Insurance

• Publication year: 2020

Insurance

Maren R. Cave

Thomas D. Martin

Bradley S. Wolff

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Insurance

by Maren R. Cave^*

Thomas D. Martin^**

and Bradley S. Wolff^***

I. Introduction

During this Survey period, the courts in Georgia returned to the usual abundance of automobile and uninsured motorist (UM) cases, the summaries of which make up most of this annual update.¹ The courts decided three cases involving UM coverage limits that were less than the policies' liability limits and the claims of insureds that the carriers owed coverage equal to the liability limits. The insurers prevailed in all three cases. In a fourth case, the Georgia Court of Appeals determined that an insured could not sue a tortfeasor in the name of "John Doe," where the person's name was known but his whereabouts were unknown.² The court of appeals also decided that an insurance policy delivered in Georgia could be interpreted according to Kentucky law and considered, but did not decide whether a requirement that the insured notify the

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insurer of a proposed settlement was a substantive or remedial matter.³ The case was therefore returned to the trial court on that issue.⁴ In the liability insurance arena, there were a couple of important decisions concerning declaratory judgment actions, another involving the cooperation of an insured in a liability claim, and another concerning liability coverage under a homeowner's policy for injury claims relating to an incident involving a motor vehicle. In the property arena, the survey found both state and federal decisions on first-party issues like rescission, the duty to read, coverage under a "seepage and leakage" exclusion, and the legal effect of accepting premiums after a lapse in coverage.

II. Automobile Insurance Cases

A. Duty to Offer Statutory Minimum UM Coverage Not Triggered by Increase in Liability Coverage

In Hunter v. Progressive Mountain Insurance Co.,⁵ the Georgia Court of Appeals held that an insured's request for an increase in liability coverage under an existing automobile insurance policy does not per se trigger an insurer's duty under O.C.G.A. § 33-7-11(a)(1)⁶ to offer the insured the mandated statutory minimum UM coverage.⁷ After continuously renewing their Progressive Mountain Insurance Company (Progressive Mountain) automobile insurance policy for two years, the Hunters elected to increase their liability coverage from $50,000/person and $100,000/accident to $100,000/person and $300,000/accident. The couple did not request—and Progressive Mountain did not offer—a corresponding increase in their $25,000/person and $50,000/accident UM limits.⁸ In addressing whether Progressive Mountain had a duty to offer the Hunters increased UM coverage, the court made clear that an insurer must offer the statutory minimum UM coverage only when (i) an insured first obtains UM coverage; or (ii) an insured requests an increase in UM coverage.⁹ Because the Hunters' increase in liability coverage did not (i)

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create a new policy such that the policy was again "issued or delivered" within the meaning of O.C.G.A. § 33-7-11(a)(1); or (ii) constitute a requested increase in UM coverage,¹⁰ the court found that Progressive Mountain had no duty to offer the Hunters an increase in UM coverage.¹¹ However, the court pointed out that its decision was based on the fact the Hunters had elected to "decouple" their liability and UM limits.¹² Where the limits were "still linked in some way," the result might well be different.¹³

B. Affirmative Choice of Unequal Limits Not Affected by 2008 "Added On" Amendment to O.C.G.A. § 33-7-11

O.C.G.A. § 33-7-11(a)(1) makes an automobile insurance policy's UM limits equal to the liability limits by default, though an insured may "affirmatively choose" lower UM limits.¹⁴ In Cline v. Allstate Property & Casualty Insurance,¹⁵ the Georgia Court of Appeals held that an affirmative choice for lower UM limits made prior to enactment of the "added on" amendment to O.C.G.A. § 33-7-11 in 2008¹⁶ was not nullified by the amendment.¹⁷ In 2003, the Clines entered into an Allstate automobile insurance policy with equal UM and liability coverage limits. In October 2008, before the "added on" amendment went into effect, Mrs. Cline increased the liability limit to $100,000 and completed a new coverage selection/rejection form, electing to keep the UM coverage of $25,000/person. The Clines continuously renewed the policy through 2016, when Mr. Cline was injured in an automobile accident. Mr. Cline argued that the "added on" amendment nullified the October 2008 affirmative election for lower UM coverage, requiring Allstate to provide him default UM coverage in an amount equal to the policy's $100,000

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liability limit.¹⁸ The Georgia Court of Appeals held that the "added on" amendment did not affect Mrs. Cline's right to affirmatively choose unequal UM and liability limits; but it did result in the UM coverage being converted from "reduced by" to "added on."¹⁹

C. Selection of Unequal Limits by Pre-Filled Application with Disclaimer Constitutes Affirmative Choice

The United States Court of Appeals for the Eleventh Circuit also addressed what it means for an insured to "affirmatively choose" lower UM limits under O.C.G.A. § 33-7-11(a)(1).²⁰ In State Auto Property & Casualty Insurance Co. v. Jacobs,²¹ Jacobs signed a pre-filled automobile insurance application specifically requesting $25,000 in UM coverage. The application also contained a disclaimer acknowledging that UM coverage had been offered and explained to him and that he selected the limits shown in the application.²² The court held that Jacobs affirmatively chose the $25,000 UM limit, and that it was inconsequential that Jacobs's signature and election came in a pre-filled application rather than a separate, written statement because Jacobs had a duty to read and understand the policy.²³

D. Insured Cannot Sue Known Tortfeasor as "John Doe"

Under Georgia's UM statute, a plaintiff may only institute an action against a "John Doe" defendant when the owner or operator of a vehicle is unknown.²⁴ When the owner or operator is known, he or she must be named as a defendant; service by publication is authorized if the person resides out of the state, has departed from the state, cannot after due diligence be found within the state, or avoids service.²⁵ In Bell v. State Farm Mutual Automobile Insurance Co.,²⁶ the Georgia Court of Appeals made clear that its decision in Smith v. Phillips²⁷ did not allow a plaintiff to sue a defendant as John Doe when she knew her tortfeasor's identity, although she did not know where the tortfeasor may be found.²⁸

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Bell was in an automobile accident with Brown in California. Bell knew Brown and communicated with him following the accident. When Bell filed suit in Georgia, however, she named John Doe, not Brown, as the defendant. Bell served her UM insurer, State Farm, with a copy of the complaint, but did not attempt to locate or serve Brown. The trial court granted summary judgment to State Farm on the ground that Bell did not serve Brown before the expiration of the statute of limitations, preventing her from obtaining a judgment against Brown and therefore precluded her from obtaining UM benefits from State Farm.²⁹

On appeal, Bell quoted a line from the decision in Smith: "a motorist or vehicle owner against whom a claim is pending, but who cannot be located, is treated as an uninsured motorist, since 'whereabouts unknown' is now equal to 'identity unknown' and 'identity unknown' is equal to 'uninsured motorist' under O.C.G.A. § 33-7-11(d)."³⁰ Bell argued that because there was no accident report, she did not have Brown's date of birth, address, or other identifying information that could be used to determine where he lived. Therefore, she argued Brown's whereabouts were unknown, which "equals" his identity being unknown, permitting her to sue "John Doe" in lieu of service on Brown before proceeding against State Farm.³¹

The Georgia Court of Appeals rejected Bell's argument, noting that the line from Smith was taken out of context.³² The court explained that, in Smith, the plaintiff filed a complaint against a non-resident tortfeasor for injuries arising from an automobile accident.³³ The plaintiff's UM carrier participated in the suit under the tortfeasor's name rather than its own.³⁴ The trial court entered judgment against the UM carrier,³⁵ and the Georgia Court of Appeals reversed on the grounds that (i) the plaintiff needed to obtain at least a nominal judgment against the tortfeasor for judgment to be entered against the UM carrier, and (ii) the UM carrier was not a named party, so no judgment could be entered against it.³⁶ The Smith court used the language quoted by Bell to explain that the trial court could not exercise personal jurisdiction over the non-resident tortfeasor; but should have allowed an action to proceed against him so

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that the plaintiff could satisfy the condition precedent to seeking judgment against his UM carrier.³⁷ Bell, on the other hand, never sued Brown in his own name and never attempted to serve him. Thus, there was never a claim pending against Brown and Smith did not apply.³⁸

E. A Policy Delivered In Georgia Could Be Considered A Kentucky Policy, Yet Georgia Law May Apply To A Particular Provision If It Is Remedial

As discussed in the 2018 Survey,³⁹ in Newstrom v. Auto-Owners Insurance Co.,⁴⁰ the Georgia Court of Appeals held that when an insured under a Georgia policy is injured out of state but seeks to recover UM benefits in Georgia, Georgia law controls as to "procedural and remedial matters," like the effect of a release.⁴¹ In Helton v. United Services Automobile Association,⁴² the court left open whether an out-of-state's notice provision regarding settlement is a substantive or remedial matter when an insured is injured in Georgia and seeks to recover UM benefits in Georgia.⁴³

The Heltons entered into an automobile insurance...