Georgia Appeals Court Bars $100M Liability Shift to Excess Insurer

A recent decision from the Georgia Court of Appeals clarifies how layered liability coverage can constrain post-settlement efforts to shift exposure to an excess carrier. The dispute arose after a fatal boating accident led to a large verdict against Malibu Boats LLC and a subsequent $100 million settlement with the decedent’s family. Malibu later pursued its insurers, alleging failures to settle, and the primary carrier sought to apportion liability to the second-layer excess insurer. The appellate panel affirmed that apportionment was unavailable under the excess policy’s terms and the record developed in the trial court, leaving ongoing claims focused on the primary insurer’s conduct.

Appellate Ruling on Excess Carrier Obligations

The Georgia Court of Appeals held that Federal Insurance Co. could not require Starr Indemnity & Liability Co. to share responsibility for the $100 million settlement based on pre-verdict settlement negotiations. The panel concluded Federal did not establish that Starr had a duty to respond to settlement offers made before the verdict, or that Starr’s actions caused Malibu any cognizable damage tied to the settlement posture. Affirming partial summary judgment, the court emphasized that the absence of any settlement-consent requirement in Starr’s policy undercut Federal’s attempt to frame Starr’s nonparticipation as actionable.

Central to the ruling was the court’s application of the policy’s attachment structure. The panel reasoned that Starr’s limits were not implicated unless and until Federal fully tendered its own limits. Without a tender, Starr’s obligations did not attach, and the court found no evidence that Starr prevented Federal from tendering or otherwise blocked settlement. The opinion stated that, because Starr could not have been the proximate cause of damages under these circumstances, the trial court did not err in barring Federal from apportioning liability to Starr.

How Policy Language and Settlement Demands Shaped the Outcome

The underlying case featured multiple pretrial settlement demands—reported at $18 million, $16.9 million, and $26 million—followed by a $140 million jury verdict and then a $100 million settlement. Federal argued on appeal that the trial court incorrectly concluded Starr had no settlement duty because none of the demands fell within Federal’s policy limits. The appellate panel rejected that framing, explaining that the relevant question turned on the express language of Starr’s excess policy and the conditions precedent to triggering Starr’s coverage obligations.

The court described the coverage tower as consisting of $1 million in primary liability coverage and $5 million in first-layer excess coverage issued by Federal, with a $20 million second-layer excess policy issued by Starr. Under the Starr policy as interpreted by the court, Starr had no obligation to defend or settle Malibu’s claims absent the attachment of its layer, and attachment required a full tender of underlying limits. Because Federal never tendered its limits to the plaintiffs, the court concluded Federal could not use pre-verdict demands or the later settlement amount to impose a settlement-related duty on Starr that the policy did not create.

Procedural Posture and What Remains in the Trial Court

Following the settlement, Malibu brought an action seeking recovery of the full $100 million from the insurers, alleging they neglected duties associated with settling the case. Starr was dismissed after the trial court found Federal had not tendered its policy limits before the verdict, and the appellate decision left that dismissal intact for purposes of Federal’s apportionment theory. In the appeal, the panel also noted the absence of evidence that Starr interfered with Federal’s ability to tender or resolve the case, reinforcing the trial court’s conclusion that Starr could not be tagged for the settlement under the theories advanced.

While the appellate decision narrows the dispute as to Starr, it does not end the overall litigation. The opinion indicated that discovery continues on Malibu’s allegations of bad faith or negligent failure to settle against Federal, along with other affirmative defenses Federal has raised. Federal is represented by Everlands Sutherland (US) LLP, according to court filings. The appellate ruling primarily resolves the layered-coverage apportionment issue, leaving the fact development and merits of Malibu’s remaining claims to proceed in the lower court.