817 F. Supp. 2d 1357
N.D. Ga.2011Background
- Rosen sued Zurich for breach of the Settlement and Release Agreement from prior Griffin and Bad Faith actions arising from Protective E&O program dealings.
- Protective Life Insurance administered the E&O program; ISSI enrolled agents and Zurich underwrote; Rosen’s term as agent and termination status are pivotal.
- Settlement negotiations culminated in a settlement for $350,000 with confidentiality and no-detriment provisions added to Rosen’s draft release in January 2008.
- Disputes arose over when the confidentiality/no-detriment provisions became effective and whether Zurich could consider underlying actions in premium determinations or enrollment decisions.
- Protective Life terminated Rosen’s agency contract in early 2008; Rosen later sought alternative E&O coverage (Old Mutual) which Zurich denied in March 2008 partly due to the Bad Faith Action.
- The May 2008 Loss Run included costs from the Griffin and Bad Faith actions, which Rosen contends inflated losses and damaged his ability to obtain new insurance; a coding error is alleged.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Contract interpretation of confidentiality/no-detriment | Terms prohibit disclosure/derogatory use of Settlement terms and underlying actions. | Terms prohibit only use of contractual terms, not existence/facts; provisions effective later in January 2008. | Settlement not ambiguous; only contractual terms restricted, not underlying facts. |
| December 2007 breach by using terms to Rosen’s detriment | Zurich used Griffin/Bad Faith actions to raise premiums and terminate Rosen’s status. | No breach; no evidence that premium changes relied on settlement terms; actions pre-date final agreement. | No breach found from disclosure or detriment in December 2007; summary judgment for Zurich on this claim. |
| March 2008 breach by Old Mutual enrollment denial | Existence of Bad Faith Action used to deny coverage in Old Mutual program. | Settlement prohibits use of terms to detriment, not consideration of underlying actions; no evidence of term-based reliance. | No breach; Zurich may consider existence of Bad Faith Action; no term-based detriment shown. |
| May 2008 Loss Run and damages | Inclusion of Bad Faith Action costs in May 2008 Loss Run breached confidentiality/no-detriment and caused higher replacement costs. | Inclusion resulted from a coding error; damages are speculative and not proven. | Triable issue on damages; not entitled to summary judgment on this breach. |
| Fraud in inducement to enter Settlement | Zurich lied about intent to perform and misrepresented terms to induce Rosen to settle. | No fraudulent misrepresentation; only potential post-agreement breach; no evidence of intent to deceive at signing. | No fraudulent inducement; summary judgment for Zurich on this claim. |
| Georgia RICO pattern and conspiracy claims | Zurich engaged in pattern of racketeering via concealment, loss runs, and relationships with ISSI. | Insufficient predicate acts or nexus; no direct injury shown; conspiracy not proven. | RICO and conspiracy claims fail; summary judgment for Zurich. |
Key Cases Cited
- American Empire Surplus Lines Ins. Co. v. Hathaway Development Co., 288 Ga. 749, 707 S.E.2d 369 (Ga. 2011) (contract interpretation and ambiguity standards in Georgia)
- Gen. Steel, Inc. v. Delta Bldg. Sys., Inc., 297 Ga.App. 136, 676 S.E.2d 451 (Ga. Ct. App. 2009) (ambiguity and contract interpretation framework)
- Nesbitt v. Wilde, 306 Ga.App. 812, 703 S.E.2d 389 (Ga. Ct. App. 2010) (plain meaning and ordinary usage in contract terms)
- Perkins v. M&M Office Holdings, LLC, 303 Ga.App. 770, 695 S.E.2d 82 (Ga. Ct. App. 2010) (contract interpretation and merger clause considerations)
- Bollea v. World Championship Wrestling, Inc., 271 Ga.App. 555, 610 S.E.2d 92 (Ga. Ct. App. 2005) (damages and speculative damages framework)
- Ayers v. John B. Daniel Co., 35 Ga.App. 511, 133 S.E. 878 (Ga. Ct. App. 1926) (early contract action authority)
- Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (precedent on incorporation of Fifth Circuit decisions)
- Montgomery v. Aetna Cas. & Sur. Co., 898 F.2d 1537 (11th Cir. 1990) (expert testimony limits and reliance on legal conclusions)
- RLI Ins. Co. v. Highlands on Ponce, 280 Ga.App. 798, 635 S.E.2d 168 (Ga. Ct. App. 2006) (contract interpretation and extrinsic evidence usage)
- JTH Tax, Inc. v. Flowers, 302 Ga.App. 719, 691 S.E.2d 637 (Ga. Ct. App. 2010) (fraud elements and intent in Georgia)