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

• Decision Date: 03 November 1981
• Docket Number: No. 62318,62318
• Citation: 160 Ga.App. 523,287 S.E.2d 281
• Parties: STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. WHEELER et al.
• Court: Georgia Court of Appeals

Page 281

287 S.E.2d 281

160 Ga.App. 523

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

No. 62318.

Court of Appeals of Georgia.

Nov. 3, 1981.

Rehearing Denied Nov. 30, 1981.

Certiorari Denied Feb. 10, 1982.

Terry A. Dillard, Waycross, for appellant.

Rudolph J. Chambless, Waycross, for appellees.

CARLEY, Judge.

Appellees filed a tort action against Joseph Marshall, the son of appellant's named insured. The defense of this action was tendered to appellant as the insurer against liability. On April 27, 1979, apparently a few days after the tort action had been filed, appellant sent to Mrs. Marshall a letter which contained the following relevant provision: "We wish to call your attention to the fact that we specifically reserve our right to deny coverage to you (and anyone claiming coverage under the policy), for the following reason(s): ... It is questionable whether the accident arose out of the ownership, maintenance, use, loading or unloading of any vehicle insured in the policy." On May 30, 1979, Mrs. Marshall and her son executed the following document, denominated "Request for Claim Service and Non-Waiver of Rights": "Reason(s) for executing this request: ... 2. It is questionable whether the accident arose out of the ownership, maintenance, use, loading or unloading of any vehicle insured in the policy. For the reason(s) stated above, [appellant] may have no obligation to defend or indemnify the undersigned for claims arising out of an accident or occurrence on or about April 12, 1977 at or near Waycross and Ware County, Georgia. The undersigned request(s) and authorize(s) [appellant] to investigate, negotiate, settle, deny, or defend any claim arising out of such accident or occurrence as it deems expedient. Such action shall not waive any right the [appellant] may have to deny any obligation under the policy contract, and shall not waive any rights of the undersigned."

Thereafter, on July 7, 1979, appellant filed the instant declaratory judgment action, naming appellees and Joseph Marshall, the parties to the tort action, as defendants. Appellant sought a declaration that there was no liability coverage afforded under the policy for the injury sustained by appellee Tonnie Kay Wheeler and that it was therefore not obligated to defend Marshall in the appellees' pending tort action. The Marshalls filed no answer to the petition for declaratory relief. Appellees did answer, denying the material allegations of the petition and asserting that the injury which was the basis of their suit against Marshall was within the coverage of his mother's policy issued by appellant.

The case came on for trial before a judge and jury. Although the affirmative defense of estoppel to deny coverage had not been raised in appellees' answer, this issue was apparently tried by common consent of the parties. See Phillips v. State Farm Mut. Auto. Ins. Co., 121 Ga.App. 342, 173 S.E.2d 723 (1970). At the close of all the evidence, the trial court directed a verdict for appellant on the issue of non-coverage. Appellees have filed no cross-appeal from this ruling by the trial court and it is therefore deemed conclusive for purposes of this appeal that Marshall is not afforded liability coverage under the policy with appellant. The trial judge refused, however, to direct a verdict for appellant on the issue of appellant's estoppel to deny coverage to the Marshalls and this question was submitted to the jury under special interrogatories. The jury found that the Marshalls had not received appellant's letter of April 27, 1979, advising them of the reservation of the right to contest coverage. In that event, the jury had been instructed to continue their inquiry and to answer the following interrogatory: "[D]o you find that the agreement dated May 30, 1979, was a waiver by the insured of the notice contained in the letter [dated April 27, 1979,] in respect to the reservation of rights by the insurance company?" The jury answered this interrogatory in the negative. Relying upon the jury's answers to these interrogatories, the trial court then entered its order containing the following conclusions of law: "[Appellant], based on the verdict of the jury, is estopped to deny liability coverage to defendant Marshall under policy number 4219-682-B07-11C issued by [appellant] to defendant's mother, Mary Mildred Marshall." Judgment was therefore entered for appellees. Appellant moved for judgment n. o. v. and the instant appeal is from the denial of that motion.

"It is the law of Georgia and 'the general rule supported by the great weight of authority ... that if a liability insurer, with knowledge of a ground of forfeiture or noncoverage under the policy, assumes and conducts the defense of an action brought against the insured, without disclaiming liability and giving notice of its reservation of rights, it is thereafter precluded in an action upon the policy from setting up such ground of forfeiture or noncoverage.' [Cits.] 'The general rule of estoppel is ... limited by the principle that a liability insurer may avoid the operation of the rule by giving the insured timely notice that, notwithstanding its defense of the action against him, it has not waived the defenses available to it against the insured. Such notice, to be effective, must fairly inform the insured of the insurer's position, and must be timely, although delay in giving notice will be excused where it is traceable to the insurer's lack of actual or constructive knowledge of the available defense.' [Cit.] The consent of the insured to the nonwaiver notice 'either may be express or may be implied for [sic] the insured's tacit acquiescence in the insurer's unilateral reservation of rights;' e.g., where the insured, after receiving such notice, permits the insurer to continue the defense of the suit. [Cits.]" State Farm Mut. Auto. Ins. Co. v. Anderson, 104 Ga.App. 815, 818, 123 S.E.2d 191 (1961).

Applying the above stated legal...