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City hires attorney to fight for insurance in Gatto suit
Local judge dismisses some claims, but insurer wants out
W gatto
Michael J. Gatto

This week, the city of Statesboro acted to hire an attorney, at a cost of up to $125,000, for an effort to keep an insurance company’s coverage in the wrongful death lawsuit brought by the parents of the late Michael J. Gatto.

Gatto, 18, an incoming Georgia Southern University freshman from Cumming, died Aug. 28, 2014, of a fractured skull and other injuries.  He had been punched unconscious at a Statesboro nightclub called Rude Rudy’s by Grant James Spencer, then 20, a bouncer and fellow GS student. After pleading guilty to voluntary manslaughter last October, Spencer is now serving a 20-year prison sentence.

In their civil suit filed Oct. 26, the grieving parents asserted that the city, by tolerating underage drinking, licensing Rude Rudy’s and allowing it to employ Spencer, created an environment that led to their son’s death. Their lawyers’ February 2015 warning notice to the city estimated the Gattos’ damages at $11 million.

So far, Atlantic Specialty Insurance Co. has been paying for attorneys, led by John C. Stivarius of the Atlanta law firm Elarbee, Thompson, Sapp & Wilson, to defend the city and City Clerk Sue Starling against the Gattos’ claims in Bulloch County State Court. But the insurance company recently filed an action in federal court seeking to be declared free of any responsibility.

“Atlantic seeks a declaration that it does not have any obligation to defend or indemnify any of the Defendants for any damages, losses, claims, costs or expenses arising out of or related to the claims asserted in the underlying lawsuit on numerous grounds,” states the Jan. 24 declaratory judgment request.

Attorneys Seth Friedman and Christopher Meeks of the law firm Lewis Brisbois Bisgaard & Smith signed the request filed Jan. 24 in the U.S. District Court for the Northern District of Georgia at Gainesville.

Meanwhile, Bulloch State Court Judge Gary Mikell recently dismissed portions of the Gattos’ claims, including an allegation that the city created a nuisance by weakening the alcohol ordinance with a December 2011 amendment, as having no legal basis. But other claims remain to be decided, and Mikell has put the local case on hold temporarily and scheduled a Feb. 20 hearing on whether to stay the case longer awaiting an insurance coverage decision in federal court.

 

‘Coverage counsel’

Statesboro City Council went into closed-door session briefly to discuss “potential litigation” at the end of Tuesday’s regular meeting. Returning to open session, the council unanimously approved a motion authorizing City Manager Randy Wetmore to spend up to $125,000 with the Savannah law firm HunterMaclean. Specifically, the city has retained HunterMaclean partner Arnold C. Young to defend it in the insurance company’s declaratory judgment action.

Young confirmed Friday that he is now the city’s “coverage counsel.” He has filed a request with the U.S. District Court for the Northern District of Georgia, Gainesville Division, to have the insurance coverage portion of the case transferred to the U.S. District Court for the Southern District of Georgia, Statesboro Division.

Young said he could not discuss merits of the litigation but could confirm his role. Not directly involved in the lawsuit in Bulloch County State Court, he did not ask Mikell for the stay, but Young said he agrees that the underlying lawsuit should be stayed pending the outcome of the coverage question in federal court.

 

Judge narrows claims

Around the same time that the judge was being asked to stay the case, he ruled on some earlier motions. In November, the defense attorneys had filed for a partial judgment, asking Mikell to dismiss some of the Gatto family’s claims on purely legal grounds before any presentation of evidence.

 “The judge granted the motion in many regards,” Stivarius said Thursday.

In a Jan. 26 order, Mikell dismissed claims for punitive damages against the city. He noted a Georgia Supreme Court opinion “that awards of punitive damages against a public entity violate public policy.”

That leaves open the question of other damages, including for the value of Gatto’s life and his medical and burial expenses.

Meanwhile, the Gattos’ attorneys had moved to drop claims against Starling in her official capacity. But claims against Starling in her individual capacity remain to be considered, the judge indicated in writing.

Mikell dismissed the claim that the City Council’s amendment of its Alcoholic Beverages Ordinance in December 2011 created a nuisance by weakening the city law and allowing bars such as Rude Rudy’s to serve underage patrons.

After citing a number of cases in which Georgia cities have been found to have created nuisances, Mikell noted that they all involved failures to act or errors in city actions.

“This Court has not found a case where nuisance has included enactment of ordinances creating a dangerous environment. …,” Mikell wrote. “The allegations of Count III do not allege or even intimate that the ordinances or amendments were improperly passed or enacted.”

But his dismissal of the Gattos’ Count III leaves alive Count II, alleging that failures of enforcement and renewing Rude Rudy’s license gave rise to a nuisance, for consideration and possible presentation of evidence. Count I, alleging negligence, has not been dismissed, either.

 

Mayor: ‘No choice’

The $125,000 authorized to pay Young will not necessarily all be needed, but that was the cost projection, Mayor Jan Moore said. The money will come from the general fund, which is supplied by taxes, but the city’s elected officials have no choice, she said.

“It is the responsibility of mayor and council to ensure that the city of Statesboro is being vigorously defended in the lawsuit filed on behalf of the Gatto family, as well as in the lawsuit filed by Atlantic Specialty Insurance Company, parent of the city’s liability insurance carrier in 2014,” Moore said in prepared reply. “I would like to remind our citizens that what is alleged in the Gatto lawsuit as having occurred in 2011 and 2013 is in no way representative of how the city is operating today.”

 

Herald reporter Al Hackle may be reached at (912) 489-9458.

 

 

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