Auto-Owners Ins. Co. v. Barnes, AUTO-OWNERS

• Decision Date: 06 September 1988
• Docket Number: Nos. 76391-76393,AUTO-OWNERS,s. 76391-76393
• Citation: 188 Ga.App. 439,373 S.E.2d 217
• Parties: INSURANCE COMPANY v. BARNES. BARNES v.INSURANCE COMPANY, et al. CALDWELL & LANGFORD INSURANCE AGENCY, INC. v. BARNES.
• Court: Georgia Court of Appeals

Page 217

373 S.E.2d 217

188 Ga.App. 439

AUTO-OWNERS INSURANCE COMPANY v. BARNES.

BARNES v. AUTO-OWNERS INSURANCE COMPANY, et al.

CALDWELL & LANGFORD INSURANCE AGENCY, INC. v. BARNES.

Nos. 76391-76393.

Court of Appeals of Georgia.

Decided Sept. 6, 1988.

Rehearing Denied Sept. 20, 1988.

Certiorari Denied Oct. 26, 1988.

William C. Sanders, Thomasville, for Auto-Owners.

Russell M. Guttshall III, Thomasville, for Barnes.

Mark A. Gonnerman, Dawn G. Benson, Albany, for Caldwell & Langford.

SOGNIER, Judge.

James Barnes, the sole proprietor of a tire service and garage, brought suit against his insurance carrier, Auto-Owners Insurance Company (A-O), Caldwell & Langford Insurance Agency (C & L), an independent insurance agency, and Robert C. Doughty, a licensed insurance agent and officer of C & L, seeking payment for the loss of property of others which had been in Barnes' garage when the premises were destroyed by fire, as well as bad faith penalties and attorney fees against the insurer for failing to pay the claim. The trial court directed a verdict in favor of Doughty, and he is not involved in this appeal. A verdict was also directed in favor of A-O as to Barnes' claim under the liability portion of the policy. The jury returned a verdict in favor of Barnes against A-O but not C & L, and awarded penalties and attorney fees. All three parties appeal.

The record reveals that the policy contained a section providing coverage for property damage, as well as one providing liability coverage. In addition to the building and personal property belonging to Barnes, a substantial amount of property belonging to others which Barnes was holding on consignment, as well as tools and equipment belonging to family member employees of Barnes, were destroyed in the fire. Barnes sought payment from A-O under the policy for the loss of his own property, as well as reimbursement for sums he had paid the owners of the consigned property and the tools. While promptly paying Barnes' claim for the building and his own personalty up to the policy limits, A-O paid only $2,000 of Barnes' claim for the personal property belonging to others.

1. In Case No. 76391, A-O contends the trial court erred by denying its motion for a directed verdict as to coverage under the property insurance portion of the policy. A-O argues that under specific policy provisions it was obligated to pay Barnes only $2,000 for property belonging to others which was lost or damaged in the fire.

The declarations portion of the policy provides that "[t]his insurance shall cover for the account of the owner(s) (other than the named insured) personal property belonging to others in the care, custody or control of the insured...." However, later specific provisions clearly provide property insurance coverage only "up to 2% of the limit of liability specified for Personal Property of the Insured at such location, but not exceeding $2,000, as an additional amount of insurance, to cover ... direct loss by a peril insured against to personal property, similar to that covered by this policy, belonging to others while in the care, custody or control of the named insured," and state that "[a]s respects personal property belonging to others, this provision shall replace any loss payable provision of this policy."

We reject Barnes' argument that the general statement in the declarations controls, as such a construction contradicts explicit language to the contrary later in the policy. " 'An insurance policy must be construed as a whole [cit.], and "all of the provisions should be so interpreted so as to harmonize one with the other." [Cit.]' [Cit.]" Wilson v. Southern Gen. Ins. Co., 180 Ga.App. 589, 590, 349 S.E.2d 544 (1986). Rather we find the language in the declarations to be merely a general statement as to the type of property covered by the policy, the terms of coverage for which are set out specifically later in the policy. " 'Insurance is a matter of contract and rules governing construction of contracts are applicable to insurance contracts. [Cit.]' [Cit.]" Id. It is well established that "[u]nder the rules of contract construction, a limited or specific provision will prevail over one that is more broadly inclusive. [Cit.]" Griffin v. Barrett, 155 Ga.App. 509, 510, 271 S.E.2d 647 (1980). The specific terms in this policy limit the coverage provided for property belonging to others.

Although the provisions of an insurance policy "will be construed against the insurer when a part is susceptible of two constructions and a court will adopt that interpretation which is most favorable to the insured ...[,] if the language is unambiguous and but one reasonable construction is possible, the court will enforce the contract as written. [Cit.] Interpretation of policy provisions which are plain and definite is a matter of law for the trial court, and a policy provision ' "is not ambiguous even though presenting a question of construction, unless and until an application of the pertinent rules of construction leaves it uncertain as to which of two or more possible meanings represents the true intention of the parties." ' [Cit.]" Simmons v. Select Ins. Co., 183 Ga.App. 128, 130, 358 S.E.2d 288 (1987). We agree with A-O that the foregoing provisions are clear and unambiguous in limiting coverage for personal property owned by persons other than the named insured to a maximum of $2,000. Accordingly, A-O was entitled to judgment as a matter of law and the trial court erred by denying its motion for a directed verdict as to the issue of coverage under the property insurance portion of the policy.

2. A-O also contends in Case No. 76391 that the award of penalties and attorney fees against it was improper. The award of penalties and attorney fees was based on A-O's refusal to pay more than $2,000. Since "[t]he Supreme Court has held that '[an award of statutory penalties and attorney fees] is not authorized if an insurer had reasonable and probable cause for making a defense to the claim,' [cits.]," Commercial Union Ins. Co. v. F.R.P. Co., 172 Ga.App. 244, 250(4), 322 S.E.2d 915 (1984), and we have held in Division 1, supra, that A-O was correct in withholding payment of more than $2,000, under the facts of the instant case we find that neither the statutory penalty nor attorney fees were authorized as a matter of law, id., and the...