Associated Indem. Corp. v. Sermons, 69837
| Decision Date | 16 July 1985 |
| Docket Number | No. 69837,69837 |
| Citation | 175 Ga.App. 513,333 S.E.2d 902 |
| Parties | ASSOCIATED INDEMNITY CORPORATION v. SERMONS. |
| Court | Georgia Court of Appeals |
F. Thomas Young, Valdosta, H. Andrew Owen, Jr., Atlanta, for appellant.
Reginald C. Wisenbaker, Valdosta, for appellee.
On April 2, 1980, appellee Sermons was injured in an auto accident, as a result of which she sustained personal injuries necessitating medical expenses and loss of earnings in excess of $5,000. At the time of the accident, Mrs. Sermons was operating a car insured by appellant under a policy in which her husband was a named insured. She was shown as an operator of the listed 1965 Chevrolet. The policy provided only basic personal injury protection benefits of $5,000. Prior to its issuance, Mr. Sermons on March 4, 1975, had signed a Personal Automobile Application and a Georgia Supplemental Automobile Application (No-Fault) (Appendix I).
The subject policy was periodically renewed with the same coverage and was in full force and effect on the date of the accident. In accordance with the terms of the policy, appellant insurer paid to Mrs. Sermons only the basic PIP benefits.
By letter of January 5, 1984, counsel for appellee Sermons and the named insured, Vernon Sermons, advised the insurer that they were "demanding additional benefits in the amount of $50,000 pursuant to Flewellen v. Atlanta Casualty Company, 250 Ga. 709 [300 S.E.2d 673], 1983...." and tendered the additional premium for such coverage. Appellant did not comply with the demand, and Mrs. Sermons filed suit, demanding judgment of additional benefits in the amount of $49,562.31, together with a twenty-five percent penalty for the insurer's failure to pay within thirty days after filing proof of claim, punitive damages of not less than $500,000 plus attorney fees and costs of the action.
Mrs. Sermons filed a motion for partial summary judgment as to the issues of liability and damages except for punitive damages and attorney fees. The insurer filed a motion for summary judgment seeking to dismiss the complaint on its merits.
Counsel for the parties entered stipulations of fact in support of the motions, including the stipulation that Sermons had made demand upon the insurance company under the subject policy for $45,000 optional no-fault benefits.
The trial court overruled and denied the insurer's motion for summary judgment. It granted Sermons' motion for partial summary judgment but only as to liability on the issue of optional no-fault coverage in the amount of $45,000 and entered final judgment in this amount. The court also signed a certificate for immediate review of the denial of the insurer's motion for summary judgment. The insurer appeals both the denial of its motion and the grant of partial summary judgment to Sermons.
1. Appellant's first enumeration of error contends that the trial court erred in failing to find that the subject application for motor vehicle insurance was not in substantial compliance with OCGA § 33-34-5(b). 1 The guidelines set forth in Flewellen v. Atlanta Cas. Co., 250 Ga. 709, 300 S.E.2d 673 (1983) and its progeny control and necessitate an examination of the form and substance of the application. 2
The applicable version of OCGA § 33-34-5(b) (pre-November 1, 1982) provides that on each application for motor vehicle liability insurance the insured must indicate by signature his or her acceptance or rejection of optional PIP and vehicle property damage coverages. Tolison v. Ga. Farm Bureau Mut. Ins. Co., 253 Ga. 97, 98, 317 S.E.2d 185 (1984). The Georgia Motor Vehicle Accident Reparations Act (OCGA § 33-34-1, et seq.) imposes upon every insurer the duty to offer certain coverages, namely personal injury protection (PIP) and property damage to the motor vehicle. A minimum of $50,000 PIP coverage must be offered, but there is statutory allowance for a prospective insured to reduce the coverage to not less than $5,000 per person. Such intent to reduce coverage must be in writing and signed. See Flewellen, supra 250 Ga. at 711, 300 S.E.2d 673. Flewellen addressed baseline questions of the number and location of applicant signatures to effectively reduce coverage, and determined that the requirements of subsection (b) were satisfied by two signatures, one for acceptance or rejection of optional PIP and another for acceptance or rejection of vehicle damage coverage. Subsequently, our Supreme Court held that two signatures were not required in every case, and that the mandate of OCGA § 33-34-5(b) could be satisfied by substantial compliance therewith. See Chief Justice Hill's special concurrence to the dismissal of the writ of certiorari in Nalley v. Select Ins. Co., 251 Ga. 722, 723, 313 S.E.2d 465 (1983); St. Paul Fire, etc., Ins. Co. v. Nixon, 252 Ga. 469, 314 S.E.2d 215 (1984); Tolison v. Ga. Farm Bureau Mut. Ins. Co., supra. To be in substantial compliance a form should satisfy " 'the intent of the General Assembly to ensure' '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.' 'Flewellen, supra, 250 Ga. at 714 .' (Emphasis in original.) Nalley v. Select Ins. Co., 251 Ga., supra, p. 724 (Hill, C.J., concurring specially." St. Paul Fire etc. Ins. Co. v. Nixon, supra at 470, 314 S.E.2d 215.
Is the present application in substantial compliance? That is, is there enough on the form to show as a matter of law that the insured was offered these benefits and knowingly rejected them? And, is it clear from the form that the intent of the insured was to reject optional PIP benefits? We think not.
We first compare the instant form to that found to be defective in Flewellen. Appellant's form is similar to that in Flewellen in having varied optional coverages clustered together with blocks to be We next compare the instant application with that found to be sufficient in Nixon, supra, and find that it does not have the saving features of the Nixon form. Again we note that the present form has no language expressly stating that an offer is being made or that the applicant/insured should take special heed or note. There is no statement, as in Nixon, that "I do not want to purchase Optional Personal Injury Protection Coverage," which would more strongly indicate a knowing rejection of optional coverage. Two recent cases are also on point. In Phoenix Ins. Co. v. Womack, 174 Ga.App. 140, 329 S.E.2d 282 (1985), cert. denied, we held the form at issue there to be in substantial compliance (see Appendix III), but in that case, the applicant's signature accompanied each election to accept or reject optional coverages. He accepted some and rejected others. It was thus clear that the applicant was aware of each option and that it was the intent of the applicant to reject optional PIP benefits. In Chaney v. Ga. Mut. Ins. Co., 174 Ga.App. 734, 331 S.E.2d 78 (1985), the application (see Appendix III) bore language explaining the options and notifying the applicant of the import of his elections. The applicant signed the document acknowledging that he understood the optional coverages. Additional uninsured motorist insurance was checked as accepted and the other three were checked as rejected.
checked for acceptance or rejection. The Flewellen application bore handwritten check marks in these blocks, which could reasonably be argued as indicative of greater input by the applicant/insured, and hence a clearer expression of intent to reject optional coverage. The present form bears typewritten "X's" in each rejection box. The defective Flewellen form stated at the top "Offer to Purchase Additional Coverage." Appellant's form bears no such language indicating that the applicant is being given an offer which must be accepted or rejected
Our legislature's acknowledgement of the need for a clear and knowing acceptance or rejection of...
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