Four Season Trucking Inc. v. Grange Mutual Casualty Company

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 23-12013
Non-Argument Calendar
____________________
FOUR SEASON TRUCKING INC.,
Plaintiff-Appellant,
versus
GRANGE MUTUAL CASUALTY COMPANY,
Defendant-Appellee.
____________________
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:23-cv-00379-SCJ
____________________
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2 Opinion of the Court 23-12013
Before B RASHER , ABUDU, and DUBINA , Circuit Judges.
PER CURIAM:
Appellant Four Season Trucking, Inc. (“FST”) appeals the
district court’s order dismissing its declaratory judgment action
against Appellee Grange Mutual Casualty Company (“Grange”).
On appeal, FST argues that the district court erred because it did
not have subject matter jurisdiction to decide this case, and it in-
correctly found that FST would not suffer prejudice if Grange did
not continue to defend FST in a state court action. Having read
the parties’ briefs and reviewed the record, we affirm the district
court’s order dismissing FST’s declaratory judgment action.
I.
We review de novo a district court’s grant of a motion to dis-
miss under Federal Rule of Civil Procedure 12(b)(6). Mack v. USAA
Cas. Ins. Co., 994 F.3d 1353, 1356 (11th Cir. 2021).
II.
This case originated from an automobile accident on Octo-
ber 12, 2015, that involved one of FST’s employees and two other
drivers, Terri Slaughter and Damitra Baisden. Both drivers suffered
injuries from the accident, and they both filed separate lawsuits for
their damages. The Slaughter case was filed in 2016 in Fulton
County state court and was later dismissed without prejudice.
Slaughter refiled the action in 2020, and after the case was removed
to federal court, the district court determined that only one of the
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23-12013 Opinion of the Court 3
three insurance policies between FST and Grange covered the au-
tomobile accident, and that the drivers were injured as part of one
accident. Our court affirmed this holding. See Grange Mut. Cas. Co.
v. Slaughter, 958 F.3d 1050 (11th Cir. 2020).
Before our court affirmed the district court’s order in the
Slaughter case, Grange entered into a limited liability release and
indemnification agreement with the other driver, Baisden, for $1
million, the policy limits. The state court dismissed with prejudice
the Baisden case in July 2020. FST’s independent lawyer entered an
appearance in the Slaughter case, and Grange’s counsel motioned
to withdraw. FST opposed the motion to withdraw because it had
filed a declaratory judgment action in Dekalb County to determine
if Grange was required to continue to defend FST in the Slaughter
case.
The Dekalb County declaratory judgment action was volun-
tarily dismissed, and six months later, FST refiled a declaratory
judgment action in Gwinnett County, seeking a judgment requir-
ing Grange to continue defending FST in the Slaughter case.
Grange timely removed the Gwinnett County declaratory judg-
ment action to federal court. Grange simultaneously filed a mo-
tion to dismiss for failure to state a claim. FST opposed the motion,
claiming that it would be prejudiced if Grange did not continue to
defend FST in the Slaughter case. The district court granted
Grange’s motion to dismiss, and FST filed this appeal.
III.
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4 Opinion of the Court 23-12013
Although FST did not raise a question of subject matter ju-
risdiction to the district court, it does so here. FST asserts that the
amount in controversy requirement for diversity jurisdiction does
not exist, and it requests that we remand the case to the district
court so it can conduct an inquiry into whether the amount in con-
troversy is satisfied. Grange counters that diversity jurisdiction is
proper in this case.
A removing defendant must prove by a preponderance of
the evidence that the amount in controversy more likely than not
exceeds the jurisdiction requirement. Roe v. Michelin N. Am., Inc.,
613 F.3d 1058, 1061 (11th Cir. 2010). We have recognized that it
“may be facially apparent from the pleading itself that the amount
in controversy exceeds the jurisdictional minimum, even when the
complaint does not claim a specific amount of damages.” Id. (in-
ternal quotation marks omitted). We have noted that district
courts are permitted to make “reasonable deductions, reasonable
inferences, or other reasonable extrapolations from the pleadings
to determine whether it is facially apparent that a case is remova-
ble,” and district courts need not “suspend reality or shelve com-
mon sense in determining whether the face of a complaint estab-
lishes the jurisdictional amount.” Id. at 1061-62 (internal quotation
marks omitted).
The record demonstrates that the district court had jurisdic-
tion over this case. The question presented in this declaratory judg-
ment action is whether there is a duty to defend FST in the Slaugh-
ter case. Thus, the amount in controversy is determined by the
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23-12013 Opinion of the Court 5
value of the total cost of the defense of the Slaughter case, and
Grange is in the best position to determine that amount. Grange
states that it has incurred over $50,000 in connection with the de-
fense of the Slaughter case from its inception in 2016, and the case
has yet to be tried. It is reasonable to deduce that the entire cost of
defending the Slaughter case will exceed $75,000. Thus, we con-
clude that the amount in controversy satisfies the federal jurisdic-
tion requirement, and the district court properly had jurisdiction.
IV.
FST argues that the district court erred in concluding that
Grange did not have a duty to defend in the Slaughter case because
the liability coverage limit of insurance was exhausted by payment
of $1 million to settle the Baisden case. FST also contends that the
district court incorrectly found that it was not prejudiced by
Grange not representing FST in the Slaughter case. Based on the
record, we disagree with FST and affirm the district court.
The insurance policy at issue states that Grange’s duty to de-
fend or settle ends when the liability coverage limit of insurance
has been exhausted by payment of judgments or settlements. In
Liberty Mut. Ins. Co. v. Mead Corp., 131 S.E. 2d 534, 536 (Ga. 1963),
the Georgia Supreme Court confirmed that “the insurer’s under-
taking with respect to defense of the insured must be determined
by the particular contract of insurance between the parties.” The
policy clearly states that Grange’s duty to defend and indemnify
ends once the policy limits have been exhausted by the payment of
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6 Opinion of the Court 23-12013
a settlement, and the record demonstrates that the policy limit was
exhausted by the payment in the Baisden case.
However, an insurer cannot “abandon the defense of [a]
claim in mid-course to the prejudice of the insured.” Gibson v. Pre-
ferred Risk Mut. Inc. Co., 456 S.E. 2d 248, 250-51 (Ga. App. 1995).
There are not many cases providing guidance on what constitutes
prejudice in this situation, but the Georgia Supreme Court has de-
termined that monetary damage alone is insufficient to show prej-
udice. Liberty Mut. Ins. Co., 131 S.E. 2d at 536. In Atkinson, the
Georgia Supreme Court determined that an insured would be prej-
udiced by the insurer’s withdrawal when the insurer settled for the
full extent of policy coverage but paid the wrong party. Atkinson v.
Atkinson, 326 S.E. 2d 206, 212-13 (Ga. 1985). Another court inti-
mated there was no prejudice when the party suggested that the
insurer could better defend the insured than an attorney inde-
pendently retained. See Gibson, 456 S.E. 2d at 250-51. Other con-
siderations for assessing prejudice focus on how smooth the transi-
tion between legal representation would be, Allstate Ins. Co. v. Mont-
gomery Trucking Co. of Ga., 328 F. Supp. 415, 417 (N.D. Ga. 1971),
and if the insured consented to the settlement agreement depleting
the liability coverage. Liberty Mut., 131 S.E. 2d at 536.
We conclude, from the record, that these considerations in-
dicate that FST would not be prejudiced by the withdrawal of
Grange’s defense. There is no allegation or evidence to suggest
that Grange paid the wrong party. FST was a party to the Baisden
agreement and had a representative sign the agreement on its
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23-12013 Opinion of the Court 7
behalf. FST has had independent counsel in the Slaughter case
since April 2023, and because the case is currently stayed pending
resolution of this declaratory judgment action, the transition to
new representation should proceed rather smoothly.
Moreover, like the district court, we reject FST’s suggestion
that it is prejudiced because it relied on Grange’s continued defense
in the Slaughter case after the coverage limit had been reached. See
Scrus v. Int’l Indem. Co., 505 S.E. 2d 267, 268 (Ga. App. 1988) (find-
ing under the applicable policy that insured did not have a contin-
uing duty to defend because insurer relied on its representation).
The amount of time that Grange continued to defend was brief,
and FST had an independent lawyer involved during this period. In
sum, we conclude that the district court correctly found that FST
did not show that it will be prejudiced by Grange’s lack of repre-
sentation in the Slaughter case.
Accordingly, based on the aforementioned reasons, we af-
firm the district court’s order granting Grange’s motion to dismiss
FST’s declaratory judgment action.
AFFIRMED.
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