Res. Life Ins. Co. v. Buckner

• Decision Date: 30 June 2010
• Docket Number: No. A10A1197.,A10A1197.
• Citation: 304 Ga.App. 719,698 S.E.2d 19
• Parties: RESOURCE LIFE INSURANCE COMPANYv.BUCKNER et al.
• Court: Georgia Court of Appeals

304 Ga.App. 719

698 S.E.2d 19

RESOURCE LIFE INSURANCE COMPANYv.BUCKNER et al.

No. A10A1197.

Court of Appeals of Georgia.

June 30, 2010.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Jones, Cork & Miller, Frank C. Jones, Cater C. Thompson, Macon; Buchanan & Land, Benjamin A. Land, Columbus, for appellant.

Butler, Wooten & Fryhofer, James E. Butler, Jr., Joel O. Wooten, Jr., Columbus, Brandon L. Peak, Atlanta; Oates & Courville, Samuel W. Oates, Jr., Columbus; Stubbs, Land, Hollis & Rothschild, Gregory S. Ellington, Columbus; Bondurant, Mixson & Elmore, Michael B. Terry, Frank M. Lowrey IV, Atlanta, for appellees.

BLACKBURN, Judge.

In this class action, the putative class members are all those individuals who purchased credit life or credit disability insurance ¹ from Resource Life Insurance Company and who may be owed a refund from Resource Life for unearned premiums on those policies.² The underlying issue in the case is whether Resource Life's failure to refund unearned premiums constituted a breach of the insurance contract and/or constituted a negligent or wilful breach of a legal duty owed its insureds. Following a class discovery period that exceeded five years and involved numerous discovery disputes, Resource Life now appeals from several orders of the trial court, asserting that the trial court erred: (1) in denying Resource Life's motion for partial summary judgment; (2) in holding both that written notice was not a condition precedent to its obligation to refund unearned premiums and that, alternatively, the filing of this lawsuit satisfied the written notice provision in the Resource Life policies as to all putative class members; (3) in certifying two nationwide classes; (4) in sanctioning Resource Life for failing to comply with discovery orders and for giving false responses to discovery requests; (5) in failing to exercise independent judgment in entering certain orders; (6) in striking certain affidavits that Resource Life filed in opposition to the class certification motion; and (7) in ruling that certain documents were not privileged and were therefore discoverable. Discerning no error, we affirm.

The Resource Life Policies

The record shows that Resource Life credit insurance policies were sold by automobile dealers, who acted as Resource Life's agents.³ The term of any given policy was synonymous with the term of the loan it covered-i.e., the insurance is in effect only so long as money remains due on the loan. Premiums are calculated based on the length of the loan. Rather than being paid on a quarterly, semi-annual or annual basis, however, these premiums were paid in their entirety, at the time the insured obtained his or her car loan.

In the event a loan terminated “early” (i.e., before the end of the installment period specified in the loan agreement), the insured was, as a matter of law, entitled to a refund of the unearned premiums. See OCGA § 33-31-5. Resource Life's internal marketing and training documents evidenced the company's understanding of this legal obligation. Specifically, the “ Resource Life Credit Insurance Guide,” which was apparently provided to the automobile dealers that acted as Resource Life agents, stated:

In the event an account is prepaid, a timely refund must be made. Under this circumstance, refunds are to be made without the Insured's written request. Notification of such pre-payment can be made directly by the lender or by reference to a debit on the reserve account statement.

(Emphasis in original.) With respect to “Cancellation Procedures,” this Guide provided:

TERMINATION: Credit insurance is considered terminated when either the customer requests cancellation of the coverage or the loan is paid in full or refinanced for any reason before maturity. When Credit Insurance is terminated, a refund of unearned premium becomes due. It is the responsibility of the Group Policyholder/Agent to promptly compute and refund the unearned premium and prepare the necessary paperwork to notify the Insurance Company. FAILURE TO REFUND PREMIUM WHEN REQUIRED IS A VIOLATION OF INSURANCE LAW.

NOTICE OF CANCELLATION AND DISTRIBUTION OF REFUNDS:

Written notice by the Insured is not required to effect the cancellation when the indebtedness is paid in full or refinanced prior to the scheduled expiry date.

(Emphasis in original.)

Despite its legal obligation to refund unearned premiums, however, the Resource Life policies made such refunds contingent on its receipt of written notice, either by or on behalf of the insured, that the insured was owed such a refund. Specifically, the policies provided, in relevant part:

Refunds: If the insurance stops before the end of the Term of Insurance, We will on written notice refund any unearned premium. We will pay it to the Creditor to reduce or pay off the Debt. Any remainder will be paid to You.... Refunds will be computed as of the date the insurance stops.

The Complaint

In early 2001, Dorothy Buckner purchased a car and financed that purchase with a loan. As part of that transaction, Buckner bought both a credit life and a credit disability insurance policy from Resource Life. In November 2001, Buckner's automobile was totaled and her debt on the same was extinguished, thereby triggering the automatic cancellation of the Resource Life policies. At that time, Resource Life owed Buckner a refund of her unearned premium in the amount of approximately $1,213.60. Based upon an alleged mathematical error by the automobile dealer who issued the refund on Resource Life's behalf, Buckner did not receive the entire amount she was owed.

On January 23, 2004, Buckner filed the current action individually and on behalf of a class of all persons who purchased credit insurance from Resource Life in the preceding six years. The complaint alleged that Resource Life possessed enough information about each of its individual insureds to be able to determine whether and when any of their insurance policies had been automatically cancelled because of an early termination of the insured's loan prior to its maturity date; that despite this ability, Resource Life made no effort to determine when unearned premiums were owed and to repay the same; and that, as a result, Resource Life had breached its insurance contracts, breached legal duties owed its insureds, and unjustly enriched itself. Buckner asserted claims for breach of contract, unjust enrichment, negligence, and wilful, wanton, and intentional misconduct, and sought compensatory and punitive damages, injunctive relief, and attorney fees.

Resource Life's Motion for Partial Summary Judgment

On July 20, 2007, in the midst of the parties' ongoing discovery disputes, Resource Life filed a motion for partial summary judgment. The company sought a ruling that (i) in light of the “written notice” language in its insurance certificates, it was not obligated to refund any unearned premiums unless and until it received written notice of an insured's early loan termination; and (ii) none of the putative class members could assert a claim against Resource Life unless and until they provided the company with such written notice. The trial court summarily denied that motion by order dated May 13, 2008.

Class Certification

On June 3, 2009, Buckner filed a motion for certification of two classes under OCGA § 9-11-23. Specifically, Buckner sought certification of a class under OCGA § 9-11-23(b)(3), whose members would consist of Resource Life insureds whose loans had terminated early and who would therefore be entitled to actual damages in the amount of unearned premiums owed them, together with statutory interest. She also sought certification of a class under OCGA § 9-11-23(b)(2), whose members would consist of current and future Resource Life insureds whose policies had not yet terminated, but who would be entitled to injunctive relief.

In support of its opposition to that motion, Resource Life filed four affidavits from individuals who stated that they either worked or had worked in the finance and insurance departments of various automobile dealerships that sold Resource Life policies. Each of these individuals averred that, at the time they sold customers Resource Life credit policies, they explained to the customers that “written notice of the cancellation of their credit insurance needed to be provided in order for them to obtain a refund” of any unearned premium. Buckner moved to strike these affidavits on the grounds that they contained inadmissible parol evidence and were irrelevant. The trial court agreed, and granted the motion to strike.

Following an evidentiary hearing, the trial court granted the motion for class certification. Pursuant to OCGA § 9-11-23(b)(2), the trial court certified a class consisting of all residents of the United States who are current or former certificate holders of Resource Life's single-premium credit life and/or disability insurance.⁴ The trial court certified a second class pursuant to OCGA § 9-11-23(b)(3), consisting of all residents of the United States who held certificates of Resource Life's single-premium credit life and/or disability insurance between January 23, 1998 and the present and whose underlying debt terminated “before coverage expired but who have not received a full refund of [their] unearned premiums.” ⁵

Discovery Disputes

(i) Data on Resource Life insureds. At the time Buckner filed her complaint, she also served class discovery requests on Resource Life. Those requests asked Resource Life, inter alia, to provide 11 items of data with respect to each of its insureds who represented potential class members. The purpose of this request was to allow Buckner to obtain information that she could then utilize (by providing the same to information services providers or credit reporting agencies) to determine whether putative class members were entitled to a refund of their unearned premiums. After Resource Life objected to this request, Buckner...