Publications

The Eleventh Circuit ruled that reservation of rights letters (“ROR”) unambiguously and effectively disclaimed coverage and that the insurer was not estopped from denying coverage.  North American Specialty Ins. Co. v. Bull River Marina, LLC, 2017 WL 279211 (11^th Cir. Sept. 27, 2017).

North American issued two policies to Bull River Marina:  a commercial general liability policy (“50C”) and a marina operators policy (“50M”).  Thereafter, Bull River notified North American of a boating incident that resulted in various personal injuries.  The notice listed only the 50C policy.  When Bull River was later sued, it sent copies of the summons and complaint to North American.  The insurer issued an ROR listing only the 50C policy on the subject line and agreeing to defend while reserving its right to deny coverage at a later date.  Approximately one year later, North American sent a second ROR that listed both policies on the subject line and added various bases for non-coverage.  Three additional cases were later filed against Bull River and in response, North American issued two more RORs outlining its coverage position under both policies. 

North American sought a declaration that neither policy provided coverage.  Bull River argued that the initial ROR was ambiguous and that North American was estopped from denying coverage under the 50M policy.  Ruling on cross-motions for summary judgment, a Georgia district court held that neither policy covered the underlying claims, but that North American was estopped from arguing non-coverage under the 50M policy.  The estoppel ruling was based on two premises: (1) that the original ROR was ineffective as to the 50M policy; and (2) that North American had denied coverage while simultaneously reserving its right to raise new grounds for non-coverage, in violation of Hoover v. Maxum Indem. Co., 291 Ga. 402 (2012) (see July/August 2012 Alert).  The Eleventh Circuit affirmed in part and reversed in part.

The Eleventh Circuit reversed the district court’s estoppel ruling.  Under Georgia law, an insurer may be estopped from denying coverage if it assumes the defense of an action without reserving its rights to assert non-coverage.  The Eleventh Circuit explained that because the original ROR addressed only the 50C policy, North American had never assumed Bull River’s defense under the 50M policy.  Further, the court noted that even assuming the original ROR was tantamount to a denial of coverage under the 50M policy, Georgia precedent would not require estoppel.  The court stated: “we fail to see how Hoover mandates, as a remedy, that North American be estopped from denying coverage altogether.  It seems to us that Hoover would only prohibit North American from asserting a policy defense under 50M that it should have raised the first time around” and here, there was no belated assertion of a new basis for non-coverage.