Assaf v. Cincinnati Ins. Co.

• Decision Date: 08 September 2014
• Docket Number: No. A14A0145.,A14A0145.
• Citation: 759 S.E.2d 557,327 Ga.App. 475
• Parties: ASSAF v. CINCINNATI INSURANCE COMPANY.
• Court: Georgia Court of Appeals

327 Ga.App. 475

759 S.E.2d 557

ASSAF

v.CINCINNATI INSURANCE COMPANY.

No. A14A0145.

Court of Appeals of Georgia.

June 5, 2014.

Certiorari Denied Sept. 8, 2014.

James Alexander Rice Jr., Atlanta, for Appellant.

David M. Abercrombie, Judy Farrington Aust, Atlanta, for Appellee.

PHIPPS, Chief Judge.

In this insurance coverage dispute, Eugene F. Assaf, the insured, appeals from the trial court's order granting summary judgment to Assaf's insurer, Cincinnati Insurance Company. For the reasons set forth below, we agree with Assaf that issues of material fact remain as to whether he was entitled to $1,000,000 in excess uninsured/underinsured motorist coverage. Accordingly, we reverse.

Summary judgment is warranted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” ¹ We review the grant or denial of a motion for summary judgment de novo,² and we view the evidence, and the reasonable inferences drawn therefrom, in a light most favorable to the nonmovant.³

So viewed, the evidence shows that on August 10, 2009, an uninsured vehicle driven by Gerald Stein struck and injured Assaf as he was walking alongside a road. Assaf filed a personal injury action against Stein in the State Court of Fulton County and served Cincinnati with a copy of the complaint as Assaf's uninsured/underinsured motorist insurance carrier. Cincinnati answered in its own name and filed a cross claim against Stein. Assaf later amended his complaint to assert a claim against Cincinnati that refusal to provide $1,000,000 in uninsured/underinsured motorist coverage (“UM Coverage”) constituted a breach of contract.

Before his injury, Assaf had applied to Cincinnati for automobile liability insurance and a personal liability umbrella policy through Little and Smith, Inc. (“L & S”), an insurance agency. On April 18, 2008, Assaf spoke by telephone with Joy Chastain, an L & S employee, and she bound Assaf's automobile and umbrella insurance coverage at that time. Assaf testified that during the telephone conversation he told Chastain that he wanted an umbrella policy which included $1,000,000 in UM Coverage. On April 25, 2008, Assaf went to the offices of L & S, where he signed documentation pertaining to the insurance and received copies of the automobile and umbrella insurance policies issued to him by Cincinnati.

The automobile policy, as issued, provided liability and UM Coverage of $100,000, each person, and the umbrella policy provided coverage of $1,000,000, each occurrence. The umbrella policy, however, did not provide excess UM Coverage.⁴ The lack of such coverage was consistent with the umbrella policy application submitted by L & S to Cincinnati. The umbrella policy application included a coverage rejection form on which a box indicating, “I reject Excess Uninsured/Underinsured Motorists Coverage under this policy” was checked, and which was purportedly signed by “Eugene F. Assaf.”

Notwithstanding what appeared on the application, Assaf testified that he did not sign the form rejecting excess UM Coverage under the umbrella policy and that he did not check the box indicating his rejection of such coverage. Rather, Assaf contends, his signature was forged by Chastain, who was the only other person who had access to the insurance applications before they were submitted to Cincinnati, and who was later asked to resign from L & S because, among other things, she had signed another insured's name to a policy cancellation without that insured's consent.

Acknowledging that Assaf contended that the signature evidencing a rejection of excess UM Coverage was not his, Cincinnati moved for summary judgment, arguing that even assuming Assaf's signature was forged: (i) Cincinnati reasonably relied on the application in issuing coverage; (ii) Cincinnati could not be held liable for the alleged wrongful acts of an independent insurance agent; and (iii) Assaf was precluded from seeking excess UM Coverage because he had not read the umbrella policy. Cincinnati asked the trial court to limit its liability to $100,000 and to rule that Assaf was not entitled to recover an additional $1,000,000 in excess UM Coverage.⁵ The trial court granted the motion and entered final judgment in favor of Cincinnati.

1. On appeal, Assaf contends that because there remain genuine issues of material fact, particularly as to whether he signed the rejection of the excess UM Coverage and whether L & S was the dual agent of Assaf and Cincinnati, the trial court erred in granting summary judgment to Cincinnati. We agree.

(a) At the time Cincinnati issued Assaf's original umbrella policy, Georgia law required that “without a written waiver, all automobile policies provide UM Coverage equal to the policies' overall liability limits.” ⁶ Umbrella and excess policies that included motor vehicle or automobile liability coverage were then subject to this requirement.⁷ Thus, absent other considerations, if Assaf did not reject the excess UM Coverage in writing, then, even if his “original policy purported to exclude uninsured motorist coverage, such coverage was required by law and, therefore, implied into [his] original policy by operation of law.” ⁸

(b) Cincinnati maintains that it was nevertheless entitled to rely on the apparent rejection of UM Coverage in the application even if Assaf did not actually sign the rejection. Generally, “it is implicit that an insurer is entitled to rely on statements of an applicant as true, without conducting an independent investigation.” ⁹ For example, where an insured contended that an independent insurance broker forged his signature on an insurance application, but there was no evidence that the insurance broker was the agent of the insurer, we found that the authenticity of the signature was not material to the insurer's liability under the policy.¹⁰

Here, however, Assaf contends that L & S was not only his agent, but also the agent of Cincinnati.¹¹ And, as to this point, Cincinnati represented to the trial court that for the purpose of its motion for summary judgment Cincinnati assumed that L & S was the dual agent of both Cincinnati and Assaf.¹² As a rule,

where an agent represents two adverse parties in a transaction with the knowledge and consent of both, neither principal is liable to the other for the tortious acts of the agent so situated where the opposite principal is not in complicity with the agent or in no way participates in the tortious act. Another way of stating this same principle is that the misconduct of a dual agent by consent cannot be imputed to either of the principals who is not actually at fault, since each of the principals is under an equal duty to exercise ordinary care in selecting and supervising the agent to protect his own interest.¹³

Notwithstanding the foregoing, Georgia law, pursuant to OCGA § 10–6–56, also provides that “[t]he principal shall be bound by all representations made by his agent in the business of his agency and also by his willful concealment of material facts, although they are unknown to the principal and known only by the agent.” In considering whether this statute is negated by the rule that neither principal is civilly liable to the other for the tortious conduct of the dual agent, absent participation or collusion in such acts, our Supreme Court has held that “equity will not allow [a principal] to be relieved of responsibility for misrepresentations of the dual agent upon which the other principal relied to his detriment when the action is in contract.” ¹⁴ Thus, an insurer cannot “escape the usual effects of estoppel because the agent is also the agent of the insured party.” ¹⁵

This court applied the foregoing holding in Southern Guaranty Ins. Co. v. Cotton States Mut. Ins. Co.,¹⁶ a dispute which, as in this case, involved allegations that an insured's signature on a coverage rejection form had been forged. At the time Southern Guaranty issued the insurance policy in question, Georgia law required insurers to offer certain optional personal injury protection coverage to applicants for no-fault insurance and required waiver of such coverage to be made knowingly and in writing.¹⁷ Following an accident, the insureds sued their insurer, Southern Guaranty, to recover additional personal injury benefits that they claimed were not offered to them as required by statute.¹⁸ The trial court directed a verdict to the insureds on the coverage issue at trial, and we affirmed that ruling, noting that “the evidence is uncontroverted that the [insureds] did not knowingly and in writing waive their right to obtain” the optional coverage. ¹⁹ Although the signature of a named insured appeared on the coverage rejection form, the evidence was undisputed that neither insured signed the rejection form or authorized anyone else to sign the form on their behalf. ²⁰ Furthermore, the insurance agent that submitted the application occupied the status of a dual agent.²¹ Noting that, in contract, a principal may be held liable for the misrepresentations of a dual agent on which the other principal detrimentally relied, we held that “any knowledge by the employees of the [insurance agent] that the signature on the form was not authentic was imputable to Southern Guaranty for the purpose of establishing its liability on the policy.” ²²

In this case, the trial court distinguished Southern Guaranty on the ground that Assaf did not contend that Cincinnati was complicit in any wrongdoing by L & S or Chastain. In Southern Guaranty, this court found as to the insureds' claims for a bad-faith penalty, attorney fees, and punitive damages that the trial court erred in refusing to charge the jury that Southern Guaranty could not be liable to the insureds unless it was in complicity with the dual agent or participated in...