Stout v. Cincinnati Ins. Co.

• Decision Date: 13 July 1998
• Docket Number: No. S97G1331.,S97G1331.
• Citation: Stout v. Cincinnati Ins. Co., 502 S.E.2d 226, 269 Ga. 611 (Ga. 1998)
• Parties: STOUT v. CINCINNATI INSURANCE COMPANY.
• Court: Georgia Supreme Court

502 S.E.2d 226

269 Ga. 611

STOUT v. CINCINNATI INSURANCE COMPANY.

No. S97G1331.

Supreme Court of Georgia.

July 13, 1998.

Reconsideration Denied July 30, 1998.

Isaac S. Jolles, Jolles & Slaby, Augusta, for Elva Carolyn Stout.

Scott W. Kelly, Fulcher, Hagler, Reed, Hanks & Harper, Augusta, for Cincinnati Insurance Company et al.

CARLEY, Justice.

Elva Stout was injured in a vehicular collision. She filed suit against the driver and owner of the other vehicle, but did not serve Cincinnati Insurance Company in its capacity as her uninsured motorist carrier (UMC). After the statute of limitations had run, Ms. Stout discovered that the defendants' liability insurer was insolvent. She dismissed her suit, then refiled it within the six-month renewal period authorized by OCGA § 9-2-61(a). The UMC was served with the complaint in the renewal action, but moved for dismissal because it had not been served with the original action within the statute of limitations. The trial court granted the motion to dismiss, and the Court of Appeals affirmed. Stout v. Cincinnati Ins. Co., 226 Ga.App. 220, 486 S.E.2d 195 (1997). We granted certiorari in order to address two questions: 1) whether the statute of limitations for serving a UMC pursuant to OCGA § 33-7-11 should be the same as that for serving the defendant, even though the defendant does not qualify as uninsured under the statute until after the applicable statute of limitations has run; and, 2) whether service on a UMC of an original action is necessary in order to allow for service in a properly filed renewal action. We answer the first question in the affirmative, and the second question in the negative. Accordingly, the judgment of the Court of Appeals must be reversed.

The precise question of whether initial service on a UMC of a valid renewal suit will satisfy the requirement of OCGA § 33-7-11(d) was answered in United States Fid., etc., v. Reid, 268 Ga. 432, 434, 491 S.E.2d 50 (1997): "[A] plaintiff can wait to serve a UMC until he files a valid renewal suit after the running of the statute of limitation." This holding is based upon a recognition that OCGA § 33-7-11(d) does not require service for the purpose of making the UMC a party to the underlying tort action, but does provide for service on the UMC "as though [it] were actually named as a party defendant." Thus, service is intended only to give the UMC "notice of the existence of a lawsuit in which it ultimately may be held financially responsible." Bohannon v. Futrell, 189 Ga.App. 340, 342(1), 375 S.E.2d 637 (1988). Since the purpose of service on the UMC is simply to provide notice of the pendency of a lawsuit, rather than to establish the personal jurisdiction necessary to adjudicate liability, it is the validity of the service of the underlying lawsuit on the defendant which must necessarily control. If the defendant was validly served within an authorized time period, then it follows that the UMC also can be served within that same time period. Under those circumstances, the purpose of OCGA § 33-7-11(d) to provide the UMC with notice of the pendency of a lawsuit is fully met. Allowing the UMC to set forth, in the context of a case in which it is not even a party, a statute of limitations defense which would not be available to the named party defendant, is completely inconsistent with the tenor of OCGA § 33-7-11(d). The UMC cites no case which holds that the statute creates an independent statute of limitations defense for a non-party to the lawsuit. Although the UMC should not be placed in a worse position than the alleged tortfeasor for whose negligence it may ultimately be held financially responsible, it likewise should not be placed in a better position. In neither event is the UMC being treated as though it "were actually named as a party defendant" in the lawsuit. Because the statutory requirement that the plaintiff serve his own UMC is intended to achieve the same purpose as a contractual requirement that the defendant notify his own liability carrier of the pendency of a suit, there is no reason why service is not permissible on the UMC at any time within which valid service could be made on the defendant. See Granite State Ins. Co. v. Nord Bitumi U.S., 262 Ga. 502, 504(2), 422 S.E.2d 191 (1992).

Reid is not inconsistent with Bohannon v. J.C. Penney Cas. Ins. Co., 259 Ga. 162, 377 S.E.2d 853 (1989) and creates no unwarranted exception to the principles stated therein. The actual holding of Bohannon, supra at 163, is that, under OCGA § 33-7-11(d), the uninsured motorist carrier (UMC) "must be served within the time allowed for valid service on the defendant in the tort action. [Cit.]" (Emphasis supplied.) See also Vaughn v. Collum, 236 Ga. 582, 224 S.E.2d 416 (1976). Thus, Reid is entirely consistent with Bohannon`s requirement that the UMC be served within the same time period as is applicable to the defendant in the underlying lawsuit. Nothing in Bohannon requires that the lawsuit that is eventually served on both the defendant and the UMC be the initial lawsuit which was served only on the defendant. The only "tort action" which can now ultimately result in financial responsibility for the UMC is the renewal action. Although totally unauthorized by Bohannon, the UMC urges recognition of an exception to the mutually applicable period for service when the underlying lawsuit is a renewal action, so that the UMC, but not the party defendant, can raise a statute of limitations defense. This exception is not only inconsistent with the tenor of Bohannon and the express holding of Reid, it also would require overruling the decision in Granite State Ins. Co. v. Nord Bitumi U.S., supra, written by then Justice, now Chief Justice, Benham. Granite State held that although the insured failed to comply with notice requirements with regard to the initial, but later dismissed, lawsuit, timely notice of the renewal action to a non-party liability insurer was sufficient. We adhere to Bohannon, and decline to overrule Reid and Granite State Ins. Co. Based upon stare decisis and under the controlling authority of Reid, the Court of Appeals erred in affirming the grant of the UMC's motion to dismiss.

Judgment reversed.

All the Justices concur, except FLETCHER, P.J., who concurs specially, and BENHAM, C.J., and SEARS, J., who dissent.

FLETCHER, Presiding Justice, concurring specially.

1. Bohannon v. J.C. Penney Casualty Ins. Co.¹ established a bright-line rule requiring plaintiffs with uninsured motorist (UM) coverage to serve the UM carrier in every case, even when the defendant had insurance. The clarity of this rule avoided the confusion and complexity that would arise if courts had to determine when a plaintiff knew or should have known of the defendant's uninsured state and whether the plaintiff acted diligently once on notice. I now conclude, however, that the judicial convenience created by Bohannon does not outweigh the resulting harshness. A lawyer who fails to comply with Bohannon deprives his client of the benefit of the UM insurance contract and leaves the client with no remedy except a malpractice suit against the lawyer. I agree that this is neither a satisfactory nor fair rule. Therefore, I concur in the majority's result, which effectively overrules Bohannon. I, however, would do so expressly.

2. The majority exempts suits against UM carriers from any statute of limitation requirement. Rather than adopt such a broad rule, I would adopt the rule suggested by Justice Weltner in his dissent in Bohannon and require plaintiffs to serve the UM carrier "as soon as reasonably possible after becoming aware, by whatever means, that there is a substantive doubt as to the existence of adequate insurance coverage of an event that might become the subject of an uninsured motorist claim."² This rule would alleviate the harshness of Bohannon, in cases such as this where the defendant became uninsured after the running of the statute of limitations. It also has the advantage of providing a defense when the plaintiff's lack of diligence in service is prejudicial. BENHAM, Chief Justice, dissenting.

The late Justice Weltner suggested in a dissent in Bohannon v. J.C. Penney Cas. Ins. Co., 259 Ga. 162, 377 S.E.2d 853 (1989), that this court could shape a remedy for those who failed to obey the dictate of OCGA § 33-7-11(d), but a majority of this court properly rejected that suggestion, holding that the formulation of exceptions to the statute "is a task that is better left to the legislature." Bohannon, supra, at 163, 377 S.E.2d 853 Because the majority opinion in this case perpetuates the mistaken creation of such a remedy in U.S. Fidelity, etc., Co. v. Reid 268 Ga. 432, 434, 491 S.E.2d 50 (1997), I must dissent.

In Reid v. U.S. Fidelity, etc., Co., 223 Ga.App. 204, 206, 477 S.E.2d 369 (1996), the Court of Appeals suggested that this Court's opinions in Hobbs v. Arthur, 264 Ga. 359, 360, 444 S.E.2d 322 (1994), and Ga. Farm Bureau Mut. Ins. Co. v. Kilgore, 265 Ga. 836, 838, 462 S.E.2d 713 (1995), "have created the exception called for by Justice Weltner in his dissent in Bohannon ...." Although the majority opinion in U.S. Fidelity, etc., Co. v. Reid supra, did not address that statement, Presiding Justice Fletcher made the same point in his special concurrence, suggesting that this Court should resolve the conflict. While I am reluctant to reconsider a decision made so recently, I feel compelled to do so in this case:

It has never been the doctrine of any court of last resort that the law is to be a refuge and safe asylum for all the errors that creep into it. Indeed, the mind, private or official, which closes down upon all the errors it embraces, refusing to eject them when exposed, is no longer fit for the pursuit of truth. Courts, like individuals, but with more caution and deliberation, must sometimes reconsider what has been already carefully considered, and rectify

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