               Case: 11-15778       Date Filed: 01/30/2013       Page: 1 of 14

                                                                                  [PUBLISH]


                  IN THE UNITED STATES COURT OF APPEALS

                            FOR THE ELEVENTH CIRCUIT
                              ________________________

                                     No. 11-15778
                               ________________________

                         D. C. Docket No. 5:08-cv-00223-MTT

TERRY WAYNE DUCKWORTH,
                                                                          Plaintiff-Appellee,

                                            versus


ALLIANZ LIFE INSURANCE COMPANY
OF NORTH AMERICA, ET AL.,
                                                                     Defendants-Appellants.



                               ________________________

                      Appeal from the United States District Court
                          for the Middle District of Georgia
                           _________________________

                                     (January 30, 2013)

Before BARKETT and JORDAN, Circuit Judges, and SCHLESINGER,* District
Judge.



       *
         Honorable Harvey E. Schlesinger, United States District Judge for the Middle District
of Florida, sitting by designation.
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SCHLESINGER, District Judge:

      Allianz Life Insurance Company of North America (“Allianz”) appeals from

a final order of the U.S. District Court for the Middle District of Georgia granting

judgment in favor of Terry Duckworth (“Duckworth”) on his claim that Allianz

miscalculated the monthly benefit to which he was entitled under a long-term

disability insurance policy (“the policy”). Allianz contends that the District Court

erred in its interpretation of the policy’s offset provision and that it was entitled to

offset all of Duckworth’s Railroad Retirement Act disability benefits—not merely

a portion, as the District Court found. Allianz therefore asks this Court to reverse

the judgment of the District Court and hold that all of Duckworth’s Railroad

Retirement Act disability benefits fall within the policy’s offset provision. We find

that the District Court erred and reverse.

                                I. BACKGROUND

      This case centers on the interpretation of a non-ERISA group long-term

disability (“LTD”) insurance policy issued by Allianz to the Southeastern

Pennsylvania Transportation Authority (“SEPTA”) as group policyholder. The

policy provides that those entitled to LTD benefits will receive a monthly payment

equal to sixty percent of their pre-disability monthly earnings, minus an offset for

“other income benefits” that they receive. The policy’s offset provision defines

“other income benefits” to include “disability or retirement benefits under the
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United States Social Security Act, The Canada Pension Plan, The Quebec Pension

Plan, or any similar plan or act.” This appeal presents the issue of whether all of

the disability benefits Duckworth receives under the Railroad Retirement Act fall

within the operation of this offset provision.

      As an eligible employee of SEPTA, Duckworth was insured under the

policy. He became disabled on September 11, 1996, after which date he received

salary continuance and sick leave pay from SEPTA. The salary continuance and

sick leave ended on April 10, 1997, and Duckworth therefore became eligible for

LTD benefits under the policy. He submitted a claim for LTD benefits on March

27, 1997, and his claim was approved. There is not now, nor has there ever been

during the course of this litigation, any dispute as to the fact and onset date of

Duckworth’s disability.

      Duckworth’s LTD monthly benefit was initially calculated as sixty percent

of his pre-disability monthly salary from SEPTA—$2,285.40. However, on March

30, 2001, the Railroad Retirement Board (“RRB”) retroactively awarded

Duckworth an annuity pursuant to the Railroad Retirement Act of 1974, 45 U.S.C.

§ 231 et seq. (“RRA”). This annuity had an effective date of September 1, 1998,

and consisted of two tiers.     Duckworth’s initial monthly Tier I benefits were

$1,432.00, and his monthly Tier II benefits were $481.75. On February 2, 2007,

the RRB retroactively increased Duckworth’s monthly Tier I benefits to $1,477.00.
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         From September 1, 1998 through July 11, 2005, Allianz paid Duckworth a

total of $97,762.35 in LTD benefits, but it suspended the payment of benefits on

July 11, 2005, when it became aware that Duckworth was receiving RRA disability

benefits. Allianz believed that all Duckworth’s RRA disability benefits constituted

“other income benefits” that could be offset under the policy. Alliance therefore

believed that it had overpaid benefits to Duckworth and stated that it would

withhold future payments of LTD benefits until the overpayment was extinguished.

Allianz applied a retroactive offset effective as of the date that Duckworth began

receiving RRA benefits—September 1, 1998.                      Duckworth administratively

appealed, and when Allianz refused to change its position, he filed a breach of

contract action under Georgia law in the United States District Court for the

Middle District of Georgia based on diversity jurisdiction.1                After the District

Court denied cross motions for summary judgment, the case proceeded to a bench

trial.

         At trial, Allianz contended that Duckworth’s railroad disability benefits had

to be offset in their entirety or not at all because the policy’s offset provision

applies categorically to all disability benefits paid under an act that is “similar” to

the Social Security Act (“SSA”), 42 U.S.C. § 301 et seq., and Duckworth’s railroad


         1
         Initially, Duckworth incorrectly brought suit under ERISA, but the District Court
granted him leave to maintain his suit as a diversity action.
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disability benefits are paid under only one act—the RRA. Allianz thus argued that

the offset provision asks merely whether the RRA and SSA themselves are similar,

not whether distinct tiers of disability benefits paid under those Acts are similar.

The District Court rejected this “all or nothing” argument and instead proceeded

along a very different mode of analysis that ultimately led it to separately analyze

Duckworth’s Tier I and Tier II benefits.

      The District Court began by placing on Allianz the burden to prove the

applicability of the offset provision. The District Court then cited a bankruptcy

case, In re Scholz, 447 B.R. 887 (9th Cir. BAP 2011), rev’d on other grounds 699

F.3d 1167 (9th Cir. 2012), for the proposition that “although the Railroad

Retirement Act was indeed similar to the Social Security Act, there were

significant differences,” namely that “the Railroad Retirement Act provides, or can

provide, Tier II benefits which are not similar to Social Security benefits.” The

District Court, however, made no explicit finding that the policy’s offset provision

suffers from ambiguity.     The District Court nonetheless proceeded to apply

“Georgia’s rules of construction for insurance policies,” which, as it noted, “do not

favor insurance companies.” The District Court criticized Allianz’s “all or nothing

argument” as “dangerous,” remarking that “while in many ways the Railroad

Retirement Act benefits are similar, they are not similar in their entirety in a very

significant way.”
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      In its final analysis, the District Court declined to give the policy an all or

nothing interpretation. Instead, the District Court concluded that “the intent of the

policy was to create an offset for benefits similar to Social Security benefits” and

that allowing Allianz to offset all “benefits received by [Duckworth] that have no

similarity to the Social Security Act would be an injustice.” The District Court

therefore separately analyzed the offset provision’s applicability to Duckworth’s

RRA Tier I and Tier II benefits. Under this bifurcated mode of analysis, the

District Court concluded that Allianz should not have offset Duckworth’s RRA

Tier II benefits because they are not similar to SSA benefits, but rather analogous

to benefits that would be received from a private pension fund. The District Court

concluded that Allianz had properly offset Duckworth’s RRA Tier I benefits,

however, because they are similar to SSA benefits.

      Given its finding that Duckworth’s RRA Tier I benefits—but not his RRA

Tier II benefits—constituted “other income benefits” under the policy, the District

Court held that there was an overpayment of $15,228.97, not the higher amount

that Allianz had claimed when it stopped paying benefits to Duckworth. The

District Court, therefore, entered judgment in favor of Duckworth on his claim that

Allianz had miscalculated his monthly benefit. Allianz then filed its notice of

appeal.


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                           II. STANDARD OF REVIEW

      Because the District Court did not use extrinsic evidence to interpret the

policy, we review its interpretation de novo. Bituminous Cas. Corp. v. Advanced

Adhesive Tech., Inc., 73 F.3d 335, 337 (11th Cir. 1996). In diversity cases, the

forum state’s choice-of-law rules determine which state’s substantive law applies.

Under Georgia’s choice-of-law rules, the law of the place where a contract was

made governs its interpretation, and under Georgia law, construction of a contract

without the use of extrinsic evidence is a question of law for courts to decide. Id.

(citing cases). We will, therefore, conduct a de novo review of the District Court’s

interpretation of the policy.

                                III. DISCUSSION

      Allianz contends that the District Court improperly interpreted the offset

provision of the policy. In Allianz’s view, the provision in question needs no

interpretation at all.   According to Allianz, the plain language of the offset

provision dictates that the only questions the District Court should have asked

below are: (1) whether the RRA benefits that Duckworth receives are “disability or

retirement benefits,” and if so, (2) whether the SSA and RRA are “similar.”

Allianz argues that these questions can only be answered in the affirmative, and

that the plain language of the policy required the District Court to enter judgment

in its favor. Instead, Allianz contends, the District Court improperly based its
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decision on an analysis of a fundamentally different question—whether the

benefits paid under the SSA and the RRA are similar—and it did so without first

identifying any ambiguity in the policy’s language and after it had improperly

placed upon Allianz the burden of proof.

      Duckworth responds that the District Court followed the correct analytical

framework by finding an ambiguity in the offset provision and resolving it through

a correct application of Georgia’s rules of construction for insurance policies.

      Both parties agree that Georgia law governs this appeal. As the District

Court below and both parties have observed, no cases applying Georgia law have

interpreted an insurance policy that allows an offset for disability benefits awarded

under an act that is “similar” to the SSA. Nor do any cases applying Georgia law

appear to have decided which party bears the burden of proof when an insurer has

invoked a policy’s offset provision.       Given this lack of authorities, we must,

therefore, look to general principles of Georgia law for guidance. This Court has

previously summarized Georgia’s rules of construction for insurance policies:

             Georgia law directs courts interpreting insurance policies to
      ascertain the intention of the parties by examining the contract as a
      whole. A court must first consider the ordinary and legal meaning of
      the words employed in the insurance contract. An insurance policy
      should be read as a layman would read it. Parties to the contract of
      insurance are bound by its plain and unambiguous terms. If the terms
      of the contract are plain and unambiguous, the contract must be
      enforced as written.

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            An ambiguity exists, however, when the plain words of a
      contract are fairly susceptible of more than one meaning. Georgia law
      teaches that an ambiguity is duplicity, indistinctness, an uncertainty of
      meaning or expression. When a term in a contract is ambiguous,
      Georgia courts apply the rules of contract construction to resolve the
      ambiguity.

             Pursuant to Georgia's rules of contract construction, the
      construction which will uphold a contract in whole and in every part is
      to be preferred, and the whole contract should be looked to in arriving
      at the construction of any part. Further, ambiguities are construed
      against the drafter of the contract (i.e., the insurer), and in favor of the
      insured. . . . If the ambiguity remains after the court applies the rules
      of construction, the issue of what the ambiguous language means and
      what the parties intended must be resolved by the finder of fact.

Alea London Ltd. v. Am. Home Servs., Inc., 638 F.3d 768, 773–74 (11th Cir.

2011) (internal citations, alterations, and quotation marks omitted).          As both

Allianz and Duckworth acknowledge, it is well-settled under Georgia law that

courts may not look beyond the text of an insurance policy and apply canons of

construction absent a finding of ambiguity. The threshold questions presented by

this appeal are first, whether the District Court found an ambiguity in the policy’s

offset provision and, if so, second, whether it erred in its resolution of the

ambiguity or in the finding of ambiguity itself.

      Even under a deferential reading of the District Court’s order, nowhere did

the District Court explicitly address any ambiguity in the text of the policy before

going beyond the text to determine its unwritten intent. Instead, the District Court

briefly discussed one way in which Railroad Retirement benefits differ from Social
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Security benefits, and then immediately proceeded to an application of “Georgia’s

rules of construction for insurance policies.” This mode of analysis ran roughshod

over the settled axiom of Georgia law that courts may apply rules of construction

only “[w]hen a term in a contract is ambiguous.” Alea London Ltd., 638 F.3d at

773.

       More importantly, even if we interpret the District Court’s order to have

found an ambiguity in the policy, the manner in which it resolved the purported

ambiguity is at-odds with the language of the policy. The policy states that an

offset may be made for “disability . . . benefits [paid] under the United States

Social Security Act . . . or any similar . . . act.”       This language cannot be

interpreted so broadly as to allow a court to bifurcate and separately analyze

distinct tiers of benefits awarded under the same act.        The policy speaks in

categorical terms and directs a court to ask only whether the “act” under which

disability benefits are paid is “similar” to the SSA. Disability benefits may be

offset in their entirety if the act under which they are paid is “similar” to the SSA;

otherwise, they may not be offset at all. The District Court rejected this “all or

nothing” interpretation, but this is the only interpretation that the language of the

policy supports.

       The District Court, therefore, should have inquired whether the RRA—under

which Duckworth receives his railroad disability benefits—is “similar” to the SSA.
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If the policy were ambiguous, this is where the ambiguity would reside. Under

Georgia law, an ambiguity arises when a policy is susceptible to two or more

“logical and reasonable” interpretations. Hurst v. Grange Mut. Cas. Co., 266 Ga.

712, 716, 470 S.E.2d 659, 663 (1996). If an ambiguity exists in a policy, it will be

“construed against the drafter of the contract (i.e., the insurer), and in favor of the

insured.”   Alea London Ltd., 638 F.3d at 774 (internal citations omitted).

Therefore, if the word “similar” can logically and reasonably be interpreted in two

ways, one of which would include, and one of which would exclude, Duckworth’s

Railroad Retirement benefits from the offset provision’s operation, Georgia law

mandates selection of the interpretation that favors Duckworth.

      Thus we reach the question that the District Court should have asked before

looking beyond the text of the policy: would it be a “logical and reasonable”

interpretation of the offset provision to hold that the RRA is not “similar” to the

SSA? The answer most assuredly must be no. Under Georgia law, words in an

insurance policy “generally bear their usual and common” meaning. O.C.G.A. §

13-2-2(2); Claussen v. Aetna Cas. & Sur. Co., 259 Ga. 333, 334, 380 S.E.2d 686,

687–88 (1989).        Black’s Law Dictionary defines “similar” as “[n]early

corresponding; resembling in many respects; somewhat like; having a general

likeness.” Black’s Law Dictionary 1554 (4th Ed. 1968). In its second definition

for a less common usage of the word, Black’s Law Dictionary defines “similar” as
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“exactly like; identical; exactly corresponding (at least in all essential particulars).”

Id. Webster’s Dictionary defines “similar” as “having characteristics in common,

strictly comparable; alike in substance or essentials, corresponding.” Merriam-

Webster’s Collegiate Dictionary 1093 (10th Ed. 1999).

         Under the usual and common meaning of the word, the RRA and SSA are

certainly “similar.”      “The Railroad Retirement Act is substantially a Social

Security Act for employees of common carriers,” Eichel v. New York Central

Railroad Co., 375 U.S. 253, 254, 84 S.Ct. 316, 317 (1963), and even in the wake of

its 1974 amendment that observation remains true. As amended, the RRA still

“provides a system of annuity, pension, and death benefits . . . similar to the Social

Security Act.” Weyerhaeuser Co. v. R.R. Ret. Bd., 503 F.3d 596, 597 (7th Cir.

2007).

         Duckworth observes that the RRA now offers benefits in two tiers, the first

of which resembles social security benefits and the second of which resembles

benefits paid under a private pension fund.2 Even so, this difference between the

two acts does not make them dissimilar when viewed holistically. As this Court, in

       2
          RRA Tier I benefits are based on earnings an employee has acquired under both
Railroad Retirement and Social Security covered employment, and are calculated using Social
Security benefit formula, but with Railroad Retirement age and service requirements. RRA Tier
II benefits, on the other hand, are based entirely on railroad earnings and are computed under
separate formula. They resemble benefits paid over and above Social Security benefits to
workers in other industries. Dist. Ct. Dkt. 35-9 at pp. 2–3, Railroad Retirement Board,
Calculating Railroad Retirement Employee Annuities: Benefit Information, available at
http://www.rrb.gov/opa/cal_rr_ann/calcrrann.asp (last visited Jan. 23, 2013).
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line with the unanimous concurrence of our sister courts, has held: “The provisions

of the Railroad Retirement Act are so closely analogous to those of the Social

Security Act that regulations and cases interpreting the latter are applicable to the

former.” Elam v. R.R. Ret. Bd., 921 F.2d 1210, 1213 (11th Cir. 1991). See also,

e.g., Harris v. R.R. Ret. Bd., 198 F.3d 139, 142 (4th Cir. 1999); Aspros v. R.R. Ret.

Bd., 904 F.2d 384, 386 (7th Cir. 1990); Burleson v. R.R. Ret. Bd., 711 F.2d 861,

862 (8th Cir. 1983); Estes v. R.R. Ret. Bd., 776 F.2d 1436, 1438 (9th Cir. 1985);

Abbruzzese v. R.R. Ret. Bd., 63 F.3d 972, 974 n.3 (10th Cir. 1995).

      In light of these observations, if the words “disability . . . benefits [paid]

under the United States Social Security Act . . . or any similar . . . act” are to have

any meaning at all, they must at the very least encompass disability benefits paid

under the RRA. The policy’s offset provision directs us to compare the RRA and

SSA with our reading glasses, not under a microscope. Viewed from that level, it

is difficult to envision an act that more closely resembles the SSA than does the

RRA. The policy’s offset provision therefore is not afflicted with any ambiguity,

and the District Court should not have resorted to canons of construction to

determine the unwritten intent of the provision. It may be true, as the District

Court remarked, that allowing Allianz to offset the entirety of Duckworth’s RRA

benefits would be unfair. But we are not aware of any rule of Georgia law that

allows us to re-write the provisions of an unambiguous contract in an effort to
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strike a better bargain than the one that the parties reached.

      Given the foregoing analysis, we need not decide the question of which

party bore the burden of demonstrating the applicability of the offset provision.

Hypothetically, even if Allianz bore the burden, it carried it by showing that the

RRA and SSA are “similar.” The policy supports no other interpretation, and

Allianz was entitled to offset the full amount of Duckworth’s RRA disability

benefits.

                                IV. CONCLUSION

      For the foregoing reasons, the decision of the District Court is REVERSED

and this case is REMANDED to the District Court for entry of judgment in favor

of Allianz in accordance with this decision.




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