Cynergy, LLC v. First American Title Insurance Company
706 F.3d 1321
| 11th Cir. | 2013Background
- Retreat at Lake Thurmond, LLC purchased land in Lincoln County, GA with a short-term loan from Farmers State Bank and obtained a First American title insurance policy.
- The policy insured losses from lack of a right of access to the land; the Retreat intended to obtain an easement across adjacent land for access.
- Cynergy, LLC, successor in interest to the Bank, filed a claim after the loan defaulted and ownership transferred to Cynergy.
- First American denied the claim under an exclusion for losses that were “assumed or agreed to by the insured.”
- Bank officers testified the Bank knew the land lacked dedicated access and still funded the loan using additional collateral; Cynergy sued for breach of the insurance policy and bad-faith penalties.
- The district court granted summary judgment for First American, holding the Bank’s knowledge meant the loss was excluded under the policy; Cynergy appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the exclusion cover losses arising from matters assumed by the insured? | Cynergy argues the exclusion cannot defeat coverage for lack of access when the policy separately covers lack of right of access. | First American contends the exclusion applies whenever the insured assumed the risk, including lack of access. | Yes; the exclusion applies when the insured assumed the risk, limiting coverage. |
| Did the Bank’s knowledge of lack of access make the loss uninsurable? | Cynergy argues knowledge is irrelevant to coverage. | First American contends knowledge and appreciation of the issue by the Bank trigger the exclusion. | Yes; there were no genuine issues of material fact that the Bank knew and appreciated the access issue. |
| Is Leverett's affidavit admissible and properly considered at summary judgment? | Cynergy argues the affidavit is hearsay and improperly admitted. | First American argues Rule 807 allows its admission as a trustworthy, probative statement not barred by Rule 56. | The affidavit is admissible under Rule 807 and properly considered. |
| Is there a genuine dispute of material fact to defeat summary judgment? | Cynergy contends there are factual disputes about the Bank’s knowledge. | First American asserts undisputed facts show the Bank knew of the lack of access. | No; the record shows no genuine disputes of material fact and First American is entitled to judgment. |
Key Cases Cited
- Vaughn v. Pleasent, 471 S.E.2d 866 (Ga. 1996) (assumption of risk standard cited by district court)
- Isdoll v. Scottsdale Ins. Co., 466 S.E.2d 48 (Ga. Ct. App. 1995) (exclusion effects in title insurance context)
- Transp. Ins. Co. v. Piedmont Const. Group, LLC., 686 S.E.2d 824 (Ga. Ct. App. 2009) (exclusion vs. coverage in policy language)
- Fid. Nat. Title Ins. Co. v. Matrix Fin. Servs. Corp., 567 S.E.2d 96 (Ga. Ct. App. 2002) (insurer’s burden to obtain evidence; lender not liable for lack of diligence)
- United States v. Rodriguez, 218 F.3d 1243 (11th Cir. 2000) (Rule 807 standards for hearsay exceptions)
- Kernel Records Oy v. Mosley, 694 F.3d 1294 (11th Cir. 2012) (standard of review for summary judgment)