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By: Sun Choy and Wes Jackson
Last week the Georgia Court of Appeals issued a favorable ruling for the City of Statesboro that will benefit municipalities (and their insurers) across the state. The decision included two advantageous decisions for municipalities concerning “nuisance” claims against cities premised on third-party criminal conduct and the extent to which purchasing insurance will waive a city’s sovereign immunity.
In Gatto v. City of Statesboro (Ga. Ct. App. A19A1408, A191409, Oct. 21, 2019), the parents of an underage college student at Georgia Southern University sued the City of Statesboro after their son was killed by a bouncer at a bar. The parents claimed the City had maintained a nuisance by failing to shut down the bar where their son was killed, even though it was widely known by the City and University students as an establishment that will serve alcohol to underage patrons.
The City asserted multiple defenses to this claim, the two most important being (1) a City cannot be liable under a theory of “nuisance” for third-party crime; and (2) the City did not waive its sovereign immunity by purchasing liability insurance because a specific endorsement in its policy provided that the policy would not cover claims for which the City would otherwise be entitled to sovereign immunity.
As to the “nuisance” defense, Freeman Mathis and Gary attorneys Sun Choy, Jake Daly, and Wes Jackson had recently secured a reversal of a $10.6 million trial verdict against the City of Albany on strikingly similar facts. (City of Albany v. Stanford, 347 Ga. App. 95, 815 S.E.2d 322 (2018); see also prior blog posts here and here.) In Gatto, the Court of Appeals relied on Stanford to unanimously hold that cities cannot be liable for criminal conduct on private property under a “nuisance” theory because the “nuisance exception” to sovereign immunity only applies to “takings” claims of property, not to claims for personal injury or loss of life. The Court of Appeals’ decision in Gatto marks an important win for municipalities across the state, as it reinforces the Court’s decision in Stanford and, as a unanimous decision, creates binding precedent on this issue.
In a case of first impression, the Court also ruled favorably for the City on its sovereign immunity defense based on an interpretation of an insurance policy immunity endorsement. In Georgia, municipalities can waive their sovereign immunity on certain claims by purchasing liability insurance. To preserve cities’ sovereign immunity, some carriers have been issuing policies with an endorsement that effectively states the policy does not provide coverage for any claims for which the City would otherwise have sovereign or governmental immunity. Before Gatto, these endorsements and the extent to which they allow a city to retain its sovereign immunity had never been tested at the Georgia Court of Appeals or Supreme Court. However, the Court of Appeals held in Gatto that such endorsements are enforceable and, where the language of the policy expressly provides that it will not cover occurrences when sovereign immunity applies, the policy would not operate to waive sovereign immunity.
Gatto, then, marks two important and favorable developments for municipalities in Georgia. For additional questions about this case or sovereign immunity under Georgia law, please contact Sun Choy ([email protected]) or Wes Jackson ([email protected]).