National Casualty Company v. Georgia School Board Association- Risk Management

[DO NOT PUBLISH]
In the
United States Court of Appeals
For the Eleventh Circuit
____________________
No. 22-13779
Non-Argument Calendar
____________________
NATIONAL CASUALTY COMPANY,
Plaintiff-Counter Defendant-Appellant,
versus
GEORGIA SCHOOL BOARD ASSOCIATION – RISK
MANAGEMENT FUND,
Defendant-Counter Claimant-Appellee.
____________________
Appeal from the United States District Court
for the Northern District of Georgia
D.C. Docket No. 1:16-cv-00691-LMM
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2 Opinion of the Court 22-13779
____________________
Before L UCK , L AGOA, and BRASHER , Circuit Judges.
PER C URIAM:
This case is about the apportionment of liability between
National Casualty Company and the Georgia School Board Associ-
ation – Risk Management Fund, both of which insure Georgia pub-
lic school employees. Both parties’ insurance contracts include
clauses asserting that when an educator is covered by “other insur-
ance,” they’ll only provide “excess” coverage. Applying Georgia
law, the district court found these clauses irreconcilable and di-
rected the parties to provide coverage on a pro rata basis. We af-
firm.
FACTUAL BACKGROUND AND PROCEDURAL HISTORY
National Casualty is an insurance company that provides
policies to the Professional Association of Georgia Educators. The
Fund is an agency created by Georgia statute that enables boards
of education to share liability risk.
Several Georgia educators, who were insured by both Na-
tional Casualty and the Fund, were sued. National Casualty and
the Fund disagreed about who bore the primary duty to defend and
indemnify them. The dispute arose from National Casualty’s and
the Fund’s dueling “other insurance” clauses. National Casualty’s
clause stated:
This policy is specifically excess if the insured has
other insurance of any kind whatsoever, whether
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22-13779 Opinion of the Court 3
primary or excess, or if the insured is entitled to de-
fense or indemnification from any other source what-
soever, including by way of example only, such
sources as state statutory entitlements or provisions.
Other insurance includes, but is not limited to, insur-
ance policies, state pools, and programs of self-insur-
ance, purchased or established by or on behalf of any
EDUCATIONAL UNIT, to insure against CLAIMS
arising from activities of the EDUCATIONAL UNIT
or its employees, regardless of whether or not the pol-
icy or program provides primary, excess, umbrella[,]
or contingent coverage.
In addition, [Liability Coverage] is specifically excess
over coverage provided by any EDUCATIONAL
UNIT’S or school board’s errors and omissions or
general liability policies, purchased by the insured’s
employer or former employers, or self-insurance pro-
gram or state pools, whether collectible or not, and it
is specifically excess over coverage provided by any
policy of insurance which purports to be excess to a
policy issued to the insured.
The Fund’s clause was shorter. It provided: “If valid and collectible
insurance is available to the Member for a loss covered by [the
Fund] under any coverage parts within this Coverage Document,
the obligations of [the Fund] are excess over the available and col-
lectible insurance.”
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4 Opinion of the Court 22-13779
National Casualty sued for a declaratory judgment that the
Fund had “the primary duty to defend and indemnify” the educa-
tors. The Fund counterclaimed. The Fund sought its own declar-
atory judgment that National Casualty was at least responsible for
covering a pro rata share of the educators’ defense and indemnity
costs. The Fund brought two other counterclaims to recover the
amounts it had paid to defend and indemnify the educators: a
breach of contract and legal contribution claim and an unjust en-
richment and equitable contribution claim.
National Casualty moved for summary judgment on its
claim for declaratory judgment, and the Fund cross-moved for par-
tial summary judgment on its claim for declaratory judgment. The
district court denied National Casualty’s motion and granted the
Fund’s motion. The district court concluded that the parties’ con-
flicting “other insurance” clauses couldn’t be reconciled. So the
district court applied a Georgia rule that when two insurance poli-
cies covering the same risk are irreconcilable, the insurers must
share defense and indemnity costs on a pro rata basis.
Both parties moved for reconsideration, and the district
court certified to the Supreme Court of Georgia whether the irrec-
oncilable-clauses rule applied to an entity “entrusted with public
funds,” like the Fund. The Supreme Court of Georgia answered
that “no law or public policy” prohibited application of the irrec-
oncilable-clauses rule simply because the Fund was a creature of
statute and not a commercial insurance company. Nat’l Cas. Co. v.
Ga. Sch. Bds. Ass’n-Risk Mgmt. Fund, 818 S.E.2d 250, 255–56 (Ga.
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22-13779 Opinion of the Court 5
2018). With the answer from the Georgia Supreme Court, the dis-
trict court declined to reconsider its partial summary judgment or-
der.
The parties then filed a joint notice of stipulated facts in
which the Fund stipulated to the dismissal of its attorney’s fee
counterclaim and both parties withdrew their jury trial demand
and requested that the district court enter final judgment. The par-
ties said they had “reached a compromise agreement as to how de-
fense costs and indemnity obligations” would be shared pro rata to
comply with the district court’s partial summary judgment order.
They stipulated to the facts necessary to calculate damages and
agreed that National Casualty’s pro rata share “to date” for actions
related to mutually covered individuals totaled $481,231.84, along
with $99,037.51 in prejudgment interest. The parties also reserved
their appeal rights.
The district court entered final judgment consistent with the
parties’ stipulated facts. The judgment explained that—pursuant
to the partial summary judgment order and the ensuing stipula-
tions—the Fund was awarded the stipulated amounts and future
defense and indemnity expenses were to be apportioned equally.
National Casualty appeals the partial summary judgment or-
der.
STANDARD OF REVIEW
We review an order granting summary judgment de novo.
Amy v. Carnival Corp., 961 F.3d 1303, 1308 (11th Cir. 2020).
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6 Opinion of the Court 22-13779
DISCUSSION
The irreconcilable-clauses rule has a long pedigree in Geor-
gia, starting with State Farm Fire & Casualty Co. v. Holton, 205 S.E.2d
872 (Ga. Ct. App. 1974). There, the Court of Appeals of Georgia
held that when “both insurers attempt to limit their liability to ex-
cess coverage ‘if there is other insurance,’ then the clauses are ir-
reconcilable, cancel each other out, and the liability is to be divided
equally.” Id. at 874 (citing S. Home Ins. v. Willoughby, 182 S.E.2d 910,
914 (Ga. Ct. App. 1971)); accord Fund, 818 S.E.2d at 253; Carolina
Cas. Ins. v. Underwriters Ins., 569 F.2d 304, 315 (5th Cir. 1978).
National Casualty contends that the district court erred in
finding that, under Holton, the parties’ “other insurance” clauses
canceled each other out and the parties must split defense and in-
demnity costs pro rata. National Casualty argues the irreconcila-
ble-clauses rule doesn’t apply to this case for two reasons.
First, National Casualty stresses that the Fund’s “other insur-
ance” clause states that “[i]f valid and collectible insurance is avail-
able . . . , the obligations of [the Fund] are excess over the available
and collectible insurance.” Based on this language, National Casu-
alty argues that the Fund’s “other insurance” clause wasn’t trig-
gered because National Casualty’s policies are neither available nor
collectible.
The policy language at issue in Holton demonstrates that this
argument falls short. There, State Farm and General Accident had
issued insurance contracts, both including “other insurance”
clauses. Holton, 205 S.E.2d at 873. State Farm’s “other insurance”
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22-13779 Opinion of the Court 7
clause—like the Fund’s clause in our case—stated that its coverage
was “excess insurance over any other valid and collectible insurance
available.” Id. at 874 (emphasis added, quotation omitted). In con-
trast, General Accident’s “other insurance” clause simply provided
that “if there was any other insurance available,” then its policy ap-
plied “only as excess insurance.” Id. General Accident’s clause, un-
like State Farm’s, didn’t include any language that the other insur-
ance policy had to be “collectible.” See id. Despite this difference,
the Holton court found the two policies’ “other insurance” clauses
“absolutely antithetical” and ruled they must “be disregarded” in
favor of “pro rata coverage.” Id. at 874–75.
So too here. Although General Accident’s “other insurance”
clause in Holton may be shorter than National Casualty’s clause in
our case, they’re functionally the same in that neither requires that
the “other insurance” be “collectible.” Moreover, also like General
Accident’s clause, National Casualty’s clause is excess to “any”
other insurance available, be it “primary, excess, umbrella[,] or con-
tingent.” Even so, National Casualty’s policies are “collectible” and
“available” because they’d pay if liability exceeded what the other
insurance covered. Because National Casualty’s policies are “col-
lectible” and “available,” the Fund’s “other insurance” clause kicks
in to provide excess coverage. In this clash of irreconcilable “other
insurance” clauses, Georgia law doesn’t allow National Casualty’s
clause to supersede the Fund’s clause. Instead, Holton dictates that
liability is divided on a pro rata basis, which it describes as “the only
equitable answer.” Id. at 875.
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8 Opinion of the Court 22-13779
Second, National Casualty argues that, unlike the Fund’s
more general clause, its more specific clause is “super excess” be-
cause it expressly provides that its coverage is excess to any other
coverage—even if that other coverage is itself excess.
The Georgia court rejected a similar argument in Holton.
There, the Holton court explained that there’s
a growing tendency in the entire picture to reject the
circular reasoning, more prevalent in an earlier day,
whereby the restrictive clause of one policy will be
given prior effect, or one of two policies affording
coverage upon different hypotheses will be deemed
“specific” and therefore, to constitute “primary” in-
surance. This rejection has been strongest in cases
where the conflict has been between like “other insur-
ance” clauses.
205 S.E.2d at 874–75. National Casualty advocates for a rule—
where a more specific “other insurance” clause governs a more
general “other insurance” clause—that’s contrary to Georgia law,
and the law of most other states. See, e.g., Home Ins. v. St. Paul Fire
& Marine Ins., 229 F.3d 56, 61 (1st Cir. 2000) (“[M]ost courts came
to reject” the rule that “considered the primary insurer to be the
one whose ‘other insurance” clause was more general in scope.”).
The district court didn’t err in rejecting it.
AFFIRMED.
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