Lee v. Criterion Ins. Co.

• Decision Date: 05 May 1987
• Docket Number: No. CV486-314.,CV486-314.
• Citation: 659 F. Supp. 813
• Parties: Jannette S. LEE, formerly known as Jannette S. Williamson, Individually and On Behalf of All Other Similarly Situated Persons, Plaintiff, v. CRITERION INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Georgia

659 F. Supp. 813

Jannette S. LEE, formerly known as Jannette S. Williamson, Individually and On Behalf of All Other Similarly Situated Persons, Plaintiff, v. CRITERION INSURANCE COMPANY, Defendant.

No. CV486-314.

United States District Court, S.D. Georgia, Savannah Division.

May 5, 1987.

W. Douglas Adams, Brunswick, Ga., for plaintiff.

John E. Bumgartner, Brunswick, Ga., for defendant.

ORDER

EDENFIELD, District Judge.

The case at bar, the third in a series of lawsuits brought by plaintiff Jannette S. Lee against defendant Criterion, involves the alleged breach of an insurance contract. Defendant, contending that the action is barred on the ground of res judicata, has filed a motion for summary judgment; defendant also has requested that sanctions be imposed pursuant to Fed.R. Civ.P. 11. For reasons only slightly different from those advanced by defendant, the Court finds the motion for summary judgment to be meritorious and the request for sanctions well-founded.

I. FACTS

A. Prior Litigation

On September 5, 1982, plaintiff was involved in an automobile accident, as a result of which she allegedly sustained disabling injuries and incurred medical expenses. Plaintiff was insured by the defendant insurance company. Because defendant allegedly failed to pay in a timely fashion certain medical bills submitted to it by plaintiff during the early months of 1983, plaintiff brought suit, on March 16, 1983, in the Superior Court of Glynn County, Georgia. In her complaint, plaintiff contended that defendant's acts violated § 33-34-6 of the Official Code of Georgia, which mandates payment of no-fault benefits "within 30 days after the insurer receives reasonable proof of the fact and the amount of loss sustained...." The same code section provides that an insured may bring suit against its insurance carrier for violation of the statute. In any such action, if it is shown that an insurance company has failed to pay benefits within thirty days after proof of loss, and if the carrier does not raise or cannot prove the affirmative defense of good faith, the defendant company may be held liable to the insured for certain specified penalties and attorney's fees. O.C.G.A. § 33-34-6 provides additionally that where benefits are not paid within sixty days after proof of loss, insurance companies may be held liable for punitive damages. Pursuant to the statute, plaintiff sought to recover penalties, attorney's fees and punitive damages from the defendant.

Just prior to trial, the state court ruled on an objection that had been lodged by the defendant. According to the defendant, the Georgia Court of Appeals decision in Falagian v. Leader Nat'l Insurance Co., 167 Ga.App. 800, 307 S.E.2d 698 (1983), mandated that the scope of the litigation should be strictly limited, such that the only determination to be made by the jury would be whether defendant had failed to pay claims with respect to which proof of loss had been provided to the defendant more than thirty days prior to the filing of the action. The court ruled in defendant's favor, and limited the scope of the proceedings accordingly. As a result of the court's ruling, plaintiff was precluded from litigating the question whether defendant had wrongfully delayed in paying benefits the proof of loss as to which was provided to defendant after the cut-off date thirty days prior to trial. The ruling also precluded resolution of questions concerning plaintiff's alleged disability.

The jury found that plaintiff was entitled to additional benefits of $927.36, for payment of a hospital bill that had been submitted to the defendant more than thirty days prior to trial. The jury found, however, that defendant had acted in good faith, and that therefore no penalties or attorney's fees should be awarded. The Superior Court entered judgment on the jury verdict on November 19, 1985.

On October 28, 1985, plaintiff filed suit, in connection with the same September 1982 automobile accident, in the Brunswick Division of the United States District Court for the Southern District of Georgia. The case was assigned to Judge Alaimo.

Plaintiff alleged in her federal-court complaint that the accident had rendered her totally disabled. Plaintiff further contended that, while defendant recently had made certain payments to her, it had refused to pay additional benefits for the stated reason its disbursements to date had actually exceeded the limit of plaintiff's coverage. Defendant claimed the coverage limit to be $5,000; plaintiff contended that she was in fact entitled to coverage up to $50,000, by virtue of alleged deficiencies in the application for the insurance policy. In addition to the disability benefits allegedly due her, plaintiff sought, as she had in state court, penalties, attorney's fees, and punitive damages under O.C.G.A. § 33-34-6 on the basis of defendant's alleged bad faith refusal to tender timely payments.

In contrast to her state-court complaint, plaintiff's federal-court complaint included class action allegations, and did not include a jury trial request. Defendant moved to dismiss the class action allegations; that motion was granted by Judge Alaimo on December 26, 1985, on the ground that the requirements of Fed.R.Civ.P. 23 had not been met. Apparently, the omission of a jury request from plaintiff's complaint was not intentional, for plaintiff made an out-of-time motion for jury trial. That motion was denied on January 21, 1986. Ultimately, however, the Court impanelled an advisory jury pursuant to Fed.R.Civ.P. 39. The case went to trial before Judge Alaimo and the advisory jury in July, 1986.

It should be noted that during the trial before the Brunswick Division Court plaintiff testified, in response to a question from defense counsel, that she had been rendered totally disabled as a result of the September 1982 automobile accident from March 23, 1983 (the date on which plaintiff quit her job as a toll booth attendant) up to and through the date of trial. Plaintiff's proposed findings of fact, however, indicate that plaintiff sought to establish only that she had been disabled from March 23, 1983 "through thirty days prior to the filing of the Brunswick Division action." This limitation was included in plaintiff's proposed findings in accordance with the holding of the Falagian case, see supra.

On July 17, 1986 the advisory jury found in favor of the plaintiff and proposed an award of $5,500 in additional benefits, and a total of $21,500 in penalties, attorney's fees, and punitive damages.

Shortly thereafter, on August 6, 1986, plaintiff filed suit in the Superior Court of Liberty County, Georgia. Plaintiff once again alleged that she had been rendered totally disabled as a result of the September 1982 automobile accident. In her complaint, however, plaintiff stated the period of her disability as running from October 28, 1985 (the date of filing of the Brunswick Division federal-court complaint) through the date of filing in the Liberty County Superior Court. Plaintiff's complaint included class action allegations.

On September 3, 1986, Judge Alaimo entered his findings of fact and conclusions of law in the Brunswick Division case. Notwithstanding that Judge Alaimo agreed that plaintiff's coverage limit was $50,000, he otherwise rejected the findings of the advisory jury and found, inter alia: that plaintiff's testimony was not credible; that the injuries, if any, sustained by plaintiff in the September 1982 automobile accident were relatively minor; that plaintiff had quit her job as a toll booth attendant in March, 1983 for reasons unrelated to any disabling physical condition; that plaintiff had been paid all sums due her under the insurance policy issued by the defendant, and; that plaintiff had fully and permanently recovered from any injury she might have suffered as a result of the mentioned accident.

On the day following the entrance of Judge Alaimo's findings, September 4, 1986, defendant removed the instant action from the Liberty County Superior Court to the Savannah Division of this Court. On September 11, 1986 defendant moved for summary judgment on the ground of res judicata.

B. CV 486-314

Upon removal, this case was initially assigned to Judge Alaimo; it was reassigned to this Court, however, on October 20, 1986, and came up on the calendar for mandatory status conference on March 20, 1987.

A review of the pleadings prior to the conference raised serious doubts in the Court's mind as to the merits of and motives behind the case sub judice. Accordingly, at the status conference, the Court warned plaintiff's counsel in no uncertain terms that defendant's motion for summary judgment appeared meritorious, and that plaintiff might well be facing the imposition of sanctions under Fed.R.Civ.P. 11. However, because the facts surrounding the two previous lawsuits brought in connection with the September 1982 automobile accident appeared complex, the Court invited the parties to submit a detailed chronology of the litigation, and briefs dealing further with the merits of the case (as well as with the appropriateness of Rule 11 sanctions). The parties accepted the invitation.

Defendant's position, in essence, is as follows: 1) plaintiff's testimony at trial in the Brunswick Division conclusively establishes that the matters litigated in that prior action encompassed plaintiff's claim of disability up to and including the date of trial (July 17, 1986), and therefore the instant action (in which benefits are claimed for a period running from October 28, 1985 forward) is barred by res judicata principles regardless of the date suit was filed; 2) even assuming that plaintiff had some arguable justification for bringing this action on August 6, 1986 (after the advisory jury had "found" in favor of plaintiff in the Brunswick Division), plaintiff should not have persisted in pressing her claim after September 3, 1986 (the date on which Judge Alaimo...