Guideone Life Ins. Co. v. Ward
| Decision Date | 08 August 2005 |
| Docket Number | No. A05A0858.,No. A05A0857.,A05A0857.,A05A0858. |
| Parties | GUIDEONE LIFE INSURANCE COMPANY v. WARD. Ward v. Kansas City Life Insurance Company. |
| Court | Georgia Court of Appeals |
John Bonnie, Howard Russell, Weinberg, Wheeler, Hudgins, Gunn & Dial, LLC, Atlanta, for appellant/appellee.
Jonathan Johnson, Johnson & Benjamin, LLP, Atlanta, for appellee/appellant.
Following her husband's death, Kelly Ward sued Guideone Life Insurance Company to collect benefits under a term life insurance policy (the "Policy"). In Case No. A05A0857, Guideone appeals from (i) the trial court's grant of summary judgment to Kelly Ward on her claim for Policy benefits, and (ii) the trial court's denial of Guideone's motion for summary judgment on this claim. In Case No. A05A0858, Kelly Ward appeals from the trial court's grant of summary judgment to Kansas City Life Insurance Company, as successor in interest to Guideone, on her claim for bad faith damages under OCGA § 33-4-6.1 For the reasons set forth below, we reverse in part and affirm in part in Case No. A05A0857, and we affirm in Case No. A05A0858.
Kelly Ward and Guideone filed cross-motions for summary judgment on Kelly Ward's breach of contract claim. The trial court granted Kelly Ward's motion for summary judgment and denied Guideone's motion for summary judgment. We agree with Guideone that the trial court erred in granting Kelly Ward's motion for summary judgment as to Guideone's liability under the Policy, but we also find that the trial court properly denied Guideone's motion for summary judgment on this claim.
On appeal from the grant or denial of a motion for summary judgment, we conduct a de novo review of the law and evidence, 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. Holbrook v. Stansell, 254 Ga.App. 553, 553-554, 562 S.E.2d 731 (2002).
So viewed, evidence shows that the Policy, issued on July 7, 1997, for a seven-year renewable term, insured the life of Stephen Ward, Kelly Ward's husband. Kelly Ward was the beneficiary of the policy's death proceeds of $250,000. The Policy provided for a grace period of 31 days for nonpayment of premiums, and death proceeds were payable if the insured died during the 31-day grace period. If premiums were not paid by the end of the grace period, the Policy terminated as of the premium due date.
The Policy allowed the insured to make annual, semi-annual, quarterly, or monthly premium payments, depending on the payment frequency selected on the application. The Policy initially provided for quarterly payments of $126.10, with annual premiums set at $460. The frequency of payments could be changed with Guideone's approval. While the Policy was in effect, Guideone accepted monthly, quarterly, and semi-annual premium payments by Stephen Ward.
Guideone did not receive the premium payment due on August 17, 2001. On September 13, 2001, Guideone sent Stephen Ward a "late payment offer" indicating Guideone would accept a late premium payment through approximately September 27, 2001, but conditioned upon a signature of Stephen Ward confirming he was alive.
Stephen Ward died on September 21, 2001. On September 22, 2001, Daniel Ward, Stephen Ward's son, tendered payment on the Policy by sliding the payment under the door of his father's insurance agent. Guideone refused the check and returned it to Kelly Ward.
1. Guideone contends that it was not required to give notice to Kelly Ward that it would terminate the Policy because the Policy lapsed due to nonpayment of premiums. The trial court found that due to Guideone's past performance of the Policy terms, including acceptance of late payments, notice was needed to terminate the Policy, but no notice was sent. Kelly Ward contends that Guideone was also required to give notice of termination under OCGA § 33-24-44. We find that the trial court erred in concluding that Guideone's acceptance of late premium payments and past performance of the Policy terms gave rise to a duty by Guideone to notify Stephen Ward before terminating the Policy. We also find that Guideone was not required to give notice of Policy termination under OCGA § 33-24-44. However, as discussed in Division 2 below, remaining issues of fact as to the amount of premiums overpaid by Stephen Ward prevent the grant of summary judgment to Guideone.
(a) In reaching its conclusion that notice was needed to terminate the policy, the trial court relied on the principle of mutual departure from the terms of a contract.
Where parties, in the course of the execution of a contract, depart from its terms and pay or receive money under such departure, before either can recover for failure to pursue the letter of the agreement, reasonable notice must be given to the other of intention to rely on the exact terms of the agreement. The contract will be suspended by the departure until such notice.
OCGA § 13-4-4. A departure sufficient to require a notice of intent to insist on strict compliance of the original terms of the agreement under OCGA § 13-4-4 must be "mutual between the parties and intended, and must be such as, in law, to make practically a new agreement as to the stipulations contained in the original contract." Continental Cas. Co. v. Union Camp Corp., 230 Ga. 8, 11(1), 195 S.E.2d 417 (1973).
Although the evidence shows that Stephen Ward often paid his premiums after the due date, Guideone never accepted a late payment after the 31-day grace period unless it was accompanied by a reinstatement application or a signed "late payment offer." When Guideone received a payment after the grace period in 1998, it sent a letter to Stephen Ward informing him that the Policy had lapsed and he was required to submit an application to reinstate the Policy. Guideone accepted premiums received during the 31-day grace period without condition, but this acceptance was contemplated by the terms of the Policy and does not show a mutual departure from the contract terms.
Guideone allowed Stephen Ward to reinstate the Policy five times after he failed to pay his premiums within the 31-day grace period. The Policy expressly contemplated reinstatement if the insured showed he was insurable and paid all past due premiums with six percent interest. Consistent with this term, Stephen Ward submitted reinstatement applications in which he answered several health- and occupation-related questions. The applications also provided that acceptance was conditioned upon approval during the applicant's lifetime. Although Guideone did not insist that Stephen Ward pay the six percent interest on past due premiums, Guideone's waiver of this provision is not evidence of Guideone's waiver of its right to insist on timely payment of premiums. See Gulf Life Ins. Co. v. Frost, 125 Ga.App. 63, 65, 186 S.E.2d 456 (1971). Because the parties did not vary from the contract terms in reinstating the Policy following nonpayment of premiums, there was no mutual departure from the contract provisions which would require Guideone to give notice of its intent to insist on the terms of the contract in reinstating the Policy. See Prudential Ins. Co. of America v. Nessmith, 174 Ga.App. 39, 41, 329 S.E.2d 249 (1985) ().
In 1998, Guideone accepted a premium payment outside the grace period pursuant to a "late payment offer" signed by Stephen Ward certifying that "all persons under this policy are now living." The offer form that Stephen Ward signed provided that "[t]his voluntary late acceptance of a premium is not to be considered a precedent." Guideone mailed a second "late payment offer" to Stephen Ward before his death in 2001, informing him that Guideone would accept a late premium payment if he signed the offer form, indicating he was alive at the time, and tendered payment to Guideone. While Guideone may have been obligated to accept a late premium payment if it had been accompanied by the signed offer form, there is no evidence Stephen Ward ever signed the offer, which was not included in the late payment tendered after his death. Evidence that Guideone was willing to accept two late payments, conditioned on Stephen Ward's signature on an offer form, does not establish a new understanding between the parties that Guideone would accept late premium payments without such condition.
In view of the evidence, we conclude that, as a matter of law, the parties did not reach a "practically new agreement" in accepting late premium payments such that Guideone was required to notify Stephen Ward that it would insist upon the original Policy terms with regard to such payments. The trial court therefore erred both in granting summary judgment to Kelly Ward due to Guideone's failure to provide such notice, and in not granting summary judgment to Guideone on the issue.
(b) Kelly Ward contends that, notwithstanding the other grounds for the trial court's ruling, OCGA § 33-24-44 required Guideone to notify Stephen Ward before it could terminate the Policy. We disagree.
OCGA § 33-24-44 requires the insurer to notify the insured of the cancellation of insurance policies which may under their terms and conditions be cancelled by the insurer, and to return unearned premiums to the insured. However, the notification requirements of OCGA § 33-24-44 do not apply where the policy provides for its expiration for failure to pay the premium within the grace period. See Tippins Bank & Trust Co. v. Southern Gen. Ins. Co., 266 Ga. 97, 99, 464 S.E.2d 381 (1995) (...
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