Flewellen v. Atlanta Cas. Co.

Decision Date03 March 1983
Docket Number39427,Nos. 39426,s. 39426
Citation250 Ga. 709,300 S.E.2d 673
CourtGeorgia Supreme Court

William C. Sanders, Alexander & Vann, Thomasville, for Atlanta casualty co.

William H. Hedrick, Beauchamp, Hedrick & Keenan, Albany, Powell, Goldstein, Frazer & Murphy, Atlanta, for Mattie Flewellen (case no. 394261).

O.J. Mullininx, Savannah, for Roy H. Van Dyke (case no. 39427).

Martin Kent, Savannah, Thomas S. Carlock, R. Clay Porter, for Allstate Insurance Co.

G. Conley Ingram, Oscar N. Persons, Vickie Cheek Lyall, N. Forrest Montet, Gary L. Seacrest, Thomas S. Bentley, Edwin A. Tate, Karl M. Terrell, H. Andrew Owen, Timothy J. Sweeney, Eugene G. Partain, Robert M. Travis, Thomas D. Harper, William Lewis Spearman, James G. Jackson, John R. Rogers, James E. Butler, Jr., Alfred L. Allgood, Andrew W. Estes, Don C. Keenan, Lamar W. Sizemore, Jr., William S. Stone, Milton A. Carlton, J. Franklin Edenfield, amici curiae.

CLARKE, Justice.

On its own motion this court granted certiorari in these cases to address the issue of the interpretation of OCGA § 33-34-5 (formerly Code Ann. § 56-3404b) by the Court of Appeals in this litigation, Atlanta Casualty Company v. Flewellen, 164 Ga.App. 885, 300 S.E.2d 166 (1982), and Van Dyke v. Allstate Insurance Co., 164 Ga. 885, 300 S.E.2d 166 (1982) and that court's overruling of its prior decision in Jones v. State Farm Mutual Automobile Insurance Co., 156 Ga.App. 230, 274 S.E.2d 623 (1980), which interpreted the same statute. 1 The Court of Appeals consolidated the cases of Mrs. Flewellen and Mrs. Van Dyke and held that in each case the respective insurers had complied with the intent of the provisions of OCGA § 33-34-5 (Code Ann. § 56-3404b) governing optional benefits. We disagree with the statutory construction of the Court of Appeals and reverse the judgment in Flewellen, Case No. 39426. For reasons set forth in this opinion, the judgment of the trial court in Van Dyke, Case No. 39427, affirmed by the Court of Appeals is also affirmed by this court.

These cases begin with a basically simple dispute: are the insureds entitled to coverage of $5,000 or $50,000 for personal injury protection under the terms of their no-fault automobile insurance policies. Upon review of the arguments of the parties the question takes a quick turn toward issues of considerable complexity.

The insurers contend the statute fails to meet constitutional standards because of vagueness. They also assert that the insureds made valid rejections of the coverage above $5,000. Additionally, they contend that even if both of these arguments fail, the insureds in these cases are not entitled to the benefits of the Court of Appeals' holding in Jones because it should not be given retroactive effect and because there was an accord and satisfaction or release.

We will treat the issues involved by dividing the case into four divisions. The divisions will deal with interpretation of the statute as applied to these contracts, constitutionality of the statute, retroactivity and accord and satisfaction.

1. Central to the resolution of these cases is the meaning of the language in OCGA § 33-34-5 (Code Ann. § 56-3404b) and more specifically the language of subsection (b). Much has been said and written on the words of this sentence but we cite once again the subsection in its entirety for purposes of explanation. "Each application for a policy of motor vehicle liability insurance sold in this state must contain separate spaces for the insured to indicate his acceptance or rejection of each of the optional coverages listed in subsection (a) of this Code section and no such policy shall be issued in this state unless these spaces are completed and signed by the prospective insured." OCGA § 33-34-5(b) (Code Ann. § 56-3404b).

Chapter 34 of the insurance title is the Georgia Motor Vehicle Accident Reparations Act, OCGA § 33-34-1 (Code Ann. § 56-3401b), more commonly referred to as "no-fault" insurance. The clear legislative intent of this chapter is to require all motor vehicle owners to carry no-fault insurance and to mandate that certain losses will be cheaply and expeditiously repaid without respect to fault. The mandatory no-fault coverage imposed on every motor vehicle owner is a minimum of $5,000 for personal injury protection. OCGA § 33-34-4 (Code Ann. § 56-3403b). The statute then proceeds to impose upon every insurer the duty to offer certain coverage. This requirement appears in OCGA § 33-34-5(a) (Code Ann. § 56-3404b) and is divided into two categories, personal injury protection (PIP) and property damage to the motor vehicle. The minimum which must be offered for PIP is $50,000, but the statute allows the prospective insured to reduce the coverage to not less than $5,000 per person. This reduction by the policyholder must be in writing and signed. Therefore, both the insurer and the policyholder face a minimum requirement. The insurer cannot offer less than $50,000 and the policyholder cannot accept less than $5,000.

To this point we have directed our attention to OCGA § 33-34-5(a)(Code Ann. § 56-3404b). The immediate question is how many times and where must the policyholder sign in order to effect a reduction to an amount below the minimum which must be offered by the insurer.

Atlanta Casualty contends one signature at the end of the application is sufficient. Allstate says its form which contains one signature line adjacent to the options relating to PIP and one signature line adjacent to the options relating to property damage is sufficient if the appropriate rejection blocks are checked by the applicant and the signature lines are signed. The Court of Appeals attached appendices to its opinion in these cases showing the applications involved here and in Jones.

Van Dyke contends there can be no reduction of coverage unless there is a signature adjacent to every optional amount listed on the application showing either its rejection or acceptance.

To resolve the differences in these positions, we look to the plain words of the statute. OCGA § 33-34-5(a) (Code Ann. § 56-3404) requires "written consent" to either reject or reduce the coverage required to be offered. OCGA § 33-34-5(b) (Code Ann. § 56-3404b) mandates that rejections or acceptances be accompanied by a signature, and it specifies the optional coverages to be those listed in subsection (a). The optional coverages listed there are PIP and property damage. See Auto-Owners Ins. Co. v. Safeco Ins. Co., 245 Ga. 558, 561, 266 S.E.2d 175 (1981). We hold that the requirements of subsection (b) are satisfied by two signatures, one for acceptance or rejection of optional PIP and another to indicate acceptance or rejection of vehicle damage coverage. The Allstate application and the manner in which it was executed and signed by Van Dyke meets these requirements. The Atlanta Casualty application completed by Flewellen does not.

We turn next to the effect of a failure to make a binding rejection or reduction. It has been argued by the insurers that this results in no contract of insurance at all. This argument relies on the language of the statute which says that no policy will be issued unless the spaces are completed and signed.

The insureds argue that the offer of $50,000 coverage is a continuing offer and the policy is subject to reformation to include this coverage after a tender of the additional premiums for the additional coverage. We do not agree with either of the parties.

The contract must be construed in light of the statute. The statute says that $50,000 PIP coverage is the least the insurer must offer. OCGA § 33-34-5(a) (Code Ann. § 56-3404b). The statute also says this offer of coverage may be refused only by a signed rejection in writing. OCGA § 33-34-5(a) and (b) (Code Ann. § 56-3404b). In the absence of such a rejection, the policy, therefore, provides $50,000 PIP coverage from its inception. The insured has the right to demand and receive the benefit of $50,000 coverage upon tender by the insured of such additional premium as may be due and filing of proof of loss by the injured party.

2. It is contended that the statute is unconstitutionally vague, violating due process, in that "men of common intelligence must necessarily guess at its meaning and differ as to its application." City of Atlanta v. Southern R. Co., 213 Ga. 736, 738, 101 S.E.2d 707 (1958). We are unable to discern an ambiguity and hold that the terms are sufficiently definite and certain in meaning to give proper guidance to those bound by its terms.

3. Atlanta Casualty next contends that if this court returns to the multiple signature requirement of Jones, that requirement should only be applied prospectively under the test in Chevron Oil v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296) (1971). In Chevron Oil, the United States Supreme Court held that in deciding a retroactivity question the court should:

(1) Consider whether the decision to be applied nonretroactively established a new principle of law, either by overruling past precedent on which litigants relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed.

(2) Balance of the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation would further or retard its operation.

(3) Weigh the inequity imposed by retroactive application, for, if a decision could produce substantial inequitable results if applied retroactively, there is ample basis for avoiding the injustice or hardship by a holding of nonretroactivity.

Under the first factor, it is contended that Jones was a case of first impression and the result of the case was not "foreshadowed" due to the holding in American Liberty Ins. Co. v. Sanders, 120 Ga.App. 1 169 S.E.2d 342 (1969)...

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