321 Ga. App. 103
Ga. Ct. App.2013Background
- Homeland Insurance provided up to $1 million under a Long-term Care policy to Facility Westminster Commons, excluding fraud and willful misconduct from coverage.
- Facility faced professional negligence claims, including allegations of fraud and intentional misconduct in the underlying suit.
- Homeland defended under a reservation of rights but did not expressly reserve rights to pursue uncovered-loss allocation or recoupment.
- Plaintiffs demanded settlement within the policy limit, signaling potential punitive damages due to fraud evidence.
- Homeland proposed a 50/50 allocation for covered versus uncovered losses and stated it would pursue recoupment if Facility did not contribute to uncovered losses.
- Homeland ultimately settled the underlying case, paid an interim amount, and then sued Facility to recover the uncovered-loss portion of the settlement; Facility moved to dismiss, trial court denied, and appellate review followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Homeland waived its recoupment claim by settling with knowledge of noncoverage | Homeland argues no express waiver; however, it reserved rights prior to settlement | Facility contends Homeland’s defense and settlement implied waiver of unreimbursed losses | Yes; Homeland waived the uncovered-loss recoupment right by settling after learning of noncoverage, barring the claim |
Key Cases Cited
- Hoover v. Maxum Indem. Co., 291 Ga. 402 (Ga. 2012) (reservation of rights must be clear and unambiguous to preserve defenses)
- World Harvest Church v. GuideOne Mut. Ins. Co., 287 Ga. 149 (Ga. 2010) (insurer estoppel when defense continued with knowledge of noncoverage)
- Richmond v. Ga. Farm Bureau Mut. Ins. Co., 140 Ga. App. 215 (Ga. App. 1976) (unilateral notice of reservation and defense without insured consent is problematic)
- Prescott’s Altama Datsun v. Monarch Ins. Co., 253 Ga. 317 (Ga. 1984) (risks not covered by policy generally not waived unless insurer unambiguously reserves rights)
- Richard Bowers & Co. v. Creel, 280 Ga. App. 199 (Ga. App. 2006) (contract language plain; enforce clear terms about exclusions and allocation)