A majority of the U.S. Court of Appeals for the Eleventh Circuit has held that the underlying court erred when it found that a professional liability insurer has no duty to defend against an underlying lawsuit alleging that an insured apartment manager wrongfully withheld security deposits from current and former tenants. The case is AEGIS Electric and Gas International Services Ltd. v. ECI Management LLC, No. 19-11114 (11^th Cir. July 30, 2020).

ECI Management, LLC (ECI) is a company that manages multiple apartment properties in Georgia. In 2016, ECI purchased a "Real Estate Services Professional Liability Insurance Policy" (the Policy) from AEGIS. The Policy limited AEGIS' liability to $1 million per claim and was effective from July 1, 2016 to July 1, 2017. In May, 2017, during the policy period, plaintiff Nichon Roberson (Roberson) filed a putative class action suit against ECI and others in DeKalb County State Court. Roberson claimed that ECI systematically violated the security deposit statute of Georgia by wrongfully withholding her security deposit and the security deposits of other current and former tenants of other apartment complexes ECI managed. Specifically, ECI failed to provide tenants with a list of damages that justified withholding all or part of the security deposits.

O.C.G.A § 44-7-35 provides remedies for violation of the statute. Remedies include 3x the sum improperly withheld, plus reasonable attorney's fees. The statute notes that if the landlord shows that the withholding was unintentional, and resulted as a result of an error, and there were procedures in place to make sure such an error did not occur, the landlord is only liable for the sum erroneously withheld.