         Case: 15-14070   Date Filed: 06/15/2016   Page: 1 of 21


                                                                   [PUBLISH]



          IN THE UNITED STATES COURT OF APPEALS

                  FOR THE ELEVENTH CIRCUIT
                    ________________________

                           No. 15-14070
                     ________________________

                 D.C. Docket No. 1:12-cv-04061-SCJ



GARY WAYNE COKER,
TERESINA COKER,

                                                         Plaintiffs-Appellees,

                                versus

AMERICAN GUARANTEE AND LIABILITY INSURANCE COMPANY,
ENDURANCE AMERICAN SPECIALTY INSURANCE COMPANY,
GREAT AMERICAN INSURANCE COMPANY,

                                                     Defendants-Appellants.

                     ________________________

             Appeals from the United States District Court
                 for the Northern District of Georgia
                    ________________________

                            (June 15, 2016)
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Before HULL and BLACK, Circuit Judges, and ROTHSTEIN, * District Judge.

HULL, Circuit Judge:

       In this uninsured/underinsured motorist (“UM”) coverage case, three excess

liability insurers—Great American Insurance Company (“Great American”),

American Guarantee & Liability Insurance Company (“American Guarantee”), and

Endurance American Specialty Insurance Company (“Endurance”) (collectively

“the Defendants”)—appeal the district court’s order granting summary judgment in

favor of Gary and Teresina Coker (“the Cokers”) with respect to the Cokers’

breach of contract claims against the Defendants. The district court concluded that

Georgia’s UM statute imposed upon the Defendants an unconditional obligation to

provide UM coverage to Gary Coker as if they were primary insurers, and that the

Defendants’ failure to tender payment amounted to a breach of contract. After

review of the record and with the benefit of oral argument, we reverse the district

court’s summary judgment ruling.

                          I.     FACTUAL BACKGROUND

A.     Car Accident, Consent Judgment, and Relevant Liability Policies

       On September 18, 2007, Plaintiff Gary Coker was driving a truck owned by

his then employer, Ansco & Associates (“Ansco”), on a Georgia road. Third-party



       *
         Honorable Barbara Jacobs Rothstein, United States District Judge for the Western
District of Washington, sitting by designation.
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motorist Donald Woodall crossed the center line of the road and struck Coker head

on. Coker was severely injured in the accident.

      In September 2009, the Cokers sued Woodall in the Superior Court of

Walton County, Georgia. In November 2010, the Cokers obtained a $5.5 million

consent judgment against Woodall. Though Woodall had an automobile liability

insurance policy, he was considered “underinsured” because his policy limits were

$25,000 and were not nearly high enough to satisfy the consent judgment. An

uninsured motorist is not only a person who has no insurance at all, but also a

person, such as Woodall, who was underinsured.

      The Cokers provided Woodall with a limited liability release in exchange for

$25,000, the full limit of Woodall’s automobile liability policy. Despite this partial

recovery from Woodall’s insurer, the vast majority of the $5.5 million consent

judgment remained unsatisfied. To satisfy the remainder of the consent judgment,

the Cokers turned to policies purchased by Coker’s employer, Ansco.

      At the time of the accident, Ansco held the following liability insurance

policies:

      a.     Liberty Mutual Insurance Company (“Liberty Mutual”) Business
             Automobile Policy No. AS2-631-004260-027 (“the Liberty Mutual
             policy”), with limits of $5 million;

      b.     Westchester Fire Insurance Company (“Westchester”) Umbrella
             Policy No. G22049860002 (“the Westchester policy”), with limits of
             $10 million;


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       c.     Great American Insurance Company Excess Liability Policy No.
              TUE356014902 (“the Great American policy”), with limits of $10
              million;

       d.     American Guarantee & Liability Insurance Company Excess Liability
              Policy No. AEC913878501 (“the American Guarantee policy”), with
              limits of $25 million; and

       e.     Endurance American Specialty Insurance Company Surplus Lines
              Policy No. ELD10000214301 (“the Endurance policy”), with limits of
              $25 million.

These policies were vertically structured so that the Liberty Mutual policy

provided first-layer primary coverage, the Westchester policy provided second-

layer umbrella1 coverage, the Great American policy provided third-layer excess

coverage, the American Guarantee policy provided fourth-layer excess coverage,

and the Endurance policy provided fifth-layer excess coverage.

       As noted above, at the time of the accident, Coker was driving his employer

Ansco’s truck and acting in the course and scope of his employment with Ansco.

The parties do not dispute that Coker was insured under the Ansco policies.

B.     The Liberty Mutual Primary Policy

       The $5 million Liberty Mutual policy provides primary automobile liability

coverage. The Liberty Mutual policy specifically provides that “[f]or any covered

‘auto’ you own, this Coverage Form provides primary insurance.” The “Uninsured


       1
        In the event that the Liberty Mutual policy did not provide coverage for a particular
occurrence resulting in bodily injury, the Westchester policy would provide primary coverage for
that occurrence in excess of a $10,000 deductible.
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Motorist Coverage Option Form” attached to the Liberty Mutual policy reflects

that Ansco explicitly rejected UM coverage in writing on both September 5, 2006,

and September 24, 2007.

C.    The Westchester Umbrella Policy

      The $10 million Westchester policy provides coverage for “those sums in

excess of the ‘Retained Limit’ which the ‘Insured’ by reason of liability imposed

by law . . . shall become legally obligated to pay.” The Westchester policy defines

“Retained Limit” as either “the total of the applicable limits of the ‘Underlying

Insurance,’” or, “with respect to any ‘Occurrence’ that is not covered by

‘Underlying Insurance’ or any other insurance,” $10,000. The Westchester policy

defines “Underlying Insurance” as the policies listed in the Schedule of Underlying

Insurance. The Schedule of Underlying Insurance lists, among other policies, the

Liberty Mutual policy. The Schedule of Underlying Insurance notes that the

Liberty Mutual policy does not contain UM coverage.

      Under a section titled “Limits of Insurance,” the Westchester policy

provides, “If the applicable limits of insurance of the ‘Underlying Insurance’ . . .

are reduced or exhausted by payments from one or more ‘Occurrences’ happening

during the ‘Policy Period’ of this policy, the ‘Limits of Insurance’ of this policy

will apply in excess of such reduced or exhausted limits.”




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      The Westchester policy also contains an “Automobile Limitation”

endorsement to coverage. This endorsement provides:

      With respect to ‘Bodily Injury’ or ‘Property Damage’ arising out of
      the . . . use . . . of any ‘Automobile,’ this policy is limited to the
      coverage provided by the ‘Underlying Insurance’ as listed on . . . [the]
      Schedule of Underlying Insurance.

      If coverage is not provided by ‘Underlying Insurance,’ coverage is
      excluded from this policy.

      However, this policy does not apply to any obligation or liability
      imposed on the ‘Insured’ under any . . . uninsured motorists [or]
      underinsured motorists law or any similar law.

      Attached to the Westchester policy is an “Uninsured Motorists Coverage

Offer” form reflecting that Ansco explicitly rejected UM coverage in writing.

However, Ansco executed this form on May 30, 2008—eight months after Coker’s

accident.

D.    The Great American Excess Policy

      The $10 million Great American policy provides coverage to Ansco “only in

excess of the Underlying Limits of Insurance” provided by the Westchester policy.

The Great American policy provides:

      [I]f the underlying Limits of Insurance stated in [the Westchester
      policy] are reduced or exhausted solely by payment of “loss,” such
      insurance provided by this policy will apply in excess of the reduced
      Underlying Limits or, if all Underlying Limits are exhausted, will
      apply as underlying insurance subject to the same terms, conditions,
      definitions and exclusions of the [Westchester] Policy, except for the
      terms, conditions, definitions and exclusions of this policy.


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       The Great American policy further states that “[c]overage under this policy

will not apply unless and until the Insured or the Insured’s underlying insurance

has paid or is obligated to pay the full amount of the Underlying Limits of

Insurance stated in [the Westchester policy].”

E.     The American Guarantee Excess Policy

       The $25 million American Guarantee policy provides coverage for “the

sums in excess of the total Underlying Limits of Insurance shown in . . . the

Declarations that the insured becomes legally obligated to pay as damages.” The

American Guarantee policy declarations reference the $10 million Westchester

policy and state that the “Total Limits Of All Underlying Insurance” is $20

million. 2

       Under the section titled “Limits of Insurance,” the American Guarantee

policy states that its coverage “applies only in excess of the Underlying Limits of

Insurance shown in . . . the Declarations.” The American Guarantee policy further

states that “[c]overage under this policy will not apply unless and until the insured

or the insured’s underlying insurance has paid or is obligated to pay the full

amount of the Underlying Limits of Insurance stated in . . . the Declarations.”




       2
       Though the American Guarantee policy does not mention the $10 million Great
American policy, together the $10 million Westchester policy and the $10 million Great
American policy account for the $20 million excess coverage threshold.
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F.    The Endurance Excess Policy

      The $25 million Endurance policy provides coverage for losses “in excess of

the ‘underlying limits of insurance,’” defined as “the sum of the limits of all

applicable ‘underlying insurance’ listed in Item 5. of the Declarations.” Item 5 of

the Declarations refers to an attached “Schedule of Underlying Policies,” which

identifies the “first underlying insurance policy” as the Westchester policy and the

“other underlying insurance policies” as the Great American and American

Guarantee policies.

      Under the section titled “Limits of Insurance,” the Endurance policy states

that its coverage “applies only in excess of the ‘underlying limits of insurance’ and

only after the ‘underlying limits of insurance’ have been exhausted.” The

Endurance policy further states that “[c]overage under this policy will not apply

unless and until the insured or the insured’s ‘underlying insurance’ is obligated to

pay the full amount of the ‘underlying limits of insurance.”

G.    Demands for Payment

      In March 2011, the Cokers made separate written demands against Liberty

Mutual, Westchester, and each of the Defendants for payment of the $5.5 million

consent judgment. In March 2012, the Cokers entered into a confidential

settlement agreement with Liberty Mutual for substantially less than the $5 million

policy limit. In June 2012, the Cokers entered into a confidential settlement


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agreement with Westchester for substantially less than the $10 million policy limit.

Despite the money recovered in the Cokers’ settlements with Liberty Mutual and

Westchester, a substantial portion of the $5.5 million consent judgment remained

unsatisfied.

      The three excess insurer Defendants here did not tender payment in response

to the Cokers’ demands.

                        II.     PROCEDURAL HISTORY

      In October 2012, the Cokers filed a complaint against Defendants Great

American, American Guarantee, and Endurance in the State Court of Fulton

County, Georgia, alleging causes of action for breach of contract and bad faith

relating to the Defendants’ refusal to tender payment for the $5.5 million consent

judgment. The Defendants removed the action to federal district court.

      In an August 27, 2014 order, the district court granted partial summary

judgment in favor of the Cokers as to their breach of contract claims and denied the

Defendants’ summary judgment motions. The district court concluded that the

Defendants’ excess liability policies provided “automobile liability insurance” and,

therefore, were required to provide UM coverage by operation of Georgia’s UM

statute. The district court further concluded that enforcing the vertical exhaustion

requirements in the Defendants’ excess policies “would place a limit on the

amount [the Cokers] are able to recover under the statute and not be in accordance


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with the remedial purpose of the [UM] statute.” The Defendants now appeal the

district court’s summary judgment order. 3

                                     III.   DISCUSSION

       On appeal, the Defendants argue that the district court erred by granting

summary judgement in favor of the Cokers on the ground that Georgia’s UM

statute imposed upon the Defendants an unconditional obligation to provide UM

coverage to the Cokers as if the Defendants were primary insurers. 4 The

Defendants principally argue that, regardless of any obligations imposed by

Georgia’s UM statute, the terms of the Defendants’ policies required the Cokers to

exhaust the limits of the Westchester policy and, if applicable, any other

underlying excess insurance policies before seeking payment from the Defendants.

       We first consider whether Georgia’s UM statute applies to, and imposes a

coverage obligation upon, the Defendants’ excess liability policies and conclude

that it does. Next, we interpret the terms of the Defendants’ excess liability

policies and conclude that they all contain vertical exhaustion requirements.

Finally, we consider whether the statutory coverage obligation imposed by



       3
       Following a subsequent bench trial, the district court issued an order in favor of the
Defendants as to the Cokers’ bad faith claims. That order is not being appealed.
       4
          We review de novo the district court’s grant of summary judgment. Owen v. I.C. Sys.,
Inc., 629 F.3d 1263, 1270 (11th Cir. 2011). Summary judgment is proper “if the movant shows
that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a).
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Georgia’s UM statute supersedes the vertical exhaustion requirements contained in

the Defendants’ excess liability policies and conclude that it does not.

A.    Georgia’s UM Statute Applies to Defendants’ Excess Liability Policies

      Georgia’s UM statute is found at Ga. Code Ann. § 33-7-11. The version of

section 33-7-11 in effect at the time of Coker’s September 2007 accident provided,

in relevant part:

      (a)(1) No automobile liability policy or motor vehicle liability policy
      shall be issued or delivered in this state to the owner of such vehicle
      or shall be issued or delivered by any insurer licensed in this state
      upon any motor vehicle then principally garaged or principally used in
      this state unless it contains an endorsement or provisions undertaking
      to pay the insured damages for bodily injury, loss of consortium or
      death of an insured or for injury to or destruction of property of an
      insured under the named insured’s policy sustained from the owner or
      operator of an uninsured motor vehicle, within limits exclusive of
      interests and costs which at the option of the insured shall be:

             (A) Not less than $25,000.00 because of bodily injury to or
             death of one person in any one accident . . . ; or

             (B) Equal to the limits of liability because of bodily
             injury . . . or death . . . if those limits of liability exceed the
             limits of liability set forth in subparagraph (A) of this
             paragraph.

2006 Ga. Laws 815, 816 (current version at Ga. Code Ann. § 33-7-11 (2014)). The

statute further provided that UM coverage “shall not be applicable where any

insured named in the policy shall reject the coverage in writing.” Id. at 817; see

also Abrohams v. Atl. Mut. Ins. Agency, 638 S.E.2d 330, 333 (Ga. Ct. App. 2006)

(“[Section 33-7-11] specifically requires that, without a written waiver, all
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automobile policies provide UM coverage equal to the policies’ overall liability

limits.”).

       Typically, when interpreting a contract under Georgia law, courts must

“construe [a] contract as written and not . . . make a new contract for the parties.”

Friday v. Friday, 755 S.E.2d 707, 712-13 (Ga. 2014) (quotation marks omitted).

However, an insurance policy that is not in compliance with the Georgia Insurance

Code “shall be construed and applied in accordance with such conditions and

provisions as would have applied had the policy . . . been in full compliance with

[the Code].” Ga. Code Ann. § 33-24-12(a). In doing so, “the contract will not be

rendered void[,] but the provisions of the statute will be grafted into the policy.”

Flewellen v. Atlanta Cas. Co., 300 S.E.2d 673, 678 (Ga. 1983).

       Thus, under the 2006 version of section 33-7-11, an insurer that failed to

obtain a written rejection of UM coverage from the insured was required to provide

UM coverage “[e]qual to the limits of liability because of bodily injury.” 2006 Ga.

Laws at 816. The mandatory provision of UM coverage would be “grafted” into

the non-compliant policy, and non-compliant provisions would be rendered void

by operation of statute. Flewellen, 300 S.E.2d at 678. For example, if an

automobile insurance policy with a $1 million policy limit contained a provision

explicitly excluding the provision of UM coverage, but the insurer failed to obtain

a written rejection of UM coverage from the insured, then the provision excluding


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UM coverage would be rendered void and the insurer would be required to provide

UM coverage up to the $1 million policy limit. See Zurich Am. Ins. Co. v.

Beasley, 666 S.E.2d 83, 83-85 (Ga. Ct. App. 2008); see also Abrohams, 638 S.E.2d

at 331-33.

       The requirements found in the 2006 version of section 33-7-11 applied not

only to primary automobile insurance policies, but to related umbrella and excess

liability policies as well. 5 See id. at 333. Thus, at the time of Coker’s accident,

any umbrella or excess liability policy providing coverage for bodily injury

sustained by the insured due to a motor vehicle accident was required by law to

provide UM coverage to the insured unless the insured rejected UM coverage in

writing. See id.

       Here, the Abrohams decision makes clear that the Defendants’ excess

liability policies, which undoubtedly provide “automobile or motor vehicle liability

insurance” in excess of the Westchester policy, are subject to the requirements of

section 33-7-11. See id. Because Ansco did not reject UM coverage in writing

with respect to any of the Defendants’ excess liability policies, the Defendants had

a statutory obligation to provide UM coverage up to the injury limits of their



       5
         The Georgia General Assembly amended section 33-7-11 in 2008 to exclude umbrella or
excess liability policies from its UM coverage requirements. See 2008 Ga. Laws 1192, 1194. The
2008 amendment expressly applies to policies issued, delivered or renewed in Georgia on and
after January 1, 2009. See id. at 1198. Accordingly, the amendment does not apply to the policies
at issue in this appeal.
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respective policies. See id.; 2006 Ga. Laws at 817. Indeed, all of the Defendants

admit that (1) they did not obtain written rejections of UM coverage 6 and (2) their

excess policies provide “automobile or motor vehicle liability insurance” subject to

the requirements of section 33-7-11. Accordingly, by operation of statute, each

Defendant’s excess liability policy provided UM coverage up to the liability limits

of that policy.

       Although they acknowledge their statutory obligation to provide UM

coverage, the Defendants argue that, pursuant to the terms of their excess liability

policies, they were not required to tender payment until the Cokers exhausted the

policy limits of the underlying $10 million Westchester policy and, if applicable,

any other underlying excess liability policies. 7 Accordingly, we examine the

exhaustion requirements found in excess liability policies governed by Georgia law

as well as those contained in the Defendants’ policies.




       6
         Endurance and American Guarantee argue that Ansco’s written rejection of UM
coverage in the Liberty Mutual policy functions as a written rejection of UM coverage for all
excess policies because those policies contain “follow form” provisions. We need not address
this argument in order to resolve this appeal and assume arguendo that the “follow form”
provisions in the Defendants’ excess policies did not affect the Defendants’ statutory obligations
to provide UM coverage.
       7
          In Abrohams, the injured party had severe injuries from the accident and a $1.45 million
claim. Abrohams, 638 S.E.2d at 331. It was not disputed that the injured party had or would
receive the full benefit of two underlying policies, which were the tortfeasor’s $25,000 per
person and $50,000 per accident policy, and the injured party’s own $500,000 automobile
liability policy. Id. at 331 & n.3. As such, there was no vertical exhaustion issue in Abrohams.
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B.    Defendants’ Excess Liability Policies Contain Vertical Exhaustion
      Requirements

      “Excess or secondary coverage is coverage whereby, under the terms of the

policy, liability attaches only after a predetermined amount of primary coverage

has been exhausted.” U.S. Fire Ins. Co. v. Capital Ford Truck Sales, Inc., 355

S.E.2d 428, 431 (Ga. 1987). Thus, excess policies, by their very nature, contain an

exhaustion requirement. Georgia courts have repeatedly recognized the validity of

excess policies and the exhaustion requirements necessarily embedded within those

policies. See, e.g. Jackson v. Sluder, 569 S.E.2d 893, 898 (Ga. Ct. App. 2002)

(“[E]xcess insurance coverage is not regarded as collectible insurance until the

limit of liability of the primary policy is exhausted.” (quotation marks omitted));

Atl. Wood Indus. v. Lumbermen’s Underwriting All., 396 S.E.2d 541, 545 (Ga. Ct.

App. 1990) (concluding that the exhaustion of the limits of a primary liability

policy was “a condition precedent” to recovery under an excess policy).

      This Court has determined that, under Georgia law, when an excess policy

clearly sets a threshold starting point for payment, the contract is unambiguous and

must be enforced. See Garmany v. Mission Ins. Co., 785 F.2d 941, 945-46 (11th

Cir. 1986).

      Here, each of the Defendants’ excess liability policies contain unambiguous

language limiting recovery to only those amounts exceeding the policy limits of an

underlying insurance policy or policies. The Great American policy contains
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language providing that no coverage is available until the Westchester policy limits

are exhausted. The American Guarantee policy contains language providing that

no coverage is available until the Westchester and Great American policy limits

are exhausted. The Endurance policy contains language providing that no

coverage is available until the Westchester, Great American, and American

Guarantee policy limits are exhausted. Based on these terms, the Defendants were

under no obligation to provide any coverage, UM or otherwise, until the Cokers

exhausted the policy limits of the Westchester policy, which they did not do.

      The Cokers nevertheless contend that the exhaustion requirements in the

Defendants’ excess liability policies are void under section 33-7-11, at least to the

extent that those exhaustion requirements would limit in any way the provision of

UM coverage. Thus, we consider whether section 33-7-11 supersedes the vertical

exhaustion requirements contained in the Defendants’ excess liability policies.

C.    Section 33-7-11 Does Not Supersede the Vertical Exhaustion
      Requirements in Defendants’ Excess Liability Policies

      The Georgia Supreme Court has described the remedial purpose of section

33-7-11 as follows:

      The purpose of uninsured motorist or UM coverage is to place the
      injured insured in the same position as if the offending uninsured
      motorist were covered with liability insurance. Stated otherwise, the
      purpose of uninsured motorist legislation is to require some provision
      for first-party insurance coverage to facilitate indemnification for
      injuries to a person who is legally entitled to recover damages from an
      uninsured motorist, and thereby to protect innocent victims from the
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      negligence of irresponsible drivers. The Georgia uninsured motorist
      statute is designed to protect the insured as to his actual loss, within
      the limits of the policy or policies of which he is a beneficiary.

State Farm Mut. Auto. Ins. Co. v. Adams, 702 S.E.2d 898, 900 (Ga. 2010)

(emphasis added) (quotation marks and citations omitted).

      According to the Georgia Court of Appeals, section 33-7-11 “states in plain

language that every policy issued or delivered in [Georgia] shall undertake to pay

the insured all sums which he is legally entitled to recover from the owner or

operator of an uninsured motor vehicle.” Abrohams, 638 S.E.2d at 333 (quotation

marks omitted). The court further stated that “[t]here are no exceptions or

qualifications to this statutory requirement.” Id. (quotation marks omitted). This is

because section 33-7-11 is “remedial in nature and must be broadly construed to

accomplish [its] legislative purpose.” Id. at 332 (quotation marks omitted).

      Georgia courts have never explicitly addressed whether section 33-7-11

renders void the vertical exhaustion requirement inherent in every excess liability

policy. Still, Georgia courts have acknowledged the statute’s remedial intent and

have concluded that section 33-7-11 places strict requirements on insurers. For

example, Georgia courts have held that section 33-7-11 may void routine “other

insurance” provisions that seek to limit liability when multiple policies that are

horizontally aligned provide UM coverage. See, e.g., State Farm Mut. Auto. Ins.




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Co. v. Murphy, 177 S.E.2d 257, 260 (Ga. 1970); Travelers Indem. Co. v. Williams,

167 S.E.2d 174, 175-76 (Ga. Ct. App. 1969).

      The problem for the Cokers is that nothing in section 33-7-11 voids the

vertical exhaustion requirements of umbrella and excess liability policies governed

by Georgia law. First, interpreting section 33-7-11 that way would, in effect,

preclude the existence of a market for excess UM coverage in Georgia. Under the

Cokers’ interpretation of section 33-7-11, parties could never contract for excess

UM coverage because the vertical exhaustion requirements inherent in every

excess policy would always violate section 33-7-11 and convert all excess policies

into primary policies. However, parties do contract for excess UM coverage, and

Georgia courts have implicitly recognized the validity of those agreements. See,

e.g., Progressive Classic Ins. Co. v. Nationwide Mut. Fire Ins. Co., 670 S.E.2d 497,

499 (Ga. Ct. App. 2008) (discussing the priority of three excess policies that

provided potential UM coverage “if the limits of the [primary] policies are

exhausted”).

      Second, while section 33-7-11 imposes a duty to provide UM coverage and

may invalidate certain “other insurance” provisions, nothing in section 33-7-11 or

the relevant case law explicitly proscribes the use of coverage limitations that

depend on the exhaustion of underlying policy limits in a tiered insurance scheme.

The cases that the Cokers cite to suggest otherwise are distinguishable because


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they all involve priority disputes between multiple primary UM carriers. Such

cases are of little help here, where the dispositive issue is not a priority dispute

between primary UM carriers, but a threshold coverage defense asserted by excess

UM carriers. Without an explicit proscription from the Georgia courts, we cannot

conclude that section 33-7-11 would render void the vertical exhaustion

requirement that, under Georgia law, is the defining characteristic of an excess

liability policy. To do so would alter the nature and fundamental purpose of the

agreement itself—that is, to provide excess coverage. See U.S. Fire Ins. Co., 355

S.E.2d at 431.

      Third, a vertical exhaustion requirement does not undermine the remedial

purpose of section 33-7-11. Although there are no “exceptions or qualifications”

to the statutory requirement that an insurer “undertake to pay the insured all sums

which he is legally entitled to recover,” we do not see how enforcing a vertical

exhaustion provision, alone, would prevent an insured from recovering those sums

to which he is “legally entitled.” Abrohams, 638 S.E.2d at 333 (quotation marks

and emphasis omitted). The only way an insured might not recover for the full

amount of his injuries—and therefore realize the harm section 33-7-11 was

designed to prevent—is if, as is the case here, he settles with an underlying insurer

for less than the policy limits. But in that case, the insured voluntarily settled for

less than the policy limits and, therefore, is undercompensated of his own volition.


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In such a situation, it is not the exhaustion requirement that directly contravenes

the legislative intent of section 33-7-11, but the insured’s own settlement

negotiations.

      For these reasons, we conclude that section 33-7-11 does not vitiate the

vertical exhaustion requirement of an umbrella or excess liability policy governed

by Georgia law. As such, we conclude that the Defendants are entitled to summary

judgment in their favor with respect to the Cokers’ breach of contract claims. Each

Defendant’s excess policy contained an unambiguous statement that coverage

would not apply until the insured exhausted the $10 million policy limit of the

Westchester policy. Indeed, the American Guarantee and Endurance policies even

contained further vertical exhaustion requirements with respect to their

codefendants. Though the Defendants were obligated by statute to provide UM

coverage, they did so in the permissible excess way.

      Because the Cokers failed to exhaust the limits of the underlying

Westchester policy, the Defendants were under no obligation to provide any

coverage whatsoever. As such, they are entitled to summary judgment on the

Cokers’ breach of contract claims.

                                 IV.   CONCLUSION

      For the foregoing reasons, the district court’s August 27, 2014 order granting

the Cokers’ motion for partial summary judgment against the Defendants and


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denying the Defendants’ motions for summary judgment against the Cokers is

REVERSED. The case is REMANDED for entry of judgment in favor of the

Defendants.




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