Thursday, March 23, 2017

Insurer Settles Bad Faith Claim Over Denial of Coverage in Fatal Bar Brawl (Georgia)

A convoluted case stemming from a brawl that left a man dying in a McDonough bar's parking lot has settled eight years later with the tavern's insurer, Occidental Fire and Casualty, agreeing to pay $7.8 million. The settlement nearly matches a default judgment entered against the bar after Occidental refused to defend the original case, which led to a bad-faith suit against the insurer.

Settlement negotiations began after the Georgia Court of Appeals ruled late last year that Occidental had breached its contract and had a duty to defend the owners of the Irish Bred Pub & Grill against a wrongful death claim.

"This is a case that really shows the compounding effect of the decision the insurer made years ago not to defend their client," said plaintiffs attorney Andrew Ausband of Ausband & Dumont in Stockbridge. "That case could have settled years ago well within the bar's million-dollar policy limits," said Ausband, who co-counseled with Atlanta solo John "Jay" Peavey Jr.

Ausband said that Dennis Corry Porter & Smith partner Georgie Connell was involved in early stages of the litigation, but firm partner Angela Cooper was Occidental's lead counsel throughout most of the case. Neither Connell nor Cooper responded to requests for comment.

According to Ausband, Peavey and court filings, the case began March 8, 2009, when Ryan Gilliam, 22, was at the bar drinking with friends following a NASCAR race at the Atlanta Motor Speedway.

A fight broke out in the parking lot during which an off-duty bouncer at the bar, Charles Edward Brown, stabbed Gilliam multiple times, killing him. Brown was subsequently acquitted on criminal charges of felony murder, malice murder and voluntary manslaughter.

Ausband filed a wrongful death suit in Clayton County State Court on behalf of Gilliam's parents, Harold and Robin Gilliam, naming defendants including Brown and the corporate owners, R&R Spirits and Irish Bred Pub and Grill V Inc. R&R had bought the bar a few months before Gilliam's death and had purchased a general liability policy from Occidental naming as the insureds Irish Bred Pub & Grille V Inc. and Irish Bred Pub and Grille.

Shortly after the suit was filed, the plaintiffs filed a demand for the bar's $1 million policy limits. Instead, after initially providing a lawyer, Occidental dropped any effort to offer a defense, claiming that R&R was not a named insured. The insurer refused to participate or respond to discovery, he said, and in late 2009 R&R entered into a settlement assigning the Gilliams its claims against Occidental for not providing coverage.

In 2012, a default judgment was entered against R&R for $7,841,946.

In 2013, the Gilliams sued Occidental and the insurance broker that sold the policy in Fulton County Superior Court asserting claims including breach of contract and reformation of the insurance policy.

Both the bar's buyers and sellers were "very unsophisticated people," Ausband said, and had clearly intended for R&R to assume the coverage for which it continued to pay premiums after the sale.

The trial court agreed, ruling that a "mutual mistake" had led to R&R not being listed on the policy, and reformed it. The trial court also refused to dismiss the breach of contract claim, and ruled that Occidental was liable for postjudgment interest on the 2012 judgment.

The trial court also dismissed the claims against the insurance broker as time-barred.

In its Nov. 14, 2016, ruling upholding the trial court, the Court of Appeals found that Occidental "agreed to insure the operations of the bar and restaurant, accepted payment to do so, and now seeks to avoid such coverage."