Reservation of Rights and Duty to Defend

 The United States Court of Appeals certified questions to the Georgia Supreme Court pertaining to the reservation of rights and the insurer's duty to defend. This case is World Harvest Church v. Guideone Mutual Insurance Company, 695 S.E.2d 6 (2010).

Between 1995 and 1999, Homa and Gause operated an auto title lending business that actually constituted a huge Ponzi scheme. During that time, Gause donated large sums of money to World Harvest Church. The SEC filed a civil enforcement action in federal court and demanded that the Church return about $1.8 million of Gause's donations. The SEC eventually brought a lawsuit against the church asserting claims of fraudulent transfer and unjust enrichment. The church turned the lawsuit over to its insurer, Guideone. The insurer did not issue a written reservation of rights and assumed the defense of the insured for over 10 months. At the end of that time period, the insurer informed the insured that it would stop defending the action in 30 days because there was no coverage. The insured then settled the case and brought a lawsuit against the insurer for allegedly breaching the insurance contract. The trial court found in favor of the insurer.