Johnson v. National Union Fire Ins. Co.

• Decision Date: 07 November 1985
• Docket Number: 70407,Nos. 70406,s. 70406
• Citation: Johnson v. National Union Fire Ins. Co., 338 S.E.2d 687, 177 Ga.App. 204 (Ga. App. 1985)
• Parties: JOHNSON v. NATIONAL UNION FIRE INSURANCE COMPANY. NATIONAL UNION FIRE INSURANCE COMPANY v. JOHNSON.
• Court: Georgia Court of Appeals

Page 687

338 S.E.2d 687

177 Ga.App. 204

JOHNSON v.NATIONAL UNION FIRE INSURANCE COMPANY.

NATIONAL UNION FIRE INSURANCE COMPANY v.JOHNSON.

Nos. 70406, 70407.

Court of Appeals of Georgia.

Nov. 7, 1985.

Rehearing Denied Dec. 9, 1985.

Certiorari Denied Jan. 9, 1986 in No. 70406.

Sammy J. Hawkins, Marietta, for appellant.

Edgar S. Mangiafico, Jr., Atlanta, for appellee.

SOGNIER, Judge.

Roy F. Johnson brought suit against National Union Fire Insurance Company(National Union) seeking to recover personal injury protection (PIP) benefits under a policy issued by National Union, plus statutory and punitive damages.During a jury trial, a directed verdict was granted to Johnson as to the amount of benefits stipulated by the parties, and the jury returned a verdict in favor of Johnson for 25% statutory penalties as provided by OCGA § 33-34-6(b) and $1.00 in punitive damages under OCGA § 33-34-6(c).Johnson appeals in Case No. 70406; National Union cross-appeals in Case No. 70407.

On December 29, 1981, Johnson was walking along the side of a highway when a Volkswagen driven by National Union's insured struck a Lincoln Continental parked on the side of the road.The force of the impact propelled the Lincoln into Johnson, inflicting physical injury.Johnson sought PIP benefits from National Union as the insurer of the Volkswagen and he filed suit when National Union refused to pay.It is uncontroverted that National Union's denial of Johnson's claim was based solely on the insurance company's position that Johnson's claim lay with the insurer of the Lincoln Continental, believed by all parties to be another insurance company.However, information obtained from the wife of the owner of the Lincoln led National Union's investigators to discover for the first time on April 20, 1982, that it was also the insurer of the Lincoln.A tender of the benefits sought by Johnson was promptly made by National Union under the Lincoln's policy, but Johnson refused the offer and the case proceeded to trial.

1.National Union contends the trial court erred by denying its motion for directed verdict because National Union, as the insurer of the Volkswagen, was not liable to Johnson as a matter of law for PIP benefits.OCGA § 33-34-7(a) provides for the payment of basic no-fault benefits without regard to fault for economic loss resulting from "(3) Accidental bodily injury sustained by any other person as a result of being struck by the owner's motor vehicle while a pedestrian in this state."National Union argues that it is not liable as the Volkswagen's insurer because it was the Lincoln which physically struck Johnson and under the Georgia "no-fault" system the fact that the Volkswagen was the cause of the accident is irrelevant in determining the party liable for the injury.

In regard to National Union's liability as the insurer of the Volkswagen, we find persuasive the reasoning of the United States District Court (N.D.Georgia) in Southern Guar. Ins. Co. v. Berry, 560 F.Supp. 901(1983), which construed OCGA § 33-34-7 under a similar factual situation.In that case, as here, "[t]he crux of the instant dispute is, of course, whether the phrase 'struck by a motor vehicle' contemplates or requires direct physical contact between the alleged offending vehicle and the bodies of the persons claiming PIP benefits....[National Union] does not seem to disagree with the contention that its insured vehicle was the 'but-for cause' of this accident.Rather, [National Union] asserts that issues of causation are irrelevant in the context of a statutory scheme in which 'fault' is immaterial, and that 'struck by an automobile' must be narrowly construed to cover only those situations in which there exists direct physical contact between the claimants and the offending vehicle.Although there is some authority to the contrary, the majority rule appears to be that one can be 'struck by an automobile' without actually coming in contact with the automobile itself.[Cits.]This court agrees.In ordinary parlance, the word 'struck' is frequently used to denote a movement or a force causing or resulting in a physical impact.The 'striking' force can be either the force which most immediately comes in contact with the object struck, or it can be the force setting in motion a chain of events leading up to the striking of an object.Were this court to accept [National Union's] argument that the moving car cannot have 'struck'[Johnson] because it never physically touched [him], this court would be straining the meaning of these words far beyond their ordinary and logical usage in order to achieve a wholly impractical and inequitable result."Id. at 903.

Applying the reasoning behind the majority rule, as stated in Berry, supra, we hold that one can be "struck by" an automobile for the purpose of the application of OCGA § 33-34-7(a)(3) without actually coming into physical contact with the automobile itself.Thus, viewing the uncontroverted evidence that National Union's insured's vehicle was the force which set in motion the chain of events leading up to the striking of Johnson, the evidence supports the jury's verdict and the trial court did not err by denying National Union's motion for directed verdict on the issue of its liability as the insurer of the Volkswagen.See generally, White Repair etc. Co. v. Daniel, 171 Ga.App. 501, 503(2), 320 S.E.2d 205(1984).We note that due to National Union's dual role as the insurer of both the Volkswagen and the Lincoln Continental, we are not faced with the question of the liability of the insurer of the parked vehicle and this opinion should not be read as in any way adopting the conclusion reached by the district court in Berry, supra, as to this issue.

2.National Union contends the trial court erred by denying its motion for directed verdict as to the statutory penalties, attorney fees and punitive damages sought by Johnson pursuant to OCGA § 33-34-6(b) and (c).We agree.Both OCGA § 33-34-6(b)(25% penalty and attorney fees) and OCGA § 33-34-6(c)(punitive damages) provide for the imposition of penalties should the insurer fail to prove that it acted in good faith in failing or refusing to pay the benefits sought."Ordinarily, the question of good or bad faith is reserved for the jury, but where there is no evidence of a frivolous or unfounded reason to pay, or if the issue of liability is a close one, the court should disallow imposition of bad faith penalties.[Cits.]"Government Employees Ins. Co. v. Presley, 174 Ga.App. 562, 566(1), 330 S.E.2d 779(1985).At trial National Union presented evidence that it refused to pay Johnson's claim solely on the ground of its counsel's advice that as the insurer of the Volkswagen, National Union was not liable to Johnson under OCGA § 33-34-7(a).The evidence adduced at trial shows that National Union acted consistently with this position when it promptly tendered the PIP benefits sought by Johnson under the Lincoln's policy upon learning that it was the insurer of the Lincoln.No evidence was presented at trial by Johnson to controvert National Union's assertion that it acted in good faith in refusing to pay Johnson's claim under the Volkswagen's policy.Johnson argues that as a matter of law National Union's good faith defense was refuted by its knowledge that foreign jurisdictions, in litigating similar factual situations, had reached conclusions adverse to National Union's position as to its liability as the insurer of the moving vehicle.However, those opinions were not binding interpretations of Georgia law, seeU.S. Fidelity etc. Co. v. Kelley, 131 Ga.App. 6, 205 S.E.2d 38(1974), Martin v. Henson, 95 Ga.App. 715, 99 S.E.2d 251(1957), and we are not persuaded by Johnson's arguments that National Union's knowledge of these nonbinding foreign decisions is a ground for the bad faith damages sought by Johnson.Although we now adopt the reasoning of these other courts as to the construction of "struck by,"this case is one of first impression in Georgia in its interpretation of the specific language in OCGA § 33-34-7(a)(3), and presented a close question as to the construction to be given this language.Thus, we find the trial court erred by denying National Union's motion for directed verdict on the issue of bad faith penalties as there was no legal basis for the jury to award such damages.SeePresley, supra, 174 Ga.App. at 566(1), 330 S.E.2d 779;cf.Binns v. MARTA, 250 Ga. 847, 301 S.E.2d 877(1983).

3.Johnson enumerates 49 errors in the judgment of the trial court.An examination of these enumerations reveals either that they were all resolved in Johnson's favor in view of the jury verdict in Johnson's favor and thus present no question of harmful error to authorize reversal, seeVeal v. Fraser, 155 Ga.App. 157, 161-162(3), 270 S.E.2d 250(1980), or else that they are decided adversely to Johnson under our ruling in the divisions above.Thus, there being no reversible error in this case other than the award for the 25% penalty, attorney fees, and punitive damages, the judgment of the trial court is affirmed in both appeals with direction that the portion of the verdict and judgment awarding such bad faith penalties be written off; otherwise the judgment is reversed.SeePresley, supra, 174 Ga.App. at 569, 330 S.E.2d 779.

Judgment affirmed on condition.

BANKE, C.J., McMURRAY and BIRDSONG, P.JJ., and POPE and BENHAM, JJ., concur.

McMURRAY, BIRDSONG and DEEN, P.JJ., and POPE and BEASLEY, JJ., also concur specially.

CARLEY, J., concurs in part and dissents in part.

BIRDSONG, Presiding Judge, concurring specially.

I agree with the majority opinion in all that it says.

In my opinion, the evidence in this case shows as a matter of law that the appellant acted in good faith.After the accident happened, an adjuster was notified and given the facts in this case that Johnson had been hit by a Lincoln Continental which had been struck by a...