State Farm Mut. Auto. Ins. Co. v. Stanley, 91-8431
| Decision Date | 16 July 1992 |
| Docket Number | No. 91-8431,91-8431 |
| Parties | STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Plaintiff-Appellee, v. J.H. STANLEY, Indiv. and as Temporary Adm of the Estate of Mary Ann Stanley, Deceased; Spencer Youngblood, Defendants, Betty B. Blocker; Merriam Kenneth Blocker, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
B. Daniel Dubberly, Jr., Glennville, Ga., for defendants-appellants.
Joseph H. Barrow, Beckmann & Pinson, Savannah, Ga., for plaintiff-appellee.
Appeal from the United States District Court for the Southern District of Georgia.
Before HATCHETT and BIRCH, Circuit Judges, and MORGAN, Senior Circuit Judge.
Betty and Merriam Blocker appeal the grant of State Farm's summary judgment motion by the United States District Court for the Southern District of Georgia in State Farm's declaratory judgment action. 773 F.Supp. 1539. Insurer, State Farm, brought this action claiming that under O.C.G.A. § 33-7-15(b) (Supp.1991) it was not obligated to defend its insured, Mary Ann Stanley, or responsible to a third party for its insured's liability. O.C.G.A. § 33-7-15(b) relieves an insurer of its policy obligations when the insured fails to timely notify it that a covered action has been brought against the insured. In order to carry the substantive burden of its claim, State Farm was required to show that any notice by its insured of an adversarial lawsuit was unreasonably delayed and that this delay resulted in material prejudice. See id. As the party seeking summary judgment, State Farm had the burden of showing the absence of any material issues of fact with respect to both prongs of its action--the unreasonable delay in notification and the resulting prejudice. See Fed.R.Civ.P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). For the reasons that follow, we REVERSE the grant of summary judgment.
The automobile accident underlying this litigation occurred on November 16, 1988. Mary Ann Stanley was operating a vehicle owned by Spencer Youngblood, who was insured by Pinnacle Insurance Company. Mary Ann struck a vehicle owned by Betty and Merriam Blocker in Tattnall County, Georgia, injuring the Blockers. As Youngblood's automobile insurance carrier, Pinnacle was the primary insurer with respect to this collision. State Farm was the excess insurer under a policy issued to Mary Ann's spouse, J.H. Stanley. J.H. Stanley was not aware that his wife was covered under his State Farm policy because the couple was separated and planning to divorce.
On January 10, 1989, Betty and Merriam Blocker filed separate suits in state court against Mary Ann, seeking damages for their injuries resulting from the November, 1988, collision. Pinnacle Insurance Co. retained the law firm of Kent, Rackett & Nelson to defend Mary Ann under the policy issued to Youngblood. Mary Ann Stanley died on April 6, 1989, and J.H. Stanley, as temporary administrator of her estate, was substituted as party-defendant in the state court cases. Pinnacle then paid the limits of its coverage, $100,000.00, to the Blockers. On September 5, 1989, the Blockers' attorney asked Pinnacle's attorney whether Mary Ann was covered under her husband's policy with State Farm. On September 13, 1989, State Farm received notice of the suits filed against Mary Ann.
We now address the question of Georgia law presented to us: whether under O.C.G.A. § 33-7-15(b) an insured--who has breached her contractual duty to notify her insurer of a suit filed against her relating to the coverage of her automobile liability insurance policy--has left the insurer materially prejudiced by that delayed notice when the insured driver of the vehicle has died prior to such notice. If such material prejudice is proven, the insurer is released from any obligation to pay under the policy to a third party. See id. The district court granted the insurer summary judgment in its declaratory judgment action, finding that there was no disputed material issue of fact, that in notifying the insurer eight months after suit was filed against insured the insured had unreasonably delayed, and that the insurer was materially prejudiced by that delayed notice as a matter of law because the insured driver of the car involved in the litigated collision had died, depriving the insurer of the opportunity to interview or depose this key witness in any defense of the...
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