Hoover v. Maxum Indem. Co..Maxum Indem. Co. v. Hoover.

• Decision Date: 17 October 2011
• Docket Number: A11A0285.,Nos. A11A0284,s. A11A0284
• Citation: 712 S.E.2d 661,310 Ga.App. 291
• Parties: HOOVERv.MAXUM INDEMNITY COMPANY.Maxum Indemnity Companyv.Hoover.
• Court: Georgia Court of Appeals

310 Ga.App. 291

712 S.E.2d 661

11 FCDR 2106

HOOVER

v.MAXUM INDEMNITY COMPANY.Maxum Indemnity Company

v.Hoover.

Nos. A11A0284

A11A0285.

Court of Appeals of Georgia.

June 24, 2011.Certiorari Granted Oct. 17, 2011.

Lance Alan Cooper, Marietta, for appellant.Freeman, Mathis & Gary, Philip Wade Savrin, Darl Hilton Champion, Jr., Atlanta, for appellee.MILLER, Presiding Judge.

James Matthew Hoover filed the instant action against Maxum Indemnity Company, seeking to recover under an insurance policy issued by Maxum to its insured, Emergency Water Extraction Services, LLC (“EWES”). Hoover's complaint alleged that Maxum's policy provided coverage for the bodily injuries he sustained during an accident, and that Maxum breached its duties to defend EWES and to indemnify his claim for compensation. Maxum denied Hoover's allegations and filed a motion for summary judgment, contending that Hoover's claim was not covered under its policy since timely notice of the occurrence had not been given, and since a policy exclusion applied. Hoover filed a motion for partial summary judgment, contending that Maxum was liable for breach of the duty to defend as a matter of law. The trial court granted the motions filed by both parties, finding that Maxum had breached a duty to defend EWES against the underlying claim, but did not breach a duty to indemnify since there was noncompliance with the policy's notice requirements. These cross-appeals ensued.

We conclude that the evidence established an unreasonable failure to give timely notice as required by the policy, and therefore, Maxum was not obligated to provide either a defense or coverage. Accordingly, in Case No. A11A0284, we affirm the trial court's decision granting summary judgment in favor of Maxum. In Case No. A11A0285, however, we reverse the trial court's decision granting partial summary judgment to Hoover as to the duty to defend claim.

“Summary judgment is proper when there is no genuine issue of material fact and the movant is entitled to judgment as a matter of law. OCGA § 9–11–56(c). We review a grant or denial of summary judgment de novo and construe the evidence in the light most favorable to the nonmovant.” (Citation omitted.) Kay–Lex Co. v. Essex Ins. Co., 286 Ga.App. 484, 485, 649 S.E.2d 602 (2007).

So viewed, the record evidence shows that Hoover was employed as a water technician with EWES. On October 20, 2004, Hoover's supervisor asked him to deliver an extension ladder to the residence of a EWES customer. The residence was undergoing roof repairs by a contractor who was not affiliated with EWES. After Hoover delivered the ladder to the residence, the contractor asked Hoover to climb onto the roof and assist with the roof repairs. Hoover agreed and climbed up the ladder to the roof.

Hoover later descended from the roof, using a different ladder that had been placed against the residence. Upon his descent, the ladder collapsed and Hoover fell approximately 25 to 30 feet to the ground. Hoover struck the back of his head and neck, causing him to sustain a catastrophic brain stem injury. Hoover was transported to the hospital for treatment of his life-threatening injuries.

The co-owner of EWES, Jeff Owen, was made aware of the accident on the same day that it occurred. Owen went to the hospital and spoke to Hoover's father. ¹ Owen testified that at that time, Hoover's father requested EWES's insurance information and stated that he intended to contact the insurer for verification of the policy and coverage. Approximately one week later, Owen had another conversation with Hoover's father, who allegedly stated that he had “put in a call to somebody and was waiting to hear back[.]” Owen claimed that he believed that Hoover's father had contacted Maxum since he had obtained the policy information from EWES and was familiar with the amount of coverage under the policy.

On October 18, 2005, Hoover filed a workers' compensation action against EWES. The workers' compensation action was subsequently dismissed since EWES was not subject to the Workers' Compensation Act.

Thereafter, on September 22, 2006, Hoover filed a tort action against EWES, alleging that it was liable for the negligence of its supervisor under the doctrine of respondeat superior. By a letter dated October 18, 2006, EWES's counsel forwarded the complaint from the underlying tort action to Maxum, indicating that the complaint had been served on or about September 25, 2006, that counsel was familiar with the claim, and that a determination was needed as to whether counsel's law firm should continue defending the claim on behalf of EWES and Maxum.

On October 23, 2006, Maxum responded that the October 18 letter was the first notice that it had received of the occurrence. Maxum's letter went on to state that coverage did not exist for the occurrence under its policy since Hoover's supervisor was not defined as an insured and since the policy contained an “Employer's Liability” exclusion, which expressly provided that the insurance did not apply to bodily injury of an employee of EWES arising out of and in the course of employment by EWES or performing duties related to the conduct of EWES's business. In addition, Maxum's letter stated that “[c]overage for this matter may be barred or limited to the extent the insured has not complied with the notice provisions under the policy.” The letter further specified as follows:

Maxum's specific enumeration of the above policy defenses is not intended as a waiver of any other policy defenses that Maxum may now have or that may arise from facts discovered in the future[,] nor should Maxum be estopped from raising additional coverage defenses. Maxum also continues to reserve the right to raise any other coverage defenses, including the right to disclaim coverage on any other basis that may become apparent as this matter progresses and as Maxum obtains additional information.

Maxum did not provide a defense for EWES in the underlying tort action. EWES instead retained and was represented by its own defense counsel. Hoover filed a third-party complaint against Maxum for indemnification in the underlying tort action, but the third-party complaint was subsequently dismissed. Following a bench trial, a judgment in the amount of $16,456,501.60 was entered in favor of Hoover against EWES. Thereafter, EWES assigned its right of action against Maxum to Hoover, pursuant to a post-judgment assignment of action.

Hoover then commenced the instant lawsuit against Maxum, asserting claims for breaches of the duties to provide a defense and indemnification under the policy. The trial court resolved the lawsuit by granting both parties' cross-motions for summary judgment.

Case No. A11A0284

1. (a) Hoover contends that the trial court erred in granting Maxum's motion for summary judgment since a jury question existed as to whether Maxum received timely notice of the occurrence in accordance with the policy's terms. We disagree.

“Insurance is a matter of contract and the parties are bound by the terms of the policy. It is also the general rule that the insured is chargeable with knowledge of all the conditions imposed upon him by the terms of his policy.” (Citations and punctuation omitted.) Richmond v. Ga. Farm, etc., Ins. Co., 140 Ga.App. 215, 221(3), 231 S.E.2d 245 (1976). Notice provisions in an insurance policy are valid and must be complied with, absent a showing of justification. Id. at 222(3), 231 S.E.2d 245. Significantly, “[t]he purpose of the notice provision in an insurance policy is to enable an insurer to investigate promptly the facts surrounding the occurrence while they are still fresh and the witnesses are still available, to prepare for a defense of the action, and, in a proper case, to determine the feasibility of settlement of the claim.” (Citations omitted.) Id. at 221–222(3), 231 S.E.2d 245. When timely notice of an occurrence is not given, the insurer is deprived of the opportunity to perform a prompt investigation and to preserve essential evidence. Id.; see also Bituminous Cas. Corp. v. J.B. Forrest & Sons, 132 Ga.App. 714, 716–717(1), 209 S.E.2d 6 (1974). Consequently, “[w]here an insured has not demonstrated justification for failure to give notice according to the terms of the policy, and where the insurer has not waived compliance with the terms or any objections to the insured's failure, then the insurer is not obligated to provide either a defense or coverage.” (Citations omitted.) Richmond, supra, 140 Ga.App. at 222(3), 231 S.E.2d 245.

Here, the pertinent notice provisions of Maxum's policy stated as follows:

SECTION IV–COMMERCIAL GENERAL LIABILITY CONDITIONS

...

2. Duties in the Event of Occurrence, Offense, Claim or Suit

a. You must see to it that we are notified as soon as practicable of an “occurrence” or an offense which may result in a claim. To the extent possible, notice should include:

(1) How, when and where the “occurrence” or offense took place;

[712 S.E.2d 665 , 310 Ga.App. 295]

(2) The names and addresses of any injured persons and witnesses; and

(3) The nature and location of any injury or damage arising out of the “occurrence” or offense.²

The undisputed evidence showed that on the date of the occurrence, EWES's co-owner was aware of the occurrence and the life-threatening injuries that Hoover had sustained. He also was aware that a claim against EWES was expected to be filed on Hoover's behalf. Moreover, he knew that EWES had an insurance policy with Maxum that may have provided coverage. It is further undisputed that EWES's co-owner did not notify Maxum of the occurrence at that time. There also was no evidence indicating that Maxum was notified by any other EWES representative or co-owner.

Hoover nevertheless contends that Maxum received timely notice of the occurrence through his father. In this regard, Hoover relies upon EWES's co-owner's testimony that approximately one week after the occurrence, Hoover's father...