Forbus v. Allstate Ins. Co.

• Decision Date: 21 December 1984
• Docket Number: Civ. A. C84-29N.
• Citation: 603 F. Supp. 113
• Parties: Carol E. FORBUS v. ALLSTATE INSURANCE COMPANY.
• Court: U.S. District Court — Northern District of Georgia

603 F. Supp. 113

Carol E. FORBUS v. ALLSTATE INSURANCE COMPANY.

Civ. A. C84-29N.

United States District Court, N.D. Georgia, Newnan Division.

December 21, 1984.

David B. Kitchens, R. Dennis Withers, Hurt, Richardson, Garner, Todd & Cadenhead, Atlanta, Ga., for plaintiff.

Dennis J. Webb, Brian A. Boyle, Dennis, Corry, Webb & Carlock, Atlanta, Ga., for defendant.

ORDER

TIDWELL, District Judge.

The above-styled matter is presently before the court on motions for partial summary judgment by both the plaintiff and the defendant. Plaintiff has also made a motion in limine. In March 1983 the plaintiff's home was destroyed by fire. At the time of the fire, the plaintiff was insured under a policy issued by defendant. One of the insurance company's defenses is that the fire might have been caused by arson. Plaintiff moves for summary judgment on the issues of whether plaintiff has a full insurable interest in the damaged property and whether defendant established an arson defense. Defendant opposes these motions and in turn moves for summary judgment on the issue of bad faith penalties and attorney's fees.

Insurable Interest

Plaintiff initially asks for summary judgment on the issue of whether she has a full insurable interest in the property under the insurance policy. Defendant concedes that plaintiff has some insurable interest in the property but contends plaintiff is not entitled to the face amount of the Allstate policy for two reasons. First, defendant argues that because plaintiff owes her ex-husband $23,000 under a divorce decree, and plaintiff intended to repay the majority of that debt from the proceeds of the sale of her house, her ex-husband has an interest in the house. This argument is unpersuasive. Under the divorce decree plaintiff received complete title to the house. Plaintiff has no legal duty to pay the money to her ex-husband from the proceeds of any sale of the property. The cases of Allstate Ins. Co. v. Ammons, 160 Ga.App. 257, 286 S.E.2d 765 (1981) and Allstate Ins. Co. v. Thompson, 164 Ga.App. 508, 297 S.E.2d 520 (1982) are inapposite on this point as in those cases the divorce decree specifically granted both spouses an interest in the property. Such is not the situation in this case. Defendant asks this court to look beyond the language of the divorce decree to determine the intent of the parties, however the language is clear and the court need look no further to determine the interests conveyed. Undercofler v. Whiteway Neon Ad., Inc., 114 Ga.App. 644, 152 S.E.2d 616 (1966).

Defendant also relies on Ammons and Thompson for the proposition that because plaintiff attempted to sell her property before the fire, she is limited to that sale price as the amount of her insurable interest. Ammons and Thompson involved divorce settlements in which as part of the settlement the spouses contracted to sell their property either for a minimum price or at fair market value. The Georgia Court of Appeals in those cases limited the insurable interest to the price established in the divorce decree. In the present case because plaintiff has independently contracted to sell her property, defendant asserts that plaintiff is also limited to that value as insurable interest.

The facts of this case are distinguishable. In the Ammons and Thompson cases the divorce decree determined what each party's interest was in the property. Here there is an agreement with a third party, which, based on prior dealings between the parties, is unlikely to materialize. No value on plaintiff's house was determined in the divorce decree. In fact in the Thompson case, where the decree ordered a sale but not a fixed price, the court used the policy limits to determine insurable interest.

Even if the facts of this case were determined to be indistinguishable from the cases cited by defendant, the cases would not be controlling as there is a statute directly on point. The Georgia Valued Policy Statute, O.C.G.A., § 33-32-5 states that whenever any insured residential building is wholly destroyed by fire "the amount of insurance set forth in the policy relative to the building or structure shall be taken conclusively to be the value of the property except to the extent of any depreciation in value occurring between the date of the policy or its renewal and the loss." The insurance policy in question explicitly provides that any policy provisions in conflict with state statutes are amended to conform to such statutes.

None of the cases defendant cites discusses this provision. Indeed, this court has not been able to discover and counsel has not directed the court to any Georgia cases that addressed this issue. However, numerous other jurisdictions have uniformly held that when a state has a value policy law an insured with a possible ownership less than the whole policy limits may recover the entire policy amount under such a statute. See Dewitt v. American Family Mutual Insurance Company, 667 S.W.2d 700, 707 (Mo.1984); Smith v. Nationwide Mutual Fire Insurance Company, 564 F.Supp. 350 (N.D.Fla.1983); Holden v. Hanover Fire Insurance Company, 128 F.Supp. 527 (W.D.S.C.1955); Hilltop Bowl Inc. v. USF & G Company, 259 F.Supp 649, 653 n. 14 (W.D.La.1966); Roberts v. Houston Fire and Casualty Company, 168 So.2d 457 (C.A.La.1964); Tedford v. Security State Fire Insurance Company, 224 Ark. 1047, 278 S.W.2d 89 (1955); Hensley v. Farm Bureau, 243 Ark. 408, 420 S.W.2d 76 (1967); Board of Trustees v. Cream City Mutual Insurance Company, 255 Minn. 347, 96 N.W.2d 690, 695 (1959); Hight v. Maryland Ins. Co., 69 S.D. 320, 10 N.W.2d 285 (1943); Bright v. Hanover Insurance Company, 48 Wash. 60, 92 P. 779 (1907). While these cases are helpful, they are not decisive as this court must consider how this statute would be interpreted by Georgia courts. This court is of the opinion that a Georgia state court alerted to this statute would enforce its provisions Until an indication is given to the contrary this court concludes that the valued policy statute controls and that plaintiff is entitled to summary judgment on this issue.

Arson Defense

The plaintiff asserts that the defendant, as a matter of law, is unable to establish the elements required to successfully assert an arson defense to the policy. While the question of arson is usually decided by the jury, where the evidence is insufficient to raise even an inference of arson, under Georgia law summary judgment is appropriate. Southern Trust Company v. Braner, 169 Ga.App. 567, 314 S.E.2d 241 (1984). Plaintiff refers this court to the three-part test enunciated in Southern Trust at 568, 314 S.E.2d 241, that defendant must show incendiary origin, motive by the suspect, and unexplained surrounding circumstantial evidence implicating the suspect in order to establish an arson defense. Defendant refers this court to another Georgia case, Fortson v. Cotton States Mutual Insurance Company, 168 Ga.App. 155, 308 S.E.2d 382 (1983), for its three-part test, on what is necessary in order to establish an arson defense.

An examination of Georgia law in this area does not indicate which formula should be followed. The two cases were decided four months apart by different panels of the Georgia Court of Appeals. The later decision, Southern Trust, does not refer to the earlier one. Neither Southern Trust nor Fortson cite...