ATAIN SPECIALTY INSURANCE COMPANY v. 247 CONSTRUCTION COMPANY LLC et al

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION
ATAIN SPECIALTY INSURANCE 	)
COMPANY, 	)
)
)
Plaintiff, 	)
)
v. 	) 	CIVIL ACTION NO. 5:24-cv-433 (MTT)
)
247 CONSTRUCTION COMPANY LLC, 	)
et al., 	)
)
)
Defendants. 	)
)
ORDER
In this declaratory judgment action, Plaintiff Atain Specialty Insurance Company
(“Atain”) moves for summary judgment, arguing it has no duty to defend or indemnify
Defendants Darin Simmons and 247 Construction Company, LLC (“247 Construction”),
in a lawsuit brought by Defendants Frank and Sondra Erwin for negligent and defective
workmanship on the ground-up construction of a house on the Erwins’ property. ECF
30-1 at 1. For the following reasons, Atain’s motion is GRANTED. However, Atain’s
request for recoupment of costs is DENIED.
I. 	BACKGROUND1
Frank and Sondra Erwin employed 247 Construction, owned by Simmons, to
construct a residential home in Eastman, Georgia. ECF 1-1 ¶¶ 22, 27. Construction
1 The following facts are taken from the Erwins’ complaint in the underlying lawsuit. ECF 1-1; see Penn-
Am. Ins. Co. v. Disabled Am. Veterans, Inc., 268 Ga. 564, 565, 490 S.E.2d 374 (1997) (“[S]ince the
contract obligates the insurer to defend claims asserting liability under the policy; even if groundless, the
allegations of the complaint against the insured are looked to determine whether a liability covered by the
policy is asserted.” (citation modified)).
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began in September 2019. Id. ¶ 28. Shortly after construction commenced, the Erwins
complained about a litany of workmanship problems and deviations from construction
plans. Id. ¶ 30. Simmons and 247 Construction never completed the construction
project. Id. ¶¶ 31, 34.
The Erwins brought suit against Simmons and 247 Construction, identifying the
following issues:
[I]mproper fabrication and assembly of the framework and foundation;
improper installation of the siding; improper fabrication and assembly of the
roof; improper fabrication and assembly of the front porch; improper
fabrication and assembly of the back porch; improper fabrication and
installation of various interior components, including but not limited to
shelving, door knobs, shiplap, drywall, cabinets, trim, doors, clothing rods,
and kitchen backsplash; incorrect installation of the garbage disposal;
incorrect installation of the fireplace; incorrect installation of security lights;
failure to install doorbell; a voluminous number of miscellaneous issues with
aesthetics; 	failure 	to 	provide 	the 	garage 	code 	to 	Plaintiffs; 	incorrect
installation 	and 	cleaning 	of 	windows; 	and 	failure 	to 	complete 	the
construction of the Property.
Id. ¶¶ 32, 56, 66.
The Erwins assert claims for: 1) breach of contract for failure to adequately complete
construction of the property, 2) negligent construction, 3) negligence per se,2 and 4)
negligent supervision of subcontractors.3 Id. ¶¶ 54–86.
During the events giving rise to the Erwins’ complaint, Simmons Construction, a
business owned by Simmons, had commercial general liability (“CGL”) insurance with
Atain (“the Policy”). ECF 1-2; 1-3; 30-2 ¶ 1. The Policy states that Atain “will pay those
2 The underlying complaint alleges 247 Construction lacked a required residential contractor license
despite Simmons’ initial representations to the contrary. Id. ¶¶ 26, 72
3 The underlying complaint also asserts vicarious liability against 247 Construction as Count V. ECF 1-1
¶¶ 87–89. In addition, the Erwins assert claims against other contractors: Handy Andy of Eastman, Inc.,
William Brown, John Holcomb, and Kennith King, relating to faulty floor installation and failure to provide
purchased construction materials. Id. ¶¶ 90–130.
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sums that the insured becomes legally obligated to pay as damages because of ‘bodily
injury’ or ‘property damage’ to which this insurance applies.” ECF 1-2 at 48; 1-3 at 48;
30-2 ¶ 1. It also states, “[w]e will have the right and duty to defend the insured against
any ‘suit’ seeking those damages.” ECF 1-2 at 48; 1-3 at 48. The insurance applies to
“property damage” caused by an “occurrence,” but it contains several business risk
exclusions that limit coverage. ECF 1-2 at 48, 51–52; 1-3 at 48, 51–52; 30-2 ¶¶ 3, 4, 6–
11.
In September 2022, Atain agreed to participate in the defense of a suit brought
by the Erwins against Simmons and 247 Construction, subject to a reservation of rights.
ECF 1-4; 30-2 ¶¶ 15, 25. This first suit was dismissed without prejudice, and the Erwins
filed a new suit against 247 Construction and Simmons in June 2024. ECF 30-2 ¶ 15.
After receiving notice of the new suit, Atain issued a supplemental reservation of rights
letter, reserving the right to seek a judicial determination in a declaratory judgment
action and to “seek reimbursement of any non-covered attorneys’ fees and costs.” ECF
1-5 at 14; 30-2 ¶¶ 16, 26, 27. Atain now seeks such relief. ECF 1 at 14–15; ECF 30-1 at
20.
II. 	STANDARD
A “court shall grant summary judgment if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). “When the moving party has the burden of proof at
trial, that party must show affirmatively the absence of a genuine issue of material fact:
it must support its motion with credible evidence . . . that would entitle it to a directed
verdict if not controverted at trial. In other words, the moving party must show that, on
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all the essential elements of its case on which it bears the burden of proof at trial, no
reasonable jury could find for the nonmoving party.” United States v. Four Parcels of
Real Prop., 941 F.2d 1428, 1438 (11th Cir. 1991) (citation modified). “Only when that
burden has been met does the burden shift to the non-moving party to demonstrate that
there is indeed a material issue of fact that precludes summary judgment.” Clark v.
Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991).
In contrast, “[w]hen the nonmoving party has the burden of proof at trial, the
moving party is not required to ‘support its motion with affidavits or other similar material
negating the opponent’s claim.’” Four Parcels of Real Prop., 941 F.2d at 1437 (quoting
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). The moving party “simply may
show . . . that there is an absence of evidence to support the nonmoving party’s case.”
Id. at 1438 (cleaned up). “Assuming the moving party has met its burden, the non-
movant must then show a genuine dispute regarding any issue for which it will bear the
burden of proof at trial.” Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220,
1224–25 (11th Cir. 2002) (citing Celotex Corp., 477 U.S. at 324).4
In determining whether a genuine dispute of material fact exists, the Court “must
avoid weighing conflicting evidence or making credibility determinations.” Damon v.
Fleming Supermarkets of Fla., Inc., 196 F.3d 1354, 1361 (11th Cir. 1999). Instead, “[t]he
4 Under Georgia law, the insured has the burden to prove that it suffered a loss covered by the policy, that
it complied with the conditions precedent under the policy, and that the insurer waived its right to raise a
certain defense. Rsrv. Life Ins. Co. v. Davis, 224 Ga. 665, 667, 164 S.E.2d 132 (1968); Wolverine Ins.
Co. v. Sorrough, 122 Ga. App. 556, 557, 177 S.E.2d 819 (1970); Metropolitan Life Ins. Co. v. Smith, 48
Ga. App. 245, 247, 172 S.E. 654 (1934); see also 17A Steven Plitt et al., Couch on Insurance § 254:11
(3d ed. 2022). However, the insurer bears the burden to prove a policy exclusion, exception, or other
affirmative defense applies. Rsrv. Life Ins. Co. v. Ayers, 217 Ga. 206, 213, 121 S.E.2d 649 (1961); see
also 17A Steven Plitt et al., Couch on Insurance § 254:12 (3d ed. 2022). Thus, Simmons and 247
Construction have the burden of proving that the Policy covers the Erwins’ claims; Atain has the burden of
proving that any exclusion applies.
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evidence of the non-movant is to be believed, and all justifiable inferences are to be
drawn in his favor.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). A
material fact is any fact relevant or necessary to the outcome of the suit, and a factual
dispute is genuine “if the evidence is such that a reasonable jury could return a verdict
for the nonmoving party.” Id. at 248. Furthermore, “[a]ll material facts contained in the
movant’s statement which are not specifically controverted by specific citation to
particular parts of materials in the record shall be deemed to have been admitted,
unless otherwise inappropriate.” M.D. Ga. L.R. 56.
III. 	DISCUSSION
“[T]he insurer is obligated to defend where . . . the allegations of the complaint
against the insured are ambiguous or incomplete with respect to the issue of insurance
coverage.” Penn-Am. Ins. Co., 268 Ga. at 565, 490 S.E.2d 374. “[I]t is only where the
complaint sets forth true factual allegations showing no coverage that the suit is one for
which liability insurance coverage is not afforded and for which the insurer need not
provide a defense.”5 Id. “Where the claim is one of potential coverage, doubt as to
liability and [the] insurer's duty to defend should be resolved in favor of the insured.” Id.
(citation modified). “Though the duty to defend and the duty to indemnify are
independent obligations and should generally be analyzed separately, the absence of a
duty to defend is dispositive of the duty to indemnify.” Travelers Indem. Co. of
5 Simmons argues that Atain’s defense under a reservation of rights shows there is a genuine dispute as
to coverage. ECF 43 ¶ 3. But under Georgia law, “[i]f an insurer has knowledge of the facts but does not
feel safe in making a determination as to a proper course of action it may enter upon a defense under a
reservation of rights and then seek a declaratory judgment.” S. Tr. Ins. Co. v. Eason, 134 Ga. App. 827,
829, 216 S.E.2d 667 (1975) (citation omitted).
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Connecticut v. Peachstate Auto Ins. Agency, Inc., 357 F. Supp. 3d 1259, 1264 (N.D.
Ga. 2019) (citations omitted).
Moreover, “[i]nsurance is a matter of contract and the parties are bound by the
terms of the policy.” Richmond v. Ga. Farm Bureau Mut. Ins. Co., 140 Ga. App. 215,
221, 231 S.E.2d 245 (1976). Under Georgia law, the interpretation of an insurance
policy is generally “a question of law,” to which courts apply the “ordinary rules of
contract construction.” O.C.G.A. § 13-2-1; Boardman Petroleum, Inc. v. Federated Mut.
Ins. Co., 269 Ga. 326, 327, 498 S.E.2d 492 (1998). “The cardinal rule of construction is
to ascertain the intention of the parties. If that intention is clear and it contravenes no
rule of law and sufficient words are used to arrive at the intention, it shall be enforced
irrespective of all technical or arbitrary rules of construction.” O.C.G.A. § 13-2-3.
“[U]nder the rules of contract construction, the policy is construed against [the
insurer] as the drafter of the policy and any exclusions from coverage are strictly
construed.” Old Republic Union Ins. Co. v. Floyd Beasley & Sons, Inc., 250 Ga. App.
673, 677, 551 S.E.2d 388 (2001). “When the language of an insurance policy defining
the extent of the insurer's liability is unambiguous and capable of but one reasonable
construction, the court must expound the contract as made by the parties.” Burnette v.
Ga. Life & Health Ins. Co., 190 Ga. App. 485, 485, 379 S.E.2d 188 (1989). “Where a
term of a policy of insurance is susceptible to two or more constructions, even when
such multiple constructions are all logical and reasonable, such term is ambiguous and
will be strictly construed against the insurer as the drafter and in favor of the insured.”
Ga. Farm Bureau Mut. Ins. Co. v. Meyers, 249 Ga. App. 322, 324, 548 S.E.2d 67
(2001); see O.C.G.A § 13-2-2(5).
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A. Policy Coverage
It is a “settled notion that CGL coverage generally is intended to insure against
liabilities to third parties for injury to property or person, but not mere liabilities for the
repair or correction of the faulty workmanship of the insured.” Taylor Morrison Servs.,
Inc. v. HDI-Gerling Am. Ins. Co., 293 Ga. 456, 460–61, 746 S.E.2d 587 (2013); see also
Sapp v. State Farm Fire & Cas. Co., 226 Ga. App. 200, 486 S.E.2d 71, 75 (1997) (“The
coverage applicable under [a] CGL policy is for tort liability for injury to persons and
damage to other property, and not for contractual liability of the insured for economic
loss because the product or completed work is not that for which the damaged person
bargained.” (citation modified)). At bottom, the Erwins’ complaint asserts liability for
incomplete and faulty workmanship. See ECF 1-1. Consistent with the general purpose
of most CGL policies, the Policy here unambiguously excludes coverage.
1. 	Property damage coverage
The Policy covers “property damage” caused by an “occurrence.” ECF 1-2 at 48;
1-3 at 48; 30-2 ¶ 3. It defines “property damage” as “[p]hysical injury to tangible
property, including all resulting loss of use of that property” or “[l]oss of use of tangible
property that is not physically injured.” ECF 1-2 at 62; 1-3 at 62; 30-2 ¶ 5.6 Under
Georgia law, “‘property damage,’ as that term is used in the standard CGL policy,” like
this one, “necessarily must refer to property that is nondefective, and to damage beyond
mere faulty workmanship.” Taylor Morrison Servs., 293 Ga. at 461, 746 S.E.2d 587.
“Property damage” may include damage to non-defective work on the same project. Id.
6 The Policy defines an “occurrence” as an “accident.” ECF 1-2 at 62; 1-3 at 62; 30-2 ¶ 4. The Georgia
Supreme Court has held an “occurrence” does not “require damage to the property or work of someone
other than the insured.” See Taylor Morrison Servs., Inc., 293 Ga. at 460, 746 S.E.2d 587.
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n.10 (noting the Georgia Supreme Court was not “attempt[ing] to define the precise line
of demarcation between defective and nondefective property or work when both are a
part of the same project.”). But there is no coverage for “liabilities for the repair or
correction of the faulty workmanship of the insured.” Id. at 460–61; Empire Quality
Constr., Inc. v. W. World Ins. Co., 2019 WL 9633223, at *3 (N.D. Ga. Sept. 24, 2019)
(“When a contractor must repair or replace an element of his own work, damaged by his
own faulty workmanship, his standard CGL policy is not intended to provide protection”).
In other words, the “‘property damage’ requirement . . . ‘limit[s] coverage in faulty
workmanship cases to instances in which the faulty workmanship has damaged other,
nondefective property or work’; that is, ‘damage beyond mere faulty workmanship’ on
the work the insured was hired to perform.” Cowart v. Nautilus Ins. Co., 2019 WL
254662, at *6 (S.D. Ga. Jan. 17, 2019) (quoting Taylor Morrison Servs., 293 Ga. at 461,
746 S.E.2d 587). “[C]laims of economic loss . . . do not constitute property damage.”
Evanston Ins. Co. v. DCM Contracting, Inc., 441 F. Supp. 3d 1336, 1343 (N.D. Ga.
2020) (citing Se. Color Lithographers, Inc. v. Graphic Arts Mut. Ins. Co., 164 Ga. App.
70, 296 S.E.2d 378 (1982)).
The underlying complaint does not assert a claim for “property damage” under
the Policy. Rather, it asserts liability for incomplete and defective work:
[I]mproper fabrication and assembly of the framework and foundation;
improper installation of the siding; improper fabrication and assembly of the
roof; improper fabrication and assembly of the front porch; improper
fabrication and assembly of the back porch; improper fabrication and
installation of various interior components, including but not limited to
shelving, door knobs, shiplap, drywall, cabinets, trim, doors, clothing rods,
and kitchen backsplash; incorrect installation of the garbage disposal;
incorrect installation of the fireplace; incorrect installation of security lights;
failure to install doorbell; a voluminous number of miscellaneous issues with
aesthetics; 	failure 	to 	provide 	the 	garage 	code 	to 	Plaintiffs; 	incorrect
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installation 	and 	cleaning 	of 	windows; 	and 	failure 	to 	complete 	the
construction of the Property.
ECF 1-1 ¶¶ 32, 56, 66. Because the underlying complaint does not allege damage to
nondefective work or damage beyond faulty workmanship, it does not assert a claim for
“property damage” as the Georgia Supreme Court has interpreted that term.7 See
Taylor Morrison Servs., 293 Ga. at 461, 746 S.E.2d 587.
Consequently, the Policy does not provide coverage for the Erwins’ suit against
Simmons or 247 Construction.
2. 	Damage to property exclusion
Even if the underlying complaint alleged property damage, the Policy’s “Damage
To Property” exclusion bars coverage. ECF 1-2 at 51–52; 1-3 at 51–52. “Business risk
exclusions are designed to exclude coverage for defective workmanship by the insured
builder causing damage to the construction project itself.” Auto Owners Ins. Co. v. Gay
Const. Co., 332 Ga. App. 757, 760, 774 S.E.2d 798 (2015) (quoting QBE Ins. Co. v.
Couch Pipeline & Grading, Inc., 303 Ga. App. 196, 199, 692 S.E.2d 795 (2010))
(emphasis removed). “The risk intended to be insured is the possibility that the work of
the insured, once relinquished or completed, will cause bodily injury or damage to
property other than to the completed work itself, and for which the insured may be found
liable,” not “business risk borne by the contractor to replace or repair defective work to
7 The Erwins argue that the underlying complaint alleges “facts that show that negligence in the
construction of certain areas in the home, such as the master bathroom, ultimately resulted in
damage to otherwise non-defective conditions, such as the adjacent bathroom flooring.” ECF 36 at
6. But the Erwins do not cite to the underlying complaint, nor point to anything else in the record
supporting their assertion, and the Court’s independent review has unveiled none. Id.; see also
ECF 1-1. Rather, the complaint seeks recovery for the repair of defective workmanship and
consequential damages for the economic loss suffered by the project’s incompletion. ECF 1-1 ¶¶
32, 56, 58, 66, 68, 78, 86, 89.
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make the building project conform to agreed contractual requirements.” Id. at 761
(citation modified).
Here, the Policy contains a “Damage To Property” exclusion, barring coverage
for damage to:
(5) That particular part of real property on which you or any contractors or
subcontractors working directly or indirectly on your behalf are performing
operations, if the “property damage” arises out of those operations; or
(6) That particular part of any property that must be restored, repaired or
replaced because “your work” was incorrectly performed on it.
ECF 1-2 at 51–52; 1-3 at 51–52.8
Interpreting identical language, the Georgia Court of Appeals held CGL policies
excluded “coverage for damage to the construction project itself caused by the defective
workmanship of the insured contractor.” Bituminous Cas. Corp. v. N. Ins. Co. of New
York, 249 Ga. App. 532, 534, 548 S.E.2d 495 (2001) (applying exclusion where
homeowners alleged that during the process of removing and reinstalling decks built
with insufficient waterproofing, the builder negligently failed to take sufficient
precautions to protect the construction project from being inundated by water); See also
Sapp, 226 Ga. App. at 202–03, 486 S.E.2d 71 (1997). Defendants do not argue, nor
does the underlying complaint allege, that Simmons or 247 Construction damaged
property other than the construction project itself. See ECF 1-1 at 36; 43.
8 The Court notes that paragraph six “does not apply to ‘property damage’ included in the ‘products-
completed operations hazard’” under the Policy. ECF 1-2 at 52; 1-3 at 52. The products-completed
operations hazard extends to certain property damage arising out of abandoned work. ECF 1-2 at 62; 1-3
at 62. Defendants do not argue that the products-completed operations hazard bars the application of
paragraph six. ECF 36; 43. Indeed, Defendants do not respond to Atain’s argument that the Policy’s
business risk exclusions bar coverage at all. See ECF 36; 43.
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Accordingly, the “Damage To Property” exclusion bars coverage for the
restoration, repair, or replacement of Simmons and 247 Construction’s incorrectly
performed work.9
B. 	Recoupment of Costs
Atain requests recoupment of costs. ECF 30-1 at 20. “In Georgia, it remains an
open question whether and under what circumstances an insurer can recoup its
defense costs when it is determined that the insurer has no duty to defend.” Atain
Specialty Ins. Co. v. E.H. Fortitude Inc., 2025 WL 1531581, at *5 (S.D. Ga. May 29,
2025) (citation modified); Cont'l Cas. Co. v. Winder Lab'ys, LLC, 73 F.4th 934, 947 (11th
Cir. 2023) (“Georgia courts have not addressed this question.”). In Winder Laboratories,
the Eleventh Circuit predicted that “the Supreme Court of Georgia would not allow an
insurer to recoup its expenses based on a reservation of rights letter without any
contractual provision allowing for reimbursement.” Winder Lab'ys, LLC, 73 F.4th at 949–
50.
Here, Atain expressly reserved the right to recoup costs in its supplemental
reservation of rights letter. ECF 1-5 at 14. But Atain has not directed the Court to any
provision in the Policy that would allow for cost recoupment. ECF 30-1. In other words,
Atain has not established that it has a right to recoup expenses based on a contractual
provision allowing for reimbursement.
Accordingly, Atain’s request to recoup costs is DENIED.
IV. 	CONCLUSION
9 Atain also argues that Simmons and 247 Construction are not the named insured under the Policy. ECF
30-1 at 19–20. The Court does not address this argument because even if the Policy extends to Simmons
and 247 Construction, it does not extend coverage here.
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Atain’s motion for summary judgment (ECF 30) is GRANTED.
The Policy does not provide coverage for the underlying action brought by Frank
and Sandra Erwin against Simmons and 247 Construction, and Atain may withdraw its
defense.10
Atain’s request for recoupment of costs is DENIED.11
The Clerk shall enter final judgment.
SO ORDERED, this 23rd day of April, 2026.
S/ Marc T. Treadwell
MARC T. TREADWELL, JUDGE
UNITED STATES DISTRICT COURT
10 Because this determination binds all parties to this action, Atain need not renew its motion for default
judgment against 247 Construction.
11 The Erwins’ motion for a hearing (ECF 37) is DENIED as moot.
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