State Farm Auto. v. Metropolitan Property, A06A2429.

• Decision Date: 22 March 2007
• Docket Number: No. A06A2429.,A06A2429.
• Citation: 643 S.E.2d 895,284 Ga. App. 430
• Parties: STATE FARM AUTOMOBILE INSURANCE COMPANY et al. v. METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY et al.
• Court: Georgia Court of Appeals

284 Ga. App. 430

643 S.E.2d 895

STATE FARM AUTOMOBILE INSURANCE COMPANY et al. v. METROPOLITAN PROPERTY AND CASUALTY INSURANCE COMPANY et al.

No. A06A2429.

Court of Appeals of Georgia.

March 22, 2007.

John T. Croley Jr., Fitzgerald, for appellants.

Watson, Spence, Lowe & Chambless, John M. Stephenson, Albany, Jesse G. Bowles III, Cuthbert, Clarence M. Mullin, Ben B. Philips, Columbus, for appellees.

PHIPPS, Judge.

State Farm Insurance Company and its insured, Horst Ziesing, challenge a declaratory judgment obtained by Metropolitan Property and Casualty Insurance Company that an automobile liability policy issued by State Farm to Ziesing covered the driver of an automobile involved in an accident. Because we agree with appellants that the declaratory judgment was not authorized, it is hereby vacated appellants' argument pertaining to the merits of the ruling is not reached; and the case is remanded for entry of a dismissal order.

On April 12, 1999, an automobile accident involving vehicles driven by Donald Pelham and Jodie Gilbert resulted in Gilbert's death. Pelham and his wife filed claims of personal injury and loss of consortium, respectively, against Gilbert's estate. At the time of the accident, Gilbert was driving a vehicle that belonged to her friend; Ziesing was Gilbert's stepfather and had a personal automobile liability policy with Metropolitan.

During the pendency of the Pelhams' lawsuit, Metropolitan filed a separate action for a declaratory judgment. In its petition, Metropolitan stated that it had issued a personal automobile liability policy to Ziesing, which policy was in full force and effect and insured Gilbert and the vehicle she was driving at the time of the accident. It further alleged that Nationwide Insurance Company had issued an insurance policy under which Nationwide had "primary liability insurance coverage" for Gilbert at the time of the accident.¹ And Metropolitan alleged that State Farm had issued a policy of automobile liability insurance to Ziesing that provided "excess coverage" for Gilbert in the accident, but State Farm had denied coverage. Metropolitan sought a ruling that, contrary to State Farm's position, "State Farm ... has liability coverage for the decedent, Jodie Gilbert, and for the accident, which is the subject matter of [the Pelhams' lawsuit]."

State Farm answered that Metropolitan was not entitled to a declaratory judgment, stating, among its defenses, that Metropolitan was impermissibly

seeking an adjudication of [State Farm's] duty to defend and indemnify, not its own, and in fact [Metropolitan] herein has admitted its duty to defend and indemnify and has admitted that it is primary with regard thereto, and State Farm has in fact denied coverage for this occurrence, has chosen its course of action, and all matters concerning State Farm can be fully adjudicated once the rights of the underlying plaintiffs have been decided, and [Metropolitan] is faced with absolutely no uncertainty of choice or no course of action that it might or might not take to its detriment sufficient to warrant declaratory relief.

Metropolitan filed a motion for summary judgment, stating that its insured, Gilbert's mother as the administrator of Gilbert's estate, had been sued by the Pelhams. It further stated that it had not denied coverage to Gilbert's mother, but State Farm had denied coverage. Citing evidence allegedly showing that on the date of the accident, the State Farm policy covered Gilbert in the accident, Metropolitan claimed it was "seeking specific relief as to whether or not State Farm should also provide a defense to [Gilbert's mother] and should also pay a judgment.... State Farm is exposed to uncertainty with regard to its duty to defend and with regard to its duty to pay any judgment." In addition, Metropolitan claimed that it needed to know "how much coverage is available to the defense of [its insured, Gilbert's mother]," posing the question,

[I]f [the Pelhams] demand[] a settlement amount in excess of the Metropolitan policy, but not in excess of the policy limits of Metropolitan and State Farm, then how does Metropolitan make a reasonable assessment of whether to pay said demand and not subject its insured to an excess verdict and itself to penalties and damages for bad faith in not properly settling a claim[?]

State Farm countered that it was entitled to summary judgment, reiterating that Metropolitan's action was not a proper subject matter for declaratory relief because Metropolitan was not seeking guidance as to its own liability, but was seeking a determination whether another insurance company may also be liable. In addition, State Farm argued that Metropolitan's motion should be denied, citing evidence it claimed showed that Gilbert was not covered under its policy.

The trial court denied State Farm's motion and entered a declaratory judgment that the State Farm policy afforded coverage to Gilbert in connection with the accident and that State Farm must therefore defend Gilbert's estate against the Pelhams' lawsuit.

1. Appellants State Farm and Ziesing contend that the declaratory judgment was not authorized. We agree.

"While our declaratory-judgment statute itself says that it should be liberally construed, it manifestly was never intended to be applicable to every occasion or question arising from any justiciable controversy."²

(I)n order to be entitled to a declaratory judgment the plaintiff must show facts or circumstances whereby it is in a position of uncertainty or insecurity because of a dispute and of having to take some future action which is properly incident to its alleged right, and which future action without direction from the court might reasonably jeopardize its interest.³

Metropolitan showed no such facts or circumstances here. It is undisputed that State Farm has denied coverage in the Pelhams' lawsuit. And Metropolitan has conceded in its petition below and in its brief on appeal⁴ that it is obligated to defend the personal injury action against Gilbert's estate pursuant to a personal automobile liability policy it issued to Ziesing.

Therefore, since [Metropolitan] has a duty to defend [Gilbert's estate] in any event, and since the amount as well as the existence of its liability in this regard is one of the issues to be determined in the tort action, [Metropolitan] does not ... show a present state of facts that an adjudication of its rights prior to the trial of the tort action is necessary to relieve it from the risk of taking undirected action which, without such direction, would jeopardize its interests.⁵

Moreover, the question Metropolitan posed concerning its duty to negotiate a settlement demand that exceeds the Metropolitan policy limits failed to demonstrate sufficient uncertainty or insecurity to authorize...