IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
CLAUDE ROBERT PAYNE,
Plaintiff,
v.
STATE FARM FIRE AND
CASUALTY COMPANY;
INFINITY SPECIALTY
INSURANCE COMPANY f/k/a
ATLANTA SPECIALTY
INSURANCE COMPANY;
LATASHA WILLIAMS; AND SUE
ARENSTEIN, JOINTLY AND
SEVERALLY,
Defendants.
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Case No.: 1:11-CV-00309-AT
PLAINTIFF PAYNE'S REPLY BRIEF IN SUPPORT OF HIS MOTION
FOR SUMMARY JUDGMENT AS TO CLAIMS AGAINST INFINITY
SPECIALTY INSURANCE COMPANY F/K/A ATLANTA SPECIALTY
INSURANCE COMPANY
COMES NOW, Plaintiff Claude Robert Payne and files this Reply Brief in
Support of his Motion for Summary Judgment as to Claims Against Infinity
Specialty Insurance Company f/k/a Atlanta Specialty Insurance Company
("Infinity").
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INTRODUCTION
In its Memorandum in Opposition to Plaintiff's Motion for Summary
Judgment ("Memorandum"), Infinity again tries to cast blame on everyone but
itself for its failure to accept the Hollomon plaintiff's demand, failure to settle the
claims it could settle against Payne, and failure to protect Payne from the $13.8
million judgment that was ultimately rendered against him in the Hollomon
Litigation. Infinity's position with respect to Payne's motion is apparently so weak
that Infinity tries to obscure the facts even further by attacking Payne for not
responding to arguments made by Infinity in Payne's motion for summary
judgment. Payne was not required to respond to arguments made by Infinity its in
motion for summary judgment in Payne's motion for summary judgment and Payne
appropriately and properly reserved its arguments in opposition to Infinity's motion
in its response brief.
The evidence is clear--Infinity failed to accept the Hollomon plaintiff's
demand, failed to settle the claims that were within its power to settle against
Payne, and failed to put Payne's interests above its own throughout the pendency of
the Hollomon Litigation, including at trial. Payne's bankruptcy attorney, Todd
Camp, never objected to any of the proposed releases and left the language of the
release to the discretion of Kristin Hall, who failed in her duty to Payne.
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Infinity now claims that even if it did fail its in duty to Payne, it is not liable
because "late notice…is a complete defense to this lawsuit." (Memorandum p. 2).
What Infinity refuses to acknowledge, despite overwhelming evidence to the
contrary, is that Infinity accepted coverage for the claims made against Payne in
the Hollomon Litigation and has waived its right to rely on late notice as a defense.
No questions of material fact remain and Payne is entitled to judgment as a
matter of law.
ARGUMENT AND AUTHORITY
A. Infinity did not accept the Hollomon plaintiff's demand
Despite Infinity's arguments to the contrary, Infinity did not accept the
Hollomon plaintiff's demand to settle the wrongful death claim asserted by Stacy
Hollomon. Infinity claims that James Neuberger conceded that Infinity accepted
the demand (Memorandum p. 3). In fact, Neuberger has maintained, since 2008,
that there was no meeting of the minds regarding the settlement demand. (July 23,
2008 Letter, Exhibit 21 to Payne's Statement of Material Facts). It is clear that
there was no meeting of the minds “at the same time, upon the same subject matter,
and in the same sense” such that an enforceable contract was formed. Jones v.
Frickey, 274 Ga.App. 398, 401, 618 S.E.2d 29, 31 (2005). This is apparent from
the subsequent conduct of Infinity and Hall, who made it clear on numerous
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occasions, though the various draft settlement agreements, that their understanding
of the terms of the alleged settlement differed from the Hollomon plaintiff's offer.
As Payne has stated previously, there can be no question that the conduct of
Infinity constituted a counteroffer to the February 19 Letter. In its purported
acceptance, Infinity tried to vary the terms of the proposed releases to release more
parties and more claims than offered by the Hollomon plaintiff. This constituted a
counteroffer. The February 19 Letter was clear—it offered to release the wrongful
death claim only—and Infinity's attempts to include language in the release that
varied the terms of the February 19 Letter was a counteroffer. Infinity had both a
right and a duty to settle only the wrongful death claim for the Infinity Policy
limits and it failed to do so. See Nash v. Allstate Ins. Co., 256 Ga.App. 143, 567
S.E.2d 748 (2002).
Infinity claims that the language of the release proposed by Kristin Hall on
March 10, 2008 was consistent with the terms of the demand. (Memorandum p. 6).
As Payne stated at length in his motion for summary judgment, the release
proposed by Hall in March 2008 was in no way consistent with the demand
because it purported to release claims for property damage, funeral expenses, and
medical expenses, which claims were not held by the Hollomon plaintiff but were
held by the estate, and which claims were not part of the demand. Furthermore,
the release proposed by Hall in June 2008 also was inconsistent with the demand
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and attempted to expand the terms of the demand to release claims that the
Hollomon plaintiff had not offered to release. It is clear that the understanding of
Infinity and Hall regarding the terms of the agreement differed from the Hollomon
plaintiff's offer.
The cases cited by Infinity in opposition to Payne's motion for summary
judgment are inapposite because there was no meeting of the minds sufficient to
form a contract at the time of Infinity's purported acceptance of the Hollomon
plaintiff's demand. Furthermore, the cases cited by Infinity all involve a single
plaintiff with a single claim where the offer and acceptance necessarily settled and
extinguished all the plaintiff's claims against the defendant. In this case, the
demand was to settle only one of two different claims against Payne and Infinity's
response indicates there was no meeting of the minds between the Hollomon
plaintiff and Infinity because Infinity clearly attempted to settle and obtain a
release of both claims.
Furthermore, the cases cited by Payne are controlling. It is clear that Infinity
did not accept the Hollomon plaintiff's demand because Infinity made a
counteroffer in attempting to expand the breadth of the terms of the release to
include claims that were not part of the Hollomon plaintiff’s demand.
Additionally, that Infinity claims Kristin Hall was "willing to work with
[Neuberger] to find mutually agreeable language" is irrelevant--Infinity and
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Neuberger never reached a settlement agreement and never entered into a
settlement agreement, thereby leaving Payne exposed to judgment. That said, even
though Hall claimed Infinity was willing to work with the Hollomon plaintiff to
reach "mutually agreeable language," the facts indicate that Infinity was willing to
do no such thing and on numerous occasions made that clear. Then, after Infinity
had failed to accept the demand and realized the error of its ways, it attempted to
backpedal and offered to accept the language of the Neuberger release.
Unfortunately for Payne, at that point, it was too late.
Furthermore, after the massive $13.8 million judgment was rendered against
Payne, Infinity tendered the $25,000 Infinity Policy limits to the Hollomon
plaintiff, not to protect Payne, but, to protect itself, as evidenced by the fact that it
did not even seek to obtain the release evidencing the settlement it claimed it had
with the Hollomon plaintiff in exchange for that payment, but, instead, sought to
confirm “that Plaintiffs will not pursue any further claims against Infinity…
including but not limited to any claims for bad faith penalties.” (July 9 Letter)
(emphasis supplied).
If, as Infinity claims, a settlement agreement exists, Infinity has offered no
explanation for why it failed to bring the purported settlement agreement to the
Hollomon trial court’s attention, failed to file an interpleader or otherwise attempt
to tender the Infinity Policy limits into the registry of the court, and has failed seek
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to enforce the settlement agreement or moved to set aside the wrongful death
judgment against Payne. Infinity makes some amorphous arguments that to do so
would destroy the alleged agreement between Neuberger and Payne's bankruptcy
attorney Camp, which agreement did not exist. (Affidavit of Michael Todd Camp
¶¶ 24-25, Exhibit 11 to Payne's Response and Opposition to Infinity's Statement of
Undisputed Material Facts). This statement is untrue. There is nothing in a
settlement agreement embodied in a limited liability release that prevents a
tortfeasor from moving to enforce the terms of that agreement and release. Here,
what Payne is asking, is why Infinity has failed to move to enforce the claimed
settlement agreement between Payne and Stacy Hollomon for the wrongful death
claim.
Infinity claims that Payne's question evidences a misunderstanding of the
workings of a limited liability release. (Memorandum p. 11). It does not. Payne
does not dispute that under a limited liability release, the Hollomon plaintiff would
be entitled to obtain a judgment against him. However, under settlement pursuant
to a limited liability release, the insured's personal exposure for the claims settled
is extinguished and the insured only remains exposed to the extent of further
insurance coverage. The judgment against Payne totaled $13.8 million, $10.7
million of which was allocated to the wrongful death claim, which claim Infinity
had the ability to settle but failed to settle.
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As stated below and in Payne's motion for summary judgment, however,
there can be no doubt that Stacy Hollomon was entitled to recover the full value of
the wrongful death claim under O.C.G.A. section 51-4-2 and interpretive case law.
Had Infinity settled the wrongful death claim asserted by Stacy Hollomon against
Payne for the $25,000 Infinity Policy limits, which claim clearly was the larger of
the two claims as evidenced by the $10.7 million judgment on the wrongful death
claim ultimately rendered against him, Payne's personal exposure in the Hollomon
Litigation would have been capped at the amount the estate was entitled to recover,
and the $10.7 million judgment on the wrongful death claim would have been
settled for $25,000. If, as Infinity claims, it settled the wrongful death claim
against Payne, Infinity could have and should have protected its insured, Payne, by
moving to enforce that settlement. It clearly has not done so because it knows that
no agreement exists.
B. Payne did not object to the release proposed by Neuberger
Despite Infinity's allegations to the contrary, Payne did not object to the
release proposed by Neuberger. Neither Payne nor his bankruptcy attorney, Camp,
ever objected to the release proposed by Neuberger. Camp was not even hired by
Payne until May 2008, long after settlement discussions had occurred and Infinity
had rejected the demand. Camp never told Infinity that he objected to Neuberger's
release because it did not release all potential wrongful death claims. (Affidavit of
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Michael Todd Camp ¶¶ 12-13, Exhibit 11 to Payne's Response to Infinity's
Statement of Undisputed Material Facts). Additionally, Camp never told Infinity
to do anything, including attempt to obtain a release of all claims. In fact, Camp,
as Payne’s bankruptcy counsel, left the terms of any release of the wrongful death
claims to the complete discretion of Infinity. (Affidavit fo Michael Todd Camp ¶¶
15-19, Exhibit 11 to Payne's Response to Infinity's Statement of Undisputed
Material Facts).
Furthermore, in an attempt to again deflect blame from itself, Infinity claims
that Payne objected to the release through Sean Hynes, who was hired by State
Farm to represent Payne for a short period of time in 2008. Sean Hynes never met
with Payne nor spoke with him on the phone and can hardly be said to have known
of Payne's desires regarding the Neuberger release or represented Payne's position
with respect to that release. (Sean Hynes 13:1-6; 17:23-25; 18:1-2; 19:3-9, Exhibit
10 to Payne's Response to Infinity's Statement of Undisputed Material Facts).
Infinity, however, owed an independent duty to Payne to protect Payne's interests
and it failed to do so.
Infinity also makes much of the fact that the release proposed by Neuberger
would have left Payne personally exposed to liability, as if this fact somehow
releases Infinity from all liability to Payne. There is no doubt that the Neuberger
release would have left Payne exposed to personal liability for the estate claim--the
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Hollomon plaintiff's demand was only to settle the wrongful death claim and there
was no offer by the Hollomon plaintiff to settle the estate claim. Even when the
insurer cannot effectuate settlement of all claims against its insured, it has a duty to
settle as many claims against its insured as it can settle. Cotton States Mut. Ins. Co.
v. Brightman, 276 Ga. 683, 580 S.E.2d 519 (2003). Here, as noted previously, the
failure of Infinity to settle the wrongful death claim--the claim that was within its
power to settle--resulted in a $10.7 million judgment against Payne on that claim.
There is no evidence that it was within Infinity's power to settle the estate claim
and Payne does not contend otherwise. It was, however, within Infinity's power to
settle the wrongful death claim asserted by Stacy Hollomon and Infinity failed to
do so, leaving its insured exposed.
C. Settlement of the wrongful death claim would not have left Payne
exposed to liability from any of Ms. Turner's other heirs for the
wrongful death claim.
In support of its position that Payne would have remained exposed had
Infinity accepted Neuberger's proposed release, Infinity cites to two Georgia cases,
Lynn and Wells, both of which were decided under Georgia Code section 105-
1302, a prior version of O.C.G.A. section 51-4-2, which section has since been
modified. The code section in effect in 2008, the year in which the settlement
demand was made, and interpretive case law make it very clear that it is not
necessary that all heirs of a decedent be joined as party plaintiffs to a wrongful
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death action and that upon settlement of a wrongful death claim, heirs have no
right of action against the tortfeasor. O.C.G.A. § 51-4-2; Adams v. Wright, 162
Ga.App. 550, 293 S.E.2d 446 (1982). Furthermore, Infinity's reliance on an Idaho
case interpreting Idaho statues is completely misplaced, as is its reliance on an
A.L.R. article that does not cite to a single Georgia case other than Lynn and Wells,
which as described above, are now inapplicable. As such, it is clear that if Infinity
had fulfilled its duty to Payne and settled the wrongful death claim asserted by
Stacy Hollomon, the settlement of that claim would have extinguished the entire
wrongful death claim and extinguished the right of Ms. Turner’s other heirs to
pursue any judgment against Payne for the wrongful death claim.
D. Payne's claim is not barred because Infinity accepted coverage
and has waived any right to rely on the notice provision as a
defense to coverage.
Infinity claims that Payne's action against it is barred because Payne failed to
comply with the notice provision of the Infinity Policy. In fact, Payne's claim is
not barred and Infinity has waived any right to rely on the notice provision of the
Infinity Policy because it accepted coverage. (Infinity Claim Notes p. 7, Exhibit 4
to Payne's Statement of Material Facts; February 20, 2008 Letter, Exhibit 8 to
Payne's Statement of Material Facts; Touchstone Deposition 18:13-24; 19:4-8, 12-
21, Exhibit 9 to Payne's Statement of Material Facts).
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Georgia law is clear--notice provisions are strictly construed and "small
circumstances will be sufficient to show a wavier by the company.” State Farm
Mut. Auto. Ins. Co. v. Wright, 137 Ga.App. 819, 822, 224 S.E.2d 796, 798 (1976).
“Payment by the insurer with knowledge of the pertinent circumstances giving it a
policy defense waives its right to rely thereon.” Sargent v. Allstate Ins. Co., 165
Ga.App. 863, 866, 303 S.E.2d 43, 47 (1983) (emphasis supplied). In this case,
while Infinity did send Payne a reservation of rights, it later determined that it
would provide coverage for the claim made in the Hollomon Litigation and paid
both a property damage claim and a liability claim under the Infinity Policy. These
facts are indisputable--there are two documents as well as testimony from Infinity's
in-house counsel that prove Infinity accepted coverage for the claim against Payne
in the Hollomon Litigation.
Under Wright, Sargent, and other cases cited by Payne in his Response to
Infinity's Motion for Summary Judgment, Infinity's conduct constitutes waiver of
the notice provision and Infinity is now estopped to deny there is coverage for the
claim made against Payne. Were this not the case, insurers would be free to
undertake coverage, defend their insureds, and then walk away without any
liability if they failed to settle the claims, failed to pay the claims, or failed to put
their insureds interests ahead of their own. Georgia law is clear--because it
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accepted coverage and made payments under the Infinity Policy, Infinity is
estopped to deny there is coverage under the policy for the claims against Payne.
Even if Infinity has not waived its right to rely on the notice provision,
notification of the claim was not untimely or, at the least, the timing of the notice
was justified and reasonable as stated by Payne in his response to Infinity's motion
for summary judgment. The accident was not a typical motor vehicle accident and
Payne was not driving on a roadway at the time of the accident. Furthermore,
Payne was represented by two different lawyers in the time period after the
accident, neither of whom considered whether the Infinity Policy might apply.
Payne himself also never had any idea that the Infinity Policy might provide
coverage, as evidence by the fact that Payne never would have paid attorneys out-
of-pocket or paid the property damage judgment against him if he had any idea the
Infinity Policy might provide coverage. Infinity was notified of the claim as soon
as anyone considered whether the Infinity policy might apply. Thus, it is clear that
the notice provided to Infinity was not untimely or, at the least, the timing was
reasonable and justified.
CONCLUSION
For the reasons stated herein and those contained in Payne's Motion for
Summary Judgment, Payne respectfully requests that this Court grant his motion
for summary judgment as to his claims for negligent and bad faith failure to settle
Case 1:11-cv-00309-AT Document 108 Filed 01/11/12 Page 13 of 16
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against Defendant Infinity and issue an order that, as a matter of law, Infinity acted
negligently and in bad faith in handling the claims made against Payne in the
Hollomon Litigation.
Respectfully submitted this 11th day of January, 2012.
THE DWYER LAW GROUP:
By: /s/ J. Matthew Dwyer, Jr.
J. MATTHEW DWYER, JR.
State Bar No. 236400
[with express permission]
Attorneys for Plaintiff
2100 Riveredge Parkway, Suite 700
Atlanta, GA 30328
(770) 956-1984 (Telephone)
(770) 956-1381 (Fax)
matt@thedwyerlawgroup.com
CARLOCK, COPELAND & STAIR, LLP
By: /s/ Fred M. Valz, III
FRED M. VALZ, III
State Bar No.: 723379
MEGAN E. BOYD
State Bar No. 211079
Attorneys for Plaintiff
191 Peachtree Street, NE, Suite 3600
Atlanta, Georgia 30303
(404) 522-8220 (Telephone)
(404) 523-2345 (Fax)
fvalz@carlockcopeland.com
mboyd@carlockcopeland.com
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CERTIFICATION AS TO FONT
Pursuant to N.D. Ga. Local Rule 7.1 D, I hereby certify that this document is
submitted in Times Roman 14 point type as required by N.D. Ga. Local Rule
5.1(b).
This 11th day of January, 2012.
/s/ Fred M. Valz, III
FRED M. VALZ, III
State Bar No.: 723379
Attorneys for Plaintiff
Case 1:11-cv-00309-AT Document 108 Filed 01/11/12 Page 15 of 16
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CERTIFICATE OF SERVICE
I hereby certify that I have this day electronically filed the foregoing with
the Court using the CM/ECF system which will automatically send e-mail
notification of such filing, and via U.S. Mail, proper postage prepaid to the
following attorneys of record:
Thomas W. Curvin, Esq.
Molley J. Clarkson, Esq.
Sutherland Asbill & Brennan LLP
999 Peachtree Street, NE
Atlanta, GA 30309-3996
thomas.curvin@sutherland.com
molley.clarkson@sutherland.com
Peter J. Klee
Charlie Danaher
Luce, Forward, Hamilton & Scripps,
LLP
600 West Broadway, Suite 2600
San Diego, California 92101
Michael J. Athans, Esq.
Jeffrey A. Kershaw, Esq.
Fields, Howell, Athans & McLaughlin
LLP
191 Peachtree Street, N.E., Suite 4600
Atlanta, GA 30303
mathans@fieldshowell.com
jkershaw@fieldshowell.com
This 11th day of January, 2012.
By: /s/ Fred M. Valz, III
FRED M. VALZ, III
State Bar No.: 723379
Attorneys for Plaintiff
Carlock, Copeland & Stair, LLP
P.O. Box 56887
Atlanta, Georgia 30343-0887
(404) 522-8220 (Telephone)
(404) 523-2345 (Fax)
fvalz@carlockcopeland.com
3630777
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