Georgia Farm Bureau Mut. Ins. Co. v. Musgrove, 67602

• Decision Date: 20 June 1984
• Docket Number: No. 67602,67602
• Citation: 171 Ga.App. 639,320 S.E.2d 776
• Parties: GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY v. MUSGROVE et al.
• Court: Georgia Court of Appeals

Page 776

320 S.E.2d 776

171 Ga.App. 639

GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY v. MUSGROVE et al.

No. 67602.

Court of Appeals of Georgia.

June 20, 1984.

Rehearings Denied July 16, 1984.

Certiorari Denied Sept. 4, 1984.

Certiorari Granted Oct. 2, 1984.

F. Thomas Young, Valdosta, for appellant.

Berrien L. Sutton, Homerville, for appellees.

McMURRAY, Chief Judge.

On May 28, 1976, Willis Musgrove's son Kenneth Musgrove was seriously injured in a collision between a farm tractor he (Kenneth Musgrove) was operating and a 1967 truck (owned and operated by Allison Hayes). As a result of the injuries suffered in the collision, medical bills in excess of $23,000 were incurred by Willis Musgrove. At the time of the collision Willis Musgrove had three insurance policies with Georgia Farm Bureau Mutual Insurance Company (Georgia Farm Bureau), each providing for $5,000 basic no-fault benefits and $5,000 optional no-fault benefits. In addition, each policy provided $1,000 medical payments coverage. Georgia Farm Bureau also insured the truck that struck Kenneth with coverage of $5,000 basic no-fault benefits.

Georgia Farm Bureau paid to Kenneth Musgrove $3,000 ($1,000 each policy) under the medical payments coverage of the Musgrove policies, $2,500 basic no-fault benefits under the Hayes policy, and $2,500 basic and $5,000 optional no-fault benefits under one of the Musgrove policies.

Plaintiffs then sued defendant Georgia Farm Bureau for additional optional no-fault benefits of $10,000 under the two remaining policies and the trial court (without a jury and on stipulated facts) entered judgment in plaintiffs' favor in the amount of $10,000, plus $1,750 attorney fees, $2,500 penalty, and $5,000 punitive damages. On appeal, this court reversed and held that due to a provision in the insured's policy, Georgia Farm Bureau's liability was limited to the highest amount of additional personal injury protection (PIP) purchased on any one policy. Since the parties had stipulated that each of the three Musgrove policies provided for $5,000 additional PIP coverage, this court held that the plaintiffs (Willis and Kenneth Musgrove) could only recover up to $5,000 under the optional coverage, and, that limit having been reached, no further recovery was permitted. (See Ga. Farm Bureau Mut. Ins. Co. v. Musgrove, 153 Ga.App. 690, 692, 266 S.E.2d 228.

On March 2, 1982, the named insured, Willis Musgrove, through his attorney, sought to elect optional PIP coverage to increase his policy limits to $50,000 under each of the three Musgrove policies, pursuant to Jones v. State Farm Mut. Auto. Ins. Co., 156 Ga.App. 230, 274 S.E.2d 623. In this regard, Mr. Musgrove notified Georgia Farm Bureau of his election of increased optional benefits and tendered the additional premiums. Proof of loss statements had been filed previously by the plaintiffs. However, Georgia Farm Bureau refused to pay, and plaintiffs (Kenneth and Willis Musgrove) subsequently, on October 29, 1982, commenced this action seeking the additional PIP benefits and bad faith penalty and attorney fees. Thereafter, on June 17, 1983, plaintiffs, by amendment to their complaint, also sought to elect optional PIP coverage under the Hayes policy. Georgia Farm Bureau again refused to pay.

Following a hearing on the motions for summary judgment filed by each of the parties, the trial court granted summary judgment in plaintiffs' favor holding that plaintiffs were entitled to recover, as primary coverage, optional no-fault benefits under the Hayes policy and, as secondary coverage, optional no-fault benefits under the Musgrove policies. Defendant appeals to this court from the grant of summary judgment in favor of the plaintiffs and the denial of summary judgment in favor of defendant. Held:

1. Defendant contends that plaintiffs' present action is barred by OCGA § 9-3-24 (formerly Code Ann. § 3-705) since it was brought more than six years after plaintiff Kenneth Musgrove's medical expenses were incurred. We disagree.

OCGA § 9-3-24, supra, provides in part: "All actions upon promissory notes, drafts, or other simple contracts in writing shall be brought within six years after the same become due and payable ..." (Emphasis supplied.) A contract of insurance not executed under seal is a simple contract in writing, and where no contractual limitations are contained therein as to the time when an action on the policy shall be brought, the statute of limitation applicable to simple contracts in writing applies. See Burton v. Metro. Life Ins. Co., 48 Ga.App. 828, 173 S.E. 922.

In the present case, the parties agree that the applicable limitations period is six years. This is in fact the case since the insurance policy contained no contractual limitation as to the time when an action on the policy should have been brought. However, the parties disagree as to when the statutory period should begin to run. Thus, we must determine when the right of action as to the optional PIP benefits would accrue by virtue of the three Musgrove policies.

In Burton v. Metro. Life Ins. Co., supra, the court considered a policy which did not contain any contractual limitation upon the time to bring suit thereon, but provided that any loss thereunder was not due and payable until six months after the insured submitted proof of loss. The court held that the statutory period of limitations governed the action, but did not begin to run until six months after the insurer received the proof of loss.

"Former OCGA § 33-34-5(b) (Code Ann. § 56-3404b) required that the 'insured' be given an opportunity to accept or reject optional PIP coverage, and cases construing that statute have granted relief to the 'insured.' For example, the Supreme Court has stated: 'In the absence of such a rejection [as is required by statute], 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.' " (Emphasis supplied different from that quoted.) [Cit.] Bailey v. Ga. Mut. Ins. Co., 168 Ga.App. 706, 707-708, 309 S.E.2d 870. Consequently in the instant case, the statute of limitation began to run on the date when the insurer received notice of the policyholder's intent to elect optional PIP coverage by his tender of the additional premiums due and filing of his proofs of loss, which date according to the plaintiff's (policyholder Musgrove's) letter, was March 2, 1982. The policy being a written contract, had six years to run before becoming barred. Suit was filed October 29, 1982, which was within six years from the time the statute began to run.

Hence, as to the three Musgrove policies, the plaintiffs' action is not barred. This result is not only consistent with the decision in Burton v. Metro. Life Ins. Co., supra, but also is in accord with the general rule, followed in Georgia, that, where a condition precedent to a right of action exists, the statute of limitation does not begin to run until that condition is performed. See, e.g., Thomas v. Hudson, 190 Ga. 622, 10 S.E.2d 396; cf. Decatur Fed. Savings & C. Assn. v. York Ins. Co., 147 Ga.App. 797, 799(4), 250 S.E.2d 524 (notice to the loss payee is a condition precedent if the insurer wishes to bind payee to limitation on suit and other policy provisions). See also Nicholson v. Nationwide Mut. Fire Ins. Co., 517 F.Supp. 1046, 1052 (N.D.Ga.1981); Ginn v. State Farm Mut. Auto. Ins. Co., 417 F.2d 119 (5th Cir.1969).

2. Defendant contends that plaintiffs' present action for maximum coverage (i.e., $50,000) under the three Musgrove policies is barred by the doctrine of res judicata. To this end, defendant points out that under Jones v. State Farm Mut. Ins. Co., 156 Ga.App. 230, 274 S.E.2d 623, supra, as modified by Flewellen v. Atlanta Cas. Co., 250 Ga. 709, 300 S.E.2d 673, supra, if an "insured" has not been afforded an opportunity to reject the maximum coverage (which opportunity defendant claims was afforded to plaintiffs), then the insurance policy provides $50,000 PIP coverage from its inception. As such, defendant argues that plaintiffs' present claim for increased coverage was available to them at the time of the prior suit. Thus, by failing...