State Farm Mut. Auto. Ins. Co. v. Mabry

• Citation: 274 Ga. 498,556 S.E.2d 114
• Decision Date: 28 November 2001
• Docket Number: No. S01A0982.,S01A0982.
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. MABRY et al.
• Court: Supreme Court of Georgia

556 S.E.2d 114

274 Ga. 498

STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. MABRY et al.

No. S01A0982.

Supreme Court of Georgia.

November 28, 2001.

Powell, Goldstein, Frazer & Murphy, E.A. Simpson, Jr., Linda G. Birchall, Atlanta Page, Scrantom, Sprouse, Tucker & Ford, W.G. Scrantom, Jr., Columbus, for Appellant.

Pope, McGlamry, Kilpatrick & Morrison, Charles N. Pope, Michael L. McGlamry, Paul Kilpatrick, Jr., Wade H. Tomlinson III, Columbus, Elizabeth P. Holmes, William U. Norwood III, Sutherland, Asbill & Brennan, John A. Chandler, Carey P. DeDeyn, Teresa W. Roseborough, Hatcher, Stubbs, Land, Hollis & Rothschild, James E. Humes II, William B. Hardegree, C. Ronald Ellington, Athens, for Appellees.

Hawkins & Parnell, Michael J. Goldman, H. Lane Young II, Atlanta, Buchanan & Land, Benjamin A. Land, Clay D. Land, Columbus, Walker, Hulbert, Gray & Byrd, Charles W. Byrd, Groover & Childs, Duke R. Groover, Frank H. Childs, Jr., Troutman Sanders, Herbert D. Shellhouse, Alan W. Loeffler, King & Spalding, Dwight J. Davis, S. Stewart Haskins, Atlanta, amici curiae.

BENHAM, Justice.

Two policyholders¹ (hereinafter collectively, "Plaintiffs") brought an action for damages and injunctive relief against State Farm Mutual Automobile Insurance Company (hereinafter "State Farm"). Plaintiffs asserted in the "Breach of Contract" sections of their complaint that they had made first-party physical damage claims and that State Farm had failed to pay them part of the covered losses they sustained. The element of loss they alleged was covered by their policies, and that State Farm did not tell them about or pay, was the diminution in value of their vehicles caused by the fact of the physical damage. In the "Equitable Relief" section of the complaint, Plaintiffs asserted that State Farm, with knowledge of its contractual obligations, and pursuant to a scheme to avoid those obligations, had failed to establish a procedure for handling the diminution in value element of claims, had failed to inform its policyholders of that coverage, and had failed to pay Plaintiffs' claims. The Plaintiffs sought an order requiring State Farm to notify insureds of the coverage or to implement a procedure for handling diminution in value claims, and to honor its contractual obligation to pay diminution in value in first-party physical damage claims presented by its policyholders. Finally, the complaint sought certification of at least two classes of plaintiffs, one consisting of all former or current insureds of State Farm who presented first-party physical damage claims in the past six years, the "Breach of Contract Class," and one consisting of present insureds, the "Equitable Relief Class." After State Farm filed an answer and the parties engaged in discovery, the trial court issued an order certifying a class for declaratory and injunctive relief consisting of all current insureds under State Farm policies issued in Georgia. Following another hearing and further discovery, the trial court entered an order in December 2000 declaring that the law of Georgia requires that State Farm pay its first-party physical damage claimants for any diminution in value their cars sustain; that State Farm, once an insured reports a loss, evaluate the claim to determine whether the vehicle has sustained diminution in value; and that State Farm, at the conclusion of the adjustment and repair process, either affirm the presence of diminution in value and pay it, or deny the presence of diminution in value. That order also included an injunction by which State Farm was ordered to evaluate first-party physical damage claims for diminution in value "by an appropriate methodology and procedure," and either offer to pay it or deny it; to collect, catalog, and maintain any information necessary to make a determination of diminution in value; and to report to the trial court the manner in which it complies with the order. This appeal is from the order certifying the class and the order granting declaratory and injunctive relief to Plaintiffs.

1. We turn first to State Farm's contention that the certification of a class of plaintiffs for declaratory and injunctive relief was improper. Specifically, State Farm asserts that bifurcation of the class into a declaratory and injunctive relief class and a damages class was improper, that there are no common issues for trial, and that individual issues predominate.

While Georgia's class action statute, OCGA § 9-11-23, does not by its terms provide for bifurcation of classes in a class action as does Federal Rule 23(c)(4), the appellate courts of Georgia have relied on the federal rules when construing our statute. See Ford Motor Credit Co. v. London, 175 Ga.App. 33, 35, 332 S.E.2d 345 (1985) (noting adoption from federal rules of requirement of certification of class action). Although this Court found it unnecessary in Tanner v. Brasher, 254 Ga. 41, n. 5, 326 S.E.2d 218 (1985), to decide whether to follow federal precedent permitting the splitting of issues in certifying class action, the Court of Appeals suggested in Trend Star Continental v. Branham, 220 Ga.App. 781, n. 2, 469 S.E.2d 750 (1996), that a trial court could certify a class with respect to some counts of a complaint and not as to others. We agree with that suggestion for reasons which answer State Farm's other complaints about the certification of a class in this case: commonality of rights and issues. The issues for the declaratory and injunctive relief class in this case are whether Georgia law, as applied to the contract at issue, requires insurers to assess vehicles presented with first-party physical damages claims for diminution in value and, if found, pay it; and, if so, whether State Farm has sought to avoid that obligation. Those issues are common to all members of the class certified by the trial court, all of whom are policyholders. "Common questions of law and fact predominate, as in the instant case, when action is brought on behalf of purchasers of agreements from a common source, the character of the right sought to be enforced is common, and common relief is sought. [Cit]" Sta-Power Indus. v. Avant, 134 Ga.App. 952, 954, 216 S.E.2d 897 (1975). Thus, contrary to State Farm's assertion on appeal, there are issues for trial common to the members of the class, and those issues predominate over any individual issues. By certifying a class of plaintiffs only for declaratory and injunctive relief, the trial court ensured that the class would possess the qualifications of a proper plaintiff class.

"On appellate review of a trial court's decision on a motion to certify a class, `the discretion of the trial judge in certifying or refusing to certify a class action is to be respected in all cases where not abused.' [Cit.]" Jones v. Douglas County, 262 Ga. 317(2), 418 S.E.2d 19 (1992). No abuse of discretion appears in the trial court's decision to certify a plaintiff class in this case.

2. We consider next State Farm's contentions that the trial court's rulings in this case infringe on the expertise of the Georgia Insurance Commissioner; that the Insurance Commissioner has exclusive jurisdiction over the issues here and the courts should defer to the Insurance Commissioner; and that Plaintiffs were required to exhaust administrative remedies before filing suit. State Farm argues that the imposition of specific claims handling procedures was improper because the Insurance Commissioner is charged with regulating claims handling procedures. That argument is factually faulty since the trial court's order did not impose specific claims handling procedures. The trial court's order required State Farm to include an evaluation of diminution in value in its standard assessment of damages, just as it evaluates other elements of damage, and to adopt a suitable methodology for doing so. Thus, the trial court's order did not mandate any certain claims handling procedure, only that State Farm start actually handling its claims in accord with its contract, without refusing to consider some elements of loss. Since Plaintiffs' claims do not require proof that State Farm has violated the Insurance Code, there is no exclusive jurisdiction in the Insurance Commissioner and no requirement that the courts defer to the Insurance Commissioner in this case. Griffeth v. Principal Mut. Life Ins. Co., 243 Ga.App. 618, 533 S.E.2d 126 (2000); Provident Indem. Life Ins. Co. v. James, 234 Ga.App. 403, 506 S.E.2d 892 (1998). Where, as here, no administrative procedure has been invoked, exhaustion of administrative remedies is not required. See Griffeth, supra. Compare Cerulean Cos. v. Tiller, 271 Ga. 65(2), 516 S.E.2d 522 (1999). Accordingly, there was no error in the trial court's rejection of State Farm's arguments regarding the jurisdiction or expertise of the Insurance Commissioner.

3. State Farm contends the trial court's declaratory judgment is infected with two errors. First, it argues that declaratory judgment is inappropriate because there are no circumstances necessitating the trial court's guidance with respect to Plaintiffs' future acts. The trial court relied on the provision in OCGA § 9-4-2(b) permitting a declaration of rights when required by the ends of justice.

[T]he respective superior courts of this State, under [OCGA § 9-4-2(b)], have power to determine and settle by declaration any justiciable controversy of a civil nature where it appears to the court that the ends of justice require that such should be made for the guidance and protection of the petitioner, and when such a declaration will relieve the petitioner from uncertainty and insecurity with respect to his rights, status, and legal relations.

Calvary Independent Baptist Church v. City of Rome, 208 Ga. 312(3), 66 S.E.2d 726 (1951). This Court has held that use of a declaratory judgment action by insureds to determine the scope of policy provisions is in keeping with...