Judge William Duffey, U.S. District Court for the Northern District of Georgia

A federal judge has ruled that Fulton County's failure to notify its liability carrier about several lawsuits filed largely by county lawyers over pay discrepancies—delays ranging from months to years—means the insurer doesn't have to pony up about $6.5 million the county wanted to help pay for an $18.3 million settlement. 

On Thursday, U.S. District Judge William Duffey Jr. ruled that National Casualty Co. is off the hook for nearly all of the county's claims, although he said a jury issue remains for one relatively small grievance action the county settled for more than $450,000.

Duffey agreed with the county that the employment claims are covered by the insurance policies—which National Casualty denied—but he said the county waited too long to tell notify the insurer.

National Casualty's attorney, John Malone of Goldberg Segalla's office in Greensboro, North Carolina, said he did not have permission to discuss the case.

The county is represented by Swift, Currie, McGhee & Hiers partner David Atkinson and associate Jonathan Kandel. Patrise Perkins-Hooker, attorney for Fulton County,  declined to comment.

The case involves a yearslong dispute over pay parity for county attorneys that spawned seven lawsuits and the grievance action. All involved a now-discontinued program that ran from 2000 to 2005 under which lawyers hired for the county's Law Department were paid more than lawyers hired for other departments.

In 2006, 23 staff attorneys for the State and Superior Courts filed a grievance against the county for pay parity and back pay, asserting that the pay disparity violated the county's personnel regulations.  

The grievance committee refused to hear their complaint, and the court clerks eventually filed an arbitration demand. An arbitrator ruled in their favor, awarding $4.3 million, and the Georgia Court of Appeals upheld the award in 2015.

In the meantime, lawyers with the offices of the county solicitor, public defender, district attorney, child attorney and 73 sheriff's office employees—who said some deputies were paid more than others—filed lawsuits claiming breach of contract and violations of county regulations and the Civil Service Act of 1982. They all sought back pay.

After the Court of Appeals upheld the court clerks' award and another trial court's summary judgment for a separate case brought by public defenders, the county and employees entered into mediation and reached a nearly $18.4 million global settlement in October 2015.

According to Fulton County Commission minutes, the settlement includes $5.9 million in attorney fees and expenses for the firm handling all of the complaints, Parks, Chesin & Walbert.

According to the declaratory judgment action National Casualty filed in federal court in Georgia's Northern District in March 2016, Fulton County had $7 million in “employment practices wrongful act” coverage between July 2013 and July 2014. A renewal policy increased the limit to $10 million for 2014 to 2015.

Fulton County demanded nearly $6.6 million from National Casualty in January 2016 for what it deemed the insurer's portion of the settlement.

National Casualty denied coverage, arguing in its complaint that the county's “liability for back pay and reimbursements did not arise out of any employment practices wrongful act within the meaning of the policies,” and that exclusions written into the contract excluded the pay parity claims.

The insurer also argued the county was obligated to inform it as soon as practical of a claim or likely litigation. But the county waited up to three years after the various lawsuits were filed to notify the insurer.

That was “a significant and unreasonable delay” and a material breach of the polices, according to National Casualty.

Fulton County filed counterclaims arguing the policies at issue covered the pay parity claims, and that National Casualty breached its contract by failing to indemnify the county.

Both sides filed motions for summary judgment, and Duffey's 52-page order granted and denied portions of each.

Duffey agreed with the county that the policies clearly covered the pay parity actions and granted the county summary judgment on that issue.

He wrote that the notice requirements in the policies “are not ambiguous” and that National Casualty is not obligated to provide coverage as a result.

Granting summary judgment to the insurer on all of the lawsuits, Duffey said the only jury issue remaining is whether the insurer is liable to indemnify the county for a 2015 grievance action filed by 22 members of the public defender's office. According to the county commission's minutes, that portion of the settlement was $453,333.

Parks, Chesin & Walbert partner A. Lee Parks, whose firm is not a party to case against National Casualty, said he is not aware of any other declaratory judgment actions arising from the delay in notifying the insurer.

But Parks said the “ruling isn't surprising,” given the county's delay in providing notice.