[PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT FILED
________________________U.S. COURT OF APPEALS
ELEVENTH CIRCUIT
NOVEMBER 2, 2006
No. 05-17184
________________________ THOMAS K. KAHN
CLERK
D.C. Docket No. 03-00247-CV-WDO-5
FEDERATED RURAL ELECTRIC
INSURANCE EXCHANGE,
Plaintiff-Appellee,
Cross-Appellant,
versus
R. D. MOODY & ASSOCIATES, INC.
and MASTEC NORTH AMERICA, INC.,
Defendants-Appellants,
Cross-Appellees.
________________________
Appeals from the United States District Court
for the Middle District of Georgia
_________________________
(November 2, 2006)
Before BLACK and HULL, Circuit Judges, and CONWAY,* District Judge.
PER CURIAM:
Plaintiff Federated Rural Electric Insurance Exchange (“Federated”)
and Defendants MasTec North America, Inc. (“MasTec”) and R. D. Moody
& Associates, Inc. (“Moody”) appeal a summary judgment ruling issued in
this subrogation case. Federated challenges the district court’s
determination that Federated’s subrogation claim is barred, at least in part,
by the Florida Insurance Guaranty Association Act (“FIGA”), Fla. Stat. §§
631.50-.70. In turn, Moody and MasTec appeal the district court’s
suggestion that FIGA may not preclude Federated from recovering the
portion of Federated’s damages that exceeds the amount of Moody and
MasTec’s liability insurance coverage. We conclude that Georgia law
controls this dispute and the district court erred in applying Florida law.
I. BACKGROUND
This lawsuit arises from an electrical accident that occurred in
Washington County, Georgia. In May 2000, Thomas Smith was seriously
injured when he contacted a downed power line owned by Washington
*
The Honorable Anne C. Conway, U.S. District Judge for the Middle District of
Florida, sitting by designation.
2
Electric Membership Corporation (“WEMC”), a Georgia corporation, and
constructed by Moody, a now-dissolved Florida corporation. MasTec, also
a Florida company, is Moody’s successor-in-interest by virtue of a merger
that occurred in 1998.
Ultimately, Smith succumbed to his injuries. His surviving spouse
brought a personal injury/wrongful death suit against WEMC and an
engineering firm. Eventually, that case settled. Federated, WEMC’s
insurer, paid Smith’s widow $6,500,000; the engineering firm paid
$500,000. Moody did not participate in the settlement.
In July 2003, WEMC commenced the present action seeking
indemnity and contribution from Moody and MasTec, on the asserted basis
that Moody negligently constructed the power lines and utility poles
involved in the accident. In early April 2005, Federated was substituted, by
consent, for WEMC as the plaintiff in this suit, based on the fact that
WEMC had assigned to Federated the former’s right to seek recovery
against Moody and MasTec. A few days following Federated’s substitution,
Moody and MasTec filed papers raising FIGA as a defense. Essentially,
Moody and MasTec took the position that because Federated is a member of
FIGA, and Moody and MasTec’s insurer, Reliance Insurance Company
3
(“Reliance”), is both a FIGA member and insolvent, Fla. Stat. § 631.54 bars
Federated’s claims. Section 631.54(3)(b) provides that “[m]ember insurers
shall have no right of subrogation, contribution, indemnification, or
otherwise, sought directly or indirectly through a third party, against the
insured of any insolvent member.”1 It is undisputed that both Federated and
Reliance are FIGA members.
Thereafter, Moody and MasTec filed a motion for summary
judgment, which included the FIGA argument. Federated countered that
Georgia, not Florida, law applied and that its subrogation claim was
permitted under Georgia law. Alternatively, Federated asserted that if
Florida law did control, Moody and MasTec had waived the FIGA defense
by not raising it in a timely manner.
The district court entered an order granting MasTec and Moody’s
motion for summary judgment on the basis of the FIGA defense. See
Federated Rural Elec. Ins. Exch. v. R.D. Moody & Assocs., Inc., 391 F.
Supp. 2d 1228 (M.D. Ga. 2005). After acknowledging that he was bound to
apply Georgia’s choice of law rules in this diversity case, the district judge
1
Prior to its amendment in 2004, § 631.54(3)(b) provided that member insurers had
“no right of subrogation against the insured of any insolvent member.”
4
proceeded to discuss those rules. Id. at 1230-31. Then, without explicitly
stating why Florida law applied, the district court determined that
Federated’s subrogation claim was a “covered claim” under FIGA and it
was barred by Fla. Stat. § 631.54(3)(b). Id. at 1231-32. The district court
also found that FIGA and Georgia’s counterpart law, the Georgia Insurers
Insolvency Pool Act, O.C.G.A. §§ 33-36-1 to -19 (“GIIP”), did not differ in
any way that application of FIGA would violate Georgia public policy. Id.
at 1232. In fact, the district court stated: “Georgia’s insolvency statute
contains its own choice of law provision which provides that the sole
recovery for claims other than those for workers’ compensation or
destruction of property ‘shall be under the insolvency fund or its equivalent
of the state of residence of the insured.’” Id. (quoting O.C.G.A. § 33-36-
10(a)(3)). “In this case,” stated the district court, “that would be the State of
Florida.” Id. The district court thus concluded that FIGA prevented
Federated from suing Moody and MasTec. Id. The court also determined
that any claim by Federated against the insolvency pool itself would be
time-barred under Florida’s one-year statute of limitations applicable to
such claims. Id.
5
The district court then discussed several Florida appellate opinions
and concluded that it was “not entirely clear” whether FIGA barred
Federated’s subrogation claim in toto, or whether, instead, Federated could
pursue that portion of its claim that exceeded the liability limits of the
Reliance policy. Id. at 1232-33. Accordingly, the court granted Moody and
MasTec’s summary judgment motion “as to the applicability of FIGA,” but
also made findings pursuant to 28 U.S.C. § 1292(b) so that the parties could
request interlocutory appellate review of the summary judgment order. Id.
at 1233. This appeal ensued.
II. STANDARD OF REVIEW
Grants of summary judgment and choice of law determinations are
both subject to de novo review. Brooks v. County Comm'n of Jefferson
County, Ala., 446 F.3d 1160, 1161-62 (11th Cir. 2006) (summary
judgment); LaFarge Corp. v. Travelers Indem. Co., 118 F.3d 1511, 1514-15
(11th Cir. 1997) (summary judgment involving choice of law ruling).
III. DISCUSSION
A. Choice of Law
This appeal turns on the choice-of-law issue: does Georgia
substantive law control, or does Florida law apply?
6
In a case founded on diversity jurisdiction, the district court must
apply the forum state’s choice of law rules. McGow v. McCurry, 412 F.3d
1207, 1217 (11th Cir. 2005). Neither side disputes this proposition. In this
case, the forum state is, of course, Georgia.
Under Georgia law,
[t]he traditional method of resolving choice-of-law
issues is through a tripartite set of rules, which are
lex loci contractus, lex loci delicti, and lex fori.
Under the rule of lex loci contractus, the validity,
nature, construction, and interpretation of a
contract are governed by the substantive law of the
state where the contract was made, except that
where the contract is made in one state and is to be
performed in another state, the substantive law of
the state where the contract is performed will
apply. General Elec. Credit Corp. v. Home Indem.
Co., 168 Ga. App. 344, 349 [], 309 S.E.2d 152[,
157] ([Ga. App.] 1983). Under the rule of lex loci
delicti, tort cases are governed by the substantive
law of the state where the tort was committed.
Ohio Southern Express Co. v. Beeler, 110 Ga.
App. 867, 868 [], 140 S.E.2d 235[, 236] ([Ga.
App.] 1965). Under the rule of lex fori, procedural
or remedial questions are governed by the law of
the forum, the state in which the action is brought.
Menendez v. Perishable Distrib[s]., 254 Ga. 300,
[302,] 329 S.E.2d 149[, 151] ([Ga.] 1985),
[abrogated on other grounds by Posey v. Medical
Center-West, Inc., 257 Ga. 55, 354 S.E.2d 417
(Ga. 1987)].
7
Fed. Ins. Co. v. Nat’l Distrib. Co., Inc., 203 Ga. App. 763, 765, 417 S.E.2d
671, 673 (Ga. App. 1992) (alterations added).
Since this case does not involve a procedural or remedial question,
lex fori is not implicated. This narrows the choices to lex loci contractus
and lex loci delicti.
Moody and MasTec urge application of the lex loci contractus rule
based on the liability insurance policy issued by Reliance. Since that policy
was delivered in Florida, it is considered “made” in that state. Fed. Ins. Co.,
203 Ga. App. at 767, 417 S.E.2d at 674-675. We reject this argument.
Federated’s subrogation claim against Moody and MasTec cannot fairly be
characterized as an action based on that insurance contract. While the
policy might ultimately provide a source of funds to satisfy any judgment
obtained against Moody and/or MasTec, Federated is not suing to recover
for breach of that contract. Moreover, the terms of the Reliance policy are
not in dispute, and this case does not otherwise involve the validity, nature,
construction, or interpretation of that insurance contract.
The same can be said of the contracts between WEMC and Moody,
under which Moody constructed the power line involved in the accident.
Federated has not sued for breach of these contracts, either. Instead,
8
Federated’s subrogation claim seeks indemnity and contribution based on
Moody’s alleged negligence. Accordingly, the lex loci contractus doctrine
does not apply.
We conclude that Federation’s subrogation claim sounds in tort. To
succeed on that claim, Federated must prove that Moody was negligent. A
subrogation claim arising from a tort committed in Georgia is properly
characterized as a tort claim for choice of law purposes, thereby mandating
application of the lex loci delecti rule. Swain v. D & R Transp. Co., 735 F.
Supp. 425, 427-428 (M.D. Ga. 1990). Because the underlying tort occurred
in Georgia, the substantive law of that state governs Federated’s
subrogation claim. The district court thus erred in applying Florida law.
B. Georgia Substantive Law
The remaining question is whether Georgia law permits an insurer to
bring a subrogation claim against the tortfeasor-insured of an insolvent
insurer. To answer that question, we first examine Georgia’s own insolvent
insurer scheme.
GIIP contains no analogue to FIGA’s provision barring a member
insurer from suing the insured of an insolvent member insurer. The closest
GIIP comes is O.C.G.A. § 33-36-6(e), which provides, in pertinent part:
9
“The pool as a legal entity and any of its individual members shall have no
cause of action against the insured of the insolvent insurer for any sums it
has paid out except such causes of action as the insolvent insurer would
have had if such sums had been paid by the insolvent insurer and except as
otherwise provided in this chapter.” § 33-36-6(e) (emphasis added). This
provision has no apparent application to the present dispute, since there is
no indication that Georgia’s insolvency pool has paid out any sums on
behalf of Moody, MasTec or Reliance. Indeed, there is no suggestion that
any claim relevant to this case has been made against Georgia’s insolvent
insurer pool.
More fundamentally, GIIP does not apply in this case because
Federated’s subrogation claim is not a “covered claim” under the Act.
Section 33-36-3(4) provides, in pertinent part:
(A) “Covered claim” means an unpaid claim
which:
(i) Arises out of a property or casualty insurance
policy issued by an insurer which becomes an
insolvent insurer which was authorized to do an
insurance business in this state either at the time
10
the policy was issued or when the insured event
occurred;2 and
(ii) Is within any of the classes of claims under
subparagraph (B) of this paragraph.
(B) A claim shall not be paid unless it arises out of
an insurable event under a property or casualty
insurance policy and it is:
(i) An unearned premium claim of a policyholder
who at the time of the insolvency was a resident of
this state;
(ii) An unearned premium claim of a policyholder
under a policy affording coverage for property
permanently situated in this state;
(iii) The claim of a policyholder or insured who at
the time of the insured event was a resident of this
state;
(iv) The claim of a person having an insurable
interest in or related to property which was
permanently situated in this state; or
(v) A claim under a liability or workers’
compensation insurance policy when either the
insured or third-party claimant was a resident of
this state at the time of the insured event.
§ 33-36-3(4)(footnote added).
Federated’s claim does not fit within any of the five classes of claims
set forth in § 33-36-3(4)(B)(i)-(v). Plainly, subsections (i), (ii) and (iv) do
not apply. Subsection (iii) also does not apply because the policyholders
2
It is unclear whether Reliance was authorized to conduct insurance business in the
State of Georgia. For analytical purposes, we will assume that it was.
11
and insureds to whom the statute refers are Moody and MasTec, and they
were not Georgia residents when the accident occurred. Finally, although
Federated’s subrogation claim may be a claim under a liability insurance
policy, subsection (v) is inapplicable because neither the “insured”
(Moody/MasTec) nor the “third-party claimant”(Federated) were Georgia
residents at the time of the accident.3 For these reasons, we conclude that
Federated’s subrogation claim is not a “covered claim” under GIIP.
Moreover, even if Federated’s claim were covered by GIIP, any
statutory objections the pool might raise against such a claim are
unavailable to Moody and MasTec. “[T]he mere fact that one of the
prerequisites to recovery under the Act is not satisfied does not create a
‘personal defense so as to bar [the claimant’s tort case]’against a defendant
other than GIIP.” United States v. Rutland, Inc., 849 F. Supp. 806, 812
(S.D. Ga. 1994) (alteration added) (quoting Lee v. Fulton Concrete Co., 195
Ga. App. 348, 349, 393 S.E.2d 449, 450 (Ga. App. 1990)). This is
3
One might argue that § 33-36-3(4)(B)(v) applies because Federated stands in
WEMC’s shoes as a subrogee, and since WEMC resided in Georgia at the time of the
accident, Federated’s third-party claim is transformed into that of a Georgia resident.
However, that argument has not been presented to us. In any event, such an argument
appears foreclosed by Conex Freight Sys., Inc. v. Ga. Ins. Insolvency Pool, 254 Ga. App. 92,
561 S.E.2d 221 (Ga. App. 2002), which held that the “resident of this state” language in GIIP
does not permit multiple states of residency.
12
consistent with the “axiomatic” Georgia rule that “under normal
circumstances, a defendant’s tort liability is not contingent upon its
insurance coverage[;] . . . insurance is a non-issue.” Id. at 811.
Before leaving GIIP, we address O.C.G.A. § 33-36-10(a), which the
district court and Moody/MasTec have characterized as a choice of law
provision. Section § 33-36-10(a) states:
It is not the purpose of this chapter to provide or
permit duplicate recoveries of covered claims
under this chapter and an insolvency fund or its
equivalent of any other state. In the construction
and application of this chapter with respect to a
covered claim which may be recoverable under
this chapter and under an insolvency fund or its
equivalent in another state, the sole recovery: (1)
with respect to a workers’ compensation claim,
shall be under the insolvency fund or its
equivalent of the state of residence of the
claimant; (2) with respect to a first-party claim of
an insured for damage to or destruction of property
with a permanent location, shall be under the
insolvency fund or its equivalent of the state
where the property is permanently situated; and (3)
with respect to any other covered claim, shall be
under the insolvency fund or its equivalent of the
state of residence of the insured.
§ 33-36-10(a) (emphasis added).
This statute cannot apply because, as previously discussed,
Federated’s subrogation claim is not a “covered claim” under GIIP. Further,
13
by its plain terms, this provision is designed to prevent duplicative
recoveries when more than one state’s insolvent insurer scheme applies,
rather than to referee the more general question of which state’s statutory
scheme controls in a conflict of law situation. This interpretation is
buttressed by the immediately succeeding subsection of the statute, which
states:
Any recovery obtained from the pool pursuant to this chapter
shall be reduced by those amounts recovered in any other state
from a similar or equivalent insolvency fund in such state when
the recovery was obtained by the same claimant for the same
claim filed against the pool in this state.
O.C.G.A. § 33-36-10(b). If § 33-36-10(a) were truly a choice of law
provision, § 33-36-10(b) would be unnecessary. Accordingly, we reject the
notion that § 33-36-10(a) mandates application of FIGA.
Having thus determined that GIIP does not bar Federated’s
subrogation claim, we now examine whether that claim, obtained by
assignment, is permitted under Georgia law. We conclude that it is. See
United Budget Co. v. Ga. Insurers Insolvency Pool, 253 Ga. 435, 437, 321
S.E.2d 333, 335 (Ga. 1984) (assignee and attorney-in-fact for policyholders
stood in insureds’ shoes and were deemed entitled to receive unearned
premiums on insolvent insurer’s cancelled policies); J. Transp. Inc. v. Ga.
14
Insurers Insolvency Pool , 209 Ga. App. 748, 751, 434 S.E.2d 552, 555-556
(Ga. App. 1993) (discussing United Budget and stating “[t]hat the insured’s
right to recover from the insolvent insurance company was assigned to
another party does not relieve the Pool from its statutory duty to pay the
claim”). Hence, under Georgia law, Federated may proceed with its
subrogation claim.
C. Timeliness
The foregoing analysis moots Federated’s argument that Moody and
MasTec waited too late to raise the FIGA defense.
IV. CONCLUSION
We determine that the district court erred in applying Florida law, and
in ruling that FIGA bars Federated’s subrogation claim. Further, we
conclude that Georgia law applies and that, under Georgia law, Federated
may proceed with its subrogation claim. Accordingly, the summary
judgment entered in Moody and MasTec’s favor is reversed, and this case is
remanded to the district court for further proceedings consistent with this
opinion.
REVERSED AND REMANDED.
15