Georgia Mut. Ins. Co. v. Glennville Bank & Trust Co., A97A1675

• Decision Date: 17 November 1997
• Docket Number: No. A97A1675,A97A1675
• Citation: 229 Ga.App. 402,494 S.E.2d 103
• Parties: , 97 FCDR 4339 GEORGIA MUTUAL INSURANCE COMPANY v. GLENNVILLE BANK & TRUST COMPANY.
• Court: Georgia Court of Appeals

Page 103

494 S.E.2d 103

229 Ga.App. 402, 97 FCDR 4339

GEORGIA MUTUAL INSURANCE COMPANY v. GLENNVILLE BANK & TRUST COMPANY.

No. A97A1675.

Court of Appeals of Georgia.

Nov. 17, 1997.

Brennan, Harris & Rominger, Mason White, Savannah, for appellant.

Hugh J. McCullough, Metter, for appellee.

SMITH, Judge.

This appeal presents a question concerning whether a mortgagee may recover the proceeds of a fire insurance contract covering the mortgaged premises. The policy provided that "the action [must be] started within one year after the date of loss." In this case, the insured mortgagor filed an action against the insurer to recover the proceeds within one year after the loss. The mortgagee did not file a separate action, but intervened in the mortgagor's action after the expiration of the one-year period. We conclude that under these circumstances the mortgagee may recover, and we affirm the decision of the trial court.

The record shows that the home of Doyle and Sherry Moody was destroyed by fire on January 26, 1994. The property was covered for fire loss under an insurance contract issued by Georgia Mutual Insurance Company, which listed Glennville Bank & Trust Company in the declarations as the mortgagee. The policy contained two relevant provisions in its "Conditions" segment. Paragraph 8 ("Suit Against Us") provided that "[n]o action can be brought unless the policy provisions have been complied with and the action is started within one year after the date of loss." Paragraph 12 ("Mortgage Clause") provided in pertinent part that "[p]olicy conditions relating to appraisal, suit against us and loss payment apply to the mortgagee."

In July 1994, the insurer notified the bank that it was denying coverage under the policy. On January 11, 1995, the bank sent the insurer a demand letter, informing it that suit would be filed within two weeks of receipt unless payment was made. On January 17, 1995, the Moodys filed an action against the insurer seeking recovery of the policy proceeds. On January 30, 1995, the bank sent the insurer another letter confirming a prior telephone conversation in which the bank had agreed, at the insurer's request, to extend the time for a response to the demand letter because the insurer's claims manager was out of the country. The letter confirmed that the bank had agreed to extend the response period until February 9, 1995, and that it would not file suit until then. The one-year period after the Moodys' loss expired on January 25, 1995. On March 20, 1995, the bank filed a motion to intervene in the Moodys' action, which was granted on April 4, 1995. The insurer's subsequent motion for summary judgment as to the bank's claim was denied. The bank then filed its motion for summary judgment against the insurer. The Moodys later dismissed their complaint against the insurer. The trial court granted the bank's motion for summary judgment, and the insurer appeals.

The insurer contends the trial court erred in granting summary judgment in favor of the bank because the bank did not file suit on its claim within one year of the date of the loss, as required by the policy. The insurer argues that this contractual limitation has been held to be valid and enforceable. Suntrust Mtg. v. Ga. Farm Bureau Mut. Ins. Co., 203 Ga.App. 40, 416 S.E.2d 322 (1992). We do not agree with this contention.

Although such provisions are certainly valid and enforceable, the facts in this case are distinguished from those in Suntrust Mtg. in several ways. First, in Suntrust Mtg. no evidence existed of any conduct on the part of the insurer that would lead the mortgagee into believing the contractual limitation period would not apply. Id. at 42, 416 S.E.2d 322. In contrast, shortly before the expiration of the contractual limitation period here, Georgia Mutual actually requested, for its own benefit, that the bank delay taking legal action. This conduct certainly could be expected to lead the bank to believe that the insurer intended at least to enlarge the contractual limitation period. Compare Modern Carpet Indus. v. Factory Ins. Assn., 125 Ga.App. 150, 151, 186 S.E.2d 586 (1971).

Second, in Suntrust Mtg., no "action" at all was filed within the required time period, and no intervention was involved. In a well-reasoned order, the trial court concluded that this case is distinguished from Suntrust Mtg. for precisely that reason. The policy provision requiring that "the action" be brought within one year from the date of loss does not specify the identity of the party required to bring "the action." Notwithstanding the language in the "mortgage clause" making this time limitation applicable to the mortgagee, the policy provision does not state that the mortgagee's claim is barred unless the mortgagee files suit within one year of the loss. It is silent as to the pivotal question of whether the...