Piedmont Office Realty Trust, Inc. v. XL Specialty Insurance Company
769 F.3d 1291
11th Cir.2014Background
- Piedmont Office Realty Trust, Inc. held a Primary Policy (up to $10M) and an Excess Policy (up to $10M) from XL; Piedmont was sued in a federal securities class action seeking >$150M.
- Piedmont sought XL consent to settle up to the remaining Excess Policy limits (~$6M); XL consented only to $1M.
- Piedmont settled the Underlying Suit for $4.9M without XL’s consent and without further notification.
- XL refused coverage beyond the $1M XL had consented to pay after the settlement, and Piedmont sued XL for breach of contract and bad faith failure to settle.
- The district court dismissed the complaint, citing the policy language and Trinity Outdoor, Ga. Supreme Court precedent, and the Eleventh Circuit certified questions to Georgia Supreme Court.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Piedmont was legally obligated to pay the settlement amount under the Excess Policy. | Piedmont argues the Final Judgment authorized and directed settlement terms, creating a legal obligation. | XL argues the obligation was not legally binding since Piedmont settled without consent. | Certify question; issue unresolved by Georgia law. |
| Whether unconsented settlements breach the consent-to-settle clause when it says consent shall not be unreasonably withheld. | Piedmont contends reasonable withholding could be challenged; no consent means potential breach. | Consent not obtained; clause bars actions regardless of reasonableness. | Certification sought on whether unreasonableness must be established before suit. |
| Whether Piedmont’s complaint was properly dismissed under Trinity Outdoor. | Piedmont contends order approving settlement changes the legal obligation. | Trinity Outdoor controls unless distinguishable facts. | Questions certified to Georgia Supreme Court; dismissal unresolved. |
Key Cases Cited
- Trinity Outdoor, LLC v. Cent. Mut. Ins. Co., 679 S.E.2d 10 (Ga. 2009) (insured’s unconsented settlement barred from suit under policy terms)
- Erturk v. GEICO Gen. Ins. Co., 726 S.E.2d 757 (Ga. Ct. App. 2012) (insurance contract interpretation; starting point is contract language)
- Hoover v. Maxum Indem. Co., 730 S.E.2d 413 (Ga. 2012) (distinguishable from case at hand; waiver of no-action rights)