Braner v. Southern Trust Ins. Co., s. 42284

• Decision Date: 17 October 1985
• Docket Number: Nos. 42284,42285,s. 42284
• Citation: 255 Ga. 117,335 S.E.2d 547
• Parties: BRANER v. SOUTHERN TRUST INSURANCE COMPANY; SOUTHERN TRUST INSURANCE COMPANY v. BRANER.
• Court: Georgia Supreme Court

Page 547

335 S.E.2d 547

255 Ga. 117

BRANER v. SOUTHERN TRUST INSURANCE COMPANY;

SOUTHERN TRUST INSURANCE COMPANY v. BRANER.

Nos. 42284, 42285.

Supreme Court of Georgia.

Oct. 17, 1985.

Reconsideration Denied Nov. 5, 1985.

William J. Neville, Jr., Mary L. Skene, Neville & Skene, Metter, George N. Skene, Macon, for Henry J. Braner.

Dana F. Braun, Stanley M. Karsman, Karsman, Brooks, Painter & Callaway, Savannah, for Southern Trust Ins. Co.

HILL, Chief Justice.

The principal issues in this case, a suit on a fire insurance policy here on certiorari, Southern Trust Ins. Co. v. Braner, 174 Ga.App. 247, 329 S.E.2d 569 (1985), are whether it is error for a jury to make a separate award of prejudgment interest upon unliquidated claims of loss under the policy, and whether the existing rule as to proof of damage to personal property destroyed by fire should be relaxed.

Henry and Sue Braner purchased a vacation home on Colonels Island in Liberty County on January 1, 1982. At that time, fire insurance was purchased upon the dwelling for $40,000 from Southern Trust Insurance Company through Braner's independent agent. After improvements were made and the home was furnished, the dwelling insurance was increased to $55,000 at the insurance agent's suggestion, and unscheduled personal property, debris removal and loss of use coverages, among others, were added. On April 5, 1982, the house burned and was a total loss.

In addition to the $55,000 dwelling loss, Braner submitted a proof of loss form on June 25, 1982, for the $23,967.65 replacement value of the personal property, and $6,000 for debris removal and loss of use living expenses. When the 60 day statutory period to pay or deny a claim expired, see OCGA § 33-4-6, Southern Trust sought a 30-day extension from Braner. Braner responded by filing this suit.

Braner thereafter filed a motion for summary judgment as to liability (coverage) and the insurer responded that there were genuine issues of material fact as to its defense of arson. The trial court granted summary judgment as to liability to Braner and, in the first appeal in this case, the Court of Appeals affirmed. Southern Trust Ins. Co. v. Braner, 169 Ga.App. 567, 569, 314 S.E.2d 241 (1984).

At trial the jury returned a verdict for $16,000 for the unscheduled personal property with $3,280 interest, $3,000 for living expenses with $615 interest, $1,200 for debris removal with $246 interest, $11,327 in bad faith damages, and $15,000 in attorney fees, in addition to the $55,000 dwelling loss with $11,275 interest the parties agreed was owed. ¹

The insurance company appealed, urging (a) that the trial court erred in overruling its motion for directed verdict as to unscheduled personal property loss because the insured proved only its replacement cost value, not its actual cash value as insured by the policy, (b) that the trial court erred in overruling its motion for directed verdict as to bad faith damages and attorney fees, and (c) that, because they constituted unliquidated damages, the trial court erred in instructing the jury that it was authorized to award interest at 12% on the unscheduled personal property loss, debris removal and additional living expenses.

The Court of Appeals reversed, quoting Atlantic Coast-Line R. Co. v. Henderson Elevator Co., 18 Ga.App. 279(6), 88 S.E 101 (1916), for the proposition that "The demand being unliquidated, the allowance of interest was within the discretion of the jury, and, while they may have increased the damages by an allowance of interest, the amount so allowed should have been included in one gross sum as damages, and not separately specified by the verdict." Braner II, 174 Ga.App. 247, 329 S.E.2d 569, supra.

Finding that interest could not be separately stated by the jury, the Court of Appeals granted a new trial and did not reach the other issues raised by the insurance company. Braner sought certiorari, complaining that the jury verdict in his favor totaling $116,943 was to be entirely retried over $4,141 in interest, when there is no dispute whatsoever that $70,475 in damages was due and unpaid, and no decision had been rendered as to the $42,327 remaining in issue. The insurer sought certiorari pointing out that the Court of Appeals failed to address the major issues involving the larger sums, to wit: unscheduled personal property loss, bad faith damages and attorney fees. ² We granted the certiorari applications of both parties.

1. Two Code sections allow prejudgment interest to be awarded. OCGA § 7-4-15 applies to liquidated demands and is inapplicable here. In a suit on a property damage insurance policy (e.g., fire, lightening, windstorm, etc.), where liability is not disputed but where the amount of damage is disputed, the amount is unliquidated. Fireman's Ins. Co. v. Oliver, 182 Ga. 212, 184 S.E. 858 (1936).

OCGA § 13-6-13 provides for prejudgment interest in breach of contract cases, as follows: "In all cases where an amount ascertained would be the damages at the time of the breach, it may be increased by the addition of legal interest from that time until the recovery." This Code section is applicable to unliquidated damages. Norair Eng. Corp. v. St. Joseph's Hosp., 147 Ga.App. 595(6), 249 S.E.2d 642 (1978).

In Western & Atlantic R.R. Co. v. Brown, 102 Ga. 13, 14-15, 29 S.E. 130 (1897), this contract Code section was cited to support, by analogy, the existing rule that, in a suit in tort, the jury could award interest not as such but as part of the damages. See Central Rr. v. Sears, 66 Ga. 499 (1881); Western & Atlantic R.R. Co. v. McCauley, 68 Ga. 818(2) (1882); Ga. Rr. & Banking Co. v. Crawley, 87 Ga. 191, 192, 13 S.E. 508 (1891).

In Tifton Ry. Co. v. Butler, 4 Ga.App. 191(1)(2), 60 S.E. 1087 (1908), the Court of Appeals applied the rule applicable in tort cases, that a jury may include interest not as such but as damages, in a breach of contract case. ³ The Tifton Ry. case, supra, was followed in Atlantic Coast-Line Rr. Co. v. Henderson Elevator Co., supra, and the Court of Appeals in the case now before us followed the Atlantic Coast-Line case, quoting it as set forth above.

Thus, the question before us is whether it is error, in a breach of contract case where the damages are unliquidated, for the court to instruct the jury that it may return a verdict stating interest separately, rather than including it as part of the damages awarded.

OCGA § 13-6-13, supra, provides for the allowance of prejudgment interest in breach of contract cases and we find no error in allowing such interest to be found by the jury as a separate item of the award, even where the damages are not liquidated. Division 1 and that part of Division 2 of Tifton Ry. Co. v. Butler, supra; that part of Division 6 of Atlantic Coast-Line Rr. Co. v. Henderson Elevator Co., supra; and so much of Merchants Ins Co. v. Lilgeomont, 84 F.2d 685, 689-690 (5th Cir.1936), which is contrary to this holding, should not be followed.

This disposes of the issue of interest. ⁴

2. The insurer contends that the trial court erred in overruling its motion for directed verdict as to plaintiff's claim for bad faith penalty and attorney fees because (a) it had a reasonable defense, to wit: arson, and (b) there was a bona fide dispute as to the amount of the unscheduled personal property loss.

(a) The grant of plaintiff's motion for summary judgment as to liability, notwithstanding the insurer's claim of arson, affirmed by the Court of Appeals, determined that the insurer had no viable arson defense. As the Court of Appeals found: "... the evidence in the instant case was insufficient to raise even an inference of arson caused or procured by [the insured]." Braner I, supra, 169 Ga.App. at 569, 314 S.E.2d 241.

The purpose of granting summary judgment as to liability (coverage) is to remove that issue from the trial of the case. Once liability is established by summary judgment, liability is no longer in issue. The trial court did not err in overruling the insurer's motion for directed verdict as to bad faith penalty and attorney fees based on its claim that it had a reasonable defense, to wit: arson.

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