Kelly v. Lloyd's of London

• Decision Date: 27 November 1985
• Docket Number: No. 42322,42322
• Citation: 336 S.E.2d 772,255 Ga. 291
• Parties: KELLY et al. v. LLOYD'S OF LONDON.
• Court: Georgia Supreme Court

Page 772

336 S.E.2d 772

255 Ga. 291

KELLY et al. v. LLOYD'S OF LONDON.

No. 42322.

Supreme Court of Georgia.

Nov. 27, 1985.

Reconsideration Denied Dec. 9, 1985.

Carr G. Dodson, Charles L. Ruffin, Jones, Cork & Miller, Macon, for Robert F. Kelly et al.

John C. Edwards, Martin, Snow, Grant & Napier, Macon, for Lloyds of London by D.J. Walker.

BELL, Justice.

This case comes before us upon questions certified by the United States Court of Appeals for the Eleventh Circuit pursuant to Rule 36 of the Supreme Court of Georgia. See OCGA § 15-2-9.

Statement of the Facts

Appellant Robert E. Kelly is the owner of a pesticide crop dusting concern d/b/a R & B Helicopters, which was the named insured on a policy of aircraft and aerial application insurance issued by Lloyd's of London.

On June 25, 1981, Tyler Golder, the son of appellants Donald and Nancy Golder, and the employee of Kelly, was killed when he was struck and decapitated by the blade of a helicopter operated by Kelly.

On June 23, 1982, the Golders filed a wrongful death action against Kelly and R & B Helicopters in the Superior Court of Houston County. On July 14, 1982, and August 2, 1982, Lloyd's, through its attorneys, notified Kelly by letter, that it was reserving its right to deny coverage pursuant to exclusions in the insurance policy and intended to file a declaratory judgment action seeking a determination that the exclusions precluded coverage for Tyler. Lloyd's did, however, state that it would provide legal representation for the lawsuit. Lloyd's attorneys, after being granted a time extension on July 21, 1983, filed defensive pleadings on behalf of Kelly on August 31, 1982.

On September 13, 1982, Lloyd's brought a diversity suit in the U.S. District Court for the Middle District of Georgia, Macon Division, seeking declaratory judgment to determine whether the fatal incident was covered by the policy issued to R & B Helicopters, thereby binding Lloyd's to defend Kelly and R & B in the state wrongful death action. Lloyd's contended, pursuant to Exclusion 7, that the fatal incident was not covered by the policy. Exclusion 7 provides that the policy does not apply "to any obligation for which the insured or his insurer may be held liable under any Workman's Compensation, Unemployment Compensation, or Disability Benefits law or under any similar law, or to bodily injury of any employee of the insured arising out of and in the course of his employment by the insured or his sub-contractor." ¹

At the district court's suggestion, both parties filed motions for summary judgment. On November 29, 1983, the court granted Lloyd's motion for summary judgment, holding that Tyler Golder's death occurred during the course of his employment, that Exclusion 7 of the insurance contract applied, and that Lloyd's had sought declaratory judgment in a timely manner under the requirements of Richmond v. Georgia Farm Bureau Mutual Insurance Company, 140 Ga.App. 215, 231 S.E.2d 245 (1976). From this judgment, the Golders appealed to the U.S. Court of Appeals for the Eleventh Circuit. On April 19, 1985, the Eleventh Circuit certified several questions of law to this court for determination. Lloyd's of London v. Robert F. Kelly, 760 F.2d 240 (11th Cir.1985). We will state and address each certified question separately.

First Certified Question

"(1)-(a) Whether the policy form used by Lloyd's to issue a policy of aircraft and aerial application insurance to R & B Helicopters is excepted from the filing requirement of OCGA § 33-24-9(a)?

"(b) If not, does Lloyd's failure to file the form in accordance with the statute preclude equitable relief because of the 'unclean hands' doctrine or void the exclusionary provision thereby making it unenforceable?"

We hold that Lloyds' aircraft and aerial application insurance policy is excepted from the filing requirement of OCGA § 33-24-9(a). Pursuant to that subsection, "[n]o basic insurance policy or annuity contract ... where written application is required ... shall be delivered in this state ... unless the form has been filed with and approved by the Commissioner. This subsection shall not apply to surety bonds or to specially rated inland marine risks nor to policies, riders, endorsements, or forms of unique character designed for and used with relation to insurance upon a particular subject ..." (Emphasis supplied.)

Currently, there are only nine insurance companies in Georgia providing coverage for approximately one hundred aerial pesticide contractors. These statistics militate toward the conclusion that a policy providing such insurance coverage is of a unique character and is thereby expressly covered by the exclusionary language of OCGA § 33-24-9(a).

Buttressing this conclusion is the interpretation given the statute by the Insurance Commissioner. "It is a well-settled principle of law that even though an interpretation of a statute by an agency charged with the duty of enforcing it is not conclusive, it is entitled to great weight." National Adv. Co. v. Dept. of Transportation, 149 Ga.App. 334, 337(2), 254 S.E.2d 571 (1979). Mr. Ralph W. Terry, Chief Deputy Insurance Commissioner for the State of Georgia, expressly stated in an affidavit that Lloyd's is not required to file this particular policy with the Insurance Commissioner pursuant to OCGA § 33-24-9(a). He added that none of the other insurance companies issuing policies for aerial pesticide contractors had forms on file with the insurance commissioner's office.

Since we find that Lloyd's was not required to file the policy under OCGA § 33-24-9(a), it is not necessary to answer subsection (b) of the First Certified Question.

Second Certified Question

"(2) Whether Lloyd's filed its declaratory judgment action in the timely manner required by Richmond v. Georgia Farm Bureau Mutual Insurance Co.," supra, 140 Ga.App. 215, 231 S.E.2d 245.

The appellants contend that Lloyd's should be estopped from bringing their declaratory action for it was not filed immediately after the Golders filed their wrongful death action. We disagree, finding that Lloyd's followed the guidelines enunciated in Richmond.

"Upon learning of facts reasonably putting it on notice that there may be grounds for noncoverage and where the insured refuses to consent to a defense under a reservation of rights, the insurer must thereupon (a) give the insured proper unilateral notice of its reservation of rights, (b) take necessary steps to prevent the main case from going into default or to prevent the insured from being otherwise prejudiced, and (c) seek immediate declaratory relief including a stay of the main case pending final resolution of the declaratory judgment action." Richmond, supra, 140 Ga.App. at 219, 231 S.E.2d 245.

In complying with these guidelines, Lloyd's properly gave Kelly notice of its reservation of rights and also took necessary steps, by asking for an extension to file and by filing an answer, to avoid default. Two weeks after filing an answer Lloyd's filed the declaratory judgment action.

We reject the Golders' contention that Lloyd's had to file the declaratory judgment action immediately after the Golders filed suit. In Richmond the declaratory judgment action was filed following the answer, not following the filing of the action by the plaintiff. The rule enunciated in Richmond is based on principles of fairness, and, in determining whether an insurer has met the requirements thereof, the crucial inquiry is whether the rights of the insured have been adequately protected. "This course of action fully informed the insured and prevented any default being obtained in the litigation. The filing of the answer served to protect the rights of the insured as well as the insurer pending the outcome of the declaratory judgment action." In the instant case, no prejudice has been demonstrated by the Golders or Kelly due to the filing of the declaratory action on September 13, 1982. Moreover, we concur in the district court's finding that Lloyd's filing of the declaratory action on that date, within fourteen days of the filing of the defensive pleadings on August 31, was within a reasonable time.

Third Certified Question

"Whether OCGA § 2-7-103(a) requires coverage for aviation insurance policies issued to pesticide contractors to include protection for 'persons who may suffer legal damages as a result of the operation of the applicant' with the result that the exclusion relied on by Lloyd's is void and unenforceable because in conflict with the requirement or does it simply set out the requirements for obtaining a pesticide contractor's license?"

At the outset we note that OCGA § 2-7-103(a) provides in full that "[t]he Commissioner [of Agriculture] shall not issue a pesticide contractor's license until the applicant has furnished evidence of financial responsibility with the Commissioner, consisting either of a surety bond, a liability insurance policy, or a cash deposit or certification thereof, protecting persons who may suffer legal damages as a result of the operation of the applicant, provided that such surety bond, liability insurance policy, or cash deposit need not apply to damages or injury to agricultural crops, plants, or land being worked upon by the applicant."

To answer the certified question regarding OCGA § 2-7-103(a), we turn to American Cas. Co. v. Southern Stages, Inc., 70 Ga.App. 22, 27 S.E.2d 227 (1943), involving provisions of our motor common carrier statute. In order to operate as a motor common carrier, a certificate of public convenience must first be obtained. OCGA § 46-7-3. Pursuant to OCGA § 46-7-12, no certificate can be obtained until the applicant files proof of a bond or indemnity insurance policy which provides "adequate security, for the protection, in case of passenger vehicles, of the passengers and baggage carried and of the public against injury proximately caused by the negligence of such motor common carrier, its servants, or...