AEGIS Electric & Gas International Services Ltd. v. ECI Management LLC, No. 19-11114 (11th Cir. 2020)
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AEGIS filed suit alleging that it does not have a duty to defend or indemnify its insured ECI in an underlying state court action brought by a former tenant against ECI. In the underlying action, the tenant alleged that ECI wrongfully withheld the security deposits of current and former tenants in violation of Georgia's security deposit law.
The Eleventh Circuit reversed the district court's grant of summary judgment in favor of AEGIS, holding that AEGIS has a duty to defend ECI in the underlying state court lawsuit against it because that action and certain relief sought, if proved, would constitute a covered "Loss" under the insurance policy. Although an award of the allegedly wrongfully withheld security deposit would not constitute a "Loss" under the policy, the court explained that any award of attorney's fees that ECI might become obligated to pay as part of the judgment in the underlying litigation would also fall within the policy's definition of "Loss." The court held that any award of attorney's fees under Georgia's security deposit law could constitute a potential "Loss" under the policy, and thus AEGIS maintains a duty to defend ECI. The court declined to offer any opinion as to whether AEGIS, in addition to its duty to defend, has any duty to indemnify ECI.
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