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Released Opinions

March 31, 2016

On March 21, the Supreme Court of Georgia issued 10 opinions, of which two are within the scope of our coverage. Summaries of the cases and opinions are set forth below.

S15G1177 Georgia Farm Bureau Mutual Insurance Co. v. Smith et al.

In a unanimous decision by Chief Justice Thompson, the Supreme Court of Georgia held that lead-based paint was not a “pollutant” within the terms of a commercial general liability policy (CGL) covering residential rental property. The Court reversed the decision of the Georgia Court of Appeals.

The case arose from a lawsuit filed by the mother of a child against her landlord seeking damages allegedly sustained by the daughter as the result of the ingestion of lead-based paint. The landlord sought a defense and coverage under his CGL policy covering the premises, and the carrier sought a declaratory judgment on the scope of its obligations. The carrier contended that, among other things, the CGL policy’s pollution exclusion clause relieved it of any obligation to defend and indemnify the landlord. In pertinent part, the policy excluded “pollution” from the scope of its coverage, and it defined a “pollutant” as “any solid, liquid, gaseous or thermal irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals, and waste.”

The trial court granted summary judgement to the carrier, holding that the pollution exclusion applied. The Court of Appeals, however, reversed, concluding that the exclusion was ambiguous in that a reasonable insured might have understood the exclusion to apply to certain forms of industrial pollution, rather than the ingestion of lead-based paint in a residence. It then construed the ambiguous provision against the insurer.

The Supreme Court reversed, holding that the exclusion was not ambiguous. It noted that the CGL policy “contains an absolute pollution exclusion clause which precludes any recovery for bodily injury or property damage resulting from exposure to any pollutant.” (emphasis in original) That “absolute” exclusion “substantially broadened” its application, came into practice in the mid-1980’s, and has been the subject of conflicting judicial decisions since then. The Georgia courts had, however, “repeatedly applied these [pollution exclusion] clauses outside the context of traditional environmental pollution.” In addition, the Georgia courts had applied the exclusion to pollutants that were not “explicitly named in the policy.” Thus, while lead-based paint was previously unaddressed, it fit within the Georgia courts’ treatment of the exclusion.

In Reed v. Auto-Owners Ins. Co., 284 Ga. 286, 667 S.E. 2d 90 (2008), the Court held that the same exclusion covered carbon monoxide within a rental home. It noted that Reed “controls the manner in which pollution exclusions in CGL policies are to be construed by the courts of this State.” Its approach, which looks at the plain language of the policy, governed here.

S15A1442 Gebrekidan v. City of Clarkston

In a unanimous decision by Justice Nahmias, the Supreme Court of Georgia held that the Georgia laws governing coin operated amusement machines (COAM) and businesses preempted those of the City. It reversed the judgment of the trial court, holding that the “direct effect” of the local ordinance was to “ban COAMs … where the State of Georgia allows them,” something that a local law cannot constitutionally do.

The City of Clarkston cited Gebrekidan for operating “coin-operated amusement machines in [a] retail store selling packaged beer, malt beverages and wine” in violation of a City ordinance. She asserted that Georgia Law preempts the City ordinance, but the municipal court and the Superior Court of DeKalb County denied her motion to dismiss. She was found guilty and fined.

Under the Uniformity Clause of the Georgia Constitution, general laws are to operate uniformly throughout the State with no special or local laws to duplicate them, “except that the General Assembly may by general law authorize local governments by local ordinance or resolution to exercise police powers which do not conflict with general laws.” Ga. Const. of 1983, Art. III, Sec. VI, Par. 4(a). Under implied preemption, the General Assembly’s intention can be inferred from the “comprehensive nature of the regulatory scheme.”

With respect to the “except” clause, the Court explained, “Where a comprehensive general law authorizes local legislation only on particular matters, … local ordinances that regulate matters outside the scope of that specific authorization do not come under the ‘except’ provision and remain impliedly preempted.” And, even where the General Assembly authorizes local legislation, the local laws cannot conflict with the general law.

The Supreme Court held that the local ordinance was impliedly preempted by O.C.G.A. §§ 50-27-70 through 50-27-104. It noted that, while there was an exception to Georgia’s criminal laws for certain coin operated games, that activity was otherwise “comprehensively regulated” by the statute. The Court stated, “In sum, the COAM laws, the text of which (aside from annotations) fills more than 35 pages of the Georgia Code, establish by general laws precisely the sort of comprehensive statutory scheme regulating a subject — COAMs and COAM businesses — on a statewide basis that we have previously found gives rise to implied preemption of local ordinances on the same subject.”

The Court rejected the City’s contention that its ordinance regulated the trade in and consumption of alcohol, not COAMs. It explained, “[I]n the preemption context it is not the reason for or purpose behind a local ordinance that controls. The proper focus is on the subject and operation of the general and local laws.” Finally, it held that the City’s ordinance does not fit within the exception because no general law authorized its promulgation, observing that the General Assembly “did not authorize local governments to flatly prohibit alcoholic beverage licenses from allowing COAMs on their premises or to penalize such businesses for doing so.”


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