LabMD, Inc. v. Admiral Insurance
323 Ga. App. 906
| Ga. Ct. App. | 2013Background
- LabMD employed Dr. Adnan Tabrez Savera as medical director and sued him in an employment dispute (the underlying lawsuit).
- Dr. Savera tendered defense to Admiral under a policy Admiral had issued to LabMD; Admiral agreed to defend under a reservation of rights and then filed a declaratory judgment action seeking a declaration it owed a duty to defend.
- LabMD answered, later amended to add counterclaims alleging Admiral breached fiduciary duties and the insurance contract by defending Dr. Savera; Admiral moved for summary judgment on the declaratory claim and on procedural and substantive grounds as to the counterclaims.
- The trial court granted summary judgment to Admiral and denied LabMD’s motion to compel depositions; LabMD appealed.
- While the appeal was pending, the underlying suit proceeded to trial, Admiral defended Dr. Savera, the jury ruled for Dr. Savera, and the policy’s defense limits were exhausted.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Duty to defend (declaratory judgment) | Admiral did not owe a duty to defend Dr. Savera under the policy | Admiral argued it did owe a duty to defend as a matter of law and sought declaration | Moot: underlying suit proceeded to judgment and defense was provided, so declaratory claim is academic and dismissed |
| Validity of LabMD counterclaims (breach of fiduciary duty / contract) | Counterclaims should survive because Admiral had no duty to defend and thus breached duties | Admiral argued counterclaims were procedurally defective (amendment without leave) and meritless | Affirmed on procedural ground: LabMD failed to seek leave to amend; appellate challenge to that ground abandoned, so summary judgment stands |
| Motion to compel depositions | LabMD sought depositions of Admiral rep and employees to support defense and counterclaims | Admiral resisted discovery; trial court denied the motion to compel | Moot: discovery disputes depend on the now-moot declaratory and counterclaim issues and will not be reached on appeal |
| Whether appeal should be dismissed for lack of jurisdiction (mootness) | LabMD continued appeal seeking reversal on merits | Admiral moved to dismiss as moot because defense was provided and policy limits exhausted | Granted: issues would afford LabMD no practical relief; appeal dismissed |
Key Cases Cited
- Scarbrough Group v. Worley, 290 Ga. 234 (mootness requires existing facts and rights)
- McRae, Stegall, Peek, Harman, Smith & Manning v. Ga. Farm Bureau Mut. Ins. Co., 316 Ga. App. 526 (declaratory claim moot when parties’ rights have already accrued)
- Norfolk & Dedham Mut. Fire Ins. Co. v. Jones, 124 Ga. App. 761 (declaratory judgment cannot merely confirm insurer’s completed actions)
- Morgan v. Guaranty Nat. Co., 268 Ga. 343 (duty-to-defend declaratory action moot after underlying suit reaches judgment)
- Empire Fire & Marine Ins. Co. v. Metro Courier Corp., 234 Ga. App. 670 (duty-to-defend issue becomes academic once defense is concluded)
- Clarke v. City of Atlanta, 231 Ga. 84 (dismissing declaratory judgment appeal that became moot during appeal)
- Adams v. Atlanta Cas. Co., 225 Ga. App. 482 (counterclaims may survive even if declaratory claim is moot)
- Ray v. Hartwell R. Co., 289 Ga. 452 (no relief = mootness; issues providing no benefit are moot)