Dixon v. Home Indem. Co.

• Decision Date: 23 November 1992
• Docket Number: No. A92A1617,A92A1617
• Citation: 206 Ga.App. 623,426 S.E.2d 381
• Parties: DIXON v. HOME INDEMNITY COMPANY.
• Court: Georgia Court of Appeals

Page 381

426 S.E.2d 381

206 Ga.App. 623

DIXON v. HOME INDEMNITY COMPANY.

No. A92A1617.

Court of Appeals of Georgia.

Nov. 23, 1992.

Reconsideration Denied Dec. 4, 1992.

Certiorari Denied Feb. 25, 1993.

Coleman & Dempsey, R. Peter Catlin III, Atlanta, for appellant.

Freeman & Hawkins, Howell Hollis III, Kellie R. Casey, Atlanta, for appellee.

JOHNSON, Judge.

Dixon, an attorney, represented the plaintiffs in a civil action in the Superior Court of Fulton County. Within 45 days after the conclusion of that action, the defendants filed a motion seeking an award of attorney fees and expenses of litigation against Dixon personally, pursuant to OCGA § 9-15-14, alleging that the lawsuit was frivolous. Following a full evidentiary hearing on that motion, the trial court found that the lawsuit was frivolous, that it had no basis in law or fact, and that Dixon, rather than his clients, was responsible. The trial court entered an award of attorney fees against Dixon personally in the amount of $59,480.84. On appeal, the Supreme Court affirmed the award without opinion. See Dixon v. Hubert, 260 Ga. XXIX, 400 S.E.2d 17 (1991).

Following the Supreme Court's decision, Dixon filed the instant declaratory judgment action against his professional liability insurer, The Home Insurance Company, seeking coverage for the award of attorney fees entered against him. Home filed an answer denying that Dixon's policy provided coverage for awards entered under OCGA § 9-15-14. The trial court entered judgment in favor of Home. Dixon appeals.

1. Dixon contends that the trial court erred in ruling that his policy did not cover awards of attorney fees and expenses of litigation under OCGA § 9-15-14 based upon its determination that such awards are "sanctions" within the meaning of the policy. We disagree.

Awards of attorney fees and expenses of litigation entered pursuant to OCGA § 9-15-14 are not expressly included in the "Exclusions" section of the insurance policy in question, and are not expressly excluded elsewhere in the policy. The policy does, however, contain the following provisions regarding coverage:

"Section B--Coverage

"I. Professional Liability and Claims Made Clause: To pay on behalf of insured all sums ... which the Insured shall become legally obligated to pay as damages as a result of CLAIMS FIRST MADE AGAINST THE INSURED ... caused by any act, error or omission for which the insured is legally responsible, and arising out of the rendering or failure to render professional services for others in the insured's capacity as a lawyer....

"Damages, whenever used in this policy, means a monetary judgement (sic) ... and does not include fines or statutory penalties, or sanctions whether imposed by law or otherwise.... (Emphasis supplied.)"

Because the policy does not expressly exclude from coverage damages arising from the application of OCGA § 9-15-14, nor does the policy define the term "sanction," we are left to determine whether the trial court erred in its interpretation of both the policy language and OCGA § 9-15-14. In doing so, we must apply the well-settled legal principles governing both statutory interpretation and interpretation of insurance policies.

We begin with the statute. "It is a fundamental rule of statutory construction that where the language of a statute is plain and unambiguous, the terms used therein should be given their common and ordinary meaning." (Citations and punctuation omitted.) Capra v. Rogers, 200 Ga.App. 131, 133(1), 407 S.E.2d 101 (1991). When one applies this rule to a reading of OCGA § 9-15-14, it is clear that the intent of the statute is to deter attorneys and parties from filing frivolous lawsuits. It accomplishes this deterrent effect by requiring the party or attorney who is responsible for filing a frivolous lawsuit to pay the opposing party's attorney fees and expenses of litigation, thus deviating from the general rule that parties to lawsuits must bear their own attorney fees and expenses of litigation. See generally Arrington v. Thompson, 211 Ga. 734, 744(8), 88 S.E.2d 402 (1955).

The word "sanction" means "a penalty or punishment provided as a means of enforcing obedience to a law." Black's Law Dictionary (4th ed. 1957). Though an award arising from a judgment under OCGA § 9-15-14 also serves the incidental purpose of providing compensation to the injured party, this does not diminish the reality that awards made under it are "sanctions" under the accepted definition of that term.

We now must look to the policy for any guidance it provides. We are bound by the principle that "[e]very insurance contract shall be construed according to the entirety of its terms and conditions as set forth in the policy." (Punctuation omitted.) S & T Timber v. Southern Gen. Ins. Co., 198 Ga.App. 18, 19, 400 S.E.2d 379 (1990); see also OCGA § 33-24-16. "An unambiguous policy requires no construction, and its plain terms must be given full effect even though they are beneficial to the insurer and detrimental to the insured." (Citations and punctuation omitted.) Liberty Nat. Ins. Co. v. Davis, 198 Ga.App. 343, 344, 401 S.E.2d 555 (1991). Home contends that there is no coverage because the award was a "sanction" against Dixon, and that "damages" it is required to pay, as defined by the policy, expressly excludes sanctions. We agree.

The subject insurance policy does not define "sanction." In the absence of a definition within the policy, we must give the word its ordinary meaning. See OCGA § 13-2-2(2). "Sanction" is clear and unambiguous. The dictionary definition referred to above is entirely consistent with the plain meaning of the phrase in the policy, which groups "sanction" with "fine" or "statutory penalty," as being excluded from coverage. It was not error for the trial court to conclude that an award of attorney fees under OCGA § 9-15-14 is a sanction within the meaning of the exclusion contained...