                                                                  [PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT                     FILED
                           ____________________             U.S. COURT OF APPEALS
                                                              ELEVENTH CIRCUIT
                                                                  JULY 27 2000
                                  No. 99-8218
                                                               THOMAS K. KAHN
                             ____________________                   CLERK

                      D.C. Docket No. 98-00041-4-CV-JRE

PACIFIC EMPLOYERS INSURANCE COMPANY,

                                                         Plaintiff-Appellant,

                                      versus

BLANE CESNIK,
KRISTI CESNIK,

                                                         Defendants-Appellees.

                             ____________________

                   Appeal from the United States District Court
                       for the Middle District of Georgia
                            ____________________
                                (July 27, 2000)

Before EDMONDSON and HULL, and WOOD, JR.*, Circuit Judges.

WOOD, JR., Circuit Judge:




      *
        Honorable Harlington Wood, Jr., U.S. Circuit Judge for the Seventh Circuit,
sitting by designation.
      This case arises out of a 1993 lawsuit filed by Blane and Kristi Cesnik against

Edgewood Baptist Church (“Edgewood”) and three individual Edgewood employees

based on the Cesniks’ adoption of two newborn babies through the church’s adoption

agency. The underlying facts of this case are set forth in our previous opinion, Cesnik

v. Edgewood Baptist Church, 88 F.3d 902 (11th Cir. 1996) (“Cesnik”), and we will

not restate them here. The Cesniks’ original complaint alleged “wrongful placement

and adoption,” state and federal conspiracy claims, and a claim for breach of contract.

On appeal, this court upheld the district court’s grant of summary judgment with

respect to the Cesniks’ tort claims against all of the defendants based on statute of

limitations grounds. Id. at 908-09. The panel affirmed the district court’s grant of

summary judgment in favor of the individual defendants on the Cesniks’ contract

claims. Id. at 910. The court also affirmed the grant of summary judgment in favor

of one of the individual defendants on the conspiracy claims. Id. However, the panel

vacated the district court’s grant of summary judgment in favor of Edgewood on the

Cesniks’ contract claims as well as the judgment in favor of Edgewood and two of the

individual defendants on the conspiracy claims. Id. The case was remanded with

instructions to the district court “to require” the Cesniks to replead their contract and

conspiracy claims. Id.




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      The Cesnik opinion was issued on July 5, 1996. This court then issued an

unpublished order, Pacific Employers Insurance Company v. Cesnik, No. 94-9458

(11th Cir. August 20, 1996) (per curiam), dealing with a declaratory judgment action

that Pacific Employers Insurance Company (“Pacific Employers”) brought in the

district court while Cesnik was pending seeking a declaration that the claims asserted

in Cesnik were not covered under the commercial general liability insurance policy

it issued to Edgewood (“the policy”). The district court held that the claims were

embraced by the policy, but this court reversed, holding that the Cesniks alleged only

non-physical injuries and, therefore, their claims were not covered by the policy.

      Following remand and denial of certiorari in Cesnik, on July 31, 1997, the

Cesniks filed their First Amended Complaint (“amended complaint”). Once again,

Pacific Employers defended the suit pursuant to a reservation of rights. On March 2,

1998, Pacific Employers filed the declaratory judgment action at issue in this case,

asserting that the claims of the amended complaint were not covered by the policy.

The parties filed cross-motions for summary judgment. On January 22, 1999, the

district court denied Pacific Employers’ motion for summary judgment and granted

summary judgment in favor of appellees, holding that there were claims in the

amended complaint that were not asserted in the original complaint and that the

amended complaint stated claims which, if successful, could arguably fall within the


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policy’s coverage. The district judge concluded, therefore, that this court’s decision

on the first declaratory judgment action was inapplicable and that Pacific Employers

must continue to defend the suit. Pacific Employers appeals.

                                     ANALYSIS

      Pacific Employers raises several issues. First, Pacific Employers argues that

the facts, claims, and damages alleged in the amended complaint are the same as those

alleged in the original complaint and, therefore, the parties are barred by the earlier

declaratory judgment action from relitigating the issue of insurance coverage.

Alternatively, Pacific Employers contends that the Cesniks’ claims are not covered

under the policy. We review the district court’s grant of summary judgment de novo.

Elan Pharmaceutical Research Corp. v. Employers Ins. of Wausau, 144 F.3d 1372,

1175 (11th Cir. 1998). The parties agree that Georgia law governs this diversity case.

      We need not determine the preclusive effect of the earlier declaratory judgment

action because we find that the claims set forth in the amended complaint are clearly

excluded from coverage under the express language of the policy. “Under Georgia

law, the duty to defend an insured is separate and independent from the obligation to

indemnify.” Elan Pharmaceutical, 144 F.3d at 1375 (citing Penn-America Ins. Co. v.

Disabled Am. Veterans, Inc., 490 S.E.2d 374, 376 (Ga. 1997)). “[A]n insurer must

provide a defense against any complaint that, if successful, might potentially or


                                          4
arguably fall within the policy’s coverage.” Id. (citing Penn-America, 490 S.E.2d at

376). To determine whether a duty to defend exists, we must “compare the allegations

of the complaint, as well as the facts supporting those allegations, against the

provisions of the insurance contract.” Id. (citing Great Am. Ins. Co. v. McKemie, 259

S.E.2d 39, 40-41 (1979)); see also SCI Liquidating Corp. v. Hartford Fire Ins. Co.,

181 F.3d 1210, 1214 (11th Cir. 1999) (citing cases).

      The policy, which supplied coverage from October 1, 1989 through October 1,

1990, provides in pertinent part:

      SECTION I – COVERAGES

      COVERAGE A. BODILY INJURY AND PROPERTY DAMAGE
      LIABILITY

      1. Insuring Agreement

             a. We will pay those sums that the insured becomes legally
             obligated to pay as damages because of “bodily injury” or
             “property damage” to which this insurance applies.
             ...

             b. This insurance applies to “bodily injury” or “property damage”
      only if:

                   (1) The “bodily injury” or “property damage” is caused by
                   an “occurrence” that takes place in the “coverage territory;”
                   and
                   (2) The “bodily injury” or “property damage” occurs during
                   the policy period.



                                          5
             c. Damages because of “bodily injury” include damages claimed
             by any person or organization for care, loss of services or death
             resulting at any time from the “bodily injury.”

      2. Exclusions

             This insurance does not apply to:

             a. “Bodily injury” or “property damage” expected or intended
             from the standpoint of the insured. This exclusion does not apply
             to “bodily injury” from the use of reasonable force to protect
             persons or property.

             b. “Bodily injury” or “property damage” for which the insured is
             obligated to pay damages by reason of the assumption of liability
             in a contract or agreement. This exclusion does not apply to
             liability for damages:

                    (1) Assumed in a contract or agreement that is an “insured
                    contract,” provided the “bodily injury” or “property
                    damage” occurs subsequent to the execution of the contract
                    or agreement; or

                    (2) That the insured would have in the absence of the
                    contract or agreement.

The policy defines “bodily injury” as “bodily injury, sickness or disease sustained by

a person including death resulting from any of these at any time.” “Occurrence” is

defined as “an accident, including continuous or repeated exposure to substantially the

same general harmful conditions.”

      The Cesniks’ amended complaint contained four causes of action. Count One

alleged breach of contract while Counts Two, Three, and Four alleged violations of


                                          6
Georgia’s Racketeer Influenced and Corrupt Organizations Act (Georgia RICO), GA.

CODE ANN. § 16-14-4(a), (b), and (c). The amended complaint’s prayer for damages

sought to recover “all contractual damages including medical, psychological,

psychiatric, educational, and like extraordinary child care expenses for [their two

sons] which have been or will be incurred by the Cesniks” as well as “all contractual

and/or extracontractual damages for past, present and future mental and emotional

pain, distress, anguish and suffering.”

      It is clear that the Cesniks do not seek damages for bodily injury directly

because, as this court has previously held, they are barred by the statute of limitations

from pursuing tort claims under Georgia common law. Cesnik, 88 F.3d at 908-09.

Furthermore, the Cesniks’ Georgia RICO claims are not covered under the policy.

These claims are based on allegations of intentional conduct, and therefore, any injury

would not result from an occurrence as defined in the policy. See O’Dell v. St. Paul

Fire & Marine Ins. Co., 478 S.E.2d 418, 420 (Ga. Ct. App. 1996); Presidential Hotel

v. Canal Ins. Co., 373 S.E.2d 671, 673 (Ga. Ct. App. 1988). Additionally, the

Cesniks’ claims for damages for mental and emotional pain do not constitute claims

for damages because of bodily injury as defined in the policy and, therefore, are not

covered. See Anderson v. Southern Guar. Ins. Co., 508 S.E.2d 726, 729 (Ga. Ct. App.

1998) (holding that purely mental harm is not covered under a policy that defines


                                           7
“bodily injury” as “bodily harm, sickness or disease”).      Therefore, we focus our

analysis on whether the Cesniks’ breach of contract claim seeks damages because of

bodily injury as defined in the policy.

      Under the policy, the mere fact that bodily injury occurred is insufficient to

trigger coverage. Instead, the policy provides coverage for damages sought “because

of ‘bodily injury.’” As the Court of Appeals of Georgia has held, damages “because

of bodily injury” can be construed two ways. Lunceford v. Peachtree Cas. Ins. Co.,

495 S.E.2d 88, 90 (Ga. App. Ct. 1997). Under a narrow construction, the phrase

would only require coverage equal to the amount of damages actually awarded for

bodily injury. Id. at 90-91. The phrase could also reasonably be construed more

broadly to mean all damages which an insurer becomes liable to pay “by reason of”

or “on account of” an injury. Id. at 91. Under either interpretation, the express terms

of the policy at issue in the present case require a connection between the damages

sought and a covered bodily injury. The amended complaint contains no such

connection. While, in the body of their complaint, the Cesniks allege that, “related to

the contractual agreement for the physical placement and prospective adoption” of the

boys, they incurred costs for care of the boys due to bodily injury, there is no actual

claim for damages on account of this injury. As previously noted, “whatever tort

claims the Cesniks may have had under Georgia common law” are barred by the


                                          8
statute of limitations. Cesnik, 88 F.3d at 908. Furthermore, as evidenced by their

prayer for damages, the Cesniks seek only contractual damages. Liability, if any, for

these damages would result from a breach of contract; they are not damages that the

insured could be liable for by reason of or on account of a bodily injury and, therefore,

do not fall within the scope of the policy. The amended complaint does not contain

any claims which potentially might fall within the policy’s coverage. Therefore,

Pacific Employers has no duty to defend in the present case, and the district court

erred in denying Pacific Employers’ motion for summary judgment.

                                   CONCLUSION

      The district court’s grant of summary judgment in favor of appellees is

REVERSED. The case is REMANDED to the district court with instructions to enter

judgment in favor of Pacific Employers.




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