Jones v. Cotton States Mut. Ins. Co.

• Decision Date: 09 November 1987
• Docket Number: 74914,Nos. 74913,s. 74913
• Citation: 363 S.E.2d 303,185 Ga.App. 66
• Parties: JONES v. COTTON STATES MUTUAL INSURANCE COMPANY. COTTON STATES MUTUAL INSURANCE COMPANY v. JONES.
• Court: Georgia Court of Appeals

Page 303

363 S.E.2d 303

185 Ga.App. 66

JONES v. COTTON STATES MUTUAL INSURANCE COMPANY.

COTTON STATES MUTUAL INSURANCE COMPANY v. JONES.

Nos. 74913, 74914.

Court of Appeals of Georgia.

Nov. 9, 1987.

Rehearing Denied Nov. 24, 1987.

Certiorari Denied Jan. 14, 1988.

William Q. Bird, Joseph D. Perrotta, Atlanta, for appellant.

I.J. Parkerson, Decatur, for appellee.

SOGNIER, Judge.

Mark O'Gwin was seriously injured when the automobile he was driving was struck by vehicles driven by Billy George Stapler and Tony Hamill. Evelyn Jones, as guardian for O'Gwin, accepted the $10,000 liability coverage available to Hamill in exchange for a covenant not to sue him and then brought suit against Stapler, who was uninsured, serving Cotton States Mutual Insurance Company pursuant to OCGA § 33-7-11 as the uninsured motorist carrier of the policies covering O'Gwin. Cotton States filed an answer in its own name but two years later dismissed its answer as to the Count I allegation regarding Stapler's negligence, tendering payment to Jones of $50,000. Cotton States then moved for partial summary judgment as to Count II of Jones' complaint seeking bad faith penalties and attorney fees. Jones moved for summary judgment both on Count II of her complaint and on Count III, as amended, for abusive litigation pursuant to Yost v. Torok, 256 Ga. 92, 344 S.E.2d 414 (1986). Jones appeals from the trial court's order on her motion in Case No. 74913; Cotton States cross appeals from that same order as to its motion for partial summary judgment in Case No. 74914.

1. Both parties contend the trial court erred by denying their respective motions for summary judgment regarding Count II of Jones' complaint seeking bad faith penalties and attorney fees pursuant to OCGA § 33-7-11(j). The trial court determined that the defenses raised by Cotton States failed to entitle it to summary judgment on Jones' claim but held, nevertheless, that a question remained for the jury whether Cotton States acted in good or bad faith in denying Jones' claim for over two years.

(a) Cotton States contends it was entitled to summary judgment on Count II because its defenses, two of which are the subject of enumerated errors, show no question of fact exists as to its good faith in denying Jones' demand for payment. Cotton States first asserts the trial court erred by holding it was not entitled to a $10,000 "credit" for the liability insurance paid to Jones by the insurer of Hamill's vehicle in exchange for a covenant not to sue. O'Gwin was insured under five policies issued by Cotton States with a total of $50,000 uninsured motorist (UM) coverage available to him. It appears uncontroverted that O'Gwin incurred medical expenses exceeding $185,000 as a result of the accident. Cotton States argues, however, that because Jones, on behalf of O'Gwin, accepted $10,000 in settlement of claims against Hamill, Stapler's joint tortfeasor, it was entitled to write off that amount from the $50,000 it admits it owes O'Gwin in UM coverage.

In Wages v. State Farm, etc., Ins. Co., 132 Ga.App. 79, 208 S.E.2d 1 (1974), as in the case sub judice, the plaintiff was injured by two tortfeasors, only one of whom was insured. The plaintiffs' UM carrier in Wages sought to offset its coverage by the amount paid by the insured tortfeasor, in effect absolving it from all liability since the amount of the plaintiffs' injuries, as determined by jury verdict there, did not exceed the insured tortfeasor's liability coverage. In Wages, we affirmed the insured tortfeasor's right to recover contribution and indemnification from the plaintiffs' UM carrier and rejected the UM carrier's argument that it could limit the applicability of UM coverage to a sum which was in excess of other insurance coverage. We held that "the purpose in providing for uninsured motorist protection was to afford the public generally with the same protection that it would have had if the uninsured motorist had carried the same amount of coverage under a public liability policy issued in his name." Id. at 83(1), 208 S.E.2d 1.

We reject Cotton States' argument that it can "write off" the $10,000 Jones received from Hamill, thereby limiting the applicability of its UM coverage to the sum in excess of that $10,000, i.e., $40,000. Under its argument, had Hamill been insured by a policy providing $50,000 in liability coverage, Cotton States would have been completely absolved from any payment. This reasoning is incorrect under Wages, supra, in which the UM coverage Cotton States provides represents the amount O'Gwin would have been entitled to receive had Stapler been so insured. The extent of O'Gwin's injuries are such that there is no question he would be entitled to recover both Hamill's $10,000 and the $50,000 sum from Cotton States representing Stapler's coverage. Thus, Cotton States' attempt to distinguish Wages on the basis that that case involved common law contribution must fail.

Finally, Cotton States, in its arguments regarding OCGA § 33-7-11(b)(1)(D)(ii), fails to recognize that the evidence is uncontroverted Stapler was an operator of an uninsured motor vehicle under OCGA § 33-7-11(b)(1)(D)(i), not subsection (ii). Thus, there existed no amount of bodily injury liability insurance and property damage liability insurance for the uninsured motor vehicle operated by Stapler the "difference" of which Cotton States could deduct from the amount it provided O'Gwin. We do not agree with Cotton States that the amount paid by the other tortfeasor, Hamill, operating a separate insured vehicle, comes within the purview of this code section.

(b) Cotton States' other defense enumerated as error here is its contention that it could not be held liable for bad faith penalties in the absence of a judgment entered by the jury against the uninsured motorist. Cotton States argues its liability for damages was not established until it dismissed its answer as to Count I of Jones' complaint asserting Stapler's liability. It is uncontroverted Cotton States tendered payment of the UM coverage to Jones within the statutory period after its dismissal of that part of its answer contesting liability.

In Wallis v. Cotton States Mut. Ins. Co., 182 Ga.App. 147, 354 S.E.2d 842 (1987), we noted that this court has interpreted the Uninsured Motorist provisions of OCGA § 33-7-11 to require, as a condition precedent to a suit against the insurance carrier, that the insured first sue and recover a judgment against the uninsured motorist, whether known or unknown. The reasoning behind this interpretation, in the absence of explicit statutory language requiring such a condition precedent, is that since the insurer is liable for the amount which the insured "shall be legally entitled to recover" from the uninsured motorist, OCGA § 33-7-11(a), that liability for damages should be ascertained in an appropriate forum before the bringing of a suit against the insurance company under such coverage. A demand for payment and refusal by the insurer prior to trial on the tort liability of the uninsured motorist was thus held not to eliminate the requirement that a judgment first be obtained against the uninsured motorist as a condition precedent to suit against the insurer. Id. at 148, 354 S.E.2d 842. " 'It follows that an insurer has no duty to accept an insured's demand for payment of a claim prior to judgment being entered against an uninsured motorist. Inasmuch as the insurer is not required to make payment or settlement, it defies logic to argue that [the insurer] could have acted in bad faith in failing to pay the claim prior to judgment in the tort case. [Cit.]' [Cit.]" Id.

We agree with Cotton States that filing of an answer or other response by an insurer in its own name pursuant to OCGA § 33-7-11(d) does not constitute a waiver of any issues regarding the uninsured motorist's tort liability but merely reflects the insurer's position that, regardless of the underlying tort liability, the insurer is not liable under the policy of insurance. See Moss v. Cincinnati Ins. Co., 154 Ga.App. 165, 170, 268 S.E.2d 676 (1980); see also Fire, etc., Ins. Co. v. Spell, 183 Ga.App. 675, 359 S.E.2d 705 (1987). Thus, the filing of an answer by Cotton States in its own name did not by itself eliminate the requirement that a judgment first be obtained against Stapler, the uninsured motorist, as a condition precedent to a claim for bad...