Smith v. Transamerica Ins. Co., A95A1686

Decision Date26 October 1995
Docket NumberNo. A95A1686,A95A1686
Citation463 S.E.2d 711,218 Ga.App. 839
PartiesSMITH v. TRANSAMERICA INSURANCE COMPANY.
CourtGeorgia Court of Appeals

Schreeder, Wheeler & Flint, Lawrence S. Burnat, Debbie A. Wilson, Atlanta, for appellant.

Webb, Carlock, Copeland, Semler & Stair, John W. Sandifer, David F. Root, Atlanta, for appellee.

SMITH, Judge.

This appeal involves the ancient common-law device of vouchment and its survival in modern practice in statutory form. OCGA § 9-10-13. We are asked to determine the scope of that statute's effect upon a subsequent claim against the vouchee. We conclude that the effects of a vouchment under OCGA § 9-10-13 are limited to those explicitly provided by the statute, and we affirm the trial court's decision granting summary judgment in favor of the vouchee.

Smith, an insurance agent, was sued in Fulton County by a former customer and its employees after a medical insurance policy he procured failed to pay the employees' medical claims. Smith notified his errors and omissions insurer, Transamerica, which denied coverage on the basis of the insolvency exclusion in its policy. Smith then sent a letter to Transamerica vouching it into the Fulton County action pursuant to OCGA § 9-10-13. It does not appear from the record that Transamerica filed pleadings, defended, or otherwise participated in the Fulton County action as a vouchee. The trial court in the Fulton County action entered findings of fact and conclusions of law, granting summary judgment to the plaintiffs and finding Smith liable for plaintiffs' damages.

Smith then filed this action against Transamerica in the State Court of DeKalb County, seeking coverage under the errors and omissions policy, bad faith penalties, and attorney fees. Both Smith and Transamerica moved for summary judgment. In a thorough and well-reasoned order, the trial court denied Smith's motion and granted summary judgment in favor of Transamerica on the basis of the insolvency exclusion. From this order, Smith appeals.

In three related enumerations of error, Smith contends the trial court erred in allowing Transamerica to litigate the issue of its liability under the errors and omissions policy. 1 According to Smith, the vouchment foreclosed the relitigation of any issue addressed by the findings of fact and conclusions of law in the Fulton County action, which he contends determined by implication the issue of Transamerica's liability to Smith. Smith argues that because the court found the failure of reinsurance through Smith's negligence was the proximate cause of the plaintiffs' losses, that finding is conclusive as to the reason for the underlying loss, and therefore, the insolvency exclusion does not apply. This argument assumes, however, that the trial court in the Fulton County action considered a multitude of issues that were never presented for decision, including the terms of coverage and exclusions under the Transamerica policy or the policy of reinsurance. 2 Moreover, even if we assume that the Fulton County trial court made a sub silentio determination of Transamerica's liability under the policy without ever expressly so holding, Smith's argument misstates the function and effect of the vouchment statute.

OCGA § 9-10-13 provides: "Where a defendant may have a remedy over against another person and vouches him into court by giving notice of the pendency of the action, the judgment rendered therein shall be conclusive upon the person vouched, as to the amount and right of the plaintiff to recover." This court and the Supreme Court have consistently interpreted this language to mean precisely what it says. "By the terms of the quoted Code section, when a person against whom a defendant has in fact a remedy over has been thus vouched, and such remedy over has been actually established by aliunde proof, the vouchee thereby is bound by the previous judgment establishing the liability of the original defendant and the amount thereof.... But the mere avouchment of a third person by a defendant to a suit, under the claim of a remedy over against him, and the failure of the vouchee to respond, does not adjudicate the validity of such claim of the voucher against his vouchee. The previous judgment does not determine whether the voucher's claim over against the vouchee was in fact good or bad. [Cits.] The underlying purpose of the rule which permits the vouching of another into court to defend a suit, where the defendant claims that the vouchee would in turn be...

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3 cases
  • CSX Transp., Inc. v. Gen. Mills, Inc.
    • United States
    • U.S. District Court — Northern District of Georgia
    • 17 Febrero 2022
    ...the defendant claims that the vouchee would in turn be responsible to him for any recovery had[.]" Smith v. Transamerica Ins. Co. , 218 Ga. App. 839, 839-40, 463 S.E.2d 711 (1995) (citation omitted). This principle has been codified in O.C.G.A. § 9-10-13, which provides: "Where a defendant ......
  • Hosley v. Computer Transport of Georgia, Inc.
    • United States
    • United States Court of Appeals (Georgia)
    • 26 Octubre 1995
  • CSX Transp. v. Gen. Mills
    • United States
    • U.S. District Court — Northern District of Georgia
    • 17 Febrero 2022
    ...the claim of a remedy over against him . . . does not adjudicate the validity of such claim of the voucher against his vouchee.” Transamerica, 218 Ga.App. at 840 (emphasis and citation omitted). A second lawsuit is necessary to “determine whether the voucher's claim over against the vouchee......
1 books & journal articles
  • Georgia's Public Duty Doctrine: the Supreme Court Held Hostage - R. Perry Sentell, Jr.
    • United States
    • Mercer University School of Law Mercer Law Reviews No. 51-1, September 1999
    • Invalid date
    ...although he did observe that it was not being shored. Id. at 790, 463 S.E.2d at 710. 85. Id. at 791, 463 S.E.2d at 710-11. 86. Id., 463 S.E.2d at 711. The court thus affirmed summary judgment favoring defendant. Id. Other applications of the doctrine, within this time frame, included Washin......

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