No Waiver Without Knowledge: Georgia’s Clear-and-Unmistakable Standard Governs Ownership Conditions in Temporary-Substitute Auto Coverage

Introduction

The Eleventh Circuit’s unpublished decision in Cypress Insurance Company v. Jesse Batten Farms LLC addresses a recurring friction point in commercial auto coverage: when, if ever, an insurer’s communications or premium practices “waive” coverage-defining ownership conditions in a Temporary Substitute Auto provision. The case arises out of a tragic August 2020 collision involving a truck driven by an employee of Jesse Batten Farms, LLC (Batten Farms), which resulted in a wrongful death. The central insurance dispute concerned whether the truck qualified as a “temporary substitute auto” under the commercial auto policy issued by Cypress Insurance Company (Cypress), notwithstanding the policy’s ownership requirement and the insurer’s pre-loss email exchanges with the insured’s agent.

Defendants-Appellants (Batten Farms and its owner, Jesse Lee Batten) conceded that the policy’s plain language foreclosed coverage. They pivoted instead to waiver, arguing that Cypress’s underwriter, by asking about temporary substitutes and not invoking the policy’s ownership clause in real-time communications, had waived the ownership condition months before the fatal crash. The Eleventh Circuit rejected that argument, holding that Georgia law requires a clear and unmistakable waiver of an important policy right—and that waiver demands proof the insurer knowingly relinquished that right. The record did not show Cypress knew the disqualifying ownership facts when it sent the emails or accepted premiums.

The decision clarifies two important points of Georgia insurance law: (1) conditions that define the scope of coverage, including ownership requirements embedded in Temporary Substitute Auto grants, may be waived only through a clear and unmistakable, knowing relinquishment; and (2) Georgia’s “small circumstances” waiver standard applies to post-loss conditions (like notice or proofs of loss), not to scope-defining coverage conditions.

Background and Key Facts

• Policy: Cypress insured Batten Farms under a commercial auto policy listing specified “covered autos.” The policy also extended coverage to “Temporary Substitute Autos,” defined as any auto the insured does not own, used with the owner’s permission as a temporary substitute for a covered auto the insured owns that is out of service due to breakdown, repair, servicing, loss, or destruction.
• Ownership alignment: Batten Farms could schedule autos it owned and those owned by others. A 2002 Freightliner (the “Deer Vehicle”) was personally owned by Jesse Batten but listed on the policy’s schedule. Separately, a 1999 Freightliner (the “Accident Vehicle”) was also personally owned by Jesse Batten and had been removed from the schedule in late 2019 for long-term repairs.
• May 2020 loss of Deer Vehicle: After a deer-avoidance accident on May 10, 2020, Cypress deemed the Deer Vehicle a total loss. Cypress underwriter Jessica Parker emailed the insured’s agent on May 28 and June 5, asking whether the insured would keep the unit and whether any temporary substitutes had been used while the unit was down. No mention of ownership was made in those emails.
• August 2020 fatal accident: On August 11, 2020, a Batten Farms employee, driving the 1999 Accident Vehicle, collided with a sedan; a passenger later died from injuries. The Accident Vehicle was not on the policy’s schedule at the time.
• Coverage denial: Cypress denied coverage on November 2, 2020, citing two reasons: (a) the Accident Vehicle was not a scheduled auto at the time of loss; and (b) it did not qualify as a temporary substitute for a covered auto because the out-of-service vehicle (the Deer Vehicle) was not owned by the named insured (Batten Farms), as required by the policy’s Temporary Substitute Auto provision.
• Litigation posture: After the decedent’s estate filed a wrongful death suit in state court, Cypress filed a federal declaratory-judgment action. On cross-motions for summary judgment, the district court ruled for Cypress. The Eleventh Circuit affirmed.

Summary of the Judgment

The Eleventh Circuit affirmed summary judgment for Cypress. The court accepted Appellants’ concession that the policy’s plain language defeated coverage: the temporary-substitute provision applies only when the substitute is used for a covered auto that the named insured (“you”) owns, and the relevant covered auto here (the Deer Vehicle) was owned by Jesse Batten personally, not by Batten Farms. The sole live issue on appeal was whether Cypress had waived the ownership requirement.

Applying Georgia law, the court held that waiver of an important contract right requires proof of an intentional relinquishment of a known right—a waiver that is clear and unmistakable. The court rejected the notion that an insurer’s silence about a condition, an underwriter’s general inquiry about temporary substitutes, purchase of salvage, or acceptance of premiums (later refunded) can constitute waiver absent evidence that the insurer knew the disqualifying ownership fact at the time. Because no record evidence showed Cypress knew the Deer Vehicle was personally owned by Jesse Batten when it sent the emails or accepted premiums, the waiver claim failed as a matter of law.

Analysis

Precedents Cited and Their Influence

The court’s reasoning is anchored in Georgia contract and insurance law governing waiver:

• Ochoa v. Coldwater Creek Homeowners Association, Inc., and Greenberg Farrow Architecture, Inc. v. JMLS 1422, LLC: These cases reiterate that waiver is the intentional relinquishment of a known right and that, for important contractual rights, the waiver must be clear and unmistakable. The Eleventh Circuit drew this line to categorize the policy’s ownership clause as a scope-defining provision—an “important” right not lightly inferred from ambiguous conduct.
• Vratsinas Construction Co. v. Triad Drywall, LLC, and Georgia Farm Bureau Mutual Insurance Co. v. Meyers: These Georgia decisions distinguish between essential policy provisions that “fix, create, limit, or enlarge liability” (coverage-defining terms) and post-loss conditions. The ownership clause here falls squarely in the former category, reinforcing the stringent waiver standard.
• Christian v. Allstate Insurance Co., and its progeny (Nationwide Mutual Fire Insurance Co. v. Wiley; Georgia Farm Bureau Mutual Insurance Co. v. Burton; Barnum v. Sentry Insurance): Christian recognizes that an insurer can waive an ownership requirement if it knows the true ownership, issues the policy treating the insured as owner, and calculates and collects premiums accordingly. But Christian is knowledge-driven: the insurer must know who actually owns the vehicle. The Eleventh Circuit distinguished Christian because the record did not show Cypress had actual knowledge in 2020 that the Deer Vehicle was personally owned by Jesse Batten.
• Hoover v. Maxum Indemnity Co., Norfolk & Dedham Mutual Fire Insurance Co. v. Cumbaa, and N.Y. Underwriters Insurance Co. v. Noles: Appellants invoked Hoover for the “small circumstances” standard of waiver, but the court correctly limited that doctrine to post-loss conditions like notice or proofs of loss. Hoover does not dilute the clear-and-unmistakable standard for scope-defining provisions such as the ownership clause at issue.
• Barwick v. General American Life Insurance Co. and American Home Mutual Life Insurance Co. v. Harvey: These premium-acceptance cases stand for a related but distinct principle: an insurer that continues taking premiums with knowledge that a condition limiting coverage has not been met may waive that condition. Again, knowledge is the fulcrum. The Eleventh Circuit found no evidence Cypress knowingly took premiums while aware that Batten Farms did not own the Deer Vehicle; indeed, Cypress later refunded the premium after backdating the removal to the date after loss.
• Procedural authorities (Sweet v. Secretary, Department of Corrections; Blue Martini Kendall, LLC v. Miami-Dade County; Dean Witter Reynolds, Inc. v. Fernandez): The court addressed preservation concerns and exercised discretion to reach the merits even though waiver was not expressly pleaded, finding no prejudice and noting the issue’s resolution was beyond doubt based on the record.

Legal Reasoning: Why Waiver Failed

The court’s analysis proceeded in two steps: a statement of Georgia waiver law and a fact-intensive application to the record.

• Step 1: Framing the standard. Under Georgia law, waiver requires an intentional relinquishment of a known right, and for significant contract rights, the waiver must be clear and unmistakable. Conditions that define the scope of coverage—such as an ownership requirement embedded in a temporary-substitute grant—are “important” and thus not lightly waived. By contrast, post-loss duties (e.g., notice) may be waived under a more forgiving “small circumstances” standard. The court placed the policy’s ownership clause squarely in the coverage-defining category.
• Step 2: Applying the standard to the evidence. The record showed that:
  • Underwriter emails asked about temporary substitutes but did not mention ownership.
  • There was no evidence that, at the time of those emails, Cypress knew the Deer Vehicle was personally owned by Jesse Batten.
  • The insurer’s later declaration used the present tense in 2024 and did not prove 2020 knowledge.
  • A failure to restate every policy condition in a routine email is not a waiver, much less a clear and unmistakable one.
  • The salvage transaction’s date was not established, so it could not fill the knowledge gap.
  • Acceptance of premiums (later refunded) could not establish waiver absent proof Cypress knew of the disqualifying ownership when taking those premiums.
  On these facts, no reasonable factfinder could conclude Cypress intentionally and knowingly relinquished its right to enforce the ownership clause. Summary judgment was therefore appropriate.

What This Decision Clarifies

• Coverage-defining conditions vs. post-loss conditions: The decision fortifies the doctrinal boundary in Georgia law. Ownership requirements that determine whether a vehicle can qualify as a temporary substitute are coverage-defining; they are not subject to “small circumstances” waiver. Insureds seeking waiver of such terms must carry the heavy burden of proving clear and unmistakable, knowing relinquishment.
• Knowledge is indispensable: Both the Christian line and the Barwick/Harvey line hinge on the insurer’s actual knowledge of the disqualifying fact at the time of the alleged waiver. General inquiries about substitute vehicles, silence about a clause, or administrative steps without proof of contemporaneous knowledge do not suffice.
• Listing non-owned vehicles does not re-write the temporary-substitute grant: Even though the policy allowed scheduling vehicles not owned by the named insured, the temporary-substitute definition still required the out-of-service “covered auto” to be one “you own.” The broader scheduling flexibility did not override the ownership requirement in the substitute-coverage clause.

Impact and Practical Consequences

The decision’s practical footprint is large for insurers, insureds, and practitioners, especially in commercial auto programs that blend owned, non-owned, and scheduled vehicles.

• For insureds and risk managers:
  • Align title with the named insured when operationally possible if you intend to rely on substitute-auto coverage. A personally titled tractor subbing for an LLC-owned tractor may fall outside coverage.
  • Do not assume that listing a personally owned vehicle on a commercial policy modifies ownership-dependent coverage grants. Read the temporary-substitute definition carefully.
  • When using a substitute vehicle, contemporaneously document which scheduled covered auto it is substituting for, who owns that covered auto, and why it is out of service. Notify your agent promptly and seek an endorsement if necessary.
  • Consider endorsements such as “Hired and Non-Owned Auto” coverage or broader symbols (in ISO terminology) where risk profile demands flexibility. Tailor coverage to routine substitute-vehicle operations.
• For insurers and underwriters:
  • Maintain clear documentation of ownership status when scheduling vehicles, especially where an entity insured schedules vehicles owned by individuals or affiliates.
  • When communicating about temporary substitutes, be explicit that all use must conform to policy terms, including ownership requirements. While silence is not waiver, clarity reduces disputes.
  • Timely refunds and precise backdating help avoid arguments grounded in premium-acceptance waiver theories. If knowledge of a disqualifying fact exists, act consistently with policy terms.
  • Use reservation-of-rights language where appropriate during claim investigations to foreclose implied-waiver arguments.
• For coverage litigators:
  • Waiver claims require evidence of contemporaneous knowledge. Build (or defeat) the record with depositions of underwriters/adjusters, agency communication logs, salvage paperwork dates, premium billing and acceptance timelines, and any internal references to the true owner at the relevant times.
  • Frame conditions accurately. If a disputed clause is coverage-defining, insist on the clear-and-unmistakable standard and resist the importation of “small circumstances” concepts from post-loss cases.
  • Preservation: Even though waiver must ordinarily be pleaded, courts may reach the merits absent prejudice. Nevertheless, plead waiver and estoppel expressly to avoid threshold fights.
• For third-party claimants:
  • Coverage may turn on corporate formalities (title ownership and scheduling). Early diligence into ownership and endorsements can shape strategy, including potential claims against other defendants or insurers.

Complex Concepts Simplified

• Temporary Substitute Auto: A special, short-term coverage mechanism that protects the insured when a listed, covered vehicle is out of service (e.g., breakdown, repair, loss) and a temporary vehicle is used instead. The fine print matters: many policies, as here, require the out-of-service vehicle to be owned by the named insured.
• Ownership Clause: Here, the clause required the substitute to be used in place of “a covered auto you own.” In commercial auto policies, “you” typically means the named insured (e.g., the LLC), not individuals affiliated with it. A personally owned vehicle listed on the schedule can be a covered auto for some purposes, but the temporary-substitute grant may still demand that the down vehicle be owned by the named insured.
• Waiver (vs. Estoppel): Waiver is the insurer’s intentional relinquishment of a known right; it focuses on the insurer’s knowledge and conduct. Estoppel typically requires reliance by the insured on the insurer’s conduct and usually cannot be used to create coverage for risks or property never within the policy’s scope. Georgia permits waiver of certain conditions (including ownership) in narrow circumstances, especially where the insurer knowingly accepted premiums on a contrary risk.
• Coverage-Defining vs. Post-Loss Conditions: Coverage-defining provisions fix the scope of what the policy covers (e.g., who owns the vehicle; what types of autos are covered). Post-loss conditions (e.g., prompt notice, cooperation) govern what the insured must do after a loss. Waiver of the former requires a clear and unmistakable, knowing relinquishment; the latter can be waived more readily by “small circumstances.”
• Schedule of Covered Autos: A list within the policy declaration that identifies vehicles for which a premium has been charged. Being listed affects primary coverage, but does not automatically override separate conditions that may apply to specific grants (like temporary-substitute coverage).
• Salvage and Return Premium: After a total loss, an insurer may take ownership (salvage) of the damaged vehicle and refund unearned premiums. Neither act, without proof of knowledge of disqualifying facts at the time, implies waiver of other policy terms.
• Endorsement: A formal written change to a policy. Using a different vehicle for business operations often requires an endorsement to add it as a covered auto; reliance on temporary-substitute provisions without satisfying ownership and other conditions is risky.

Why the Record Evidence Could Not Support Waiver

Appellants’ waiver theory stood on three legs; each fell short under Georgia law’s knowledge requirement:

• Underwriter Emails (May 28 and June 5, 2020): The emails inquired about temporary substitutes and referenced potential backdating of the removal of the Deer Vehicle if no substitutes were used. They did not mention ownership. More importantly, nothing showed the underwriter knew in 2020 that the Deer Vehicle was personally owned by Jesse Batten. Without proof of knowledge, there can be no clear and unmistakable waiver.
• Salvage Purchase: Appellants suggested that processing salvage would have revealed true ownership. But the record did not establish when the salvage transaction occurred. Absent a date, the court could not infer contemporaneous knowledge supporting waiver before or during the relevant communications.
• Premium Acceptance: Barwick/Harvey teach that knowingly accepting premiums inconsistent with a limiting condition can waive that condition. Here, the insurer refunded the premium and there was no evidence it accepted premiums knowing that Batten Farms did not own the Deer Vehicle during the relevant period. Knowledge is the missing link.

Standard of Review and Procedural Notes

• Standard: De novo review of summary judgment; the court viewed the evidence in the light most favorable to the nonmovants. The absence of any genuine dispute of material fact on the knowledge element doomed the waiver claim.
• Preservation: Although Appellants did not expressly plead waiver as an affirmative defense, the Eleventh Circuit reached the merits because Cypress showed no prejudice and the arguments had been functionally briefed below. The court also indicated it would, in any event, exercise discretion to decide an issue whose correct resolution was beyond doubt.

Key Takeaways

• In Georgia, an insurer’s waiver of a coverage-defining ownership requirement must be clear, unmistakable, and made with knowledge of the disqualifying fact. Adjuster/underwriter inquiries that do not discuss ownership are not waiver.
• The “small circumstances” doctrine for waiver applies to post-loss duties, not to scope-of-coverage terms such as ownership clauses in Temporary Substitute Auto grants.
• Listing a non-owned auto on a commercial policy does not alter the ownership requirement inside a temporary-substitute coverage grant. If a business intends to rotate or temporarily substitute personally owned units, it must structure endorsements and ownership accordingly or risk gaps.
• Premium acceptance and salvage processing do not, without proof of contemporaneous knowledge, establish waiver. Timely premium refunds and precise effective dates matter.
• For litigants, waiver proofs must pin down knowledge at the critical times with documentary dates and testimony. Hunches about what the insurer “must have known” will not defeat summary judgment.

Conclusion

Cypress Insurance Company v. Jesse Batten Farms LLC underscores a disciplined application of Georgia waiver law to coverage disputes involving temporary substitute vehicles. The Eleventh Circuit reaffirmed that ownership requirements baked into the coverage grant are “important” contractual rights that can be waived only by clear, unmistakable, and knowing conduct. Neither an underwriter’s general emails, nor silence about a clause, nor un-dated salvage paperwork, nor later-refunded premiums sufficed to prove such waiver here.

Beyond the immediate outcome, the decision delivers crisp guidance: separate the rules that define coverage from post-loss duties; be precise about who owns what; and recognize that waiver turns on proof of knowledge at the relevant time. For commercial fleets mixing entity-owned and personally owned tractors, the decision is a cautionary tale: schedule management and ownership alignment are not mere formalities. They are the hinge on which substitute coverage swings—or not.