• Georgia Supreme Court Holds "Made Whole" Doctrine Does Not Apply to Some Commercial Property Policies
  • July 22, 2013 | Author: George B. Hall
  • Law Firm: Phelps Dunbar LLP - Houston Office
  • The Georgia Supreme Court has held that the “made whole” doctrine does not apply to commercial property policies that expressly authorize an insurer to pursue subrogation rights after compensating the insured for damage to its property. Woodcraft by MacDonald, Inc. v. Georgia Cas. & Surety Co., 2013 WL 2150808 (Ga. May 20, 2013).

    An insured suffered damage to a building it owned when a gas pipeline fractured and caused an explosion and fire. The insured’s insurer paid the insured under two policies and then pursued a subrogation action against the pipeline owner. The insured also sued the tortfeasor. The parties settled, subsequent to which the insured sued the insurer alleging breach of contract and bad faith refusal to ensure that it be made whole. The trial court denied the insurer’s motion for summary judgment, which it appealed. The appellate court reversed, finding that the “made whole” doctrine did not require the insurer to demonstrate that the insured had been fully compensated prior to exercising its subrogation rights.

    The Georgia Supreme Court affirmed, finding that the Georgia legislature specifically declined to include a "made whole" provision in the statute that governs commercial property policies.  The Supreme Court reasoned that because no "made whole" doctrine existed in the statute for commercial property policies, it could not invent such a right.