H. Pace Burt, Jr. v. Great Northern Ins. Co. , 290 F. App'x 297 ( 2008 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
AUGUST 21, 2008
No. 08-12206 THOMAS K. KAHN
Non-Argument Calendar CLERK
________________________
D. C. Docket No. 06-00154-CV-WLS-1
H. PACE BURT, JR.,
Plaintiff-Appellant,
versus
GREAT NORTHERN INSURANCE COMPANY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Georgia
_________________________
(August 21, 2008)
Before MARCUS, WILSON and PRYOR, Circuit Judges.
PER CURIAM:
H. Pace Burt, Jr. appeals the summary judgment in favor of Great Northern
Insurance Company and against Burt’s complaint of bad faith. The district court
concluded that Burt was not legally responsible for damages sought by Deborah
and Michael Draper and was not covered under the homeowner policy issued by
Great Northern Insurance. We affirm.
I. BACKGROUND
Burt and Mark Harris agreed to purchase, renovate, and resell a house in
Atlanta, Georgia. Burt did not make a personal investment in the venture. Burt
and his family invested funds they had accumulated in several business accounts,
including the Hotel Trust, a real estate investment entity, to purchase the house.
The family businesses and Harris were to share any profit on the resale of the
house. Harris was given a power of attorney that he used to purchase the house
and make renovations.
Deborah and Michael Draper purchased the house. Harris transferred title to
the Drapers as attorney-in-fact on behalf of Albany Lime & Cement Company, the
Burt Company, Burt Development Company, H. Pace Burt, Jr. as Trustee of the
Hotel Trust, and Hilliard P. Burt. After the purchase, the Drapers discovered
several construction defects and sued all the parties listed on the warranty deed,
including Burt in his capacity as Trustee of the Hotel Trust.
Burt submitted a claim to Great Northern Insurance and requested that the
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company defend him in the lawsuit. Great Northern Insurance had issued a
homeowners policy to Burt for his home at 702 River Chase Lane in Albany,
Georgia. The policies provided liability coverage for “damages for which [Burt]
[was] legally responsible.”
In response to questions from Great Northern Insurance, Burt stated that he
acted as Trustee of the Hotel Trust to invest in the purchase of the Atlanta house.
Burt stated that he “derived no income from the sale of the property, however he
received his small undivided interest from the proceeds of the sale.” Burt also
stated that the owners of the Hotel Trust had a “commercial general liability policy
which covered all real estate they owned.” The commercial insurer had “verbally
agreed to provide a defense” for the Draper lawsuit pending its investigation.
Great Northern Insurance denied Burt coverage. The company determined
that the damages sought by the Drapers were economic in nature and did not
qualify as personal, bodily, or property damage as defined in Burt’s homeowners
policy. The company also determined that four exclusions listed in Burt’s
insurance policy precluded coverage: intentional acts; business pursuits,
investment or other for-profit activities; the performance of or failure to perform
professional services; and oral or written business contracts.
Burt, in his role as Trustee of the Hotel Trust, and the other defendants
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settled the lawsuit and agreed to pay the Drapers damages of $250,000. Burt
signed the settlement agreement in his capacity as Trustee of the Hotel Trust. The
settlement was paid by the personal insurance carrier for Hilliard P. Burt Sr., Pace
Burt, Inc., and Burt & Burt, P.A.
Burt filed a complaint in a Georgia court that alleged that Great Northern
Insurance had refused, in bad faith, to defend and indemnify him. Burt sought
reimbursement for $100,000 that he allegedly contributed to the settlement. Burt
alleged that he agreed to divide equally any profits and losses with Harris and the
family businesses and, after settlement of the lawsuit, borrowed $100,000 from
Pace Burt, Inc. to reimburse the other investors.
Great Northern Insurance removed the action to federal court. After
discovery, Great Northern Insurance moved for summary judgment. Great
Northern Insurance argued that Burt did not incur personal liability from the
Draper lawsuit and the policy excluded coverage for the incident.
The district court granted summary judgment in favor of Great Northern
Insurance. The district court concluded that there was no genuine issue of material
fact that Burt acted as Trustee for the Hotel Trust and, under a state statute, could
not be held personally liable for the damages incurred by the Drapers. See Ga.
Code Ann. § 53-12-199. Because the Great Northern policy restricted coverage to
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incidents for which Burt was “legally responsible,” the district court concluded that
Great Northern Insurance did not act in bad faith by refusing to defend or
reimburse Burt for the settlement.
II. STANDARD OF REVIEW
We review a summary judgment de novo and view the evidence in the light
most favorable to the nonmoving party. Twin City Fire Ins. Co. v. Ohio Cas. Ins.
Co., 480 F.3d 1254, 1258 (11th Cir. 2007). Summary judgment should be entered
when there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Fed. R. Civ. P. 56(c).
III. DISCUSSION
Under Georgia law, which the parties agree applies, the duty of an insurer to
defend is different from the obligation to indemnify. Pac. Employers Ins. Co. v.
Cesnik, 219 F.3d 1328, 1330 (11th Cir. 2000) (citing Elan Pharm. Research Corp.
v. Employers Ins. of Wausau, 144 F.3d 1372, 1375 (11th Cir.1998)). Although an
insurer need not indemnify the insured for a liability he incurs outside the terms of
the policy, an insurer must provide a defense for a liability that might fall within
the policy. Id. The duty to defend “turns on the language of the insurance contract
and the allegations of the complaint asserted against the insured.” City of Atlanta
v. St. Paul Fire & Marine Ins. Co., 231 Ga. App. 206, 207, 498 S.E.2d 782, 784
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(1998) (citing Canal Indem. Co. v. Chastain, 228 Ga. App. 255, 256, 491 S.E.2d
474, 475 (1997)). If the complaint does not assert a claim covered by the insurance
policy, the insurer may refuse to defend the insured. Id. (citing Leader Nat. Ins.
Co. v. Smith, 177 Ga. App. 267, 274, 339 S.E.2d 321, 327 (1985)).
Great Northern Insurance did not have a duty to defend Burt. Great
Northern Insurance issued to Burt a homeowners policy with coverage for
incidents for which he was “legally responsible.” The complaint filed by the
Drapers named Burt as a defendant in his role as Trustee for the Hotel Trust; the
Drapers never even attempted to hold Burt personally liable for their loss. Under
state law, Burt did not become liable as a trustee unless he dealt with the Drapers in
a personal capacity. See Ga. Code Ann. § 53-12-199 (a trustee is not personally
liable unless the trustee “expresses an intention to be personally bound” by a
warrant made to convey property or “fails to reveal [his] representative capacity”
in a contract, and is completely protected against actions brought against the trust).
The real estate was conveyed to the Drapers by Harris acting as attorney-in-fact for
Burt in his role as Trustee for the Hotel Trust, and Burt does not allege he had any
interaction with the Drapers that would create any personal liability under state
law. Because Great Northern Insurance never had a duty to defend Burt, it could
not have a duty to reimburse Burt for the settlement he allegedly paid.
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IV. CONCLUSION
The summary judgment in favor of Great Northern Insurance is
AFFIRMED.
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