GEORGIA SUPREME COURT AFFIRMS MADE WHOLE

Recently, the Georgia Supreme Court again affirmed that, in Georgia, the Courts will ensure that as between an insurance company and an insured party who has sustained a loss, the policy of Georgia is to side with the insured. 

In Royal Capital Development v. Maryland Casualty Ins.Co. ____ Ga. ____ (No. S12Q0209, 2012), the Court held that an insured making a claim for damage to real property under a contract of insurance could claim damages for diminution in value of the property.  The facts of the case were that the owner of a building sustained property damage to his building after a neighboring building underwent construction.  The owner filed a claim with his property insurance company for over $1 million in property damage to his building as well as a the diminution in value for now owning a building that had sustained serious damage requiring substantial repairs. 

The insurance company, as they often do, tried to weasel out of paying the damages to which the insured claimant was legally entitled, claiming that diminution in value damages are limited to automobile property damage claims.  (In that regard, see State Farm v. Mabry 274 Ga. 498 (556 SE2d 114) (2001)).  The insurance company actually convinced a federal district court judge to agree with them.  The federal judge, in an unsettled area of state  law, granted summary judgment to the insurance company.  The owner appealed to the 11^th Circuit, which certified the question to the Georgia Supreme Court, requesting an answer: does Georgia limit diminution in value insurance claims exclusively to the automobile insurance context?. 

In a unanimous decision, the Georgia Supreme Court concluded that Georgia law did not limit an insured from claiming damages for diminution in value in an insurance claim involving real property (real estate).  The Court reasoned that Georgia’s public policy was to support making the claimant who has sustained damages whole and that many, many real property insurance contracts involve unsophisticated homeowners who could potentially be duped by the insurance company by not paying the full value of a claim.  To the Court, the economic realities of insurance claims involving damages to real property was that even if the property was repaired by the insurance company, the owner would still be left with diminished value to his real property simply by now having property that had substantial repairs. 

The case shows how, despite the best effort of insurance companies and their cronies, Georgia remains a state that looks out for the injured claimant.  The case further shows how federal courts should not interfere with issues of state law due to the fact that they can misinterpret state law or just plain get it wrong.