ORDER
I. INTRODUCTION
Plaintiff Massachusetts Mutual Life Insurance Company (MMLIC) brings this diversity-based, 28 U.S.C. § 2201 action to obtain a judgment declaring that its insured, defendant John Woodall, cannot recover on the disability insurance that MMLIC sold him. 1 Doc. # 1. In denying Woodall’s earlier, F.R.Civ.P. 12(f) motion to strike as immaterial (etc.) references to *1367 prior litigation, the Court noted that neither party had litigated Woodall’s personal jurisdiction and improper venue defenses. Doc. # 23 at 4.
Woodall now moves the Court under F.R.Civ.P. 56 (styled as a “Request for Ruling”) to dismiss this case for lack of venue and personal jurisdiction. Doc. # 24 (“Request”); # 25 at 10-11 (brief citing to matters outside of the pleadings). He also moves for summary judgment on the merits. Doc. # 27 (motion); # 28 (brief); # 38 (reply). MMLIC cross-moves for partial summary judgment, doc. # 33; # 39 (reply); # 42 (reply), and opposes Woodall’s venue/jurisdiction motion. Doc. # 37. The parties agree that the material facts are undisputed, doc. #22 ¶ 8; #35 at 1, 6; # 36 at 1-10, and that this is a first-impression case. Doc. # 35 at 2.
II. BACKGROUND
MMLIC sold (mostly in the 1980s) Woo-dall disability, life and business insurance policies. Doc. # 1 ¶¶ 7-9. The disability policy wording in question states that MMLIC would consider Woodall disabled “if because of sickness or injury you can’t do the main duties of your occupation. You must be under a doctor’s care.” Doc. # 26 ¶ 9; # 36 ¶ 9. The policy expressly excludes coverage “caused or contributed to by: • war (declared or not) • normal pregnancy • or normal childbirth.” Id.
Starting in 1995, Woodall became embroiled in, and ultimately became depressed over, what would become known as the “Shiggs ” controversy:
Ms. Julia Mae Shiggs suffered brain damage and became comatose as the alleged result of medical malpractice. The [Chatham County, Georgia] probate court appointed Michael Mydell, Ms. Shiggs’ common law husband, guardian of her person and property. In his representative capacity, Mydell retained the legal services of David Roberson for the purpose of filing in state court a malpractice action on behalf of his ward. Roberson, in turn, associated another attorney, John Woodall, to assist him in the case. During the course of trial, an oral settlement agreement was reached, and the defendants thereafter delivered significant sums to Roberson. Roberson deposited the money into his trust account. Prior to the approval of any written settlement agreement by the probate court, Roberson calculated attorney’s fees as $2,400,000, and issued checks drawn on his trust account to himself and Woodall. Only then did Roberson and Woodall file petitions with the state court and probate court, seeking approval of the settlement.
Gnann v. Woodall,
After removing Mydell as Ms. Shiggs’ guardian and replacing him with J. Hamrick Gnann, the probate court refused to approve the settlement agreement and, finding that the disbursement of the settlement proceeds was improper, ordered Roberson and Woodall to pay all monies received by them on behalf of Ms. Shiggs into the registry of the state court. Ms. Shiggs died, and Gnann was appointed administrator of her estate. When Roberson and Woo-dall refused to pay the funds into the registry as ordered] the probate court held them in contempt.
Woodall’s wrongdoing in the
Shiggs
case ultimately led to his (and* Roberson’s) disbarment. Doc. #1 ¶ 24.
See In re Woodall,
As the walls closed in on him, Woodall became depressed. The parties have stipulated
that, beginning in [2/97], [Woodall] became and has remained as of the date this suit was filed [5/29/02], unable to perform the main duties of his occupation and continually has been under a doctor’s care by reason of depression and its related effects, which resulted principally and directly from his being subject to allegations of misconduct in the [Shiggs] case, which he disputed, and *1369 his initial anticipation of a reprimand from the State Bar of Georgia.
Doc. # 21 at 1 (footnote omitted; emphasis added). Both sides further acknowledge that
[t]he [Shiggs] allegations led to very negative publicity and comments concerning Mr. Woodall, a civil contempt order being directed against him, a civil lawsuit being brought against him by the estate of his former client on [5/22/97], State Bar disciplinary proceedings filed against him in [12/97], and his disbarment from the practice of law on [2/5/01],
Doc. # 21 at 1-2; id. at 1 n. 1 (The parties “make no stipulation one way or the other regarding [Woodall’s] disability after ... [the date on which MMLIC filed this case, 5/29/02]”).
MMLIC thus initially paid Woodall disability benefits, but after he was disbarred, issued him reservation of rights letters. Doc. # 1 ¶ 26; #14 ¶26 (Woodall admits receiving them but disputes their effective date and scope); # 26 ¶ 8 (he agrees that after he “was disbarred, each subsequent disability payment was accompanied by [an MMLIC] reservation of rights letter....”).
MMLIC brought this action on 5/29/02. Doc. # 1 at 1. It contends that “Woodall’s alleged disability and disbarment is the direct and sole result of his prior intentional misconduct, all of which predated his claims of depression.” Id. ¶ 30. In other words, “because his legal disability and inability to work arose from his own illegal and improper conduct, [MMLIC insists that Woodall] is not entitled to benefits under the Disability Income Policy because the provision of benefits under these circumstances would violate public policy.” Id. ¶ 34.
MMLIC explains that, when it first started paying Woodall under its disability policy, Woodall had not yet been disbarred, so MMLIC “made such payments without knowledge of the facts that disqualify Woodall from being eligible for benefits under the policy.” Doc. # 1 ¶ 35. It therefore seeks recoupment, and makes essentially the same showing for benefits it paid under its “Business Overhead Expense Policies,” id. ¶¶ 37-42, as well as the premium-waiver it allowed on the subject life insurance policies. Id. ¶¶ 43-47.
III. ANALYSIS
A. Personal Jurisdiction/Venue
MMLIC persuasively argues that Woo-dall has waived his personal jurisdiction and venue defenses by litigating non-jurisdictional matters (e.g., his prior motion to strike, discovery conduct, merits-based stipulation and status report co-generation) months into this case, and only now litigating these defenses upon the Court’s prompting. Doc. # 37 at 21-22.
Unlike subject matter jurisdiction, personal jurisdiction is a waivable defense,
4
and some courts have deemed it waived through inaction.
See Datskow v. Teledyne, Inc., Continental Prod. Div.,
Nevertheless, it is not necessary to deem those defenses waived because jurisdiction and venue are proper here. Note preliminarily that in order to subject a nonresident defendant to a judgment
in personam,
the minimum-contacts standard in Georgia is satisfied if the nonresident has purposefully availed himself of the privilege of doing some act or actions, or consummating some transaction with or in the forum (Georgia).
Chung-A-On v. Drury,
In that respect, “[pjersonal jurisdiction may be general, which arise[s] from the party’s contacts with the forum state that are unrelated to the claim, or specific, which arise[s] from the party’s contacts with the forum state that are related to the claim.”
Matthews,
So if a plaintiffs cause of action against a nonresident arises out of, or results from, activity or activities of a defendant within the forum, and if exercise of jurisdiction is consistent with due process notions of fair play and substantial justice, personal jurisdiction is legally supported.
Drury,
Woodall does not dispute that he lived in Savannah, Georgia for decades, including through nearly all of the Shiggs litigation, settlement and initial recrimination events. Doc. # 32 (attached admissions); # 36 at 10-14. He did not move to Texas until 3/00, thus claiming disabling depression only as legal walls closed in on him. Id. He also (from 1979 onward) purchased and paid his premiums on all insurance policies at issue while living in Georgia. Id.
It is similarly undisputed that, while he resided in Georgia, Woodall accepted MMLIC insurance policy benefits deriving from his representation of Shiggs, committed the acts against her that resulted in his disbarment, and participated in the disbarment and Shiggs proceedings that prefaced and caused his depression. Doc. # 26 at 1-4; # 37 at 2-7, exh. A ¶ 12. Nearly all of the relevant factual events (hence, Woodall’s contacts with Georgia), then, unfolded and impacted both parties in Georgia, not Texas.
Woodall therefore fits within Georgia’s personal jurisdiction standards.
Compare
*1371
Gee v. Reingold,
It is Georgia’s policy to exercise jurisdiction over nonresident defendants to the maximum éxtent permitted by procedural due process.
Balmer v. Elan Corp.,
Finally, the .Court is not inclined to exercise its discretion with respect to Woodall’s “convenient-forum” argument, doc. # 25 at 9-12, as it is conspicuous that he does not deny the Court’s previous observation (see doc. #23 at 1-2) that he fled Georgia to Texas to avoid being jailed for contempt of the Georgia probate court’s order that he disgorge Shiggs settlement proceeds (in none of his subsequent filings does Woodall dispute this). The legal and moral force of another court’s contempt order militates against countenancing any “inconvenience” claim made by a party who validated the maxim that when the going gets tough the tough get going.
B. The Merits
1. Substantive State Law
“In diversity cases, a federal court applies the law of the forum in which it sits.”
Continental Cas. Co. v. Adamo,
However, this Court is unable to certify the issue to the state court. Some district courts can invoke a local rule and corresponding state statute to do that,
see Catipovic v. Peoples Community Health Clinic, Inc.,
2. Public Policy
Georgia public policy favors freedom. of contract:
It is well settled that contracts will not be avoided by the courts as against public policy, except where the case is free *1372 from doubt and where an injury to the public interest clearly appears. In examining this case we also follow the rule that the courts must exercise extreme caution in declaring a contract void as against public policy and should do so only in cases free from doubt.
Colonial Properties Realty Ltd. Partnership v. Lowder Const. Co., Inc,
Georgia “courts [thus] will not lightly interfere with the freedom of parties to contract. [For example, a] contracting party may waive or renounce that which the law has established in his or her favor, when it does not thereby injure others or affect the public interest.”
Bradford Square Condominium Ass’n, Inc. v. Miller,
Insurance contracts, however, occupy a unique place. On the one hand:
Insurance is a matter of contract, and parties are free to fix responsibility for various risks as long as the contract does not violate state law or public policy. By law, “[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy and as amplified, extended, or modified by any rider, endorsement, or application made a part of the policy.” OCGA § 33-24-16. Under the statutory rules of contract construction, the contract will be construed strictly against the insurer/drafter. When an insurer agrees to provide coverage to an insured, any exclusions from that coverage must be defined clearly and distinctly.
Rutledge v. Auto-Owners Ins. Co.,
But on the other hand, insurance policies are also a matter of public concern because rulings in cases involving common policies obviously affect risk and associated insurance rates at a mass level. Hence, enabling parties, by commercial transaction (i.e., the purchase of an insurance policy) to shift the cost of morally and socially injurious conduct is a phenomenon more apt to be “fine-tuned” by Georgia courts.
Via statute and case-law development, then, Georgia has fine-tuned what does and does not violate its public-policy.
Compare Colonial,
In this case the “public-policy” issue is not only first impression but troubling to say the least. Like the defendant who kills his parents and then pleads for mercy because he’s an orphan (perhaps the most *1373 fitting example of “chutzpah”), there is something inherently disturbing about a man who commits a grievous wrong, unsurprisingly becomes “depressed” when confronted and punished over it, and then demands that his disability insurer pay him for a disabling “depression” as documented by his own psychiatrists. Doc. # 26 ¶ 7.
One would think that a disability policy would explicitly include a “chutzpah” exclusion of some sort. On the other hand, policy exclusion pages would be longer than policies themselves if courts required insurers to anticipate and expressly exclude every conceivable way that an insured can engage in wrongdoing and benefit from it. Too, insurers can reasonably argue that, since fundamental public policy concerns have- long been embedded in mass-policy insurance law, they shouldn’t have to “laundry-list” every conceivable wrongful act upon which a claim should be denied.
It has been long settled law, for example, that no one may benefit from his own wrongdoing. Indeed, even a casual perusal of the case law reflects this. Those who lead the police on a car chase and suffer injury or death, for example, may not (nor may their estate- or kin) collect damages.
See City of Winder v. McDougald,
Likewise, a man who murders his wife cannot collect on her life insurance policy.
Adamo,
The ban against permitting one to benefit from one’s wrongdoing, of course, is nothing new and extends beyond the insur-
*1374
anee context. Hence, one who misuses her defense lawyer in a criminal case cannot later claim that her counsel was ineffective.
U.S. v. Lamplugh,
It is in this light that MMLIC asks this Court to read a public-policy exclusion into its policy “as a matter of general insurance law and public policy.” Doc. # 35 at 9; see also id. at 6 (“it is undisputed that the cause of Woodall’s disability is his own misconduct in the Shiggs case”). Given Woodall’s arguments against that result, the issue is best explored by re-tracing the coverage, claim pay-out, and claim-denial phases that occurred in this case:
Phase 1 (Pre-Shiggs events): MMLIC issues Woodall a disability policy that, the parties agree, covers a depression-caused disability; Woodall made no claims and paid premiums from 1981 onward;
Phase 2 (Pre-disbarment): After committing disbarable acts, Woodall became depressed before the Georgia Bar disbarred him, and during that time, MMLIC accepted the disability claim (hence, a “factual disability”) by paying out under the policy;
Phase 3 (Post-disbarment): After he was disbarred, Woodall became “legally disabled” from working in his occupation (■ie., he could no longer work because of his disbarment, not just his depression); 5
Phase 4 (litigation): MMLIC seeks a judgment declaring that it can cease disability payments and recoup all prior payments and premium-waivers. Doc. #1 at 16-17; #35 at 23-24.
Note that, in contrast to case law showing insurers seeking to terminate benefits when a legal disability prevents the claimant from working in his occupation, even if the factual disability (his depression) may still exist, MMLIC insists that it can terminate (and recoup) all benefits because Woodall intentionally engaged in wrongful (“disbarable”) conduct and caused his own depression (disability), and that no physical or mental disability caused him to commit his wrongdoing in the first place.
MMLIC supplies two streams of case law in its briefs. One has courts denying disability coverage claims because it violates public policy to allow a wrongdoer to contractually benefit from his wrongdoing (e.g., a husband could not murder his wife, then collect on a depression-based disability policy that he purchased prior to his crime).
Another says that, even though there may exist a factual disability (e.g., medical *1375 ly-certifiable depression) preventing the policy-holder from earning income from his occupation, a superceding legal disability (here, Woodall’s disbarment) trumps the former and thus entitles the insurer (MMLIC) to deny coverage. Doc. #35.
But many courts, Woodall correctly points out, deny coverage only where the legal disability -precedes the factual disability (i.e., the insured is caught at some form of wrongdoing, loses his license to carry out his trade or profession, then gets “depressed” and claims the depression disables him). See doc. # 28 at 8-18.
Conversely, courts uphold coverage where factual precedes legal disability (ie., the claimant becomes depressed before he is disbarred, de-licensed, convicted, etc.). Id. Woodall says his depression (factual disability) preceded his disbarment (legal disability), so MMLIC’s quest to deny him benefits must fail.
A variety of cases speak to the factual versus legal disability (hence, “before and after”) issue, including
Suarez v. Massachusetts Mut. Life Ins. Co.,
Woodall thus superilluminates the temporal distinction in such cases
(i.e.,
if the medical disability triggers policy coverage first, then the later, legal disability cannot undo it) in arguing against reading into MMLIC’s policy the public policy argument MMLIC now urges. Doc. # 28 at 8-14. If MMLC wanted to exclude coverage for post-factual, legal disabilities, he contends, it could have provided for that in its policy contract.
Id.
And coverage exceptions, he emphasizes, 'are strictly construed, with any ambiguity resolved in favor of the insured.
Id.
at 2-7 (citing,
inter alia, Vulcan Life Ins. Co. v. Davenport,
Woodall also contends that:
• at most, courts should uphold the insurer’s public-policy .defense only if *1376 there is evidence that the insured obtained the policy in contemplation of committing the crime or wrongful act, id. at 13; and
• federal courts (sitting in diversity) should neither create nor expand state public policy doctrines, Georgia’s codified public policy exceptions for contracts do not include this sort of situation, 6 and in any event public policy arguments can rapidly get out of control (e.g., disability coverage could be denied to a motorist injured by an accident caused by his speeding, or running a red light). Id. at 18-25.
MMLIC responds by citing Suarez as an example of a court that invoked the factual/legal disability distinction despite the absence of a corresponding exclusion in the policy (hence, it invoked a public policy bar). Doc. # 35 at 8-9. Suarez, MMLIC says, basically ignores the time-phasing set forth above and agrees that insurers can deny coverage where the disabling depression is traceable back to the wrongdoing that ultimately leads to the legal disability. Id. at 10.
Suarez,
MMLIC further emphasizes, relied upon
Provident Life & Accident Ins. Co. v. Fleischer,
[t]he critical comparison in this case is not between the claimed factual disability in January 1994 and Fleischer’s guilty plea and incarceration in September 1995. Rather, the Court must examine the legal consequence of the initiation of the criminal proceedings against Fleischer in June, 1993.
In this case, the undisputed evidence reveals that Fleischer’s illegal activity resulted in his indictment, arrest, and month-long imprisonment in June 1993. Fleischer’s illegal conduct and the subsequent criminal proceedings arising directly from that conduct occurred before Fleischer’s claimed factual disability in January 1994.
Fleischer does not greatly assist MMLIC because claimant Fleischer’s wrongful conduct and the resulting legal proceedings (which led to his legal disability) began before Fleicher’s depression-disability was established, while here only Woodall’s wrongful conduct (but not the resulting legal disability) occurred before his factual disability (his psychiatrist’s 2/97 diagnosis of depression) was established.
Woodall’s case thus falls in between the “before and after” cases set forth above. As mentioned supra, these facts make this a case of first impression, thus necessitating some deeper theoretical exploration of the public-policy doctrine’s central purpose. That exploration is perhaps best undertaken by considering the following hypothetical:
“T.S.” is in “waste management.” Married with two kids, he’s also a crime-family boss. Job and family-life pressures cause depression and anxiety attacks, so he sees a therapist, Dr. M., a Prozac-prescribing psychiatrist.
A savvy sociopath, T.S. operates both legitimate (waste-removal) and illegitimate enterprises (gambling, prostitution, etc.), *1377 and takes out a disability policy with “The Gullible Insurance Company.” Upon learning that he’s been wiretapped and is about to be indicted for a crime packing a very long prison term, T.S. ■ actually does become depressed to the point where he cannot get out of bed, much less operate his legitimate business any longer.
Dr. M. then credibly certifies that he is so depressed that he is “disabled” from running his legitimate business. 7 T.S. files a depression-based disability claim with The Gullible, which pays out under a reservation of rights letter because, as is the case in Georgia, state law imposes stiff penalties for unreasonable claim-denial. Meanwhile, “the feds” take their time and fail to indict/convict him until months later, in response to which the local municipality revokes his business license.
But Gullible, like MMLIC, failed to expressly exclude against this result in its policy, so it brings an action to . deny coverage on public policy grounds, arguing that T.S.’s criminal behavior is inextricably intertwined with the depression supporting his disability claim, and no one should benefit from one’s own wrongdoing.
Before the trial court T.S. cites the above-referenced “before and after” cases in demanding coverage. The court rules in his favor because his “medical disability” (his depression) preceded his legal (revoked business license) disability.
Word of the ruling spreads, and T.S.’s associated immediately obtain disability policies that cover depression. After all, they can • — ■ with reasonable credence — claim that they are not obtaining them with criminal intent, for all can grow depressed when downwind indictments loom, and thus become “disabled” from operating their own legitimate businesses before any criminal proceedings commence. Nat *1378 urally, Dr. M’s patient roster grows, while disability insurance rates skyrocket (what cost-effective, practical ways exist to ascertain whether an insurance customer possesses a criminal mind?).
In The Gullible v. T.S., however, the appellate court reverses. It concludes that where legal-disability consequences imminently loom on the “depressed” disability claimant’s horizon, and those consequences are inextricably intertwined (causation-wise) with the depression-based disability (ie., the “deteetion-confrontation-punishment” consequences that result from wrongful conduct are the predominant cause of the disabling depression), the fact-finder may disregard, on public policy grounds, the mere fact that the “factual” disability preceded the legal disability.
Citing the Georgia public-policy cases noted supra, the court emphasizes that one should not be able to contractually benefit from depression caused by being confronted over one’s own wrongdoing, where the consequences of such wrongdoing predominantly drive the disabling depression itself. The Gullible court additionally notes that
[s]uch a rule is in keeping with a longstanding line of cases in which state courts have refused to allow an insured to be indemnified from liability resulting from the insured’s intentional causation of an injury.... [It thus] supports] the proposition that allowing an insured to benefit from his intentionally injurious conduct is against public policy.
Massachusetts Mut. Life Ins. Co. v. Millstein,
Consider the same hypothetical except that, just before T.S. learns of the indictment, he endures a car crash that renders him a quadriplegic and thus morbidly depressed, unquestionably disabling him from operating his legitimate business. Here the Gullible court rules in his favor because his “medical disability” (his depression) not only preceded his legal (revoked business license) disability, but the imminently expected prosecution and punishment for his criminal misdeeds also were not inextricably intertwined with the depression. 8
In the instant case Woodall has stipulated that he grew depressed upon being confronted with the consequences of his own grievous wrongdoing — consequences which ultimately led to his flight from Georgia and disbarment:
[Beginning in [2/97], [Woodall] became and has remained as of the date this suit was filed [5/29/02], unable to perform the main duties of his occupation and continually has been under a doctor’s care by reason of depression and its related effects, which resulted principally and directly from his being subject to allegations of misconduct in the [Shiggs] case, which he disputed, and his initial antiei- *1379 pation of a reprimand from the State Bar of Georgia.
Doc. # 21 at 1 (footnote omitted; emphasis added).
Woodall thus falls squarely within the first
Gullible
scenario, and there is no issue of fact on that score. His case also is distinguishable from
Walker v. UnumProvident Corp.,
Woodall next asks, “[wjould the same rationale argued by [MMLIC] apply to the disability claim of a motorist who had been injured while exceeding the lawful speed, or running the red light?” Doc. # 28 at 21. Of course, Woodall is mixing apples and oranges .here, for his. question delves into the mandatory-insurance realm (where insurance is legally required to protect both the individual and the public), while here he presents a voluntary — insurance policy (protecting only one person, with a much lower public .— impact component) under which a wrongdoer is able to contractually orchestrate a benefit violative of public policy.
Other courts, for that matter, have underscored their public-policy delineations with the mandatory-insurance (and thus protection of the public on a mass-scale) factor in mind:
In Sledge v. Continental Casualt y Co.,639 So.2d 805 , 812 (La.Ct.App.1994), the court held that an automobile policy coverage exclusion for injury or damage arising out of an “act committed in violation of a law or ordinance” could be applied only to acts in violation of criminal law and that normally require specific or general intent. The court observed that a literal application of the policy language “would effectively deny coverage for all acts incidentally- and technically constituting an infraction of the statutory ‘rules of the road’.... ” Id. Noting that “a policyholder would normally not expect the instant exclusion to control in reference to speeding, running a stop sign, or failing to maintain control,” the court declared that the expansive language of the coverage exclusion clearly conflicted with Louisiana’s public policy that automobile liability insurance should protect innocent accident victims.
Allstate Indem. Co. v. Wise,
Woodall’s case is easily distinguishable from spontaneous-traffic-infraction cases. His wrongdoing involved deliberate, premeditated, calculating conduct that occurred over a long period of time. That easily contrasts with a thoughtless incident of “lead-footing” an automobile’s accelerator pedal, which happens myriad times every day, often with no mens rea, and directly imperils others on a mass scale, such that excluding coverage (for a technical criminal violation) would violate public policy.
Finally, the
Vulcan
ease, on which Woodall relies, doc. # 38 at 8, does not compel a different result here. The issue there was whether a health insurance policy’s exclusion for injuries resulting from being “drunk” applied to injuries sustained by an insured injured in a traffic accident; the insured pled guilty to driving under the influence with blood alcohol level of .19.
Vulcan,
After the insured prevailed, the insurer (Vulcan) appealed and the appeals court rejected
Vulcan’s contention that the verdict and judgment are contrary to the public policy of this state, as expressed by the recent amendment to OCGA § 40-6-391 stiffening penalties for driving under the influence of alcohol. Proof of a violation of this statute does not establish that a driver was “drunk” as required by the policy drafted by Vulcan, which connotes a more substantial degree of impairment.
Vulcan,
Thus, Vulcan does not in any way suggest that Georgia courts would reject the Gullible construct here, which is premised on a series of deliberate wrongful acts the consequences of which are inextricably intertwined with the factual disability (ie., the depression resulting from the wrongdoer’s realization that he’s been confronted and likely will suffer serious consequences over his wrongdoing) at issue in this case. Rather, Vulcan’s result turned on a policy exclusion’s failure to adequately specify what the insurer meant by the word “drunk.”
The Court therefore “Eñe guesses” that in a case like this, Georgia’s Supreme Court would conclude that where legal-disability consequences imminently loom on the “depressed” disability benefit claimant’s horizon, and those consequences are inextricably intertwined (causation-wise) with the depression-based disability {ie., the “detection-confrontation-punishment” consequences that result from wrongful conduct are the predominant cause of the disabling depression), the factfinder may disregard, on public policy grounds, the mere fact that the “factual” disability preceded the legal disability.
That court therefore would deem benefit payments (and associated premium waivers) to Woodall contrary to public policy. This Court concurs. The remaining issue, then, is when did MMLIC effectively reserve its right to deny such benefits on those grounds?
3. MMLIC’s Reservation of Rights
Understandably uncertain (this
is
a first-impression case in Georgia), MMLIC initially paid benefits to Woodall because, like all Georgia insurers, it risked bad-faith penalties if it did not.
See Vulcan,
*1381 Still, nothing legally inhibited MMLIC from bringing a declaratory judgment action earlier {e.g., right after 2/5/01, the date Woodall was disbarred, if not earlier). From 8/30/01 to 3/1/02, MMLIC accompanied its benefit payment checks to Woodall with letters in which it
reserve[d] all rights under the contract(s). Our review of your claim is continuing and the payment of this benefit does not constitute a waiver on [MMLIC’s] part of our right to invoke at any time, any provision contained in your policy or policies.
Doc. #26, attached “Stipulation” exh. I.
MMLIC thus unquestionably failed to clearly state the basis for its rights reservation in those letters. In a 5/16/01 letter to Woodall, however, its representative wrote that “[d]uring our conversation I explained that the reason your check was issued with reservation of rights was because we had received information which stated that you were disbarred.” Doc. # 36 at 14 ¶ 16; # 26, attached “Stipulation” exh. I.
Insurers commonly use rights-reservation letters to reserve their right to (often with the aid of a judicial declaration) deny benefits without facing the risk of a bad-faith penalty as opposed to a mere breach-of-contraet finding.
See Morris v. Paul Revere Life Ins. Co.,
Courts encourage the use of this device.
See, e.g., Colonial Oil Indus., Inc. v. Underwriters (Etc.),
494CV010 doc. # 88 at 11 (S.D.Ga. Order entered 8/15/95);
Legion Ins. Co. v. Moore,
Here MMLIC reserved its right to change its mind and seek a ruling adverse to Woodall — something freely permitted under Georgia law.
See, e.g., Direct Gen. Ins. Co. v. Drawdy,
MMLIC, however, is being a little bit coy because, fairly read, the substantive part of its Complaint and briefs is asking the Court to declare that MMLIC can rightly deny all payments (hence, before and after Woodall’s disbarment) on the public-policy grounds that one can never benefit (even contractually) from his own wrongdoing, and that includes a self-inflicted, “depression” — based disability.
Woodall responds that, even if the Court agrees with MMLIC on its public-policy argument (which the Court has just done, see supra Part 111(B)(2)), MMLIC nevertheless cannot recover payments that it voluntarily paid prior to its issuance of its rights-reservation letters. The insurer, he insists, knew or should have known about the Shiggs facts while making those payments. Doc. # 28 at 21-22; see also doc. # 38 at 12. And, Woodall contends, MMLIC’s rights-reservation letters never clearly stated on what basis it was reserving its right to challenge payments to Woodall. Doc. #28 at 22. Nor did the letters warn that MMLIC might seek to recoup pre-letter payments. Id.
As MMLIC correctly points out, doc. # 35 at 22, there is very little Georgia law on the effectiveness and scope of rights-
*1382
reservation letters, especially in the benefits-policy context (though the Court has found one instance elsewhere, see
Emerling v. Village of Hamburg, 255
A.D.2d 960,
Most of the Georgia case law in this area deals with an insurer’s duty to defend its insured from third party claims where the insurer is uncertain of its duty to defend. Cases hold that an insurer may be found to waive its right to refuse to defend where it does not timely issue a rights-reservation letter to its insured. See 14 Couoh on Ins § 202:57 (July 2003).
Similarly, a “[p]ayment by an insurer, with knowledge of facts to support a policy defense, amounts to a waiver of the right to rely thereupon or to recover the payment made.” 16 Couch on Ins. § 226:102 Payment With Knowledge of Facts; Generally (July 2003).
The Court agrees with Woodall that Georgia law requires insurers to timely notify their insureds of their intent to reserve rights, and clearly specify their basis.
See State Farm Mut. Auto. Ins. Co. v. Wheeler,
The Court also agrees that the
Shiggs
controversy was fully publicized and not concealed from MMLIC, which fails to support any claim of ignorance with competent evidence. And, though not in this context, it’s been said that “[a] general reservation of defenses is wholly ineffective to prevent a waiver that has already occurred.”
Sargent v. Allstate Ins. Co.,
On balance, Woodall has the better argument here, at least with respect to pre 5/16/01 payments. To claim the right to contest a payment obligation based on having “reserve[d] all rights under the contract(s)” is to claim the right to pretty much do anything. MMLIC knew something was up payment-disqualification wise (it did, after all, send Woodall the rights-reservation letters prior to that date), and nothing stopped it from stating “we think that your own misconduct disqualifies you from collecting disability benefits under Georgia law” in its earlier letters.
The Court therefore will apply these rules:
A payment of a claim is deemed voluntary, and the amount paid cannot be recovered, where the facts are all known and no artifice, deception, or fraudulent practice is used by the insured to obtain payment. However, an insurer that is not possessed of all of the facts, and misplaces confidence in the validity of a claim, will not be precluded from recovering proceeds erroneously paid.
16 Ga. Jur. INSURANCE § 23:8 (.Recovery Back of Payments by Insurer, Generally) (Aug.2002) (footnotes omitted). These rules contain an important qualification:
An insurer cannot recover a payment on the basis of a mistake as to a fact about which there was some doubt at the time of payment, particularly where the insurer cannot show any valid reason for failing to ascertain, prior to making payment, the true circumstances surrounding the claim.
Id. (footnotes omitted); see also id. (“Nor can the insurer recover a payment made through ignorance of the law, rather than by reason of a mistake of fact”).
*1383 MMLIC therefore reserved its right to terminate disability benefits on 5/16/01 — the date it clearly articulated at least a substantial part of the basis, as accepted here, for denying coverage — but not before that date.
IV. CONCLUSION
Accordingly, the Court declares that Massachusetts Mutual Life Insurance Company (MMLIC) is excused from paying defendant John T. Woodall further benefits (ie., after 5/16/01) under the policies specified in its Complaint, but it may not recover from him its pre-5/16/01 payments nor premium waivers. Conversely, it may recover post-5/16/01 benefit payments and premium waivers, while Woodall is not entitled to any benefits or premium-waiver provisions from 5/16/01 onward.
In addition, the Court OVERRULES defendant Woodall’s objection (doc. # 41) to MMLIC’s reply brief. It DENIES Woodall’s (jurisdiction/venue-based) summary judgment motion (doc. # 24); GRANTS IN PART AND DENIES IN PART MMLIC’s cross-motion for partial summary judgment (doc. # 33); and GRANTS IN PART AND DENIES IN PART Woodall’s (merits-based) summary judgment motion (doc. # 27).
Finally, the parties are directed to confer within 10 days of the date this Order is served and endeavor to in good-faith resolve the remaining issues in this matter (e.g., calculate amounts owed under the above declaration, settle or promptly litigate any remaining issues like MMLIC’s attorney-fee claim, see doc. # 1 at 16, etc.), with an eye toward jointly presenting the Court with a final judgment closing this case.
Notes
. Actually, a predecessor company sold Woo-dall that and several other policies, doc. # 1 *1367 ¶¶ 7-10 (life insurance, business overhead expense coverage), but for convenience the Court will simply refer to MMLIC. Also, several policies are in play here, see doc. # 26 ¶ 1; # 36 ¶ 1, but, also for convenience, the Court generally will reference them in the singular form throughout this Order.
. See doc. # 1 exh. H (State Bar Special Master's Report) at 44 ("Roberson and Woo-dall each wanted to earn a $1,000,000 fee. They could only achieve that personal financial goal by [inflating the Shiggs case settlement value to] $4,000,000 or more. [But t]he settlement was worth only $3,325,000 and perhaps a few thousand more.... The [inflated] valuation served Roberson’s and Woo-dall’s personal and financial interests, while doing nothing to advance Julia Mae Shiggs’ interests”); see also doc. # 1 ¶ 13; # 14 ¶ 13 (Woodall admits Roberson paid him $1.1 million from the Shiggs settlement).
. www.savannahnow.com/features/150years/ 1990faces.shtml (site as of 8/19/03); see also www.savannahnow.com/stories/033000/LOC shiggs.shtml (site as of 8/19/03) ("When she died, her total assets — $250, all from welfare *1369 payments — did not even cover her burial costs”).
. So is venue. See Tri-State Employment Services, Inc. v. Mountbatten Sur. Co., Inc., 295 . F.3d 256, 261 (2nd Cir.2002).
. "When called upon to review these claims, the courts have distinguished between persons who are unable to engage in their profession and those who are not allowed to do so. This distinction is reflected in the courts’ differentiation between factual disabilities and legal disabilities.”
Massachusetts Mut. Life Ins. Co. v. Jefferson,
. The Court rejects Woodall's argument to the extent he contends that only Georgia’s legislature generates public policy exceptions in Georgia law.
See Jefferson Pilot Life Ins. Co.
v.
Clark,
. Lawyers notoriously have had little difficulty in finding mental health professionals to "medicalize” criminality. One of the most outrageous “legal lore” examples involves the so-called "Twinkie Defense”:
It all started on November 27, 1978 in San Francisco. Dan White, an ex-policeman who had recently resigned as city supervisor, climbed in the basement window of City Hall to avoid metal detectors, walked upstairs to the office of mayor George Moscone and demanded his supervisor job back. When Mos-cone refused, White shot him twice at close range, then stood over the body and put two more bullets into the mayor's brain to finish him off. Then he reloaded, went down the hall, and killed Harvey Milk, a popular supervisor who was also America's first openly gay public office holder, shooting him five times.
At trial, White's lawyer argued that he was suffering from "diminished capacity,” a controversial defense then permissible in California courts. White supposedly was suffering from depression and thus incapable of premeditated murder. As evidence of this, psychiatrist Martin Blinder testified that the formerly .health-conscious White had recently become a junk food junkie. Blinder commented that too much sugar can affect the chemical balance in the brain and worsen depression, but didn't blame the crime on bad diet. Rather, he offered junk food use as proof of White's mental state-in other words, Twinkie consumption was an effect rather than the cause of White's problems. But the media and public immediately-and misleadingly-dubbed the defense's argument the “Twinkie defense.”
Whatever they called- it, it worked. The jury found White guilty of a lesser charge, voluntary manslaughter. White was sentenced to six years in prison rather than life as many expected. The gay community and others were outraged, and rioting broke out in San Francisco. Largely in response to this case, California voters in 1982 overwhelmingly approved a proposition to abolish the "diminished capacity” defense. Dan White, for his part, served his time in prison, was paroled in 1985 and committed suicide a few months later.
www.straightdope.com/mailbag/mdimcapaci-1y.html (site as of 8/19/03). Prosecutors have since used the "Twinkie Defense" term to disparage defense efforts to explain away criminal conduct.
See, e.g., State v. Virk,
105
*1378
Wash.App. 1011,
. It would not be an issue if, subsequently, T.S. somehow medically recovered but could not otherwise return to work because of his life imprisonment (i.e., a superceding legal disability sets in). Gullible could, as any other disability insurer can, pursue an independent medical examination and discontinue benefits on the grounds that he is not medically disabled.
Cf. Ohio Nat. Life Assur. Corp. v. Crampton,