Insurer May Not ‘Contract Around’ Georgia Law on Sovereign Immunity Waivers

An insurer is liable for the full $5 million policy limit in a lawsuit filed against a city government whose police department was involved in a high-speed chase that ended in a collision that killed a grandmother and two of her grandchildren while they were driving to church.

The Georgia Court of Appeals ruled Monday that Atlantic Specialty Insurance Co. could not “contract around” a state law that requires city governments to waive sovereign immunity by adding an endorsement to its policy that limits damages to $700,000 per occurrence. Georgia statute 36-92-2 requires local governments to waive sovereign immunity “up to the policy limits of any commercial liability insurance,” the court said.

“The waiver of sovereign immunity, which occurred by operation of law, is limited to the amount of coverage purchased by the city—this is, $5 million—as prescribed by statute,” the appellate panel said.

College Park police were pursuing a stolen Chevrolet Suburban when it crashed into a minivan driven by 75-year-old Dorothy Smith Wright of Atlanta on Jan. 31, 2016. The driver got away, but the collision killed Wright and her 12-year-old grandson, Cameron Costner, and her six-year-old granddaughter, Layla Partridge, both of Fayetteville, Ga., according to press reports.

Wright’s family filed suit against the city. The lawsuit alleges that police had an opportunity to block the stolen car, but pulled out of the way and allowed the Suburban to careen past them before running into Wright’s vehicle, according to a report by WSB-TV2 in Atlanta.

“The threat to life didn’t begin until the chase began,” attorney Christopher Chestnut told the television station.

Atlantic Specialty filed a lawsuit in federal court seeking a declaration that its liability was limited to $700,000 because of the endorsement in its policy. That endorsement states that the city does not intend to waive liability beyond $700,000, even though the policy provides coverage for up to $5 million.

High speed pursuits by police have long been a concern of state policymakers. In a 1990 paper about policies that restrict police pursuits, the National Institute of Justice noted that the Supreme Court has ruled that a high-speed chase that resulted in the death of the fleeing motorist was akin to a “seizure” as described in the 4th Amendment, which prohibits unreasonable searches and seizures.

Many states have passed laws that require local governments to waive sovereign immunity for claims involving the negligent operation of motor vehicles, the paper says. Law enforcement also faces liability in federal courts because of constitutional protections.

Georgia’s law requires local governments to waive sovereign immunity in motor vehicle claims of up to $700,000, but also states that the waiver must extend up to the limits of any commercial insurance policy that is in place.

Atlantic Specialty sued in federal court seeking a declaration that its endorsement limiting liability to $700,000 per-occurrence should be interpreted to limit its liability in the College Park case. The U.S. District Court for Northern Georgia dismissed the suit, finding that it did not have jurisdiction because the question of law was too closely linked to the family’s lawsuit filed in state court.

Nevertheless, U.S. District Judge Steve C. Jones noted his reservations about the carrier’s argument in his order.

“Finding that a local government and its insurer can contract around the legislative waiver in O.C.G.A. § 36-92-2 would have far-reaching implications for all future insurance contracts between local government entities and insurers in Georgia,” he wrote.

Atlantic Specialty filed a similar motion before the Fulton County court, with no success. The judge ruled that the carrier was liable for up to the $5 million policy limit. Atlantic appealed.

The appellate court rejected the carrier’s argument that finding it liable for the entire $5 million policy limit would make the endorsement “meaningless.” The appellate panel disagreed, saying that the $700,000 per-occurrence limit might be valid in other claims where a sovereign immunity waiver isn’t applicable.

“Thus, we agree with the trial court that to read the endorsements as suggested by Atlantic would essentially grant insurers and local governmental entities carte blanche to contract around the legislature’s clear intent to increase compensation for those who sustain injuries arising out of the use of a government motor vehicle,” the panel said.

The appellate court affirmed the trial court’s decision.

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