Travelers Casualty Insurance Company of America v. Bozovich

Facts

Bozovich visited Signature Day Spa in July of 2019 and received a Brazilian bikini wax from one of Signature’s employees. Ms. Bozovich alleged that the employee who performed the wax severely injured her waxed area. Ms. Bozovich filed suit against Signature Day Spa alleging several claims that included: negligent hiring, training, supervising, and retaining of employees; failing to have the proper policies and procedures in place and following those procedures; employing an unlicensed esthetician; exposing clients to harmful conditions; engaging in other negligent acts; and negligence per se for failing to adhere to regulations by the Georgia State Board of Cosmetology and Barbers and other state regulations. 

At the time of the incident, Signature was insured by Travelers Insurance. Per Signature’s insurance policy with Travelers, Travelers was required to defend Signature for bodily injury claims and for injuries by an esthetician who was providing beauty or spa services. The insurance policy also included an exclusion for services performed by someone who was not a licensed esthetician or someone whose conduct violated a statutory rule or governmental regulation. Based on the exclusions in the policy, Travelers filed a declaratory judgment action, seeking a determination from the court that it had no duty to defend or indemnify its insured.

In response to the declaratory judgment, Bozovich filed a motion to dismiss the declaratory judgment. Bozowich argued that her lawsuit arose under a theory of premise liability because Signature had created an unsafe environment based on their practices and she had asserted a negligent hiring claim, neither of which fell under Travelers’ exclusion. At the motion to dismiss hearing, Travelers argued that the exclusions applied because at the heart of both Ms. Bozovich’s lawsuit and Travelers’ declaratory judgment was that an unlicensed employee performed a spa service. Further, Travelers argued that the trial court could not consider discovery responses as part of this motion. If the trial was to consider any discovery responses, Travelers argued that a motion for summary judgment would be the proper procedure for asserting those arguments.

The trial court granted Bozovich’s motion to dismiss the declaratory judgment and Travelers appealed.

Issues & Holdings

The issues and holdings in this case were as follows: 

1. Could the Plaintiff avoid the exclusion in the policy by labeling her claims as arising under premises liability and negligent hiring?
2. Could the exclusion possibly apply?

The Court of Appeals first held that the Plaintiff could not avoid the exclusion by labeling the claims as premises liability and negligent hiring claims. However, the Court stated that, in the context of a motion to dismiss, the question was simply whether the exclusion could possibly apply based on the allegations of the complaint. Based on that standard, the Court concluded that the exclusion could possibly apply, and therefore, the grant of the motion to dismiss was erroneous. 

Reasoning

Key to the Court’s decision was the motion to dismiss standard. On a motion to dismiss, the factual allegations are construed most favorably to the party who filed them and any doubts must be resolved in the plaintiff’s favor. See Dennis v. City of Atlanta, 324 Ga. App. 659, 659 (2013). Viewing the facts through this lens, a motion to dismiss should only be granted when:

(1) the allegations of the complaint disclose with certainty that the claimant would not be entitled to relief under any state of provable facts asserted in support thereof; and (2) the movant establishes that the claimant could not possibly introduce evidence within the framework of the complaint sufficient to warrant a grant of the relief sought. Id.

After reciting this standard, the Court of Appeals turned to the facts of the case and the arguments from the parties. In evaluating insurance coverage arguments, the Court of Appeals noted that the interpretations of insurance policies are a matter of contract and the parties are bound by the plain and unambiguous terms of the contract. Western Pacific Mut. Ins. Co. v. Davies, 267 Ga. App. 675, 676 (2004). Further, insurers have a duty to provide a defense and defense to their insured. To determine whether an insurer has a duty to defend it’s insured or if there is a question as to coverage, the insurer can file a declaratory judgment to make that determination. Per case law, “the duty to defend is determined by the contract.” Travelers Cas. Ins. Co. of Am. v. Bozovich, No. A23A0548, 2023 WL 3811953, at *3 (Ga. Ct. App. June 5, 2023) (quoting Lawyers Title Ins. Corp. v. Stribling, 294 Ga. App. 382, 385 (2008)). 

Travelers’ first argument was that Bozovich could not get around the policy exclusion by trying to frame her claim as premise liability and negligent hiring. The Court of Appeals agreed. The Court of Appeals noted that the underlying claim still arose out of providing spa services, and that included the employment of an unlicensed esthetician who allegedly caused the injury. The Court of Appeals observed that this did not end the inquiry though, because the question was still whether any of the exclusions Travelers invoked could possibly apply.

Turning to this argument, the Court noted that there were two possible exclusions: (1) proving spa services through an unlicensed esthetician, and (2) the violation of a statute or government regulation. The Court acknowledged that in both the complaint and declaratory judgment action, both parties alleged that the esthetician was unlicensed. Further, the Court also noted that under Georgia law, all estheticians are required to be licensed to perform spa services.

The parties both argued the ultimate merits of their positions by focusing on evidence outside the complaint. But the Court determined those arguments were improper at this stage because the case was at the motion to dismiss stage. Based on a review of the policy and the facts alleged in the complaint, the Court concluded that the motion to dismiss was improper because it could not say as a matter of law that Travelers was not entitled to a declaratory judgment. Accordingly, it reversed the trial court’s grant of the motion to dismiss.

Conclusion

If you represent clients in personal injury cases, it can be difficult to know at your pleading stage what potential exclusions may apply. If you receive information pre-suit about a potential coverage defense, seek clarification on it. You can use the information obtained to try to avoid pleading yourself into a coverage denial, or a declaratory judgment action.

To learn more about The Champion Firm and the personal injury practice areas we cover, visit our main website here. If you’re an attorney seeking to refer a case or partner with us as co-counsel, learn more here.

Citation: Travelers Casualty Insurance Company of America v. Bozovich, No. A23A0548 (Ga. Ct. App. June 5, 2023)