Smith v. Transamerica Ins. Co., A95A1686
Decision Date | 26 October 1995 |
Docket Number | No. A95A1686,A95A1686 |
Citation | 463 S.E.2d 711,218 Ga.App. 839 |
Parties | SMITH v. TRANSAMERICA INSURANCE COMPANY. |
Court | Georgia 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.
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. ...
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