy was proper under Georgia
law, we affirm.
I. BACKGROUND
Shou & Shou, Inc., owned several restaurants in the Atlanta
area under the trade name “Noodle.” One restaurant was located
on Main Street in College Park. In 2013, the Shou siblings, who
owned the company, bought businessowner’s insurance and work-
ers’ compensation insurance from AmGuard Insurance Company.
The businessowner’s policy named “Noodle, Inc.” as the insured
and listed its address as 3693 Main Street in College Park. The pol-
icy listed three locations at which Shou & Shou operated restau-
rants. Location 001 was 3693 Main Street in College Park—Noodle
College Park. The workers’ compensation policy was also issued to
“Noodle, Inc.” But the Shous never had any ownership interest in
an entity by that name. Noodle, Inc. was not a corporation at all;
“Noodle, Inc.” was “merely a reference to the tradename” of the
Noodle restaurants.
The Shous renewed the businessowner’s policy through the
2018–19 policy period. Each renewal retained the same name, mail-
ing address, and Location 001 for the insured. Shou & Shou paid all
policy premiums from its operating account. In 2014, AmGuard
learned during an audit of the workers’ compensation policy that
Shou & Shou was doing business as “Noodle” at the insured loca-
tions. AmGuard accordingly added Shou & Shou to the workers’
compensation policy from its inception. But AmGuard never
added Shou & Shou to the businessowner’s policy.
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4 Opinion of the Court 22-13738
AmGuard provided legal representation to Shou & Shou un-
der the businessowner’s policy despite the omission of its name. In
2016, Eled Addus sued several corporate and individual defendants
in the Noodle chain—but not Shou & Shou—for injuries she alleg-
edly sustained at Noodle College Park. The Shous tendered the de-
fense to AmGuard, which accepted representation and appointed
defense counsel. During that litigation, defense counsel informed
AmGuard that Noodle College Park was “owned and operated by
Shou & Shou, Inc.” AmGuard gave defense counsel authority to
substitute Shou & Shou as the proper defendant and to represent
it. Defense counsel later told AmGuard again that its “insured is
Shou & Shou, Inc. This company owns and operates [Noodle Col-
lege Park].” Yet, when AmGuard issued the 2016–17 busi-
nessowner’s policy later that year, it retained the same information
for the insured, its address, and Location 001. AmGuard eventually
settled the Addus suit by obtaining a release for Shou & Shou.
AmGuard also investigated a claim by Zuri Zahara Love for
injuries she sustained at Noodle College Park during the 2016–17
policy’s coverage period. Love sued multiple defendants in the
Noodle network, including Shou & Shou. Shou & Shou again ten-
dered the defense to AmGuard, which again accepted representa-
tion. The assigned defense counsel told AmGuard that the “com-
pany that owns [Noodle College Park] is Shou & Shou, Inc.” De-
fense counsel filed an answer for Shou & Shou and moved to dis-
miss the other defendants as improper parties. AmGuard later set-
tled the Love suit by obtaining a release for Shou & Shou.
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5 Opinion of the Court 22-13738
This appeal arises from a third lawsuit. Gina Lowery bought
soup at Noodle College Park during the effective dates of the 2016–
17 policy. The soup seriously injured her when it spilled through its
packaging into her lap. She and her husband sued Shou & Shou in
state court and demanded damages for personal injuries. Shou &
Shou tendered the defense to AmGuard. But this time, the insur-
ance company denied coverage on the ground that “Shou and Shou
Inc. is not a named insured” or “otherwise qualif[ied] as an insured
under the policy.” Shou & Shou reached a $1 million consent judg-
ment with the Lowerys and assigned them its rights under the
2016–17 policy.
The Lowerys sued AmGuard in the district court based on
diversity jurisdiction. 28 U.S.C. § 1332(a). Their amended com-
plaint alleged three counts: count one for equitable reformation of
the 2016–17 policy based on mutual mistake in not naming Shou &
Shou as the insured owner of Noodle College Park; count two for
breach of contract of the reformed 2016–17 policy; and count three
for bad-faith refusal to defend and indemnify Shou & Shou. Am-
Guard filed a counterclaim seeking a declaration that Shou & Shou
had no rights under the 2016–17 policy.
The parties moved for summary judgment following discov-
ery. The Lowerys sought partial summary judgment on counts one
and two of their complaint and against the counterclaim. The dis-
trict court granted partial summary judgment in favor of the Low-
erys. But that order did not resolve count three of the complaint.
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6 Opinion of the Court 22-13738
After AmGuard asked the district court to certify its order
for interlocutory review, see 28 U.S.C. § 1292(b), the Lowerys filed
a “notice of intent to abandon” the bad-faith claim alleged in count
three. The notice stated that the Lowerys had “elect[ed] to forego”
the penalties and fees they were seeking in count three and were
“abandon[ing]” that count. The Lowerys also filed a “request for
final judgment” under Federal Rule of Civil Procedure 58(d). The
request alleged that “[n]o further matters [we]re before the District
Court for resolution” because the Lowerys had abandoned the only
count not resolved by the partial summary judgment. The Lowerys
asked that the partial summary judgment “be made the final judg-
ment of the court.” They argued that the district court should not
certify an interlocutory appeal because the motion to certify would
become moot when “final judgment [was] entered consistent with
the Court’s summary judgment order.”
AmGuard filed a notice of non-opposition to the Lowerys’
request for final judgment based on their abandonment of the re-
maining claim. The district court entered a “final order and judg-
ment” the next day. It found that “no additional claims for adjudi-
cation remain[ed] pending.” And it declared its order granting par-
tial summary judgment the “final judgment of the Court.”
This Court submitted jurisdictional questions to the parties.
First, the Court asked whether the Lowerys’ “notice of intent to
abandon” count three effectively dismissed that claim of bad faith.
Second, the Court asked whether the allegations in the pleadings
satisfied the requirements of diversity jurisdiction.
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7 Opinion of the Court 22-13738
The parties argued for jurisdiction in a joint response. They
asked this Court to construe the Lowerys’ notice of intent to aban-
don as a motion to amend their complaint to drop count three and
to construe the final judgment as a grant of that motion. See F ED .
R. C IV. P. 15(a)(2). The jurisdictional panel agreed that the district
court had diversity jurisdiction but carried the question whether
count three had been resolved and whether the district court en-
tered a final order. See 28 U.S.C. § 1291.
II. STANDARDS OF REVIEW
We review our jurisdiction de novo. Cavalieri v. Avior Airlines
C.A., 25 F.4th 843, 848 (11th Cir. 2022). We also review de novo a
summary judgment, drawing all inferences in the nonmoving
party’s favor and affirming only if there are no genuine issues of
material fact. Sutton v. Wal-Mart Stores E., LP, 64 F.4th 1166, 1168
(11th Cir. 2023). We may affirm on any ground the record supports.
Mata Chorwadi, Inc. v. City of Boynton Beach, 66 F.4th 1259, 1263 (11th
Cir. 2023).
III. DISCUSSION
We divide our discussion into three parts. First, we explain
why we have jurisdiction to hear this appeal. Next, we explain that
the district court did not err by granting summary judgment in fa-
vor of the Lowerys on their claim for equitable reformation. Last,
we explain that the district court did not err by granting summary
judgment in favor of the Lowerys on their claim for breach of con-
tract.
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8 Opinion of the Court 22-13738
A. We Have Jurisdiction Under Section 1291.
Federal law grants us jurisdiction over appeals from “final
decisions of the district courts.” 28 U.S.C. § 1291. A decision ordi-
narily is “final” only when it adjudicates all claims of all parties to
an action. Corsello v. Lincare, Inc., 276 F.3d 1229, 1230 (11th Cir.
2001). The partial summary judgment did not resolve the bad-faith
claim in count three. But the district court rendered that partial
summary judgment “final” under Rules 54 and 58 after the Low-
erys filed their notice to abandon count three.
We adopt the parties’ proposed construction of the Low-
erys’ notice of intent to abandon and the final judgment: the Low-
erys moved under Rule 15(a)(2) to amend their complaint to drop
count three, and the district court granted that motion in declaring
that no claims remained pending for adjudication. See F ED . R. C IV.
P. 15(a)(2) (allowing amendment with “the court’s leave”). Rule 15
is the “most obvious” vehicle for “dismiss[ing] a single claim with-
out dismissing an entire action”—which is exactly what the Low-
erys wanted to do: they “did not wish to proceed to trial on” their
“one single claim.” See Perry v. Schumacher Grp. of La., 891 F.3d 954,
958 (11th Cir. 2018). That the Lowerys did not style their notice a
“motion” is not dispositive; we have suggested in a similar circum-
stance that we may “construe both the notice” and a responsive or-
der “as being brought under Rule 15.” See Klay v. United Healthgroup,
Inc., 376 F.3d 1092, 1106 (11th Cir. 2004). The Lowerys also satisfied
our Circuit law by “set[ting] forth the substance” of what we con-
strue as their “proposed amendment”; they notified the district
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9 Opinion of the Court 22-13738
court that they were electing to forego count three. See Cita Tr. Co.
AG v. Fifth Third Bank, 879 F.3d 1151, 1157 (11th Cir. 2018). And the
intent of the district court to grant the Lowerys leave to drop that
count is apparent from the face of the final judgment. We have ju-
risdiction over this appeal. See 28 U.S.C. § 1291.
B. The District Court Correctly Equitably Reformed
the 2016–17 Policy to Insure the True Owner of the Restaurant.
The Lowerys sought equitable reformation of the 2016–17
policy based on mutual mistake, which under Georgia law is “an
action intended to ‘do equity’ among the interested parties by
changing completed transactions to ref lect true intentions.” Chero-
kee Nat. Life Ins. v. Coastal Bank of Ga., 238 S.E.2d 866, 869 (Ga.
1977). A mistake of fact can be an “unintentional act, omission, or
error” owing to “ignorance, surprise,” or “misplaced confidence.”
G A. C ODE § 23-2-21(a). A mutual mistake is one “shared by” the
parties, Ledford v. Smith, 618 S.E.2d 627, 637 (Ga. Ct. App. 2005) (ci-
tation omitted), but the parties’ mistakes need not be “exactly the
same,” Bank of Am. v. Cuneo, 770 S.E.2d 48, 54 (Ga. Ct. App. 2015).
Georgia courts have defined mutual mistake at a high level of gen-
erality to accomplish the basic objective the parties set out to
achieve. See, e.g., Curry v. Curry, 473 S.E.2d 760, 761 (Ga. 1996)
(granting reformation when the parties to a deed intended to con-
vey a home lot); Occidental Fire & Cas. of N.C. v. Goodman, 793 S.E.2d
606, 609 (Ga. Ct. App. 2016) (granting reformation when the parties
intended to insure a restaurant and bar). Awareness of the correct
name of the party seeking reformation is not necessary for the mis-
take to be common to both parties. See Occidental, 793 S.E.2d at 609.
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10 Opinion of the Court 22-13738
Reformation is proper only when the party seeking it proves
mutual mistake with “clear, unequivocal, and decisive” evidence.
G A. C ODE § 23-2-21(c). But the mistake need not be “admitted by
both parties.” Ga. Farm Bureau Mut. Ins. v. Wall, 249 S.E.2d 588, 590–
91 (Ga. 1978). A court can reform an instrument even if the oppos-
ing party asserts in an affidavit that it did not share the claimant’s
intent. See Cuneo, 770 S.E.2d at 54.
We focus our analysis on the 2016–17 policy, not the original
2013–14 contract. A claim for reformation arises when the parties
“labored under the same misconception . . . at the time of the exe-
cution of the instrument.” Fox v. Washburn, 449 S.E.2d 513, 514 (Ga.
1994) (citation and internal quotation marks omitted). The Low-
erys correctly seek reformation of the 2016–17 policy because that
was the policy in force when Lowery sustained her injury at Noo-
dle College Park.
AmGuard cites Infinity General Insurance v. Litton to support
its argument that we should focus our analysis on the original pol-
icy, but AmGuard misreads that decision. 707 S.E.2d 885 (Ga. Ct.
App. 2011). Litton never discussed equitable reformation. It stands
only for the proposition that a policy is a “renewal,” not a “new
contract,” when “its terms . . . carr[y] forward the same obliga-
tion[s]” as an earlier policy. Id. at 888–89. The parties do not dispute
that the 2016–17 policy is, as it says on its face, a “[r]enewal” of the
original policy. It does not follow that the 2016–17 policy is not the
proper instrument for our analysis. The 2016–17 policy does not
expressly “void” its predecessor policies. See Brannen v. Gulf Life Ins.,
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11 Opinion of the Court 22-13738
410 S.E.2d 763, 764 (Ga. Ct. App. 1991) (finding that a “duplicate”
policy was the proper instrument for the analysis of mistake when
it “clearly and unequivocally” voided an earlier policy).
AmGuard also argues that the district court erred by consid-
ering events after the execution of the relevant policy, but we disa-
gree. Courts may consult the parties’ “subsequent conduct” as “ev-
idence of their true intent.” First Chatham Bank v. Liberty Cap., LLC,
755 S.E.2d 219, 224 (Ga. Ct. App. 2014). The “actual conduct of
both parties” following contract formation is probative evidence of
mutual mistake. Fox, 449 S.E.2d at 514.
A mutual mistake in naming the insured owner of a restau-
rant provides a basis for equitable reformation. In Occidental, a lim-
ited liability company bought a bar and restaurant business. See 793
S.E.2d at 608. The individual member of the company then signed
a commercial insurance application for the restaurant that identi-
fied the restaurant and its former owner as the insured. Id. The
member later accepted an insurance proposal listing the former
owner as the insured. Id. Then the estate of a patron who had been
stabbed to death in the restaurant sued the company for wrongful
death. The company sought defense and indemnification under the
policy. But the insurer denied coverage on the ground that the en-
tity “was not listed as, and did not come within the definition of,
an insured under the policy.” Id. After the restaurant settled the suit
and assigned its policy rights to the estate, the estate obtained a
reformation of the policy. Id. The Georgia Court of Appeals held
that the insurer failed to explain why either party to the policy
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12 Opinion of the Court 22-13738
“would have intended for [it] to provide . . . coverage to the prior
owner who no longer had any interest in the business, rather than
the actual current owner.” Id. at 609. The insurer “relied on” a mis-
taken application when it issued the policy and “labored under the
same misconception that the name of the insured should be the
prior corporate owner’s name.” Id.
Occidental controls this appeal. AmGuard insists that it could
not have shared Shou & Shou’s mistake because it did not know the
“identit[y]” of the intended insured and could not have intended to
“name” Shou & Shou as an insured. But Georgia law does not de-
mand that degree of specificity in defining a mutual mistake. Noth-
ing in Occidental suggests that the insurer knew or had reason to
know the identity or name of the limited liability company. The
mistake was that the insured should be an entity other than the true
owner. And the mutual mistake here is identical: the 2016–17 policy
insured a fictional entity with no insurable interest instead of the
owner of the business that the policy was meant to insure, and the
insurer reaped premiums even as the owner was denied coverage.
As in Occidental, the parties could not have intended that outcome.
AmGuard argues that Occidental is “materially distinguisha-
ble” on three grounds, but each argument misses the mark. First,
AmGuard contends that the 2016–17 policy was not issued to a
prior owner of the insured business. But nothing in Occidental sug-
gests the materiality of the fact that the mistaken insured was the
prior owner of the bar and restaurant. What mattered was that the
mistaken insured was not the “current owner”—that is, the true
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13 Opinion of the Court 22-13738
owner. Id. (emphasis added). Second, AmGuard asserts that the
policy “did provide coverage”—to “Noodle Life” and for “various
propert[ies]” owned by the Shous—and so was “not issued to an
entity with no insurable interest.” But the record contains no evi-
dence that the policy insured “Noodle Life.” The original policy
and the 2016–17 policy were both issued to “Noodle, Inc.” And the
parties agree that “Noodle, Inc. was not an actual corporation” dur-
ing the coverage period and could have “no insurable interest.”
Third, AmGuard argues that because the Shous “own several enti-
ties,” no evidence “suggest[s] that the parties would have intended
to solely insure Shou & Shou as opposed to Noodle [Inc.]” On the
contrary, no evidence refutes the Lowerys’ consistent assertion that
the Shous intended to insure the owner of Noodle College Park—
Shou & Shou.
Lee v. American Central Insurance, on which AmGuard relies,
is inapposite. 530 S.E.2d 727 (Ga. Ct. App. 1999). The plaintiff in Lee
sought reformation of an insurance policy to which he was not a
party and that never mentioned his name. Id. at 729. The court of
appeals explained that the insurer “was not informed” that the
plaintiff owned the property, that the policy never mentioned the
plaintiff, and that the plaintiff “did not conduct business” with the
insurer “related to the policy.” Id. at 730. AmGuard, in contrast, was
informed that Shou & Shou owned Noodle College Park, and Shou
& Shou did conduct business with AmGuard under the policy. Am-
Guard’s appointed defense counsel in the Addus suit told AmGuard,
“Your insured is Shou & Shou, Inc. This company owns and oper-
ates [Noodle College Park].” Defense counsel in the Love suit told
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14 Opinion of the Court 22-13738
AmGuard substantially the same thing. Shou & Shou paid all pre-
miums for the policy and its predecessor policies out of its operat-
ing account. AmGuard also settled the Addus and Love suits by ob-
taining releases in favor of Shou & Shou. And AmGuard, in evalu-
ating policy renewal and premium rates for “Noodle, Inc.,” consid-
ered prior claims it had handled for Shou & Shou at Noodle College
Park.
Reformation of the policy does not prejudice AmGuard. Alt-
hough AmGuard contends that reformation would be prejudicial
because it would require insuring Shou & Shou, an entity it “never
agreed” or “intended” to insure, the same could be said of the in-
surer in Occidental. See 793 S.E.2d at 609. AmGuard also argues that
the policy charged premiums ref lecting the risks it judged “com-
mensurate with insuring a single business entity” and that reform-
ing the policy to “add” Shou & Shou would entail insuring “multi-
ple entities.” But the Lowerys seek only to substitute Shou & Shou
for “Noodle, Inc.,” a nonexistent entity; reformation would not
change the “number of entities to be insured.” And though Am-
Guard considers it “obviously prejudicial” to be “exposed” to the
$1 million consent judgment in the Lowerys’ state suit, the Georgia
court rejected that argument in materially identical circumstances
in Occidental, see id. Other Georgia courts too have rejected preju-
dice arguments grounded in financial loss when the contract is oth-
erwise reformable. See, e.g., Brannen, 410 S.E.2d at 763–65.
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15 Opinion of the Court 22-13738
C. The Lowerys’ Claim of Breach of Contract
Merges with Reformation of the Policy.
The district court also did not err by granting summary
judgment in favor of the Lowerys on their claim of breach of con-
tract. A claim for equitable reformation and a claim for damages
f lowing from breach of the reformed contract are “only one claim
for relief.” Wall, 249 S.E.2d at 590. Reformation relates back to the
date of the policy’s execution. Aames Funding Corp. v. Henderson, 620
S.E.2d 503, 506 (Ga. Ct. App. 2005). Because the district court cor-
rectly reformed the 2016–17 policy to substitute in Shou & Shou as
the insured, the policy required AmGuard to defend and indemnify
Shou & Shou in the Lowerys’ state suit. See Occidental, 793 S.E.2d
at 609.
IV. CONCLUSION
We AFFIRM the judgment in favor of the Lowerys.
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