939 F. Supp. 2d 1299
M.D. Ga.2013Background
- Defendant moved for judgment on the pleadings (Doc. 13); Plaintiff cross-moved for summary judgment (Doc. 15) and Defendant for summary judgment (Doc. 18) but the court treated only Doc. 13 as properly before the court.
- This diversity case involves insurance coverage under Plaintiff’s 2010 Bankers Professional Liability policy for a Recast Petition in an underlying Georgia investor action.
- The Recast Petition alleged a Lending Act and conspiracy/RICO related to GFGC’s alleged Ponzi scheme and collateral handling.
- The 2010 Policy contains a Lending Act coverage provision and a Prior Acts Exclusion Endorsement precluding claims arising from Lending Acts prior to January 19, 2010.
- The court concluded there was no coverage under the 2010 Policy for the Recast Petition and granted the motion for judgment on the pleadings, dismissing the complaint.
- The court explicitly denied without prejudice Plaintiff’s remaining motions and noted a docketing error in how some filings were submitted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Recast Petition is covered by the 2010 policy | Plaintiff argues no Lending Act coverage applies to the Recast Petition | Defendant contends the Recast Petition falls within Lending Act coverage | Yes; the Recast Petition alleges a Lending Act under the 2010 policy. |
| Whether Lending Act lies independent of the underlying loan | Plaintiff contends Lending Act requires independent conduct | Defendant argues Lending Act includes conduct connected to the loan | Court held Lending Act includes conduct connected to or relating to the loan. |
| Whether the Prior Acts Exclusion precludes coverage | Plaintiff argues exclusion does not apply to the Recast Petition | Defendant argues Lending Acts occurred before 01/19/2010, so exclusion applies | Yes; Prior Acts Exclusion applies, eliminating coverage for the Recast Petition. |
Key Cases Cited
- Hoover v. Maxum Indem. Co., 291 Ga. 402, 730 S.E.2d 413 (2012) (Ga. 2012) (waiver theory distinguished from insurer's defense strategies in defense decisions)
- Richmond v. Ga. Farm Bureau Mut. Ins. Co., 140 Ga.App. 215, 231 S.E.2d 245 (1976) (Ga. App. 1976) (insurer's defense rights when facing defense vs. payment duties)
- Penn-America Ins. Co. v. Disabled Am. Veterans, Inc., 224 Ga.App. 557, 481 S.E.2d 850 (1997) (Ga. App. 1997) (insurer's duty to pay vs. defend is separate and independent)
- Jefferson Ins. Co. v. Dunn, 269 Ga. 213, 496 S.E.2d 696 (1998) (Ga. 1998) (arising out of exclusionary clause focuses on genesis of claims)
- Gen. Steel, Inc. v. Delta Bldg. Sys., Inc., 297 Ga.App. 136, 676 S.E.2d 451 (2009) (Ga. App. 2009) (contract construction: harmonize whole policy)