Miller v. Southern Heritage Ins. Co., s. A94A1677
| Decision Date | 20 October 1994 |
| Docket Number | Nos. A94A1677,A94A1678,s. A94A1677 |
| Parties | MILLER, et al. v. SOUTHERN HERITAGE INSURANCE COMPANY. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. SOUTHERN HERITAGE INSURANCE COMPANY. |
| Court | Georgia Court of Appeals |
Duffey & Duffey, Harl C. Duffey, Jr., Rogers, Magruder, Sumner & Brinson, J. Clinton Sumner, Jr., Rome, for Miller.
Harper, Waldon & Craig, Thomas D. Harper, Hilliard V. Castilla, Atlanta, for State Farm Ins. Co.
Goodman, McGuffey, Aust & Lindsey, William P. Claxton, Constance C. Russell, Atlanta, for Southern Heritage Ins. Co.
Southern Heritage issued an insurance policy to Donald E. Chambers, Sr., covering an automobile used primarily by his son, Donald E. Chambers, Jr. While the car was being driven by 15-year-old Stephen Adams, it was involved in a collision injuring David Miller, a passenger. Since Adams possessed only a learner's permit and Miller was only 17 years old, Adams was driving illegally. OCGA § 40-5-24(a). Nevertheless, he had been given permission to drive the car by Donald E. Chambers, Jr. Adams was insured by State Farm, although it disputes coverage.
Southern Heritage paid Miller's medical expenses under liability coverage for bodily injury until those expenses reached something over $11,000, less than the $15,000 it then believed it was obligated to pay by law. After failing to negotiate a settlement, Southern Heritage sought declaratory judgment. It alleged that it had mistakenly made payments and was not liable for any of the expenses at all. It asserted in the alternative that it was liable for not more than $15,000, the statutory minimum automobile liability insurance required. See OCGA §§ 33-34-4, 40-9-34(2), 40-9-37. The declaratory judgment action was based on a clause in Chambers' policy that excluded liability coverage By cross-complaint, the Millers claimed damages substantially in excess of $15,000.
Southern Heritage was granted summary judgment. The court held that Adams could not have had a reasonable belief that he was entitled to drive the car, that he was not a covered person under the policy, and that Southern Heritage was not liable to the Millers. The Millers' motion for summary judgment was denied. In Case No. A94A1677, the Millers appeal the denial of their motion and the grant of Southern Heritage's motion for summary judgment; in Case No. A94A1678, State Farm appeals the grant of Southern Heritage's motion.
1. The Millers first argue that their motion for summary judgment should have been granted because Southern Heritage improperly sought a declaratory judgment in that it was seeking confirmation of actions already taken, not guidance. The purpose of the declaratory judgment act, which is to be "liberally construed and administered," is "to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations." OCGA § 9-4-1. " ' " ' "The object of the declaratory judgment is to permit determination of a controversy before obligations are repudiated or rights are violated." ' " ' " Famble v. State Farm Ins. Co., 204 Ga.App. 332, 333-334(2), 419 S.E.2d 143 (1992).
As to approximately the first $11,000, Southern Heritage does not need guidance. It has already paid this amount, and there is no controversy with respect to it. Instead, Southern Heritage seeks a declaration that payment of this amount is not required by law or contract. Such would be merely advisory; the only actual controversy as to this money is created by the declaratory judgment action itself, and one cannot create a controversy for declaratory judgment purposes by filing a lawsuit. If the court ruled that insurance law imposed a duty to pay it, no future action would be necessary. If the court ruled that Southern Heritage was not required to pay it, its only possible future action would be to demand reimbursement and file suit to collect it. The avoidance thereof is not the purpose of a declaratory judgment action.
There do remain unanswered questions of Southern Heritage's obligation to supply a defense to Chambers, and its obligation to pay additional amounts, that is, the unpaid amount up to $15,000 and any amount beyond $15,000. A declaratory judgment action is appropriate as to the issue of these unmet claims. Contrary to the Millers' contention, the declaratory judgment action was not filed after a denial of a claim; Southern Heritage's offer to settle the Millers' future claims did not constitute a denial of coverage and does not make the action advisory. See Atlanta Cas. Co. v. Fountain, 262 Ga. 16, 413 S.E.2d 450 (1992).
The Millers also contend that their motion for summary judgment should have been granted because Southern Heritage, by paying some medical expenses, waived reliance on the exclusion clause or is estopped from asserting that the clause is operative. Southern Heritage responds that it did not waive the exclusion clause but paid medical expenses to the extent it did because, under its interpretation of Georgia case law, public policy required it to do so.
Southern Heritage produced evidence that it believed it was required by the Supreme Court's decision in Stepho v. Allstate Ins. Co., 259 Ga. 475, 383 S.E.2d 887 (1989), to provide coverage up to the $15,000 statutory requirement to comply with public policy. Stepho requires that exclusionary clauses be declared void when "the injured party [or] the unsuspecting insured is left unprotected." Id. at 476(1), 383 S.E.2d 887; see also Cotton States Mut. Ins. Co. v. Neese, 254 Ga. 335, 341(1), 329 S.E.2d 136 (1985). Having made this determination, Southern Heritage proceeded to pay without seeking a declaratory judgment on that issue, until it had paid about $11,000.
The court did not determine whether Stepho required the payments nor does the record include all the information necessary to determine the issue. Whether public policy would be violated by the operation of the exclusion clause involves a fact specific inquiry; each case Southern Guaranty Ins. Co. v. Preferred Risk Mut. Ins. Co., 257 Ga. 355, 356, 359 S.E.2d 665 (1987).
After the declaratory judgment action was filed, State Farm contended that it was not liable under its policy. The evidence is incomplete to decide if Southern Heritage is obligated beyond what it has paid, up to $15,000. The public policy issue does not affect the amounts paid nor any amount over...
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