Hartford Fire Ins. Co. v. Jason Todd Schneider , 267 F. App'x 912 ( 2008 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE ELEVENTH CIRCUIT U.S. COURT OF APPEALS
________________________ ELEVENTH CIRCUIT
MARCH 6, 2008
THOMAS K. KAHN
No. 07-14935
CLERK
Non-Argument Calendar
________________________
D. C. Docket No. 05-01351-CV-CAP-1
HARTFORD FIRE INSURANCE COMPANY,
Plaintiff-Appellant,
versus
JASON TODD SCHNEIDER,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Northern District of Georgia
_________________________
(March 6, 2008)
Before CARNES, BARKETT and WILSON, Circuit Judges.
PER CURIAM:
Hartford Fire Insurance Company (“Hartford”) appeals the district court’s
entry of summary judgment in favor of Jason Todd Schneider. For the reasons set
forth below, we affirm.
I. BACKGROUND
Morgan Layne Dize, a minor child, was severely injured in an automobile
accident. Schneider served as co-counsel for Morgan in the personal injury
litigation that arose from that accident. A multimillion dollar settlement resulted
from the litigation. Morgan’s father, Andrew Dize (“Dize”), was appointed
guardian of Morgan’s estate on the condition that he furnish a bond securing the
faithful performance of his duties as a guardian under Georgia law. To that end,
Dize contacted Burley Roberts, an independent insurance agent, who in turn
contacted several brokerage houses that he knew could issue probate surety bonds.
One of the agencies that Roberts contacted was Universal Services Agency
(“Universal”), which brokered products from several companies, including
Hartford. Roberts also contacted Schneider and asked him to assist Dize in making
the required filings with the probate court. Schneider sent Roberts a fax indicating
his willingness to do so. Finally, Roberts contacted an accountant to obtain written
confirmation that Dize would have assistance with investments.
Roberts provided the fax from Schneider and a letter from the accountant to
a broker for Universal. The Universal broker then provided the fax and letter to
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underwriters at companies to which she was shopping the bond, including
Hartford. Hartford then contacted Universal and indicated that it would provide
the bond under a few conditions. After Hartford issued the bond, Dize filed the
bond with the probate court and was appointed guardian for Morgan’s estate.
Soon thereafter, Dize misappropriated millions of dollars from the estate. In
February 2004, Morgan’s estate, the guardian of which was no longer Dize,
entered into a settlement agreement with Hartford under which Hartford paid the
estate $6 million, which was less than the full amount of the misappropriated
funds. The agreement provided as follows:
The Estate of Morgan Layne Dize shall transfer and assign to Hartford
Fire Insurance Company and Hartford Fire Insurance Company shall
be subrogated to all of the Estate’s rights, titles, claims, causes of
action, chooses in action or other interests with respect to Andrew
Dize, Sabrina Dize and any other person or entity who received either
directly or indirectly any of the funds or property belonging to the
Estate of Morgan Layne Dize without express Probate Court Approval
(this transfer shall include authority to prosecute any such action in
the name of the Estate).
Hartford then sued Schneider for negligent misrepresentation, breach of
contract, and fraud on its own behalf, and for breach of fiduciary duty and
professional negligence, on behalf of Morgan’s estate. The district court entered
summary judgment in Schneider’s favor, and Hartford appealed.
II. STANDARD OF REVIEW
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We review de novo a district court’s grant of summary judgment. Welding
Servs. Inc. v. Forman, 509 F.3d 1351, 1356 (11th Cir. 2007).
III. DISCUSSION
A. Claims Brought on Behalf of the Estate
The district court found that Hartford lacked standing to sue Schneider on
behalf of Morgan’s estate because it limited its subrogation rights in its settlement
agreement with the estate. We agree.
In Georgia, “[a] surety who has paid the debt of his principal shall be
subrogated, both at law and in equity, to all the rights of the creditor . . . .”
O.G.C.A. § 10-7-56. As the district court recognized, however, subrogation rights
may be waived by an insurer as consideration to support a settlement agreement.
See Rabun & Assocs. Constr., Inc. v. Berry, 623 S.E.2d 691, 695–96 (Ga. Ct. App.
2005). Hartford expressly limited its subrogation rights in the settlement
agreement to Dize, Sabrina Dize, and “any other person or entity who received
either directly or indirectly any of the funds or property belonging to the Estate . . .
.” It is undisputed that Schneider did not receive any of the misappropriated funds.
Thus, because Hartford’s subrogation rights do not reach Schneider, Hartford does
not have standing to sue Schneider.
Hartford argues that Rabun & Assocs. should not apply here because it
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involved an express waiver of subrogation rights. We disagree, however, because
an express limitation of subrogation rights is the functional equivalent of an
express waiver of those rights with respect to anyone who falls outside of the
limitation. Accordingly, we affirm as to the breach of fiduciary duty and
professional negligence claims brought on behalf of Morgan’s estate.
B. Claims Brought on Hartford’s Behalf
On its own behalf, Hartford claims that (1) Schneider provided a false
statement (the fax to Roberts); (2) Hartford relied on the statement in its decision to
issue the bond; and (3) the issuance of the bond allowed Schneider to receive his
contingency fee relating to the personal injury action. Based on those allegations,
Hartford argues that it should prevail on the following substantive theories:
negligent misrepresentation, professional negligence, breach of contract and
promissory estoppel. Hartford’s arguments, however, are meritless.
1. Negligent Misrepresentation and Professional Negligence
We agree with the district court that Hartford has offered no evidence to
establish that Schneider’s alleged negligence was the proximate cause of
Hartford’s damages. There is no evidence that Schneider knew of Dize’s poor
investments or that Schneider’s failure to advise Dize in the probate process
resulted in poor investment choices. As the district court recognized, the only
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evidence of causation that Hartford has offered is the speculation as to what
Hartford might have done to protect the funds in Morgan’s estate if Schneider had
known of Dize’s misconduct and reported it. That evidence, however, does not
sufficiently connect Schneider’s alleged negligence to Hartford’s loss.
Accordingly, summary judgment was appropriate on the negligent
misrepresentation and professional negligence claims that Hartford brought on its
own behalf.
2. Breach of Contract
We also agree with the district court that no valid contract existed between
Schneider and Hartford. Under Georgia law, a contract without consideration is
invalid. O.C.G.A. § 13-3-40. Hartford has offered no evidence that Schneider
received any consideration for his agreement to assist Dize in the probate process.
Accordingly, no contract existed between Hartford and Schneider, and the district
court correctly entered summary judgment in Schneider’s favor on this issue.
3. Promissory Estoppel
Finally, we agree with the district court as to Hartford’s promissory estoppel
claim as well. Under Georgia law, a plaintiff claiming promissory estoppel must
establish that (1) the defendant made a promise; (2) the defendant should have
reasonably expected the plaintiff to rely on the promise; (3) the plaintiff relied on
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the promise to its detriment; and (4) an injustice can only be avoided by the
enforcement of the promise. Rental Equip. Group v. MACI, 587 S.E.2d 364, 367
(Ga. Ct. App. 2003). The reliance, however, must be reasonable. Gilmour v. Am.
Nat’l Red Cross, 385 F.3d 1318, 1322 (11th Cir. 2004) (per curiam). The Georgia
Court of Appeals, moreover, has declared that “it defies logic to suggest that the
intended obligee could reasonably rely on a promise to be bound without any
compensation to the promisor.” Fidelity & Deposit Co. of Maryland v. West Point
Constr. Co., 344 S.E.2d 268, 270 (Ga. Ct. App. 1986).
Hartford has offered no evidence that it gave Schneider any compensation
for any promise. Accordingly, any reliance on a promise from Schneider was
unreasonable as a matter of law, and Hartford’s promissory estoppel argument
fails.
IV. CONCLUSION
Summary judgment was appropriate on the claims that Hartford brought on
behalf of Morgan’s estate and those it brought on its own behalf. Accordingly, we
affirm.
AFFIRMED.
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