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Lloyd's Syndicate No. 5820 v. AGCO Corp.

The phrase "manufacturing defects" does not ordinarily encompass defects in product design.

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Appellee AGCO Corporation AGCO manufactured and sold a self-propelled, agricultural spray applicator called the RoGator. In 2005, AGCO began offering an Extended Protection Plan EPP to its RoGator customers. Appellant Lloyd’s Syndicate No. 5820 d/b/a Cassidy Davis Cassidy Davis provided the master policy of insurance for the EPP program, which covered AGCO for certain liability to customers who purchased the RoGator EPP. Glynn General Corporation administered the plans. Between 2005 and 2008, AGCO enrolled about 2,050 RoGator machines in the EPP program. Beginning in 2008, a number of customers presented claims under the EPP based on the failure of wheel motors on the RoGator. In September 2008, after it had paid about 25 claims related to this failure, Cassidy Davis invoked the Epidemic Failure Clause of the master insurance policy and refused to pay for any more claims.1

On June 26, 2009, AGCO sued Cassidy Davis and others asserting various claims, including claims against Cassidy Davis for breach of contract and bad faith denial of insurance coverage. The trial court granted partial summary judgment to AGCO and denied partial summary judgment to Cassidy Davis on a breach of contract issue, holding that the EPP covered failures caused by design and engineering defects in the RoGators. The trial court also denied Cassidy Davis’s motion for summary judgment on the bad faith claim, rejecting the insurer’s argument that it was not obligated to indemnify AGCO until a court entered a judgment establishing AGCO’s legal liability to its customers. The Court of Appeals affirmed the trial court on both issues. See Lloyds’s Syndicate No. 5820 v. AGCO Corp., 319 Ga. App. 260, 262-263, 265 734 SE2d 899 2012.2

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