Great Southwest Exp. v. Great American Ins.

• Decision Date: 16 July 2008
• Docket Number: No. A08A0626.,No. A08A0625.,A08A0625.,A08A0626.
• Citation: 665 S.E.2d 878,292 Ga.App. 757
• Parties: GREAT SOUTHWEST EXPRESS COMPANY, INC. v. GREAT AMERICAN INSURANCE COMPANY OF NEW YORK. Great American Insurance Company of New York v. Great Southwest Express Company, Inc.
• Court: Georgia Court of Appeals

665 S.E.2d 878

292 Ga.App. 757

GREAT SOUTHWEST EXPRESS COMPANY, INC. v. GREAT AMERICAN INSURANCE COMPANY OF NEW YORK.

Great American Insurance Company of New York v. Great Southwest Express Company, Inc.

No. A08A0625.

No. A08A0626.

Court of Appeals of Georgia.

July 16, 2008.

Craig N. Cowart, Miller, Cowart & Howe, Macon, for appellant.

John D. Dixon, Michael William Horst, Dennis, Corry, Porter & Smith, Atlanta, for appellee.

BERNES, Judge.

These companion appeals arise out of a declaratory judgment action filed by Great American Insurance Company of New York contesting coverage under an insurance policy issued to Great Southwest Express Company. In Case No. A08A0625, Southwest appeals from the trial court's grant of partial summary judgment to Great American on Southwest's counterclaims for tortious interference with contract, lost profits, and punitive damages. In Case No. A08A0626, Great American appeals from the trial court's denial of summary judgment on Southwest's counterclaim for bad faith refusal to pay pursuant to OCGA § 33-4-6. For the reasons that follow, we affirm in both cases.

On motion for summary judgment, it is the movant's burden to show that no genuine issue of material fact is at issue and that he is entitled to judgment as a matter of law. OCGA § 9-11-56(c). The movant may discharge such burden by reference to affidavits, depositions, and other documentary evidence of record showing no evidence in support of the nonmovant's case. Id. After the movant discharges his burden, the nonmovant cannot rest on his pleadings, but instead must come forward with evidence establishing a triable issue. OCGA § 9-11-56(e); Lau's Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991). We review the trial court's decision on motion for summary judgment de novo, "viewing the evidence in the light most favorable to the nonmovant, to determine whether a genuine issue of material fact exists and whether the moving party was entitled to judgment as a matter of law. [Cit.]" Gilhuly v. Dockery, 273 Ga. App. 418, 418-419, 615 S.E.2d 237 (2005).

So viewed, the evidence showed that Southwest was a common carrier whose primary customer was Goodyear Tire and Rubber Company. In 1998, Southwest obtained an insurance policy from Great American, which included coverage for the theft of goods taken from Southwest's vehicles.

At some point, Great American issued an endorsement amending Southwest's policy to include an unattended vehicle exclusion that would limit its coverage on claims related to theft.¹ The amendment purported to take effect during the relevant policy period from November 2001 to November 2002. The circumstances surrounding Great American's amendment are heavily disputed by the parties, and genuine issues of fact remain as to whether Great American followed the correct statutory and contractual procedures necessary to effect a change to the policy.

Over the weekend of February 24, 2002, three trailers loaded with Goodyear tires were parked on the premises of Southwest. Sometime during that weekend, the three trailers with their contents were stolen from the premises.²

Southwest filed a claim with Great American for the February loss and, after Great American denied coverage under the unattended vehicle exclusion, a dispute between the parties arose. In May 2002, Southwest advised Great American that one of its shippers (Goodyear) was holding up payment of freight bills pending settlement of the claim. Also in May 2002, counsel for Southwest made a demand for payment on Great American and advised it that its refusal to resolve the claim was adversely affecting Southwest's reputation and business relationship with Goodyear. Counsel for Southwest again informed Great American in October 2002 that its failure to pay was harming Southwest's reputation and its business relationship with Goodyear.

In November 2002, Great American filed a petition for declaratory judgment setting forth its contention that the unattended vehicle exclusion precluded coverage of Southwest's claims. In November 2003, Goodyear terminated its business relationship with Southwest. Southwest alleges that as a result, it was forced to close. Southwest then asserted the counterclaims at issue in these companion appeals.

Case No. A08A0625

1. The trial court correctly granted summary judgment in favor of Great American on Southwest's counterclaim for tortious interference with contract. Southwest's allegations, even if proven at trial, would fail to establish the essential element of direct inducement of adverse action by a third party. See Sandifer v. Long Investors, 211 Ga.App. 757, 760(3), 440 S.E.2d 479 (1994). Southwest contends that Great American's wrongful conduct consisted of its alleged failure to abide by the insurance policy, accept coverage, and settle Southwest's claim, with the ultimate consequence that Goodyear discontinued its business relationship with Southwest. In other words, Southwest alleges that Great American's unreasonable performance under the insurance policy culminated in Goodyear not entering into or continuing its contractual relationship with Southwest. Such an allegation is insufficient to prove the essential element of direct inducement. See id. See also St. Mary's Hosp. of Athens v. Radiology Professional Corp., 205 Ga.App. 121, 124-125(2), 421 S.E.2d 731 (1992) (physical precedent only).

Although a claim for tortious interference is not limited to conduct that causes a breach of a claimant's contract with a third party, but also may be asserted for conduct that makes the performance of that contract more difficult, nevertheless in such a circumstance the claimant still must prove that the defendant directly induced adverse behavior by the third party with respect to the third party's contract with the claimant, not merely that the defendant breached its contract with the claimant and that an element of damage resulting from that breach was the impairment of the claimant's performance of its contract with the third party.

(Citation and punctuation omitted.) Sandifer, 211 Ga.App. at 760(3), 440 S.E.2d 479. See also HLD Enterprises v. Michelin North America, 2004 WL 2095739, at *3-4 (III)(C) (N.D.Ga. June 29, 2004); St. Mary's Hosp. of Athens, 205 Ga.App. at 125(2), 421 S.E.2d 731. Accordingly, Southwest's counterclaim for tortious interference with contract failed as a matter of law.

The dissent argues that Southwest's counterclaim should be construed broadly to also assert a claim for tortious interference with business relations. But even if Southwest has alleged such a counterclaim, it cannot succeed for the same reason that Southwest has failed to come forward with sufficient evidence to show that the essential element of inducement has been met. See Renden, Inc. v. Liberty Real Estate Ltd. Partnership III, 213 Ga.App. 333, 335(2)(b), 444 S.E.2d 814 (1994) (an "essential element of tortious interference with business relations is that the alleged tortfeasor induced a third party or parties not to enter into or continue a business relationship with the plaintiff") (citation and punctuation omitted). See also Intl. Telecommunications Exchange Corp. v. MCI Telecommunications Corp., 892 F.Supp. 1520, 1543(V) (N.D.Ga.1995) (citing to St. Mary's Hospital of Athens and holding that a claim for tortious interference with business relations does not arise where the defendant simply breaches its contract to the plaintiff, with the ultimate consequence that the plaintiff loses business from a third party).

The dissent also contends that the trial court's grant of summary judgment on the tortious interference counterclaim was premature because the trial court has not yet ruled on whether the insurance policy provided coverage for the theft from Southwest's trucks. However, the trial court was not required to resolve whether the insurance policy provided coverage as a condition precedent to ruling on the motion for summary judgment brought by Great American. Summary judgment is appropriate if there is a lack of evidence as to any one essential element of a party's claim or affirmative defense. Sturdivant v. Moore, 282 Ga.App. 863, 865, 640 S.E.2d 367 (2006). If one essential element cannot be proven, "[a]ll of the other disputes of fact are rendered immaterial." (Footnote omitted.) Dozier Crane, etc. v. Gibson, 284 Ga.App. 496, 497, 644 S.E.2d 333 (2007). Where, as here, the insurer raises legal arguments for why summary judgment should be granted on a claim that are not dependent on whether the policy provides coverage, there is no reason that the trial court should be required to sua sponte resolve the coverage issue before ruling on the motion.

The dissent relies upon Southern Guar. Ins. Co. v. Dowse, 278 Ga. 674, 676-677(2), 605 S.E.2d 27 (2004) to support its decision to vacate and remand, but that case is inapposite. In Southern Guar. Ins. Co., the Supreme Court of Georgia simply remanded the case for a determination of whether insurance coverage existed, after first ruling that the trial court erred in concluding that the terms of a settlement agreement relieved the insurer of any obligation it may have had to pay the insured's claim. The opinion in no way suggests that the trial court should have first resolved the coverage issue before ruling on the settlement issue. Consequently, it is appropriate for this Court to address the substance of the trial court's grant of summary judgment in favor of Great American on the tortious interference counterclaim.

2. The trial court was also correct in granting Great American summary judgment on Southwest's counterclaims for lost profits and punitive damages. Southwest argues that its damage claims are predicated on both its counterclaim for bad faith refusal to pay pursuant to OCGA § 33-4-6 and its counterclaim for tortious interference with contract.³ But "[t]he penalties contained in OCGA § 33-4-6 are the exclusive remedies for an insurer's bad...