Smith v. Government Employees Ins. Co.

Citation179 Ga.App. 654,347 S.E.2d 245
Decision Date02 June 1986
Docket NumberNo. 72098,72098
PartiesSMITH v. GOVERNMENT EMPLOYEES INSURANCE COMPANY.
CourtGeorgia Court of Appeals

Richard Rominger, Mason White, Savannah, for appellee.

POPE, Judge.

Appellant Robert J. Smith, Sr. and Douel Castain, Jr. were involved in an automobile collision in August 1977 in Savannah. Thereafter Smith sued Castain and obtained a judgment against Castain in the amount of $60,000 in Chatham Superior Court in October 1978. That judgment remains unsatisfied. Smith brought the present action against Government Employees Insurance Company (GEICO) seeking to recover the proceeds of a liability policy allegedly issued to Castain by GEICO. GEICO moved for summary judgment on the ground that Smith could not maintain an action directly against it. This motion was granted by the trial court. Held :

1. The trial court relied on the principle that an injured person not in privity of contract with the insurance company cannot reach the proceeds of the policy for payment of his claim by means of an action directly against the insurer. Lee v. Petty, 133 Ga.App. 201, 210 S.E.2d 383 (1974); Insured Lloyds v. Bobo, 116 Ga.App. 89, 156 S.E.2d 518 (1967); Perkins v. Publix Theatres Corp., 47 Ga.App. 641(7), 171 S.E. 147 (1933); Siegel v. Assoc. Indem. Corp., 432 F.Supp. 533 (N.D.Ga.1977). While we agree with the general principle, we do not The fact that Smith has obtained a judgment against the insured Castain takes this case out of the general rule set out above. Where a judgment has been obtained against the insured which fixes the liability of the insured, an action may be maintained directly against the insurer for the proceeds of the policy. See Arnold v. Walton, 205 Ga. 606, 613, 54 S.E.2d 424 (1949); Fisher v. American Cas. Co., 67 Ga.App. 784(2), 21 S.E.2d 306, rev'd on other grounds, 195 Ga. 136, 23 S.E.2d 395 (1942); Hodges v. Ocean Accident, etc., Corp., 66 Ga.App. 431(1), 18 S.E.2d 28 (1941). See also Public Nat. Ins. Co. v. Wheat, 100 Ga.App. 695(1), 112 S.E.2d 194 (1959), wherein the general principle against direct action is set out, but the court affirmed a verdict in an action directly against the insurer where the plaintiff below had previously received a judgment against the insured. Therefore, the trial court erred in holding that such an action in the present case is not permitted.

find that it is applicable in the present case on the record [179 Ga.App. 655] before us.

We note that the record does not contain a copy of the policy in question. In his complaint, Smith contends that the policy has a provision which obligates the insurer to pay all sums which its insured becomes legally obligated to pay. GEICO denies that any insurance was in effect. The record reflects exhibits attached to a deposition which indicate issues of fact regarding whether insurance was in effect. Under these circumstances, the trial court's reliance on Davis v. Nat. Indem. Co., 135 Ga.App. 793(2), 219 S.E.2d 32 (1975), was misplaced.

2. However, the trial court correctly ruled that appellant Smith is not entitled to seek bad faith penalties against the insurer. See Allstate Ins. Co. v. Harris, 133 Ga.App. 567(3), 211 S.E.2d 783 (1974).

Judgment affirmed in part; reversed in part.

McMURRAY, P.J., and CARLEY, J., concur.

ON MOTION FOR REHEARING

Appellant Smith argues that our holding in Division 2 does not sufficiently answer the question of whether the bad faith penalties set out in OCGA § 33-34-6(c) may be sought in a situation where a third party brings an action directly against an insurance company to recover proceeds of a liability policy. Smith argues that the Georgia Motor Vehicle Accident Reparations Act (the Act), OCGA Ch. 33-34, created mandatory liability insurance, and that such liability insurance is a benefit under the Act which would bring it within the language of OCGA § 33-34-6(c): "In addition to all other penalties provided for in this Code section, in the event that an insurer fails or refuses to pay a person the benefits which the person is entitled to under this chapter within 60 days after proper proof of loss has been filed, [the person may be entitled to punitive damages.]" Thus, the question presented is whether the penalties mentioned in OCGA § 33-34-6(c) apply to the mandatory liability insurance specified in the Act.

We hold that they do not apply and the principle announced in Allstate Ins. Co. v. Harris, supra, still applies even in the face of the Act. Policies written...

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    • United States
    • U.S. District Court — Northern District of Georgia
    • March 16, 2012
    ...of the latter, an action may be maintained directly against the insurer for the proceeds of the policy. Smith v. Gov't Emps. Ins. Co., 179 Ga.App. 654, 655, 347 S.E.2d 245 (1986). The Scottsdale Policy implicitly acknowledges this rule when it provides that a “person or organization may sue......
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    ...right to recover under the contract, the Dunns are entitled to the proceeds of the policy. See Smith v. Gov't Employees Ins. Co., 179 Ga.App. 654, 347 S.E.2d 245, 246 (1986). Columbia concedes its responsiblility for the underlying judgment, at least up to the limits of its policies. (See D......
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