Printis v. Bankers Life Ins. Co.
| Decision Date | 30 June 2003 |
| Docket Number | No. S02G1697.,S02G1697. |
| Citation | 583 S.E.2d 22,276 Ga. 697 |
| Parties | PRINTIS v. BANKERS LIFE INSURANCE COMPANY. |
| Court | Georgia Supreme Court |
OPINION TEXT STARTS HERE
Sidney L. Moore, Jr., Atlanta, for appellant.
Sutherland, Asbill & Brennan, Thomas M. Byrne, Thomas W. Curvin, Atlanta, for appellee.
We granted a writ of certiorari to the Court of Appeals to determine whether OCGA § 33-31-4(a) permits, in connection with an installment loan, the sale of credit life insurance the premium for which is calculated on the total payments due through the life of the loan (i.e., gross balance decreasing term coverage), or whether the statute limits the type of credit life insurance sold to that for which the premium is calculated on the amount financed (i.e., net balance decreasing term coverage). In addressing this matter of first impression in Georgia, the Court of Appeals concluded that the statute authorized the sale of "total of payments" coverage, i.e., gross balance decreasing term coverage. Printis v. Bankers Life Ins. Co., 256 Ga.App. 266, 568 S.E.2d 85 (2002). We agree and affirm the judgment of the Court of Appeals.
Appellant Felicia Printis purchased a car, a service agreement, and optional credit life and disability insurance for the 60-month term of her financing contract. After receiving credit for her trade-in and her down payment, Printis owed $20,711.45. Printis was informed that the finance charge resulting from her financing arrangement would be $2,117.95, making the total amount she would pay over the life of the loan $22,829.40. The credit life insurance provided by appellee Bankers Life Insurance Company and for which appellant was charged a premium was for $22,829.40. In January 2000, Printis filed a complaint in which she claimed the amount of life insurance for which she should have been charged was the amount of her indebtedness ($20,711.45 plus accrued interest) rather than $22,829.40. She sought a refund of the difference in premium for the life insurance ($47.65) and the finance charges attributable to the difference, and claimed that the insurer had committed a RICO violation (mail fraud and wire fraud) by "conspiring with its agents and auto dealers to sell this illegal, unnecessary, and excessive insurance coverage at greater expense to the consumer...." The trial court granted judgment on the pleadings to Bankers Life, and the Court of Appeals affirmed that judgment.
"Indebtedness" is statutorily defined as "the total amount payable by a debtor to a creditor in connection with a loan or other credit transaction." OCGA § 33-31-1(5). When the statutory definition of "indebtedness" is applied to the first sentence of OCGA § 33-31-4(a), it is clear that "total of payments" insurance coverage is authorized. The second sentence of § 33-31-4(a) is applicable to transactions such as the one before us, i.e., where the indebtedness is secured by a policy of credit life insurance and is repayable in substantially equal installments. In such transactions, the amount of credit life insurance allowed may not exceed the approximate unpaid indebtedness on the date of death or the exact amount of unpaid indebtedness on the date of death, depending on whether the insurance policy is an individual or group policy. Since the second sentence mandates that the amount of insurance coverage cannot exceed the unpaid indebtedness on the date of death, the second sentence authorizes the credit life insurance coverage to be "decreasing term coverage." Anthony Rollo, "A Primer on Consumer Credit Insurance," 54 Consumer Fin. Law Quarterly Report 52, 53 (Spring 2000) ("A common-type of credit life insurance sold with closed-end credit is decreasing (declining) term credit life insurance, where the initial amount of coverage equals the amount borrowed plus the finance charge ... and the amount of coverage decreases as the balance of the loan declines.")
The policy issued by Bankers Life to Printis provided "total of payments" coverage that decreased in amount every month by the amount of one monthly payment ("gross balance decreasing coverage"). Ms. Printis contends the second sentence of OCGA § 33-31-4(a) limits the maximum amount of insurance coverage to that which Printis would owe on the date she died during the term of the loan, i.e., the remaining principal balance plus the interest which had accrued since the last payment ("net balance decreasing coverage"). However, § 33-31-4(a)'s second sentence clearly states the amount of insurance shall not exceed the unpaid "indebtedness" on the date of death, and "indebtedness" is statutorily defined as "the total amount payable by a debtor to a creditor in connection with a ... credit transaction." Application of the statutory definition of indebtedness to the second sentence of § 33-31-4(a) results in the conclusion that the allowable amount of insurance coverage on the date of death is the unpaid portion of the total of payments, an amount that would include the remaining amount financed plus unearned interest.2 Since the insurance policy's coverage decreased every month by the amount of a monthly payment, the insurance coverage at the date of death would be equal to the unpaid portion of the total of payments. See Liberty Bank & Trust Co. v. Splane, 959 P.2d 600, 603 (Okla.Civ.App.1998). Appellant would have the maximum authorized amount of insurance be the "pay-off balance" on the date of death, which is an amount less than the unpaid total of payments since the latter would include unearned finance charges. However, OCGA § 33-31-4(a) does not limit the amount of credit life insurance that can be sold to the "pay-off balance." Had the General Assembly wished to limit the maximum amount of credit life insurance that could be sold to the "pay-off balance," it could have enacted a statute reflecting that intent. See e.g., Al. St. § 5-19-20(b)(2)(Ala.);3 AS 21.57.040(a)(1) ( Alaska);4 24-A M.R.S.A. § 2855(1)(A) (Maine);5 M.G.L.A. 255 § 12G (Mass.);6 M.S.A.§ 62B.04 (sub. 1) (1) (Minn.);7 N.C.G.S.A. § 58-57-15(a)(1) (N.C);8 Wa. St. 31.04.125(4) (Wash.).9 Instead, the General Assembly enacted legislation similar to Uniform Consumer Credit Code § 4.202(1)(a) (1974)10 and that enacted by the majority of states.11
See, e.g., A.R.S. § 20-1605 (A), (B) (Ariz.); C.R.S.A. § 10-10-106(1) (Colo.); H.R.S. § 431:10B-105(a)(1) (Hawaii); I.C. § 41-2306(1)(a, b) (Idaho); 215 I.L.C.S. 5/155.54(a) (Ill.); I.C. § 27-8-4-4 (Sec. 4.A) (Ind.); K.S.A. § 16a-4-202 (1)(a) (Kan.); K.R.S. § 304.19-040(1) (Ky.); V.A.M.S. 385.030(1) (Mo.); M.C.A. XX-XX-XXX(1) (Mont.); U.C.A. § 31A-22-804(1) (Utah); W.S.A. 424.208(1) (Wisc.); W.S. § 26-21-104(a), (b) (Wyo.).
We conclude, as did the Court of Appeals and the trial court, that appellant's complaint, "predicated upon her contention that Bankers Life illegally calculated the premium for...
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