Colony Insurance v. 9400 Abercorn, LLC
2012 U.S. Dist. LEXIS 83111
S.D. Ga.2012Background
- Colony Insurance sues Abercorn in a declaratory judgment action over coverage for water damage at English Oaks Apartments (2008-2009 policy term).
- Abercorn owned the complex during the policy term, filed a damage claim, and an appraisal was conducted; Colony partially paid then ceased payments and filed suit.
- Abercorn foreclosed on the property in July 2010 and contends it still has standing to pursue policy proceeds, claiming it purchased the lender's rights.
- Colony seeks discovery about Abercorn's claim details; Abercorn argues the appraisal resolved coverage and requests discovery stay pending its summary judgment motion.
- Colony moves to amend its complaint to address standing and misrepresentation defenses, alleging concealment of foreclosure and misrepresentations regarding ownership and prior damage.
- The court defers ruling on the compel and amend motions to the district judge because controlling issues center on insurable interest and interactions with the district judge’s summary judgment ruling.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Abercorn have an insurable interest/standing? | Colony contends foreclosure stripped Abercorn of standing; challenges insurable interest. | Abercorn argues it retained or could reacquire insurable interest; lender status not loss-payee undermines automatic standing. | Deferred pending district judge's ruling on summary judgment |
| Is misrepresentation a defense that voids coverage here? | Colony seeks misrepresentation-based defenses to void coverage and potentially rescind. | Abercorn argues misrepresentation was not properly discovered or material; relies on Georgia law regarding misrepresentation viability. | Deferred pending district judge's ruling on summary judgment |
| Scope of discovery beyond the appraisal in this case | Colony seeks discovery on whether losses occurred outside the appraisal term and related notifications. | Abercorn maintains discovery should be bounded by the appraisal and has provided disclosures. | Deferred pending district judge's ruling on summary judgment |
| Timeliness of Colony's amendment to add standing and misrepresentation theories | Colony argues for timely amendment to address core issues of standing and misrepresentation. | Abercorn asserts amendment is untimely under scheduling order and relies on foreclosed status not disclosed. | Deferred pending district judge's ruling on summary judgment |
Key Cases Cited
- Muhammad v. Allstate Ins. Co., 313 Ga.App. 531 (Ga. App. 2012) (insurable interest required to enforce policy; foreclosure impact)
- Jackson Nat. Life Ins. Co. v. Snead, 231 Ga.App. 406 (Ga. App. 1998) (material misrepresentation burden on insurer to void contract)
- Thompson v. Permanent General Assur. Corp., 238 Ga.App. 450 (Ga. App. 1999) (misrepresentation materiality standard in insurance contracts)
- Graphic Arts Mut. Ins. Co. v. Pritchett, 220 Ga.App. 430 (Ga. App. 1995) (insurer reliance on applicant statements without independent investigation)
- Bear’s Den, 162 Ga.App. 833 (Ga. App. 1982) (interpretation of insurable interest; related precedents)
- PHL Variable Ins. Co. v. Jolly, 800 F.Supp.2d 1205 (N.D. Ga. 2011) (insurer's duty to investigate vs. reliance on application information)