Cross v. Tokio Marine & Fire Ins. Co.

• Decision Date: 14 February 2002
• Docket Number: No. A01A1864.,A01A1864.
• Citation: 563 S.E.2d 437,254 Ga. App. 739
• Court: Georgia Court of Appeals
• Parties: CROSS et al. v. TOKIO MARINE & FIRE INSURANCE COMPANY, LTD. et al.

563 S.E.2d 437

254 Ga. App. 739

CROSS et al. v. TOKIO MARINE & FIRE INSURANCE COMPANY, LTD. et al.

No. A01A1864.

Court of Appeals of Georgia.

February 14, 2002.

Reconsideration Denied April 8, 2002.

Downey & Cleveland, Y. Kevin Williams, Sean L. Hynes, Johnson & Cooper, Jean E. Johnson, Jr., Marietta, for appellants.

Hall, Booth, Smith & Slover, Rush S. Smith, Jr., Jennifer L. McKernan, Paul R. Koster, Thomas A. Graham, Morris, Manning & Martin, Lewis E. Hassett, Jessica F. Pardi, Atlanta, for appellees.

SMITH, Presiding Judge.

Michael and Jacquelyn Cross filed suit against Tokio Marine & Fire Insurance Company, Ltd., Tokio Marine Management, Inc., and Tokio's former attorneys (collectively Tokio), alleging they had misrepresented by several million dollars the limits of coverage of Tokio's insured in a suit for damages filed by the Crosses against the insured after an automobile collision. The trial court granted summary judgment in favor of Tokio and denied the Crosses' motion for partial summary judgment, and the Crosses appeal. They contend that the trial court erred in concluding that no cause of action existed under Georgia law for their claims and that no material issue of fact remained as to whether they suffered harm as a result of Tokio's failure to disclose the policy limits accurately. They also challenge the trial court's denial of their motion for partial summary judgment on the issue of liability, which they claim was admitted. We conclude that the trial court properly denied the Crosses' motion for partial summary judgment because Tokio's failure to respond to a settlement offer was not an admission of liability. We also find that the trial court properly granted summary judgment to Tokio because, although Tokio did indeed misrepresent the limits of coverage, the Crosses suffered no cognizable harm. We therefore affirm the judgment below.

The record shows that in June 1997, Tokio's insured, Patricia Williams, and Michael Cross were involved in a vehicular accident and Cross was injured. The Crosses' attorney sent a letter to Tokio in October 1997, citing OCGA § 33-3-28(a)(1) and (2), and requesting the name of each insurer and the limits of coverage. Kathy Adams, a claims examiner for Tokio, responded to the letter, enclosing a copy of the declarations page of a contract of insurance issued to American Honda. That page disclosed a liability coverage limit of $1,000,000. In July 1998, the Crosses' attorney made a demand upon Tokio to settle the Crosses' claims for $750,000 based upon "the specials, nature of injuries and past, present and future pain and suffering." At that time, Cross had sustained medical damages of more than $88,000 and lost wages of more than $15,000.

Shortly thereafter, Cross and his wife filed suit against Williams. A jury awarded the Crosses $1,204,000 in damages, and judgment was entered on the verdict. Approximately one month later, Tokio's counsel first informed the Crosses' counsel that its insured had coverage of $2,000,000, rather than the $1,000,000 that had been disclosed before suit was filed, and then informed the Crosses' counsel that the coverage was actually $7,000,000. The judgment in the underlying lawsuit was not appealed.

This lawsuit was filed in March 2000, alleging violation of OCGA § 33-3-28(d), false swearing under OCGA § 16-10-71, fraud and misrepresentation, and Racketeer Influenced & Corrupt Organizations Act violations and seeking pre-judgment interest under OCGA § 51-12-14(b). The Crosses claim that because of Tokio's misrepresentation of the coverage limits, they recovered substantially less in their original lawsuit than the full value of their claim. Tokio moved for summary judgment, alleging that no private right of action exists under OCGA § 33-3-28, that the Crosses did not make a proper demand under that statute, and that notwithstanding any misrepresentation, the Crosses received the full value of their claim in the judgment, and they accepted this in satisfaction of their claim and did not move to set aside the judgment even after they became aware of the misrepresentation. The Crosses' motion for partial summary judgment was based upon their contention that Tokio admitted liability when it failed to respond to a letter including statements that Tokio had misrepresented coverage.

1. OCGA § 33-3-28 provides:

(a) (1) Every insurer providing liability or casualty insurance coverage in this state and which is or may be liable to pay all or a part of any claim shall provide, within 60 days of receiving a written request from the claimant, a statement, under oath, of a corporate officer or the insurer's claims manager stating with regard to each known policy of insurance issued by it, including excess or umbrella insurance, the name of the insurer, the name of each insured, and the limits of coverage. Such insurer may provide a copy of the declaration page of each such policy in lieu of providing such information. The claimant's request shall set forth under oath the specific nature of the claim asserted and shall be mailed to the insurer by certified mail or statutory overnight delivery.... (d) The information provided to a claimant or his attorney as required by subsection (a) of this Code section shall be amended upon the discovery of facts inconsistent with or in addition to the information provided.

This court has held that subsection (d) of this statute does not create a private right of action against an insurer that breaches it, because the statute does not specifically include such a right, and failure to comply with the statute comes within the conduct subject to sanctions by the Insurance Commissioner as the exclusive regulatory remedy. Generali-U.S. Branch v. Southeastern Security Ins. Co., 229 Ga.App. 277, 280(2)(a), 493 S.E.2d 731 (1997). In Parris v. State Farm &c. Ins. Co., 229 Ga.App. 522, 494 S.E.2d 244 (1997), this court held that the absence of language in OCGA § 33-3-28 creating a private right of action "strongly indicates the legislature's intention that no such cause of action be created by said statute." Id. at 524, 494 S.E.2d 244. Here, as in Parris, "[t]he trial court did not err in its ruling in this regard." Id.

We held in Parris that no recovery could be had for fraud or false swearing because the plaintiffs settled their claims after the insurer corrected its original misrepresentation, and they therefore settled "with full knowledge of all insurance coverage" and could show no actual damages. Id. at 525, 494 S.E.2d 244. But this court was careful to indicate that its opinion turned

on the issue of damages and does not stand for the proposition that an insurance company will be protected from liability as long as full disclosure of insurance coverage precedes a settlement. Such a rule would emasculate any duties created by OCGA § 33-3-28, the laws of fraud, and the laws of false swearing.... Improper insurance reporting may result in liability under a proper factual scenario.

Id. at 525-526, 494 S.E.2d 244. The Crosses contend that this is such a "proper factual scenario." We do not agree.

In Merritt v. State Farm &c. Ins. Co., 247 Ga.App. 442, 544 S.E.2d 180 (2000), which was decided after the final judgment was entered in this case, this court noted that it had a "proper factual scenario" before it. Id. at 446, 544 S.E.2d 180. Merritt brought suit against State Farm for fraud, misrepresentation, false swearing, and RICO violations, claiming the insurer failed to disclose the existence of a $1,000,000 umbrella policy until after she had settled for the previously disclosed policy limits of $250,000. Guided by Parris, we reversed the trial court's grant of summary judgment to State Farm. The record showed that State Farm's adjuster initially concluded "without any further investigation" that the claim was valued in excess of the disclosed policy limits of $250,000. Id. at 448(3), 544 S.E.2d 180. Almost two years after swearing that the policy limit was $250,000, State Farm reached a "regional office decision" that Merritt's claim was worth $500,000. We concluded, therefore, that Merritt presented "some evidence from which a jury could conclude that she lost at least the use of $250,000 for some period of time" and that such damages were cognizable. Id.

In contrast, the Crosses did not settle their claims against Tokio's insured. Their claims were fully and fairly tried before a jury, which returned a verdict based on the evidence presented of the Crosses' damages. Insurance coverage usually is not disclosed to a jury, and the jury here returned its verdict without knowing of the existence or the amount of any insurance coverage. See Bennett v. Terrell, 224 Ga.App. 596, 597(2), 481 S.E.2d 583 (1997). The Crosses therefore cannot prove the elements of causation and damages, which are essential to their claims against Tokio. They cannot show that they would have made a greater...