Federated Mut. Ins. v. Ownbey Enterprises, Inc., No. A05A1701.

• Decision Date: 06 March 2006
• Docket Number: No. A05A1701.
• Citation: 627 S.E.2d 917,278 Ga. App. 1
• Parties: FEDERATED MUTUAL INSURANCE COMPANY v. OWNBEY ENTERPRISES, INC. et al.
• Court: Georgia Court of Appeals

278 Ga. App. 1

627 S.E.2d 917

FEDERATED MUTUAL INSURANCE COMPANY v. OWNBEY ENTERPRISES, INC. et al.

No. A05A1701.

Court of Appeals of Georgia.

March 6, 2006.

William B. Barrickman, Barrickman, Allred & Young, LLC, Atlanta, for appellant.

Robert M. Withrock, Avrett, Ponder & Withrock, Dalton, for appellees.

ADAMS, Judge.

Federated Mutual Insurance Company appeals from the trial court's denial of its motion for summary judgment and the grant of Ownbey Enterprises, Inc.'s cross-motion for partial summary judgment in Federated's declaratory relief action. Both motions addressed the issue of whether Ownbey had complied with the notice provisions of a commercial general liability policy issued by Federated, thus triggering Federated's duty to defend and indemnify Ownbey in connection with a slip and fall lawsuit filed by Bruce Mattox. In granting Ownbey's summary judgment motion, the trial court found that Federated's attorney admitted in judicio that the company had received actual notice of Mattox's lawsuit and thus the court held that coverage existed under the policy. Federated argues on appeal that the record does not support this finding, and further asserts that it is entitled to summary judgment under the language of the policy.

In reviewing a grant or denial of summary judgment, this Court conducts a de novo review of the evidence. To prevail at summary judgment ..., the moving party must demonstrate that there is no genuine issue of material fact and that the undisputed facts, viewed in the light most favorable to the nonmoving party, warrant judgment as a matter of law. ( Footnote omitted.)

Aames Funding Corp. v. Henderson, 275 Ga.App. 323, 620 S.E.2d 503 (2005).

The record shows that on April 1, 2000, Federated issued a commercial general liability policy to Ownbey for a term of one year. The policy was purchased through Federated's local agent, Benton Ballenger, who had handled Ownbey's insurance business in the past. In connection with these transactions, Ballenger furnished Ownbey with a business card listing his mailing address.

On December 24, 2000, Mattox was allegedly injured when he fell at a gas station owned and operated by Ownbey in Cedartown.¹ On March 1, 2001, Mattox's attorney notified Ownbey of Mattox's claim for personal injury arising out of this incident and asked the company to forward notice of the claim to its insurance carrier. Ownbey notified Federated, which assigned a claim number to the incident. On April 6, 2001, Blake McPherson, a Federated field claims representative, wrote Mattox's attorney on behalf of Federated and requested copies of Mattox's medical bills and records. Mattox's attorney responded with a settlement demand package including Mattox's medical information and an offer to settle the matter for $51,500, a figure within the policy limits.

Federated did not inform Ownbey of this offer. Instead, McPherson responded on behalf of Federated, telling Mattox's attorney that it appeared Mattox had fabricated his injuries and there was no evidence that he actually had fallen on Ownbey's property. On August 26, 2002, Mattox's attorney sent McPherson a letter notifying him that Mattox intended to file suit in the Superior Court of Polk County. In addition, the letter made a formal settlement demand under OCGA § 51-12-14 for $51,500. Although McPherson had been transferred to Federated's Nashville, Tennessee, office in November 2001 and was no longer assigned to Ownbey's account, he received the letter because the post office was forwarding his mail to him. McPherson forwarded the letter to Berkeley E. Boone, Federated's senior claims supervisor, who responded to the demand by telling Mattox's attorney that Federated's position had not changed. Federated did not notify Ownbey of Mattox's formal demand.

Mattox filed suit on December 20, 2002, and at that time, his attorney mailed a courtesy copy of the complaint to the Georgia address he had previously used to correspond with McPherson. Although McPherson's forwarding order with the post office had expired in November 2002, this mailing was never returned to Mattox's attorney as undeliverable or unclaimed. Mattox's complaint was served on Ownbey's registered agent for service of process on January 6, 2003. Two days later, the registered agent mailed the service copy to Ballenger at the post office address shown on his business card. That mailing was never returned to Ownbey's agent by the post office as being unclaimed or undeliverable. Nevertheless, both Ballenger and McPherson deny that they ever received a copy of the complaint.

No answer was filed on behalf of Ownbey to Mattox's complaint, and on December 5, 2003, Mattox was awarded a default judgment on his claims in the amount of $175,000. After receiving notice of the default judgment, Federated filed this declaratory judgment action seeking a determination that the insurance company has no duty to provide a defense or indemnity to Ownbey on Mattox's claim. Federated maintains that Ownbey failed to properly notify it of the lawsuit as required under the terms of the commercial liability policy.

It is well established that a notice provision expressly made a condition precedent to coverage² is valid and must be complied with, absent a showing of justification. Where an insured has not demonstrated justification for failure to give notice according to the terms of the policy, ... then the insurer is not obligated to provide either a defense or coverage.

(Citation and punctuation omitted.) Plantation Pipeline Co. v. Royal Indem. Co., 245 Ga.App. 23, 28(2), 537 S.E.2d 165 (2000). See also Southeastern Express Systems v. Southern Guaranty Ins. Co. of Ga., 224 Ga. App. 697, 701, 482 S.E.2d 433 (1997).

The pertinent notice provisions of Ownbey's commercial general liability policy state:

2. Duties in The Event of Occurrence, Offense, Claim or Suit

a. You must see to it that we are notified as soon as practicable of an "occurrence" or an offense which may result in a claim. To the extent possible, notice should include:

(1) How, when and where the "occurrence" or offense took place;

(2) The names and addresses of any injured persons and witnesses; and

(3) The nature and location of any injury or damage arising out of the "occurrence" or offense.

b. If a claim is made or "suit" is brought against any insured, you must:

(1) Immediately record the specifics of the claim or "suit" and the date received; and

(2) Notify us as soon as practicable.

You must see to it that we receive written notice of the claim or "suit" as soon as practicable.

c. You and any other involved insured must:

(1) Immediately send us copies of any demands, notices, summonses or legal papers received in connection with the claim or "suit"....

Federated contends that these provisions create a two-part obligation on the part of the insured: (1) the insured must first forward a copy of the summons and complaint to Federated, and (2) then "see to it" that these documents were received by the insurer. Federated concedes that an issue of fact exists as to the first of these duties, because Ownbey furnished evidence that its registered agent mailed the complaint to Federated, but Ballenger, the intended recipient, denied receiving it. Nevertheless, Federated asserts that it is entitled to summary judgment because there is no evidence that Ownbey made any effort to "see to it" that the complaint had been received by Federated.

Federated contends that this two-part requirement applies whenever an insured is the subject of a claim or a suit. Therefore, although Federated concedes that it received proper notice of Mattox's claim against Ownbey, it argues that Ownbey was also required to provide notice when Mattox filed suit and "to see to it" that such notice was received. Federated asserts that because Ownbey failed to follow the two-step process to provide notice of the lawsuit, Federated is entitled to summary judgment in its declaratory judgment action. And contrary to the trial court's findings, Federated denies admitting that it received actual notice of the lawsuit prior to March 2004, when it was informed of Mattox's default judgment.

Ownbey contends, however, that Federated's argument attempts to impose an obligation not contemplated by the language of the policy. Although paragraph 2.c of the notice provision required Ownbey to serve Federated with the complaint, it does not contain the "see to it" language found in the other notice provisions. Ownbey argues that there was no requirement that it take additional steps to confirm Federated's receipt of the complaint. And to the extent that the language of paragraph 2.b could be read as imposing such a requirement, Ownbey argues that it...