Cotton States Mut. Ins. Co. v. McFather, 42371

• Decision Date: 01 October 1985
• Docket Number: No. 42371,42371
• Citation: 334 S.E.2d 673,255 Ga. 13
• Parties: COTTON STATES MUTUAL INSURANCE COMPANY v. McFATHER et al.
• Court: Georgia Supreme Court

Page 673

334 S.E.2d 673

255 Ga. 13

COTTON STATES MUTUAL INSURANCE COMPANY v. McFATHER et al.

No. 42371.

Supreme Court of Georgia.

Oct. 1, 1985.

J. Franklin Edenfield, Spivey, Carlton & Edenfield, P.C., Swainsboro, Hilliard P. Burt, for Cotton States Mut. Ins. Co.

Jesse G. Bowles III, Cuthbert, Albert Stubbs, Columbus, for Ben McFather, Co-Admr., et al.

MARSHALL, Presiding Justice.

This is a continuation of Cotton States Mut. Ins. Co. v. McFather, 251 Ga. 739, 309 S.E.2d 799 (1983).

Carl and Ann McFather were killed in an automobile accident on August 9, 1979. On October 25, 1979, personal-injury benefits of $5,000 each were paid by their insurer, the appellant, to the administrators of their estate, the appellees. After the decision in Jones v. State Farm etc., Ins. Co., 156 Ga.App. 230, 274 S.E.2d 623 (1980), the appellees made demand on the appellant for optional PIP benefits for each of the decedents. The appellant denied the claim for additional PIP benefits. On February 2, 1982, the appellees filed suit against the appellant seeking a 25% penalty and attorney fees under OCGA § 33-34-6(b) for failure of the appellant to pay the optional PIP benefits within 30 days of demand and proof of loss. The appellees also sought punitive damages under OCGA § 33-34-6(c) for failure of the appellant to pay the optional PIP benefits within 60 days after proof of loss. The trial court directed a verdict holding that the appellees were entitled to $90,000 optional PIP benefits as a matter of law, and the jury returned its verdict for $22,500 as the statutory penalty, $36,000 attorney fees, and $138,000 in punitive damages.

On December 1, 1982, the Court of Appeals rendered its decision in Atlanta Cas. Co. v. Flewellen, 164 Ga.App. 885, 300 S.E.2d 166 (1982), overruling Jones v. State Farm etc., Auto. Ins. Co., supra. On March 3, 1983, this court rendered its decision in Flewellen v. Atlanta Cas. Co., 250 Ga. 709, 300 S.E.2d 673 (1983) reversing the Court of Appeals' decision in Atlanta Cas Co. v. Flewellen, supra. Rehearing was denied in Flewellen on March 23, 1983.

The appellant's motion for a new trial was pending at the time of this court's Flewellen decision. In our prior decision in this case, we held, among other things, "that insurance companies which tendered the optional PIP benefits owed upon proper demands of their insureds within the statutory 30 and 60 day periods after March 23, 1983, when the motion for rehearing in Flewellen was overruled, are not subject to statutory penalties, attorney fees and punitive damages. [Cits.]" Cotton States Mut. Ins. Co. v. McFather, 251 Ga., supra, [255 Ga. 14] at p. 743, 309 S.E.2d 799 (3). We further held, "In the case before us, Cotton States states that it tendered the optional PIP benefits within 30 days of March 23, 1983, and thereby satisfied the time requirements of OCGA § 33-34-6(b) and (c) ... The insureds dispute this assertion. We therefore remand this case to the trial judge for resolution of this issue." Id. at p. 744, 309 S.E.2d 799.

On remand, the trial court found that on April 1, 1983, the appellant, through its attorney, forwarded to one of the attorneys for the appellees a draft for $98,369 representing the optional PIP benefits of $90,000, plus interest and court costs. However, the print on the reverse side of the draft was a release. Under the language employed in this release, the payee, through endorsement and negotiation of the draft, would release the insurance company from all claims for which the insurance company was contractually liable as a result of, and from all legal liability resulting from, the accident. The trial court ruled that this tender did not meet the requirement of OCGA § 13-4-24 that a tender be "unconditional." Accordingly, the court held that there was no valid tender, and the appellees' motion for summary...