Lloyd's Syndicate No. 5820 v. AGCO Corp.
294 Ga. 805
Ga.2014Background
- AGCO's RoGator EPP began in 2005; ~2,050 units enrolled; Glynn General administered the program; Cassidy Davis issued the master policy.
- From 2008, customers claimed wheel motor failures; Cassidy Davis paid about 25 claims and then invoked Epidemic Failure Clause and stopped reimbursements.
- In 2009 AGCO sued Cassidy Davis for breach of contract and bad faith denial of coverage; trial court granted partial summary judgment to AGCO on coverage for design defects and denied Cassidy Davis summary judgment on bad faith.
- Court of Appeals affirmed, holding EPP covered design defects and that indemnity could be triggered when AGCO paid claims under EPP.
- Georgia Supreme Court granted certiorari to (i) interpret EPP coverage, and (ii) interpret the master policy indemnity provision; court reversed on both issues, ruling EPP does not cover design defects and indemnification requires a court-held liability.
- Epidemic Failure Clause provides insurer responsibility for epidemic claims; contract requires indemnification only for sums AGCO has been legally held liable to pay.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does EPP cover design defects? | AGCO argued manufacturing defects language includes design defects. | Cassidy Davis argued manufacturing defects are distinct from design defects and EPP excludes design defects. | EPP does not cover design defects. |
| When does Cassidy Davis indemnify AGCO under the master policy? | AGCO contends indemnity is triggered when AGCO pays or will pay EPP claims. | Cassidy Davis contends indemnity requires a court finding AGCO is legally liable for the claims before reimbursement. | Indemnity accrues only after a court holds AGCO legally liable. |
Key Cases Cited
- Rose v. Figgie International, 229 Ga. App. 848 (Ga. App. 1997) (design defects vs. manufacturing defects distinguished)
- Jones v. Amazing Products, Inc., 231 F.Supp.2d 1228 (N.D. Ga. 2002) (manufacturing vs. design defects; objective standard)
- United States v. Western Electric Co., 894 F.2d 1387 (D.C. Cir. 1990) (distinguishes manufacturing from design concepts; intent in consent decree)
- Linden v. CNH Am., LLC, 673 F.3d 829 (8th Cir. 2012) (distinguishes design vs. manufacturing defects in product liability context)