Jones v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 22 January 1981
• Docket Number: No. 60296,60296
• Citation: 274 S.E.2d 623,156 Ga.App. 230
• Parties: JONES v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
• Court: Georgia Court of Appeals

Page 623

274 S.E.2d 623

156 Ga.App. 230

JONES v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

No. 60296.

Court of Appeals of Georgia.

Submitted July 10, 1980.

Decided Oct. 22, 1980.

Certiorari Granted Jan. 22, 1981.

James E. Butler, Jr., Columbus, for appellant.

James E. Humes, III, Columbus, for appellee.

Don C. Keenan, Atlanta, Chairman, Charles R. Ashman, Savannah, GTLA, Amicus Curiae Committee.

CARLEY, Judge.

On May 18, 1977, plaintiff-appellant William Jones applied for "no-fault" automobile insurance with defendant-appellee State Farm Mutual Insurance Company (State Farm) through Ronnie Harden, an agent of State Farm. Harden completed the application form, and Jones signed the form in the single space provided thereon for his signature.

In November, 1977, Jones applied for another, less expensive no-fault policy with State Farm. Harden again prepared the application form, and Jones again signed the form in the only space provided for the applicant's signature. While the evidence is in dispute as to whether Harden ever supplied Jones with a copy of either application, copies of the applications included in the record of this case affirmatively disclose that Jones made no marks on the applications other than his signature in the single space provided.

On April 24, 1978, Jones was injured when his car was run off the road by a tractor trailer truck. Several days later, Jones visited Harden's office to inquire about filing a claim under his no-fault policy with State Farm, but was told by Harden that his policy did not cover collision claims. State Farm contends that Jones never mentioned his physical injuries to Harden while Jones argues that State Farm unequivocally told him that it would not provide assistance for any claims which he might have had as a result of the mishap including personal injury claims.

Jones consulted a local attorney concerning his coverage. On March 2, 1979, Jones' attorney sent a letter to Harden enclosing schedules of Jones' medical expenses and lost wages and requesting assistance in collecting benefits under Jones' no-fault policy. This letter was answered on March 15, 1979, by a claims representative for State Farm. An Application for Benefits form was enclosed with the directions that Jones complete the form and return it, "along with any medical bills you may have in your file."

On March 19, 1979, the completed form was returned to the claims representative, enclosing photocopies of all medical bills incurred by Jones as a result of the incident of April 24, 1978. Almost six weeks later, on May 2, 1979, drafts in the amounts of $5,000 and $1,441.46 were sent in settlement of Jones' no-fault claim. After consultation between Jones and his attorney, the drafts were returned on May 8, 1979, to the claims representative, who was informed that the drafts would not be accepted in complete settlement of Jones' claim. On June 6, 1979, two replacement drafts in the amounts of $5,000 and $4,289.46 were forwarded as full payment of Jones' claims for lost wages and medical bills. Jones' counsel accepted and cashed the drafts on behalf of Jones, but stated in a subsequent letter to the claims representative dated June 7, 1979, that the drafts were being accepted as partial payments only of Jones' no-fault claims.

Further negotiations between the parties were unsuccessful, and Jones filed suit against State Farm on July 25, 1979. In Count I of his complaint Jones sought recovery of attorney fees and punitive damages under Code Ann. § 56-3406b for State Farm's allegedly late payments of his benefits. In Count II he sought recovery of sums which would only be available under the optional no-fault personal injury coverages which were not included in his policy. Before trial, Jones moved for partial summary judgment on both counts. His motions were opposed and countered by motions for summary judgment filed by State Farm. The trial court denied Jones' motions and granted State Farm summary judgment as to both counts of Jones' complaint. Jones brings the instant appeal from the trial court's disposition of the various motions for summary judgment.

1. In his first four enumerations of error Jones contends that the trial court erred in denying his motion for partial summary judgment on Count II of his complaint and in granting State Farm's motion for summary judgment on the same count.

The essence of Jones' averments in Count II of the complaint is that State Farm, through its agent, Ronnie Harden, failed to inform Jones of the optional no-fault coverages available to him at the times he made application for coverage with State Farm. To this end Jones argues that State Farm failed to comply with the provisions of Code Ann. § 56-3404b(b), which states as follows: "Each application for a policy of motor vehicle liability insurance sold in this State must contain separate spaces for the insured to indicate his acceptance or rejection of each of the optional coverages listed in subsection (a) above and no such policy shall be issued in this State unless these spaces are completed and signed by the prospective insured." (Emphasis supplied.) Jones contends that he was never informed of the optional coverages available to him under the particular State Farm no-fault policy which he purchased, and that State Farm violated Code Ann. § 56-3404b(b) because the application did not provide and he did not sign "separate spaces for the insured to indicate his acceptance or rejection" of optional coverages. In opposition, State Farm asserts that Jones was fully informed of all available optional no-fault coverages, that Jones knowingly refused to accept any of the optional coverages, that Jones evidenced this refusal by signing the application, and that Code Ann. § 56-3404b(b) cannot be construed to require an application for no-fault insurance to contain separate spaces beside all of the available optional coverages, each of which must be signed by the applicant.

The question thus presented for resolution appears to be one of first impression in this state: To what extent does Code Ann § 56-3404b(b) impose a burden on no-fault insurers to obtain specific written acceptance or rejection from each applicant of each optional coverage listed in Code Ann. § 56-3404b(a)?

The legislative intent underlying the enactment of Code Ann. § 56-3404b is clear. The language of the statute is phrased in unequivocal terms: "Each insurer shall also make available ... the following coverage;" "Each application ... must contain separate spaces for the insured to indicate his acceptance or rejection of each of the optional coverages listed in subsection (a) above." (Emphasis supplied.) This mandatory language leaves no doubt that the General Assembly placed strong significance upon compelling insurers to offer no-fault coverages over and above the minimum basic coverage. The language used in Code Ann. § 56-3404b further enunciates the clear legislative mandate that insurers offer optional coverages to applicants for no-fault insurance and that an applicant's waiver of his privilege to obtain optional coverages be made knowingly and in writing.

We construe Code Ann. § 56-3404b as imposing an evidentiary burden upon no-fault insurers to demonstrate that optional coverages were expressly offered to, and knowingly accepted or rejected in writing by, each of their applicants for no-fault insurance. This evidentiary burden is satisfied if and when an insurer can demonstrate that its applicants completed and signed separate spaces on the no-fault insurance application...