Ga. Farm Bureau Mut. Ins. Co. v. Franks

• Decision Date: 06 March 2013
• Docket Number: No. A12A2196.,A12A2196.
• Citation: 739 S.E.2d 427,320 Ga.App. 131
• Parties: GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY v. FRANKS.
• Court: Georgia Court of Appeals

320 Ga.App. 131

739 S.E.2d 427

GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY

v.FRANKS.

No. A12A2196.

Court of Appeals of Georgia.

March 6, 2013.

Swift, Currie, McGhee & Hiers, Mark T. Dietrichs, Atlanta, for Appellant.

Burkhalter, Pierce & Burkhalter, Albert F. Burkhalter, Jr., Crystal N. Burkhalter Polizzi, for Appellee.

ELLINGTON, Chief Judge.

Thomas Franks filed this action in the Superior Court of Floyd County, seeking benefits under his homeowner's policy from Georgia Farm Bureau Mutual Insurance Company (“GFB”). The trial court denied the parties' cross-motions for summary judgment. Pursuant to a granted application for interlocutory review, GFB appeals, contending that the trial court erred in concluding that questions of material fact remain. For the reasons explained below, we affirm.

To prevail on a motion for summary judgment, “the moving party must demonstrate that there is no genuine issue of material fact, so that the party is entitled to judgment as a matter of law[.]” (Citations and punctuation omitted.) Cowart v. Widener, 287 Ga. 622, 623(1)(a), 697 S.E.2d 779 (2010). ¹ In moving for summary judgment, “a defendant who will not bear the burden of proof at trial need not affirmatively disprove the nonmoving party's case, but may point out by reference to the evidence in the record that there is an absence of evidence to support any essential element of the nonmoving party's case.” (Citation and punctuation omitted.) Id. The court must view the evidence, and all reasonable inferences drawn therefrom, in the light most favorable to the nonmovant. Id. at 624(1)(a), 697 S.E.2d 779. “Summary judgments enjoy no presumption of correctness on appeal [.]” (Citations and punctuation omitted.) Id. Rather, the appellate court is to determine whether there exists a genuine issue of material fact by conducting a de novo review of the evidence. Benton v. Benton, 280 Ga. 468, 470, 629 S.E.2d 204 (2006).

The record establishes the following undisputed facts. In August 2000, Franks purchased the subject property, 2877 Cedartown Highway, Rome. Prior to the closing on August 14, 2000, as required by the lender, Franks applied for homeowner's insurance with GFB. The application, and the policy GFB issued, listed Franks as the only insured. In addition, in the policy's “Conditions” section, it provided that, “[e]ven if more than one person has an insurable interest[ ²] in the property covered, [GFB] will not be liable in any one loss ... [t]o the insured for more than the amount of the insured's interest at the time of loss[.]” After the closing, and on the same day, Franks executed a warranty deed, conveying the property to himself and to his domestic partner, Sterling Morrison, “as joint tenants with survivorship and not as tenants in common.” ³

Franks renewed his policy with GFB annually. In the fall of 2002, Franks told GFB's agent, Todd Blankenship, that Morrison was on the deed as a co-owner and asked whether Morrison needed to be added to the homeowner's policy as an insured.⁴ Blankenship told Franks that it was not necessary to name Morrison as an insured in the policy because only Franks was liable on the debt secured by the property, and Franks remained the sole named insured.

In part because of improvements Franks and Morrison made to the property over the next decade, including a large addition to the house, the policy's coverage for the “dwelling” was increased over time from $60,000 in 2000 to $246,000 for the period August 14, 2009, to August 10, 2010.⁵

During the night of July 15 to 16, 2010, the house was completely destroyed by fire. Franks filed a claim against his homeowner's policy. At that time, the property was encumbered by two secured loans, totaling $104,175.65. GFB issued checks to discharge both of the loans. GFB informed Franks that, because the insured property was owned by Franks and Morrison as “a tenancy in common with the right of survivorship,”⁶ Franks' “insurable interest in the property is calculated by taking the total amount of insurance coverage [for the dwelling], subtracting the amount owed to the mortgagee[s] as of the date of loss, and taking one-half ( 1/2) of the remaining balance.” Based on this calculation, GFB issued a check to Franks for $70,912.18, one-half of the difference between the policy limits for the dwelling ($246,000) and the amount paid to discharge the secured debts ($104,175.65). In his action, Franks contends that he is entitled to the entire difference between the policy limits for the dwelling and the amount paid to discharge the secured debts, rather than a one-half share.

1. GFB contends that Franks' “one-half undivided interest in the [p]roperty as a joint tenant” with Morrison means that Franks' “interest in the [p]roperty is fifty percent.” Further, GFB contends that under Georgia's Insurable Interest Statute, OCGA § 33–24–4, and other applicable law, an insured whose legal ownership interest in insured property is less than 100 percent has an insurable interest only to the same extent as the insured's fractional ownership interest. Consequently, GFB argues, Franks can recover no more than 50 percent of the policy limits less amounts paid to the secured lenders. In addition, GFB contends that, given the policy's explicit insurable interest condition, evidence that GFB had imputed knowledge of Morrison's co-ownership does not create a material question of fact regarding Franks' rights under the contract.

(a) Originally, “[t]he statutory requirement of insurable interest was intended to prevent wagering on human lives.” (Citation and punctuation omitted.) Wood v. New York Life Insurance Co., 255 Ga. 300, 303, 336 S.E.2d 806 (1985).⁷ The concept was soon expanded to property insurance. See OCGA § 33–24–4(b) (“No insurance contract on property or of any interest therein or arising therefrom shall be enforceable except for the benefit of persons having, at the time of the loss, an insurable interest in the things insured.”). “Insurable interest is a keystone of the concept of insurance, safeguarding the insurer against the risk that arises if one who will receive the monetary benefit from loss of the insured property (or life, [in the case of life insurance,] ) has no interest in the property not being destroyed.” Woods v. Independent Fire Insurance Co., 749 F.2d 1493, 1496 (11th Cir. 1985). It is well settled that having title or an ownership interest is not the sole basis for having an insurable interest in property. Brown v. Ohio Cas. Insurance Co., 239 Ga.App. 251, 253(2), 519 S.E.2d 726 (1999). Rather,

[t]he test of insurable interest in property is whether the insured has such a right, title, or interest therein, or relation thereto, that he will be [benefitted] by its preservation and continued existence, or suffer a direct pecuniary loss from its destruction or injury by the peril insured against.

(Citation and punctuation omitted.) Id. Thus, Georgia law defines an “insurable interest” in property as “any actual, lawful, and substantial economic interest in the safety or preservation of the subject of the insurance free from loss, destruction, or pecuniary damage or impairment.” OCGA § 33–24–4(a). Under OCGA § 33–24–4, therefore, having title or legal ownership is not the sine qua non of having an insurable interest, so long as the insured has some lawful interest which “may be slight or contingent, legal or equitable.” (Punctuation and footnote omitted.)

Conex Freight Systems v. Ga. Insurance Insolvency Pool, 254 Ga.App. 92, 97(1)(b), 561 S.E.2d 221 (2002) (An insured's leasehold was an insurable interest.).⁸

Although GFB concedes that Franks had an insurable interest in the subject property, it contends that the measure of his ownership interest, being less than sole and undivided, limits his recovery to a fraction of the policy limits. See OCGA § 33–24–4(c) (“The measure of an insurable interest in property is the extent to which the insured might be damnified by loss, injury, or impairment of such interest in such property.”).⁹ Although the Insurable Interest Statute requires that an insured have an insurable interest, however, once such an insurable interest is shown to exist, it is the policy at issue, and not the statute, that determines the amount the insured is entitled to recover. Amalgamated Transit Union Local 1324 v. Roberts, 263 Ga. 405, 409(2), 434 S.E.2d 450 (1993); American Insurance Co. v. Bateman, 125 Ga.App. 189, 193(2), 186 S.E.2d 547 (1971). GFB contends, however, that as a matter of law the amount of Franks' interest was 50 percent of the value of the dwelling, less debt secured by the property.

Although one who owns property with another as joint tenants with right of survivorship is commonly (and confusingly) referred to as having a “one-half undivided interest,” ¹⁰ this is not in all ways the equivalent of each having a 50 percent ownership interest. See Sams v. McDonald, 117 Ga.App. 336, 340–341(1)(b), 160 S.E.2d 594 (1968).

The properties of a joint estate are derived from its unity, which is fourfold: the unity of interest, the unity of title, the unity of time, and the unity of possession; or, in other words, joint-tenants have one and the same interest, accruing by one and the same conveyance, commencing at one and the same time, and held by one and the same undivided possession.... The principal distinguishing characteristic of estates in joint-tenancy is, that on the death of one the right in the estate survives to the other to the exclusion of the heirs and representatives of the deceased joint-tenant.

(Citations and punctuation omitted.) Id. Thus, although ownership is shared, the title and interest are not divided into fractional shares. Id. It follows that, although Morrison also had the same rights as Franks to use and possess the property, Franks' title and interest in the insured property was undivided, that is, 100 percent. Id. Consequently, GFB's argument that Franks had a 50 percent...