Doran v. Travelers Indem. Co., 41550

• Decision Date: 27 February 1985
• Docket Number: No. 41550,41550
• Citation: 254 Ga. 63,326 S.E.2d 221
• Parties: DORAN v. TRAVELERS INDEMNITY COMPANY.
• Court: Georgia Supreme Court

Page 221

326 S.E.2d 221

254 Ga. 63

DORAN v. TRAVELERS INDEMNITY COMPANY.

No. 41550.

Supreme Court of Georgia.

Feb. 27, 1985.

Rehearing Denied March 14, 1985.

Berrien L. Sutton, Charles R. Reddick, Sutton & Reddick, Homerville, for Dennis Doran.

Bryan F. Dorsey, Dickins & Irvin, Atlanta, for Travelers Indemnity Co.

GREGORY, Justice.

Dennis Doran (Doran) filed suit against Travelers Indemnity Company (Travelers) in Clinch Superior Court. Travelers removed the case to the United States District Court for the Southern District of Georgia. Summary judgment for Travelers was granted by the District Court and Doran appealed to the United States Court of Appeals for the Eleventh Circuit. The Eleventh Circuit concluded the case presented important issues of Georgia law, determinative of the cause, but without precedent in the decisions of this court. Four certified questions have been presented pursuant to our Rule 37. These questions relate to the Georgia Motor Vehicle Accident Reparations Act (commonly known as the No-fault Automobile Insurance Act, OCGA § 33-34-1, et seq., or simply "no-fault").

The facts have been carefully and completely stated by the Eleventh Circuit. We quote in part and paraphrase in part:

"(Doran), a Georgia resident, brought this action against (Travelers), which is authorized to do business in Georgia, to recover benefits under the no-fault provisions of an automotive insurance policy issued to his employer. In 1974 the insured, James O'Quinn, a Florida resident doing business as O'Quinn Automotive Electrical, owned and operated an electrical repair shop principally located in Jacksonville, Florida. In November of that year, O'Quinn obtained an insurance policy with Travelers, through the company's local agent in Jacksonville, covering vehicles garaged in Jacksonville and used in the business.

"On October 29, 1979, O'Quinn opened a branch facility in Waycross, Georgia, and added at least one vehicle to the policy, a 1974 van. The van was garaged in Waycross and was used by Doran in connection with O'Quinn's business. Although the van was registered in Florida, the parties understood that it would be used primarily in O'Quinn's Georgia operations.

"In response to the addition of the Georgia vehicle, Travelers delivered to O'Quinn a Georgia endorsement for basic no-fault coverage. The record does not indicate whether the endorsement was delivered to the business address in Georgia or Florida or to the residence of O'Quinn in Florida. The endorsement stated, in part:Notwithstanding any of the other terms and conditions of the policy, the coverage afforded shall be at least as extensive as the minimum coverage required by the Georgia Motor Vehicle Accident Reparations Act....The original policy contained a similar provision, entitled 'Out-of-State Extension of Coverage,' which purported to increase the policy's minimum coverage to match the requirements specified by another state's compulsory insurance laws:While covered auto is away from the state where it is licensed we [the 'insurer'] will:(a) increase this policy's liability limits to meet those specified by a compulsory or financial responsibility law in the jurisdiction where the covered auto is being used. (b) provide the minimum amounts and types of other coverages, such as 'No-fault,' required of out of state vehicles by the jurisdiction where the covered auto is being used.On December 6, 1979, Doran, while driving the van in Clinch County, Georgia, had a collision and suffered serious injuries. Because the accident arose in the course of his employment, Doran applied for and immediately began receiving workers' compensation benefits under his employer's workers' compensation policy with Travelers. On December 8, 1980, Doran presented claims to Travelers for uninsured motorist benefits and $5,000 in benefits under OCGA §§ 33-34-1 and 33-34-3(A)(2) for basic no-fault coverage, also known as personal injury protection (PIP). Because under Georgia law an insurer must provide uninsured motorist protection on all insured vehicles garaged in Georgia, Travelers promptly paid the uninsured motorist part of Doran's claim. On January 30, 1981, however, it refused to pay the basic PIP benefits because Doran was already receiving payments under O'Quinn's workers' compensation policy. The company relied upon the September 19, 1980, Georgia Court of Appeals' decision in Boston Old Colony Ins. Co. v. Brown, 155 Ga.App. 767, 272 S.E.2d 755 (1980), which held that an employee injured in an automobile accident could not collect no-fault benefits under his employer's automotive policy if he had received workers' compensation benefits from the same employer.

"On March 12, 1981, six weeks after Travelers refused to pay Doran's PIP claim, the Supreme Court of Georgia reversed the Court of Appeals' decision, Brown v. Boston Old Colony Ins. Co., 247 Ga. 287, 275 S.E.2d 651 (1981), and held that an employee could collect a reduced amount of no-fault PIP benefits even if he had collected disability benefits under his employer's workers' compensation coverage. The court stated that an earlier opinion which the Court of Appeals had followed, Freeman v. Ryder Truck Lines, Inc., 244 Ga. 80, 259 S.E.2d 36 (1979), was no longer applicable because it was decided under the Georgia Motor Vehicle Accident Reparations Act as it existed prior to an April 1979 amendment to section 33-34-8, which now provides that an employee may recover no-fault benefits reduced to a limited extent by the amount he collected as workers' compensation. Travelers thus refused payment of the basic PIP benefits after the statute had been amended but before the Supreme Court had reviewed the Court of Appeals' decision in Boston Old Colony.

"On April 8, 1982, more than one year after the Supreme Court's decision in Boston Old Colony, Doran renewed his claim for basic PIP. The company promptly paid the $5,000 on April 16, 1982. The record shows that although Travelers was aware of the Supreme Court's reversal at least within 'several months' of the decision, it never notified Doran of the change in the law. The company asserts that by the time it became aware of the decision, the file on Doran's claim had been 'closed out'. Doran maintains that Travelers' failure to pay his claim or notify him within thirty days of the Supreme Court decision constituted a bad faith refusal to pay a claim under OCGA § 33-34-6.

"In his April 1982 claim, the plaintiff also sought $45,000 additional PIP benefits under OCGA §§ 33-34-3(a)(2) and 33-34-5, pursuant to Jones v. State Farm Mutual Automobile Ins. Co., 156 Ga.App. 230, 274 S.E.2d 623 (1980), cert. dismissed, 248 Ga. 46, 280 S.E.2d 837 (1981), which held that a policyholder may elect an additional $45,000 in PIP coverage at any time, even after the accident has occurred, unless the insurer can demonstrate that it provided the policyholder with an opportunity in writing to accept or reject the optional coverage. The parties agree that O'Quinn was afforded no such opportunity."

The Eleventh Circuit's statement of facts goes on to point out that Jones, supra, was later overruled by Van Dyke v. Allstate Ins. Co., 164 Ga.App. 885, 300 S.E.2d 166 (1982), but its holding was reinstated by this court in Flewellen v. Atlanta Casualty Co., 250 Ga. 709, 300 S.E.2d 673 (1983). The statement of facts then concludes:

"Doran brought this suit in the Superior Court of Clinch County, Georgia, and the defendant removed the case to federal district court. The complaint sought $45,000 in optional PIP benefits, and punitive damages, penalty and attorney's fees for bad faith delay in paying basic PIP benefits. The district court granted summary judgment for the defendant and Doran has appealed."

1. The first of the four questions is: "Did the Travelers act in good faith as a matter of law so as to avoid the sanctions of OCGA § 33-34-6, ¹ when it relied upon Boston Old Colony Ins. Co. v. Brown, 155 Ga.App. 767, 272 S.E.2d 755 (1980), as a basis for refusing to pay basic no-fault insurance benefits, and, when that case was reversed six weeks after the refusal, it failed to review its files, pay the claim or notify the insured within thirty days of the refusal?" Answer: Yes.

We arrive at this answer by observing the evolution of Georgia law concerning the correlation of no-fault benefits and workers' compensation benefits. Travelers' refusal to pay basic PIP ² was based on the contention such benefits were not payable where workers' compensation was paid. The beginning point is the original no-fault statute. Georgia Laws 1974, p. 113, 120. Section 9 provided that no-fault benefits should not be reduced or eliminated by workers' compensation benefits or other similar benefits. ³ This section was challenged in Freeman v. Ryder Truck Lines, Inc., 244 Ga. 80, 259 S.E.2d 36 (1979) supra. In that case, Freeman, an employee of Ryder was injured in Ryder's vehicle while on the job. Freeman claimed both no-fault and workers' compensation from Ryder, a self insurer. Ryder contended workers' compensation provided the exclusive benefits. ⁴ Freeman contended section 9, supra, required payment of both benefits. While Ryder put forth an equal protection challenge, this court declined to address the merits of that challenge. Instead, the two statutes were construed in a manner to give effect to both, and avoid the conflict. It was held that section 9 applied to Freeman's own no-fault policy covering him and his personal vehicle. He could recover no-fault benefits under his own policy notwithstanding receipt of workers' compensation from Ryder. However, Freeman could not recover no-fault benefits from Ryder because workers' compensation was the exclusive remedy against the employer.

In 1979 section 9 was amended to limit its effect. Ga.Laws 1979, p. 594. Under the amendment there was a correlation of benefits where an employer provided, at his expense, benefits for both...