                              MINDIS METALS, INC., Plaintiff-Appellant,

                                                     v.

 TRANSPORTATION INSURANCE COMPANY, Transcontinental Insurance Company, Defendants-
Appellees.

                                               No. 99-13349

                                         Non-Argument Calendar.

                                      United States Court of Appeals,

                                             Eleventh Circuit.

                                              April 20, 2000.

Appeal from the United States District Court for the Northern District of Georgia.(No. 98-01991-CV-CC-1),
Clarence Cooper, Judge.

Before COX and WILSON, Circuit Judges, and RONEY, Senior Circuit Judge.

        PER CURIAM:

        Plaintiff Mindis Metals, Inc. appeals the district court's grant of summary judgment to defendant

Transportation Insurance Company on plaintiff's claim for indemnification for its settlement with Eureka

Foundry Company. There is no consensus in other jurisdictions as to whether intentional conduct premised

on erroneous information is an "accident" under a general liability insurance policy. Compare, e.g., Red Ball

Leasing v. Hartford Accident & Indem. Co., 915 F.2d 306, 309-12 (7th Cir.1990), with Lumber Ins. Cos., Inc.

v. Allen, 820 F.Supp. 33, 34-36 (D.N.H.1993). In Georgia, however, such conduct is not an "accident," as

explained by Judge Duross Fitzpatrick in Macon Iron & Paper Stock Co., Inc. v. Transcontinental Ins. Co.,

No. 5:97-CV-168-4 (M.D.Ga. March 9, 1999), a copy of which is attached. There was no error in

determining that plaintiff's conversion of Eureka's scrap metal was not an "accident" potentially qualifying

plaintiff for indemnification under the terms of the insurance policy.

        AFFIRMED.

  IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF GEORGIA
MACON DIVISION

                     MACON IRON & PAPER STOCK COMPANY, INC., Plaintiff,
                                                      v.

TRANSCONTINENTAL INSURANCE COMPANY and Valley Forge Insurance Company, Defendants.

                                         No. 5:97-CV-168-4 (DF)

                                                  ORDER

         DUROSS FITZPATRICK, District Judge:

         This case is before the Court on the parties' cross-motions for summary judgment. Plaintiff, Macon

Iron and Paper Stock Co., Inc., ("Macon Iron") brought this suit seeking declaratory and injunctive relief

against Defendants, Transcontinental Insurance Company ("Transcontinental") and Valley Forge Insurance

Company ("Valley Forge"), regarding the Defendants' respective duties under the terms of their insurance

agreements with the Plaintiff. For the reasons that follow, the Court agrees with Defendants that coverage

was rightfully withheld, and that Defendants had no corresponding duty to defend Plaintiff in an underlying

civil suit.

I.       Background

         Plaintiff is engaged in the business of "scrap recycling." It has been in business in Macon, Georgia

for nearly 80 years. Plaintiff purchased insurance from the Defendants, obtaining a comprehensive general

liability policy ("CGL"), an umbrella policy, and a personal property policy.

         From November, 1991 until January, 1993, Plaintiff purchased approximately 51 railcars from Joe

Piekarski, the General Manager of Georgia Central Railroad. Unbeknownst to Plaintiff, Mr. Piekarski did

not have permission to sell the railcars, and though some of Plaintiff's employees thought it odd that payment

for the railcars was to be made to Mr. Piekarski personally, Plaintiff continued to buy railcars from him

during this period. After buying the railcars, Plaintiff would then cut them up for us as scrap metal.

         There is no evidence that Plaintiff paid anything other than full market value for the railcars.

Unfortunately, the payments to Mr. Piekarski's personal account were not approved by the railroad. After

discovering that some of its railcars had been sold without permission or compensation, one of the railroad



                                                      2
officials came to Macon Iron in the summer of 1993 and informed the company about what had happened.

Macon Iron handed over its documentation on the sales and Mr. Piekarski was ultimately tried and convicted

for stealing the railcars and keeping the money for his personal benefit. Georgia Central then brought suit

against Macon Iron, claiming (1) that Macon Iron engaged in a pattern of "racketeering activity" in violation

of O.C.G.A. § 16-14-3(8); (2) that Macon Iron conspired with Joe Piekarski to defraud Georgia Central of

its property rights to the railcars and was therefore liable for the intentional tort of conspiracy; (3) that Macon

Iron converted Georgia Central's stolen property; and(4) that punitive damages should be awarded because

of Macon Iron's intentional conduct.

        Macon Iron ultimately settled its dispute with Georgia Central, apparently paying them over $300,000

as part of the agreement. When Georgia Central's suit was originally filed, Macon Iron notified that

Defendant-Insurance Companies and requested their assistance in defending against the charges. The

insurance companies, however, refused to defend against Georgia Central's claims, insisting that Macon Iron

would have to present its own defense because their policies did not cover the transactions involving Mr.

Piekarski. This suit was then filed by Macon Iron to recover expenses incurred in defending itself as well

as payment for the settlement it paid to Georgia Central.

II.     Standard of Review

        Summary judgment may be granted where "there is no genuine issue as to any material fact."

Fed.R.Civ.Proc. 56(c); Lordmann Enterprises, Inc. v. Equicor, Inc., 32 F.3d 1529, 1532 (11th Cir.1994).

"Where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party,

there is no genuine issue for trial." Williams v. Vitro Services Corp., 144 F.3d 1438, 1441 (11th Cir.1998)

(quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89

L.Ed.2d 538 (1986)). In reviewing a motion for summary judgment, the court must view the record and all

inferences therefrom in a light most favorable to the nonmoving party. See WSB-TV v. Lee, 842 F.2d 1266,

1270 (11th Cir.1988).



                                                        3
        Only when the moving party demonstrates that there is "an absence of evidence to support the

non-moving party's case" will the burden then shift to the non-moving party to go beyond the pleadings and

present specific evidence giving rise to a triable issue of fact. See Celotex Corp. v. Catrett, 477 U.S. 317,

325, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). However, the mere presence of an alleged factual dispute

between the parties does not make summary judgment improper; a genuine issue of material fact must exist

for a court to deny summary judgment. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct.

2505, 2510, 91 L.Ed.2d 202 (1986).

III.    Legal Conclusion

        As in any dispute over insurance coverage, the Court begins by examining the source of coverage

itself—the general promises of coverage made in the insurance policy. If the general policy does not cover

the claim in question, an inquiry into any applicable exclusions is unnecessary. This case involves two

different, but ultimately very similar insurance policies. Defendant-Transcontinental's policy insures against

"property damage" that "is caused by an occurrence." Def.'s Mot.Summ. J., Ex. A., "Commercial General

Liability Coverage Form" at 1 (Emphasis supplied). An "occurrence" is further defined in the policy as an

"accident." Defendant-Valley Forge's policy is similar, except instead of using the word "occurrence," that

policy insures the policyholder where property damage is caused by an "incident." Def.'s Mot. Summ. J., Ex.

A., "Commercial Umbrella Plus Coverage Part" at 1. An incident, however, is also defined as an "accident."

Id. at 9. Both polices,then, say that coverage will only be provided when damage results from an "accident."

        Both parties agree with that premise, but they disagree about what the term "accident" means.

Plaintiff contends that an accident occurred in this case because it did not realize that it was harming Georgia

Central when it scrapped the railcars bought from Mr. Piekarski. Defendant, by contrast, argues that while

Plaintiff may have erroneously believed that it had good title to the railcars, this erroneous belief does not

constitute an "accident" and since Plaintiff deliberately purchased and scrapped the railcars, it cannot recover

under the general terms of the plan.



                                                       4
        In support of its position, Plaintiff relies on several cases decided by Georgia Court of Appeals. "In

applying state law, a federal court must adhere to the decisions of the state's intermediate appellate courts

absent some persuasive indication that the state's highest court would decide the issue otherwise." Insurance

Co. of North America v. Lexow, 937 F.2d 569, 571 (11th Cir.1991). The Georgia Supreme Court has never

ruled on this issue, so this Court is bound to follow the decisions of the Georgia Court of Appeals in resolving

this dispute.

        Plaintiff principally relies on Glens Falls Insurance v. Donmac Golf Shaping, 203 Ga.App. 508, 417

S.E.2d 197 (Ga.App.1992), to support its position in this case. There, a golf course construction company

built a golf course on federally protected wetlands. The company unquestionably intended to place the golf

course where it did, but it did not intend to violate federal law doing so. Several lawsuits were filed against

the company, and when it sought protection under its insurance policy (a policy similar to the one in the

instant case), the insurance company attempted to deny coverage by claiming, among other things, that no

"accident" had occurred. The Court of Appeals, reading the policy provision in conjunction with an exclusion

for property damage "expected or intended from the standpoint of the insured," held that the exclusion was

inapplicable. The exclusion did not apply, said the court, because the developer did not specifically intend

the damage caused by its own negligence, namely, the placement of a golf course on federal wetlands.

Applying that rationale to the instant case, Plaintiff argues that because it did not specifically intend to

damage Georgia Central's property, it too should receive coverage under its CGL policy.

        In Georgia Farm Bureau Mutual Insurance v. Meriwether 169 Ga.App. 363, 312 S.E.2d 823

(Ga.App.1983), the Court of Appeals took a position that, at least on the surface, appears to be in conflict with

the decision in Glens Falls. In Meriwether, a property owner placed a gate across a road that he believed was

on his property. In fact, the evidence showed that the gate might have been placed across public property.

Another person sued the property owner, claiming that the property owner had injured him by closing a public




                                                       5
road. The property owner then sought protection under its insurance policy. The policy in that case provided

the following coverage:

        The company will pay on behalf of the insured all sums which the insured shall become legally
        obligated to pay as damages because of bodily injury or property damage to which this insurance
        applies, caused by an occurrence, and the company shall have the right and duty to defend any suit
        against the insured seeking damages on account of such bodily injury or property damages even if
        any of the allegations of the suit are groundless, false, or fraudulent.

Meriwether, 312 S.E.2d at 824 (Emphasis in original). An "occurrence" was defined in the policy as "... an

accident ... which results in bodily injury or property damage neither expected nor intended from the

standpoint of the insured." Id.

        The insurance company argued it had no duty to defend and coverage did not apply because no

"accident" had occurred. The Court of Appeals agreed. "[T]here is no dispute in the present action

concerning the fact that appellee intentionally blocked the disputed way. That being so, appellee's act cannot

be said to be accidental and is, therefor, not an 'occurrence' within the definition of that word in the policy."

Id. Seizing on this language, Defendant here argues that because Plaintiff acted intentionally when it bought

and damaged the railcars, no "accident" occurred. Like the property owner in Meriwether, Plaintiff may have

been mistaken about its property rights, but that mistake, according to the Defendant, does not amount to an

"accident" as that term is commonly understood.

        This Court agrees with the Defendant. Although there is language in Glens Falls that would seem

to indicate that a mistake or error in judgment is tantamount to an "accident," such a reading of the case would

bring it into an inherent conflict with that court's earlier decision in Meriwether. This Court has a duty to

avoid interpreting the cases from the Georgia Court of Appeals in a manner that would bring about such a

conflict. See e.g. Garrett v. Heisler, 149 Ga.App. 240, 253 S.E.2d 863, 867 (Ga.Ct.App.1979) (recognizing

court's duty to reconcile opinions from the Georgia Supreme Court). A fair reading of Meriwether leads to

the inevitable conclusion that an "accident" does not include damage to persons or property when that damage

is intentionally inflicted, even where that intentional conduct is caused by erroneous information. Glens Falls



                                                       6
can be read without contradicting this understanding. In contrast to Meriwether, the court in Glens Falls was

interpreting an exclusion to insurance coverage. "Exceptions, limitations and exclusions to insuring

agreements require a narrow construction on the theory that the insurer, having affirmatively expressed

coverage in clear and explicit terms." First Financial Ins. Co. v. American Sandblasting Co., 223 Ga.App.

232, 477 S.E.2d 390, 392 (Ga.Ct.App.1996). Viewing the intentional property damage exclusion narrowly,

the Court in Glens Falls held that it did not apply because Plaintiff did not specifically intend to cause the

damages alleged by the developer. See Glens Falls v. Donmac Golf Shaping, 417 S.E.2d at 199.

        Whether or not an exclusion for intentional damage would apply in this case, the Court believes that

the antecedent question of whether there was coverage in the first instance must be answered in the negative.

A treatise on insurance law describes an accident as "an unusual or unexpected event, happening without

negligence; chance or contingency; happening by chance or unexpectedly; an event from an unknown cause

or an unexpected event from a known cause." 11 Couch on Insurance § 44:288 at 443 (2d ed.1982). In

fairness, the Georgia courts have recognized that people also commonly associate the word "accident" with

intentional acts, which would of course include acts brought about by careless ness. See e.g. Cohran v.

Douglasville Concrete Products, Inc., 153 Ga.App. 8, 264 S.E.2d 507, 511 (Ga.Ct.App.1980). That said,

what happened here was no "accident."

        This case is similar to one decided by the Seventh Circuit, Red Ball Leasing v. Hartford Accident &

Indemnity Co., 915 F.2d 306 (7th Cir.1990). There, the insured was a lessor of four vehicles. Due to an

accounting error, the insured believed that a lessee had defaulted on its payment when in fact it had not.

Proceeding on this faulty assumption, the insured repossessed the leased vehicles. After being sued, the

insured claimed it should be defended and reimbursed under the terms of its commercial liability insurance

policy. In construing an insurance policy similar to the one in the instant case, the court in Red Ball held that

coverage was not required because no "accident" had occurred:

        A volitional act does not become an accident simply because the insured's negligence prompted the
        act. Injury that is caused directly by negligence must be distinguished from injury that is caused by


                                                       7
        a deliberate and contemplated act initiated at least in part by the actor's negligence at some earlier
        point. The former injury may be an accident ... However, the latter injury, because it is intended and
        the negligence is attenuated from the volitional act, is not an accident.

Red Ball Leasing, 915 F.2d at 311 (internal citations and footnotes omitted). Because the insured

intentionally repossessed the trucks, the court in Red Ball found that no accident had occurred and that

coverage was therefore not required.1 See id.

        As in both Red Ball and Meriwether, Plaintiff here may have made a mistake of fact and/or error in

judgment, but it at all times acted in a deliberate and purposeful manner. Plaintiff confuses the issues in this

case by arguing that it did not intend the result that occurred, namely, the harm to Georgia Central. As

Plaintiff rightly points out, many "accidents" involve intentional conduct with unexpected results.2 But when

we say that the result of the intentional act is unexpected, we are referring to the direct and immediate result,

not the indirect consequences or legal significance of a particular act. In Meriwether, there was no evidence

that the property owner who blocked a public road by putting up a date intended to harm, in a legal sense,

those who used that road. The owner there believed that he owned the property and that he therefore had a

legal right to take such action. Whether or not his belief was correct, however, the court there recognized that

his subsequent action was intentional, not "accidental." Likewise, in this case, Plaintiff intended to damage

the railcars—it was cutting them up for use as scrap metal. This action may have occurred due to a mistake


   1
     For a comprehensive listing of cases in other jurisdictions that have reached similar conclusions, see Red
Ball Leasing, 915 F.2d at 309-310 n. 1. As that court notes, the decided weight of authority supports the
position adopted by the Court in this case. Subsequent cases decided by the Seventh Circuit have adhered
to the reasoning in Red Ball. See GATX Leasing Corp. v. National Union Fire Ins. Co., 64 F.3d 1112, 1118
(7th Cir.1995).
   2
    Plaintiff cites a number of cases in support of its position that involve situations with intentional acts that
lead to unexpected results. See e.g. Allstate Ins. Co. v. Justice, 229 Ga.App. 137, 493 S.E.2d 532
(Ga.Ct.App.1997) (insured shot a bystander that he may not have been aware of); So. Guaranty Ins. Co. v.
Saxon, 190 Ga.App. 652, 379 S.E.2d 577 (Ga.Ct.App.1989) (car engaged in a police chase hit a ditch and
wrecked). In these cases, the Court of Appeals, construing insurance exclusions, found that "accidents" had
indeed occurred. Those situations are quite different from the instant case. In the cases cited above, the
immediate result of the intentional conduct was not intended. The insured in those cases did not intend to
shoot a bystander or wreck into a ditch. By contrast, the immediate result of Plaintiff's conduct in this case,
the possession and subsequent destruction of the railcars, was both intended and expected.

                                                        8
as to ownership, but there was nothing "accidental" about it. Consequently, Defendants had no duty to defend

Plaintiff against Georgia Central's charges because coverage would not have applied to any of the claims.3

        Having decided that Defendants' policies do not cover the Plaintiff's actions in this case, this Court

will address the issues regarding any exclusions that might otherwise apply. Defendants' Motion for

Summary Judgment is hereby GRANTED and Plaintiff's Motion for Summary Judgment is hereby DENIED.

        So ORDERED, this 9th day of March, 1999.




    3
     In light of this ruling, the Court finds that there is also no genuine issue of material fact concerning
Plaintiff's claim of bad faith.

                                                      9
