Sandner, Inc. v. Centennial Ins. Co.

• Decision Date: 19 October 1988
• Docket Number: 77021,Nos. 77020,s. 77020
• Citation: 189 Ga.App. 277,375 S.E.2d 611
• Parties: SANDNER, INC. v. CENTENNIAL INSURANCE COMPANY. CENTENNIAL INSURANCE COMPANY v. SANDNER, INC. et al.
• Court: Georgia Court of Appeals

Page 611

375 S.E.2d 611

189 Ga.App. 277

SANDNER, INC. v. CENTENNIAL INSURANCE COMPANY.

CENTENNIAL INSURANCE COMPANY v. SANDNER, INC. et al.

Nos. 77020, 77021.

Court of Appeals of Georgia.

Oct. 19, 1988.

Rehearings Denied Nov. 15, 1988.

Certiorari Denied

Jan. 6, 1989 in No. 77020.

Certiorari Granted

Jan. 13, 1989 in No. 77021.

Kilpatrick & Cody, Robert E. Shields, Thomas H. Christopher, David P. Phippen, Atlanta, for appellant.

Neely & Player, John W. Winborne III, Atlanta, for appellee.

SOGNIER, Judge.

Sandner, Inc. brought suit against Bayley, Martin and Fay (BMF), its insurance agency, alleging breach of fiduciary duty and breach of contract, and negligence in failing to procure workers' compensation insurance for the company. BMF answered denying liability, and filed a third-party complaint against Centennial Insurance Company (Centennial). Sandner's motion to add Centennial as a defendant was then granted, and Sandner alleged theories of recovery against Centennial based on negligence and breach of an alleged oral contract to provide retroactive workers' compensation insurance. The motion for summary judgment made by BMF against Sandner was not ruled on because Sandner dismissed its claims against BMF. Centennial's motion for summary judgment against Sandner was granted as to the contract claim but denied as to the negligence claim. The trial court also denied both Centennial's motion for summary judgment against BMF and its motion to dismiss BMF's third-party complaint. These appeals ensued.

The record reveals that BMF is an independent insurance broker with an agency agreement with Centennial. In 1981, Centennial, through BMF as broker, issued several policies of insurance to Brill, Inc. (Brill), a wholly owned subsidiary of Carpro, Inc. These policies, including a workers' compensation policy which was subsequently renewed for one-year periods, showed the named insureds to be Brill and Stone Mountain Assets, Inc. In 1982, Sandner was incorporated as another subsidiary of Carpro, Inc. and BMF assumed the role of insurance adviser to Sandner, as it had done with Brill. Victor H. Hoberg was the BMF account representative who dealt with Brill and Sandner. At the time of Sandner's incorporation, Hoberg obtained for it property and liability insurance, but workers' compensation insurance was rejected at that time by Sandner because it had no employees of its own but was using Brill employees. Hoberg advised that workers' compensation insurance would be required when Sandner acquired three or more employees. Hoberg wrote to Peggy Deter, an underwriter at Centennial, that "we expect to add other coverages, [a]uto and [workers'] [c]ompensation, as these exposures develop."

In 1983 three accidents occurred involving Sandner employees. BMF submitted claims for the 1983 accidents to Centennial for payment under the Brill workers' compensation policy and Centennial paid these claims, although it contends it did so with the understanding that Sandner was still using Brill employees. In September 1984, while investigating a second claim for workers' compensation benefits by Patrick Burton, one of the Sandner employees involved in the 1983 accidents, Centennial discovered that the employees whose 1983 claims had been paid actually had been employed by Sandner rather than Brill. Centennial therefore controverted the claim, informing Sandner that no workers' compensation coverage existed for Sandner employees. Sandner then obtained a separate workers' compensation policy which provided prospective coverage for its employees. However, believing coverage already existed for Sandner employees under the Brill policy, Hoberg sought to have Sandner added to the Brill policy by endorsement as an additional named insured. In deposition testimony, Hoberg stated that he confirmed with Deter at Centennial that the endorsement adding Sandner as a named insured would be accepted. Hoberg testified he did not specifically discuss with Deter the issue of whether the coverage would be retroactive. However, Sandner subsequently submitted an affidavit by Hoberg which was considered by the trial court before denying Sandner's motion for reconsideration, after summary judgment had been granted against it on the contract issue. In the affidavit, Hoberg stated it was clear to him that retroactive coverage would result from the endorsement. Hoberg informed Sandner in a letter dated September 20, 1984 that Centennial's underwriter had agreed to process an endorsement, which should eliminate coverage questions, but Hoberg was later informed by Deter that her superiors had not agreed to add Sandner by endorsement to the Brill policy. As a result of Centennial's denial of coverage under the Brill policy, Sandner instituted this suit.

1. In the main appeal Sandner contends the trial court erred by granting partial summary judgment to Centennial on the contract issue. The trial court based its grant of partial summary judgment in favor of Centennial on its determination that the language of the Brill policy itself "prohibit[ed] oral amendments (i.e. Brill's workers' compensation policy in effect in September 1984 states that '[t]he terms of this policy may not be change[d] or waived except by endorsement issued by us to be part of this policy,'[) ] and there is no meeting of the minds as far as essential elements of the alleged oral agreement to add Sandner as an additional insured to the Brill workers' compensation policy."

Sandner contends the language in the Brill policy does not bar the agreement here, because Hoberg promised Sandner in writing that such coverage would be provided. However, we find the trial court's ruling correct even if Hoberg's September 20, 1984 letter is viewed as a promise in writing, as urged by Sandner. The Brill policy prohibited not only oral agreements, as pointed out by the trial court, but any change or waiver of any terms of the policy except by endorsement issued by Centennial to be a part of the policy. This language in the policy is clear and unambiguous, and " '(n)o construction is required or even permissible when the language employed by the parties in their contract is plain, unambiguous, and capable of only one reasonable interpretation.' [Cit.]" Citicorp Indus. Credit v. Rountree, 185 Ga.App. 417, 421, 364 S.E.2d 65 (1987). It is uncontroverted that Centennial never issued an endorsement to the Brill policy retroactively adding Sandner as an additional named insured. Further, it is clear, despite Sandner's argument to the contrary, that the letter from Hoberg to Sandner is not an "endorsement issued by [Centennial] to be part of" the Brill policy. Accordingly, even if the letter from Hoberg is a promise in writing to provide retroactive insurance, it is not such a change in the policy which is permitted by the clear and unambiguous policy language itself.

We need not consider Sandner's argument that the trial court incorrectly found there was no meeting of the minds as to an agreement to add Sandner to the Brill policy as a named insured, because even assuming there was such a meeting of the minds, the Brill policy language prohibited changing its terms except by endorsement issued by Centennial, as discussed above.

The issue, raised by Sandner, of whether Hoberg had apparent authority, as an agent of Centennial, to bind Centennial by promising Sandner that coverage would be retroactive, is irrelevant under the circumstances presented here, where the record reveals that Hoberg's September 20, 1984 letter to Sandner made no such promise. In that letter, Hoberg merely stated that "[t]he underwriter [at Centennial] has agreed to process an endorsement adding Sandner as additional named insured to your Workers' Compensation policy." (Emphasis supplied.) A statement that the carrier had agreed to process the endorsement after new information was submitted cannot be construed as tantamount to a promise that the endorsement would be approved.

Finally, contrary to Sandner's argument, Centennial may not be held to have waived its right to deny coverage for Burton's 1984 injury because it mistakenly paid the three previous claims for Sandner employees. Although waiver or estoppel has been applied to create a jury question as to an insurer's liability to an insured in some situations, ...