Prescott's Altama Datsun, Inc. v. Monarch Ins. Co. of Ohio

• Decision Date: 06 September 1984
• Docket Number: No. 41071,41071
• Citation: 319 S.E.2d 445,253 Ga. 317
• Parties: PRESCOTT'S ALTAMA DATSUN, INC. v. MONARCH INSURANCE COMPANY OF OHIO.
• Court: Georgia Supreme Court

Page 445

319 S.E.2d 445

253 Ga. 317

PRESCOTT'S ALTAMA DATSUN, INC. v. MONARCH INSURANCE COMPANY OF OHIO.

No. 41071.

Supreme Court of Georgia.

Sept. 6, 1984.

Rehearing Denied Sept. 26, 1984.

Terry A. Dillard, Daniell S. Landers, Dillard & Landers, Waycross, for Prescott's Altama Datsun, Inc., et al.

A. Martin Kent, Kent, Barrow & Royal, P.C., Savannah, John V. Skinner, Skinner, Wilson, Strickland, Hardy & Benson, Atlanta, John M. Gayner III, Gilbert, Gilbert, Whittle, Harrell, Gayner & Scarlett, Brunswick, for Monarch Ins. Co. of Ohio.

HILL, Chief Justice.

May a liability insurer, by its conduct relative to the defense of a lawsuit against its former insured, cause an expired policy of insurance to be in effect as to an accident occurring after expiration of the policy? The Court of Appeals held that a liability insurer's conduct in defending a lawsuit against its former insured could never revive an expired policy. We granted certiorari. Prescott's Altama Datsun v. Monarch Ins. Co. of Ohio, 170 Ga.App. 545, 317 S.E.2d 845 (1984).

Dr. Jerry Boatwright was injured on January 1, 1980, in the one-car crash of a Datsun he had purchased from Prescott's Altama Datsun, Inc., on June 12, 1978. He sued Prescott's, Nissan Motor Company, Ltd., and its American affiliate on December 22, 1981, alleging negligent design, manufacture and inspection by Nissan and its affiliate, negligent maintenance and repair by Prescott's, and breach of express and implied warranties by all defendants. Boatwright prayed for in excess of ten million dollars in general damages. Prescott's answered the complaint on January 18, 1982, being represented by an attorney retained by Universal Underwriters Insurance Company. Having received a copy of the complaint from Prescott's, Monarch Insurance Company of Ohio retained counsel who ascertained that the suit had been answered on Prescott's behalf and filed a notice of appearance as Prescott's counsel on January 21, 1982, in order to protect Monarch's rights. Nothing further occurred involving Prescott's until discovery was initiated by Boatwright on April 12, 1982; at that time, Prescott's personal attorney insisted in writing that either Universal's or Monarch's attorney become lead counsel. On April 15, 1982, Monarch notified Prescott's by letter that it was defending the suit subject to its reservation of rights to deny coverage because its two policies insuring Prescott's had lapsed on December 12, 1979, before the accident occurred on January 1, 1980, and because it was unclear whether products liability claims were covered by the policies. Prescott's did not contest Monarch's reservation of rights. After Boatwright's deposition was taken, Monarch filed this declaratory judgment action in October, 1982, to determine whether it must defend Boatwright's personal injury damage suit and pay damages under the provisions of its policies.

The trial court granted summary judgment to Monarch and Prescott's appealed contending that Monarch's policies were applicable and that Monarch waived the defense that the policies had expired by filing an appearance in the case and was now estopped to deny coverage under the policies. The Court of Appeals affirmed, holding that although an insurer may waive a condition or limitation in an otherwise valid policy upon which it normally could rely to deny coverage, neither waiver nor estoppel can be used to create coverage (liability) not created by the policy. The majority went on, however, to find that if waiver or estoppel could revive an...