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

• Decision Date: 07 January 1981
• Docket Number: No. 60597,60597
• Citation: 157 Ga.App. 16,276 S.E.2d 78
• Parties: BARON et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
• Court: Georgia Court of Appeals

Page 78

276 S.E.2d 78

157 Ga.App. 16

BARON et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

No. 60597.

Court of Appeals of Georgia.

Jan. 7, 1981.

Kenneth C. Pollock, Atlanta, for appellants.

M. Scott Barksdale, Richard Greer, Michael L. Wetzel, Atlanta, for appellee.

CARLEY, Judge.

On October 6, 1978, the appellants, the Barons, were involved in an automobile collision. At that time Mr. Baron was operating and Mrs. Baron was a passenger in a vehicle owned by Isidor Michael, a resident of Florida. The Michael automobile was insured by State Farm under a policy providing $5,000 Personal Injury Protection coverage and issued in accordance with the Florida Automobile Reparations Reform Act. The Barons' own automobile was also insured by State Farm under a policy issued inn accordance with the Georgia Motor Vehicle Accident Reparations Act. The Barons' policy afforded them $10,000 Personal Injury Protection coverage.

As the result of the collision Mrs. Baron sustained personal injuries and incurred $2,139.52 in medical expenses and $187 in "expenses reasonably incurred in obtaining from others ordinary and necessary services." The Barons made claim for those expenses and were paid under the Michael policy.

The Barons then made a claim under their own policy for the same expenses incurred as the result of the collision. State Farm, contending that it was uncertain whether the Barons were entitled to "duplication of benefits" and that to deny the claim would subject it to possible bad faith penalties and attorney fees, petitioned for a declaratory judgment that it "may legally deny the (Barons') claim for duplicate personal injury benefits ..."

The Barons filed their answer to the petition for declaratory judgment, raising as one of multiple but interrelated defenses the failure of State Farm's petition to state a claim upon which relief could be granted. The Barons also counterclaimed against State Farm to recover the expenses under their policy. Thereafter the Barons filed an "Application for Hearing on Defenses," requesting the trial court to inquire into the merits of the Code Ann. § 81A-112(b)(6) defense raised in their answer and demanding that the petition for declaratory relief be dismissed. Prior to any disposition of the application for a hearing on the Code Ann. § 81A-112(b)(6) defense, State Farm moved for summary judgment in the case, countered by the Barons' own motion for partial summary judgment. On April 8, 1980, the trial court entered two orders. The first denied the Barons' motion for partial summary judgment and, with reference to their "Application for Hearing on Defenses," noted that "an application for an order on (the Barons') special defenses may be made by motion under Ga.Code Ann. Section 81A-107(b) and the (Barons) opted not to pursue this path." In the second order, the trial court granted summary judgment to State Farm. The Barons appeal from these two orders.

1. The Barons first enumerate error in the failure of the trial court "to grant the Application for Hearing on Defenses ... and in failing to dismiss the Complaint as requested by said Application." In the order, the trial court, citing Hayes v. Superior Leasing Corp., 136 Ga.App. 98, 220 S.E.2d 86 (1975) and Howland v. Weeks, 133 Ga.App. 843, 212 S.E.2d 487 (1975), apparently held that the merits of a Code Ann. § 81A-112(b)(6) defense could only be pursued by motion under Code Ann. § 81A-107(b). We believe that the trial judge misconstrued those decisions and erroneously relied upon them as authority for declining to rule on the application by reason of the Barons' failure to follow the proper procedure in pursuing their Code Ann. § 81A-112(b)(6) defense.

"Every defense, in law or fact, to a claim for relief in any pleading, whether a claim, counterclaim, cross-claim, or third-party claim, shall be asserted in the responsive pleading thereto if one is required except that the following defenses may at the option of the pleader be made by a motion in writing: ... (6) failure to state a claim upon which relief can be granted ..." Code Ann. § 81A-112(b). "The choice of whether to raise the § 81A-112(b) defenses by motion or by answer is entirely at the option of the pleader. If the choice is to proceed by motion, it must be before or at the time of the responsive pleading (or, in the special case of a § 81A-112(b)(6) defense, any time thereafter). (Southern Concrete Co. v. Carter Const. Co., 121 Ga.App. 573, 174 S.E.2d 447 (1970)) ... The proper procedure to be followed when the defense is made by answer is application for a preliminary hearing and determination under Code Ann. § 81A-112(d). (Cit.)" Hayes v. Superior Leasing Corp., 136 Ga.App. 98, 99, 220 S.E.2d 86, supra.

In the instant case, the Barons raised their § 81A-112(b)(6) defense in their answer, as they were clearly entitled to do. Having done so, it was procedurally correct to seek a ruling on this defense by filing their application for a hearing under Code Ann. § 81A-112(d) rather than by making a motion under Code Ann. § 81A-107(b). Both Howland and Hayes recognize and affirm this procedural rule. Those cases merely hold that where a § 81A-112(b) defense has been raised by answer, the pleader should not be penalized for erroneously denominating his application under Code Ann. § 81A-112(d) for a hearing on the defense as a motion to dismiss under Code Ann. § 81A-107(b). "It is therefore apparent that the motion to dismiss in fact served every function of an application for preliminary hearing of a Code Ann. § 81A-112(b) defense and should not have been denied simply because it was styled a motion." Hayes, 136 Ga.App. at 101, 220 S.E.2d 86, supra. Likewise, in the instant case, the Barons should not be penalized for correctly denominating their "Application for Hearing on Defenses" under Code Ann. § 81A-112(d) as such, rather than as a motion.

Having determined that the procedural ground expressed by the trial court as the basis for his failure to entertain the Barons' application for a hearing on their § 81A-112(b)(6) defense was erroneous, we turn to the question of whether that failure as opposed to the reasons given for the failure was, under the facts of this case, error. Thus, we must decide if it was error to fail to dismiss the petition for declaratory relief because it failed to state a claim. Suffice it to say that State Farm's petition asked for a declaration of the viability of its defenses to a claim by its insureds, the Barons, of benefits under their policy. That such a petition fails to state a claim for declaratory relief is clear beyond question. Under such circumstances "the insurer is not faced with uncertainty and insecurity of making a jeopardizing election to enter into the defense of its alleged insured or to refuse to do so; suit looms against the insurer itself and its own defenses to liability can be presented without jeopardy when suit is entered by the claimant. (Cit.) Under these circumstances, there being no uncertainty or insecurity with regard to the propriety of some future act or conduct, declaratory relief will not lie. (Cit.) ... All rights have accrued; the (insurer) is either liable under the terms of its (policy) ... or it is not. The (insurer) faces no risk of taking future undirected action; its defenses can be presented when suit is entered by the (claimant). (Cit.) Therefore, the dismissal of (an insurer's) petition, which (seeks) a mere advisory opinion as to its defenses, (is) proper. (Cit.)" (Emphasis supplied.) Shield Ins. Co. v. Hutchins, 149 Ga.App. 742, 744-745, 256 S.E.2d 108 (1979). That, under these circumstances, the insurer seeks to avoid bad faith penalties and attorney fees by institution of the declaratory judgment proceeding does not insulate the petition from dismissal under § 81A-112(b)(6). State Farm Fire & Cas. Co. v. Gosdin, 147 Ga.App. 156, 248 S.E.2d 216 (1978); Sentry Ins. v. Almeida, 151 Ga.App. 514, 260 S.E.2d 356 (1979).

Therefore, were we to view the Barons' application to dismiss the petition under § 81A-112(b)(6) in isolation and out of context we would be compelled to the conclusion that the trial court committed reversible error in failing to consider that application and to grant it. However, when the Barons filed their counterclaim for recovery of the expenses which were the basis of State Farm's petition, they effectively turned the controversy from one in which State Farm was seeking declaratory relief into one in which they were seeking affirmative relief. The entire controversy over coverage under the policy became, at that point, a suit by the Barons for affirmative relief from State Farm and, in our opinion, rendered moot any question of whether State Farm was or was not entitled to declaratory relief. Cf. Trainer v. City of Covington, 111 Ga.App. 425, 142 S.E.2d 75 (1965). If there were any doubts before the Barons filed their counterclaim that all rights had accrued in the controversy, those doubts were removed when their counterclaim was filed. Since the issue of State Farm's entitlement to declaratory relief in the controversy was rendered moot and since there is no requirement that a counterclaim be answered, we see no reversible error in the trial court's failure to consider the Barons' application for a hearing on their Code...