Cotton States Mut. Ins. Co. v. Phillips

• Decision Date: 21 October 1964
• Docket Number: Nos. 40849,40850,No. 1,s. 40849,1
• Citation: 110 Ga.App. 581,139 S.E.2d 412
• Parties: COTTON STATES MUTUAL INSURANCE COMPANY v. W. L. PHILLIPS. W. L. PHILLIPS v. COTTON STATES MUTUAL INSURANCE COMPANY
• Court: Georgia Court of Appeals

Page 412

139 S.E.2d 412

110 Ga.App. 581

COTTON STATES MUTUAL INSURANCE COMPANY v.W. L. PHILLIPS.

W. L. PHILLIPS v.COTTON STATES MUTUAL INSURANCE COMPANY.

Nos. 40849, 40850.

Court of Appeals of Georgia, Division No. 1.

Oct. 21, 1964.

Rehearing Denied Nov. 3, 1964.

Syllabus by the Court

1.A petition by an insured seeking to recover from an insurance company the full amount of a judgment or judgments against an insured because of the refusal by the company in bad faith to settle the judgments against the insured, which were in excess of the policy limits, by itself paying an amount within the limits of the policy plus an additional amount to be furnished by the insured, does not state a cause of action in the absence of an allegation that the judgment creditor would have settled or agreed to settle the judgments for the amount for which the company was requested to settle.

2.Section 56-1206 of the Insurance Code, providing for the recovery of damages of not more than 25% and all reasonable attorney's fees by the insured from the insurer when the insurer refuses in bad faith to pay a claim covered by a policy of the insured, does not apply to bad faith in the failure or refusal to settle a claim before judgment against the insured under an automobile liability policy, where the insurer obligates itself to pay 'all sums which the insured shall become legally obligated to pay as damages' arising out of described automobile collisions, and further that no action shall be brought against the company 'until the amount of the insured's obligation to pay shall have been finally determined either by judgment against the insured after actual trial or by written agreement of the insured, the claimant and the company.'

3.The other charge excepted to was not error.

4.The court did not err in overruling the motion to dismiss the motion for a new trial.

W. L. Phillips brought suit against Cotton States Mutual Insurance Company in two counts.The pertinent allegations of count 1 are substantially as follows: That on or about February 5, 1961, the plaintiff was involved in an automobile collision with another automobile; that at that time the plaintiff was insured by the defendant company against bodily injury liability for $10,000 to each person and $20,000 for each accident, and against property damage liability in the amount of $5,000; that the occupants of the other automobile, Homer B. Mobley and his wife, Jurita F. Mobley, filed separate suits against the plaintiff in the United States District Court for the Southern District of Georgia, Augusta Division, alleging his negligence and praying for damages of $33,111.22 and $72,631.40 respectively; that the defendant insurer's investigative file showed that the present plaintiff was liable for the Mobleys' injuries and that they exceeded the policy limits; that on December 5, 1961, the plaintiff requested the defendant in writing to settle the suits; that on December 11, 1961, Mr. and Mrs. Mobley obtained verdicts of $10,000 and $22,500 respectively; that on February 7, 1962, the plaintiff again requested in writing a settlement by his insurer; that the plaintiff is in the real estate business and that since the judgments were rendered against him he has been unable to transact this business; that on March 17, 1962, the defendant entered into an agreement with the Mobleys in which 'they' paid $10,000 on the judgments and 'they' have failed and refused to pay the balance of the judgments although the plaintiff has demanded that 'they' do so; that the defendant is liable for the unpaid balance on the judgments, $22,500, plus interest, court costs, damages and attorney's fees, on account of its bad faith in failing to settle the suits and the judgments within the policy limits, pursuant to the plaintiff's requests.

The allegations of count 2, which prayed for damages of $10,000 for the balance due on Mr. Mobley's judgment, plus penalty and attorney's fees, are substantially similar to those of count one, but also include the following: That the defendant had failed to appeal the Federal District Court judgments and the time to file appeals had expired; that the defendant had brought an action for a declaratory judgment to determine its liability under the policy; that the court determined in that action (affirmed, Cotton States Mutual Ins. Co. v. Phillips, 108 Ga.App. 56, 131 S.E.2d 803) that the defendant was liable for payment of $10,000 on both of the judgments and found that it was guilty of bad faith in failing to pay the $10,000 judgment rendered in Mr....