Filed: May 07, 2014
Latest Update: Mar. 02, 2020
Summary: Case: 13-11672 Date Filed: 05/07/2014 Page: 1 of 8 [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 13-11672 _ D.C. Docket No. 1:10-cv-00009-WLS AUTO OWNERS INSURANCE COMPANY, Plaintiff-Appellant, GEORGE M. MARTIN FAMILY INVESTMENT, LTD., Plaintiff, versus SOUTHWEST NUT COMPANY, INC., Defendant-Cross Claimant-Appellee, TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Defendant-Cross Defendant-Appellee, NORRIS NEAL, et al., Intervenor Defendants. _ Appeal from
Summary: Case: 13-11672 Date Filed: 05/07/2014 Page: 1 of 8 [DO NOT PUBLISH] IN THE UNITED STATES COURT OF APPEALS FOR THE ELEVENTH CIRCUIT _ No. 13-11672 _ D.C. Docket No. 1:10-cv-00009-WLS AUTO OWNERS INSURANCE COMPANY, Plaintiff-Appellant, GEORGE M. MARTIN FAMILY INVESTMENT, LTD., Plaintiff, versus SOUTHWEST NUT COMPANY, INC., Defendant-Cross Claimant-Appellee, TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA, Defendant-Cross Defendant-Appellee, NORRIS NEAL, et al., Intervenor Defendants. _ Appeal from t..
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Case: 13-11672 Date Filed: 05/07/2014 Page: 1 of 8
[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
__________________________
No. 13-11672
__________________________
D.C. Docket No. 1:10-cv-00009-WLS
AUTO OWNERS INSURANCE COMPANY,
Plaintiff-Appellant,
GEORGE M. MARTIN FAMILY INVESTMENT, LTD.,
Plaintiff,
versus
SOUTHWEST NUT COMPANY, INC.,
Defendant-Cross Claimant-Appellee,
TRAVELERS PROPERTY CASUALTY COMPANY OF AMERICA,
Defendant-Cross Defendant-Appellee,
NORRIS NEAL, et al.,
Intervenor Defendants.
__________________________
Appeal from the United States District Court
for the Middle District of Georgia
__________________________
(May 7, 2014)
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Before WILSON, JORDAN, and BLACK, Circuit Judges.
PER CURIAM:
Auto-Owners Insurance Company appeals the district court’s grant of
summary judgment in favor of Southwest Nut Company and Travelers Property
Casualty Company of America. Following oral argument, we affirm the district
court’s summary judgment order. *
I
George M. Martin Family Investment, Ltd. (“Martin”) owned a storage
warehouse in Georgia and insured the warehouse under a policy issued by Auto-
Owners. Southwest Nut holds an insurance policy issued by Travelers that
provides coverage for “newly acquired property.” Southwest Nut leased a portion
of Martin’s warehouse to store pecans.
Soon after Southwest Nut leased a portion of the warehouse, a fire of
unknown origin destroyed portions of the warehouse and Southwest Nut’s stored
inventory. Auto-Owners paid Martin for damages to the warehouse and demanded
contribution (and sought subrogation) from Travelers.
Subsequently, Auto-Owners and Martin filed this suit against Southwest Nut
and Travelers to recover damages for the loss by fire. They alleged that the
*
We issued a jurisdictional question in this case, and the parties’ responses to the
question satisfy us that complete diversity exists.
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warehouse lease required Southwest Nut to purchase fire insurance for the
warehouse. Alternatively, they asserted that the Travelers policy insured the
warehouse as “newly acquired property” and that Martin (and Auto Owners as
Martin’s subrogee) had a direct claim against Travelers as an intended beneficiary.
After discovery, the parties filed cross-motions for summary judgment. The
district court granted summary judgment in favor of Southwest Nut and Travelers.
Auto-Owners (but not Martin) filed this appeal.
II
We review a district court’s grant of summary judgment de novo, viewing all
evidence in the light most favorable to the non-moving party. See Dolphin LLC v.
WCI Communities, Inc., 715 F.3d 1243, 1247 (11th Cir. 2013) (per curiam). This
case is based on diversity jurisdiction, and all parties agree that Georgia law
controls. We apply state law as declared by the state’s highest court, but when no
decision of the highest court is directly on point we consider decisions of state
intermediate courts to determine how the highest court would decide the case. See
State Farm Mut. Auto. Ins. Co. v. Duckworth,
648 F.3d 1216, 1224 (11th Cir.
2011).
A
Auto-Owners contends that Southwest Nut was required to insure the entire
warehouse against property damage. The district court extensively discussed this
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contention and concluded that the lease only required Southwest Nut to insure
against loss by fire caused by its use of the warehouse. For a number of reasons,
we agree with the district court.
First, Section 9.03 of the lease states that Southwest Nut will “insure and
keep in effect on the Warehouse and contents, fire, extended coverage and all other
endorsements to cover the full range of losses for which Tenant is responsible
hereunder.” D.E. 70-1 at 10. Significantly, although the warehouse is comprised
of nine bays and takes up approximately 60,000 square feet, the lease defines the
term “Warehouse” as “a refrigerated bulk commodity storage facility consisting of
three cold storage bays and one dry storage bay with office . . . comprising
approximately 24,000 square feet in floor size, and associated loading dock area.”
D.E. 70-1 at 4. Southwest Nut’s obligation to insure the “Warehouse” therefore
did not require procuring insurance for the entire warehouse. See, e.g., Oglethorpe
Power Corp. v. Hartwell Energy Ltd. P’ship, 537 S.E.2d 372, 376 (Ga. Ct. App.
2000) (applying parties’ “specific” definition of term “affiliate” in agreement).
Second, Section 5.02 of the lease provides that “Tenant agrees to procure
and maintain full insurance coverage for absolutely all losses, liabilities, damages,
or claims that may occur in connection with Tenant’s use of the Warehouse and
Tenant’s obligations under this lease.” D.E. 70-1 at 6 (emphasis added). This
language means that Southwest Nut is responsible only for fire losses occurring in
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connection with its use of the warehouse—not for the warehouse generally. And
even if this language was not clear, any ambiguity would be resolved against
Martin, the drafter of the lease. See O.C.G.A. § 13-2-2. Because Auto-Owners
does not contend that the fire was caused by or connected to Southwest Nut’s use
of the warehouse, the district court correctly concluded that the lease did not
require Southwest Nut to insure against the loss by fire in this case.
B
Auto-Owners, as Martin’s subrogee, alternatively argues that even if the
lease did not require Southwest Nut to obtain fire insurance, Martin has a direct
claim against Travelers under Georgia law. We disagree.
Under Georgia law, “an action on a contract . . . shall be brought in the name
of the party in whom the legal interest in the contract is vested.” O.C.G.A. § 9-2-
20. However, “[t]he beneficiary of a contract made between other parties for his
benefit may maintain an action against the promisor on the contract.” Id.
Georgia law differentiates between intended beneficiaries and incidental
beneficiaries. See Lee v. Am. Cent. Ins. Co.,
530 S.E.2d 727, 730 (Ga. Ct. App.
1999) (holding that for a third party to bring a claim “it must clearly appear from
the contract that it was intended for his benefit”). A plaintiff is not a third-party
beneficiary if a policy only incidentally covers his property. For example, in
Insured Lloyds v. Bobo,
156 S.E.2d 518 (Ga. Ct. App. 1967), the plaintiff
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consigned his car to the insured. See id. at 519. The insurance policy specifically
covered “automobiles consigned to . . . the insured.”
Id. When the plaintiff’s car
was stolen from the insured’s dealership, the plaintiff filed suit directly against the
insurer, contending that he was a third-party beneficiary under the insurance
policy.
Id. The Georgia Court of Appeals held that the plaintiff was not an
intended beneficiary because the policy was intended to protect the insured from
potential liability to owners of consigned cars, not to compensate the owners of
consigned cars. See
id. at 520.
The focus of the Travelers policy is to provide insurance protection for
“[buildings] newly acquired by the insured.” D.E. 71-1 at 10 (emphasis added).
Although this provision may occasionally provide coverage for property actually
owned by another individual, the policy is intended to protect the insured—
Southwest Nut—and not a third party. As in Insured Lloyds, Martin’s incidental
benefit is insufficient to clearly show that it was an intended beneficiary.
Auto-Owners asserts that Gulf Insurance Co. v. Mathis, 358 S.E.2d 850 (Ga.
Ct. App. 1987), compels a different result, but we are not persuaded. In Gulf
Insurance, the Georgia Court of Appeals concluded without analysis that the
insured’s brother—who was living in the insured’s home—could bring a claim
directly against the insurer for damage to personal property in the insured’s home.
See
id. at 851. Contra First of Ga. Ins. Co. v. Augusta Ski Club,
165 S.E.2d 476,
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476-77 (Ga. Ct. App. 1968) (holding that third party storing goods in insured’s
home was not a third-party beneficiary under a policy that provided property
damage coverage for personal property owned by others). Although the Mathis
panel did not explain its reasoning, it noted that the brother “solicited the policy in
question, negotiated the premium, paid the premium and lived on the premises the
entire time that the policy was in effect.” See Mathis, 358 S.E.2d at 851.
While there is no Georgia Supreme Court case directly on point, the Georgia
Supreme Court has said that more than an incidental benefit is required to create a
third-party beneficiary. See Googe v. Fla. Int’l Indem. Co., 422 S.E.2d 552, 554
(Ga. 1992). The Georgia Court of Appeals, considering similar factual scenarios,
has also held that an incidental benefit from an insurance policy is insufficient to
create a third-party beneficiary relationship. See, e.g., Anthony v. Grange Mut.
Cas. Co.,
487 S.E.2d 389, 390-91 (Ga. Ct. App. 1997) (holding that assignee of
mortgage was not an intended beneficiary even when the insurance policy listed
the original mortgagee as a payee); Augusta Ski
Club, 165 S.E.2d at 476-77;
Insured
Lloyds, 156 S.E.2d at 519. We will not construe an unclear result in one
case to conflict with the corpus of Georgia precedent, and conclude that these well-
reasoned opinions from the Georgia Court of Appeals accurately predict how the
Georgia Supreme Court would decide this case.
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Accordingly, we conclude that Martin is not a third-party beneficiary of the
Travelers policy, and as a result Auto-Owners cannot bring a direct action against
Travelers as Martin’s subrogee.
III
The district court correctly concluded that the Southwest Nut did not breach
the lease in this case because it was only required to insure against loss by fire
caused by or connected to its use of the “Warehouse,” as that term is defined in the
lease. Additionally, because Martin is not clearly an intended beneficiary under
the Travelers policy, Auto-Owners—as Martin’s subrogee—does not have a direct
claim against Travelers. Accordingly, the district court correctly granted summary
judgment in favor of Southwest Nut and Travelers, and we affirm.
AFFIRMED.
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