Georgia Supreme Court Refuses to Allow Bad Injuries Make Bad Law

Justice is Blind but it is Not Stupid

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Posted on February 22, 2022 by Barry Zalma

Dorothy Wright and her grandchildren, Cameron Costner and Layla Partridge, (collectively, the “Decedents”) were killed when their vehicle was struck by a stolen vehicle that was being chased by College Park, Georgia Police Department officers. At the time of the accident, the City of College Park had an insurance policy provided by Atlantic Specialty Insurance Company (“Atlantic”), which provided coverage for negligent acts involving the City’s motor vehicles up to $5,000,000 but also included immunity endorsements which say that Atlantic has no duty to pay damages “unless the defenses of sovereign and governmental immunity are inapplicable.” In Atlantic Specialty Insurance Company v. City Of College Park et al., No. S21G0482, Supreme Court of Georgia (February 15, 2022) the Georgia Supreme Court analyzed the policy and state statutes and refused to allow the sadness of the great loss of life to change the law of sovereign immunity.
FACTS

Joi Partridge, Floyd Costner, and Douglass Partridge (collectively, the “Plaintiffs”) filed a lawsuit against the City, raising claims of negligence and recklessness resulting in the wrongful deaths of the three Decedents, to which the City raised sovereign immunity as a defense. The Plaintiffs assert that the insurance policy limit is $5,000,000 for the three deaths, while Atlantic maintains that the policy limit is capped at $700,000 under the relevant statutory scheme and the terms of the City’s policy.

Pursuant to OCGA § 36-92-2 (a) (3), the sovereign immunity of local government entities is automatically waived up to $700,000, regardless of whether the City has a liability insurance policy. However, OCGA § 36-92-2 (d) (3) provides that “[a] local government entity [that] purchases commercial liability insurance in an amount in excess of the [statutory minimum] waiver” increases the waiver to the extent of the excess insurance.

Atlantic intervened in the case to litigate the limit of the insurance policy. The trial court ruled that the policy limit was $5,000,000, and the Court of Appeals affirmed.

At the time of the accident, the City held an insurance policy (the “Policy”) issued by Atlantic. The Policy included business auto and excess liability coverage, among other things. The limits under the Policy are $1,000,000 under the business auto section and $4,000,000 under the excess liability section. Both sections of the Policy, however, contained endorsements entitled “Georgia Changes – Protection of Immunity,” which we will refer to as the “Immunity Endorsements.” The business auto section’s Immunity Endorsement provides “We have no duty to pay damages or any ‘covered pollution cost or expense’ on your behalf under this policy unless the defenses of sovereign and governmental immunity are inapplicable to you.”

The Plaintiffs filed suit against the City in the State Court of Fulton County (“trial court”), asserting claims of negligence and recklessness in connection with the wrongful deaths of the Decedents. The City answered, raising the defense of sovereign immunity.

Plaintiffs filed a motion for partial summary judgment, seeking a ruling that the relevant Policy limit is $5,000,000. They contended that, by purchasing the Policy, the City waived its sovereign immunity up to $5,000,000. The Plaintiffs also asserted that the Immunity Endorsements are void because they are contrary to public policy.

The trial court issued a summary judgment that the relevant Policy limit is $5,000,000. The court held that the Immunity Endorsements improperly attempted to “contract around” the sovereign immunity waiver “requirements” of OCGA §§ 36-92-2 and 33-24-51. Atlantic appealed. The Court of Appeals affirmed the trial court’s ruling.
DISCUSSION

The Georgia Constitution provides municipalities performing their governmental functions with immunity from civil liability, which only the General Assembly (or the Constitution itself) may waive. In OCGA § 36-33-1 (a), the General Assembly reiterated that sovereign immunity for municipalities is the State’s public policy, while also expressly providing several narrow waivers. Where there is no insurance coverage, there is no waiver of sovereign immunity. In 2005 the General Assembly established an automatic waiver of sovereign immunity for losses arising out of claims for the negligent use of covered motor vehicles up to certain prescribed limits, including $700,000 for the bodily injury or death of two or more persons in a single occurrence.

The enactment of the automatic immunity waiver in 2002 changed only the analysis with respect to a loss under the applicable automatic waiver limit, as to which the local government entity’s purchase of liability insurance is irrelevant. Because of the automatic waiver, there is no dispute in this case that the City’s sovereign immunity was waived up to $700,000. But to increase the waiver of sovereign immunity beyond $700,000, the court must determine whether the City, in its discretion, purchased commercial liability insurance in excess of $700,000 that covers the claim at issue.

Insurance policies do not normally provide blanket coverage for any and all claims. Insurance policies are contracts that specify what types of losses are covered and to what monetary limits, and the premiums paid by policyholders are normally determined by assessing the risk that the insurer assumes for the specific claims covered.

The purchase of insurance providing coverage in excess of the automatic waiver limits, thus further waiving sovereign immunity, remains a decision left to the discretion of local government entities. Under current Georgia law, it is not against public policy for local government entities to decline to purchase liability insurance or to purchase liability insurance that does not cover any and all losses resulting from the use of their motor vehicles. Thus, the Immunity Endorsements do not contravene public policy.

To determine whether the insurance contract between the City and Atlantic provides more than $700,000 of coverage for the Plaintiffs’ claims, the Immunity Endorsement to the Policy’s business auto section states in relevant part: “We have no duty to pay damages … on your behalf under this policy unless the defenses of sovereign and governmental immunity are inapplicable to you.” These endorsements do not exclude claims for damages to which the defenses of sovereign and governmental immunity do not apply. The defenses of sovereign and governmental immunity are clearly not applicable to losses from the Plaintiffs’ claims up to $700,000. Under a plain reading of the endorsements, the insurance that the City purchased does not cover claims for damages to which the defenses of sovereign and governmental immunity do apply.

The Immunity Endorsements do not render the Policy’s higher- than-$700,000 limits meaningless. For example, claims involving police chases brought under 42 USC § 1983 would not be subject to sovereign immunity and thus could be covered up to the Policy’s aggregate maximum limit of $5,000,000.

These types of claims are undoubtedly less likely to occur than claims involving the general use of the City’s covered motor vehicles – but presumably the premiums paid for that additional coverage would take that factor into account.

In light of the Immunity Endorsements, the City did not purchase insurance coverage for the Plaintiffs’ asserted claims above the applicable automatic sovereign immunity waiver of $700,000. As a result the judgment was reversed and the plaintiffs recovery was limited to the statutory waiver.
ZALMA OPINION

Statutory and insurance policy interpretation requires a court to read the full statute and the entire wording of the insurance policies before making a decision and must ignore the extent of the injuries of the people suing the public entity. Georgia waived sovereign immunity up to $700,000, whether insured or not. Since the city had sovereign immunity over $700,000 the trial court and court of appeal did not have the right to change the policy wording or the statute because the injuries were so severe. Justice is blind but not stupid. Justice requires application of the words of statutes and contracts fairly and as written.

© 2022 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders.

He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 54 years in the insurance business.

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