Terry v. STATE FARM FIRE & CASUALTY INS.

• Decision Date: 21 September 1998
• Docket Number: No. S98G0601.,S98G0601.
• Citation: 269 Ga. 777,504 S.E.2d 194
• Court: Georgia Supreme Court
• Parties: TERRY v. STATE FARM FIRE & CASUALTY INS. CO.

504 S.E.2d 194

269 Ga. 777

TERRY v. STATE FARM FIRE & CASUALTY INS. CO.

No. S98G0601.

Supreme Court of Georgia.

September 21, 1998.

Robert S. Windholz, Atlanta, for Kenneth Terry.

Russell D. Waldon, Jonathan Myles Adelman, Janice Marie Wallace, Harper, Waldon & Craig, Atlanta, for State Farm Fire and Casualty Insurance Company.

David A. Webster, Atlanta, for amicus appellant.

HUNSTEIN, Justice.

We granted Kenneth Terry's petition for writ of certiorari from the Court of Appeals opinion in State Farm Fire & Cas. Ins. Co. v. Terry, 230 Ga.App. 12, 495 S.E.2d 66 (1997) to consider whether the Court of Appeals correctly interpreted and applied the terms of a consent dismissal in this case involving the Uninsured Motorist Act, OCGA § 33-7-11. For the following reasons we affirm that court.

This action arose from a 1993 automobile collision between Terry and Undra Davis while Davis was driving a vehicle rented from and self-insured by McFrugal Auto Rental. Terry filed a personal injury lawsuit against Davis and pursuant to the version of OCGA § 33-7-11(d) in effect at that time,¹ served State Farm Fire & Casualty Insurance Company, his uninsured motorist carrier (UMC). State Farm filed an answer and cross-claim in its own name and subsequently negotiated a consent dismissal with Terry that allowed Terry to renew a UMC claim against it only if State Farm received proper service and was afforded the opportunity to defend on the issues of liability and damages, even in the event a judgment had already been obtained in the underlying tort action. A $50,000 judgment was rendered against Davis which Terry later found out he could not collect due to the insolvency of McFrugal. Relying on the terms of the consent dismissal, State Farm refused to satisfy the underlying judgment. Terry thus filed a renewal action seeking satisfaction of the amount of the judgment, as well as penalties and attorney fees. On cross-motions for summary judgment, the trial court denied State Farm's motion and granted Terry's motion as to the $50,000, but denied summary judgment on his remaining claims. Concluding that the language of the consent dismissal required that State Farm be provided the opportunity to litigate liability and damages, the Court of Appeals reversed and remanded the case to the trial court for a trial on the issue of liability and damages.

1. Although we recently held in Stout v. Cincinnati Ins. Co., 269 Ga. 611, 502 S.E.2d 226 (1998), that nothing in Bohannon v. J.C. Penney Cas. Ins. Co., 259 Ga. 162, 163, 377 S.E.2d 853 (1989) "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," Stout has no application in this lawsuit because Terry served both State Farm and the tortfeasor at the same time while both claims were within the statute of limitation. The effect of the consent dismissal entered into between Terry and State Farm, which expressly reserves for State Farm the opportunity to defend liability and damages in any subsequent renewal action regardless of any judgment obtained by Terry against the tortfeasor, is at issue here. Therefore, unlike Stout v. Cincinnati Ins. Co., supra, the issue before us is not the propriety of Terry's renewal action, but whether his renewed lawsuit is subject to the terms of the consent dismissal.

Terry contends the consent dismissal is void because it conflicts with the remedial nature of OCGA § 33-7-11 which requires that the statute be given a broad interpretation with any uncertainty resolved in favor of the insured. We disagree that the consent dismissal is rendered void. "Competent parties are free to choose, insert, and agree to whatever provisions they desire in a contract, including insurance contracts, unless prohibited by statute or public policy. [Cit.]" Simmons v. Select Ins. Co., 183 Ga.App. 128, 129(1), 358 S.E.2d 288 (1987). Contracts should be given a construction that renders them in compliance with a governing statute rather than in contravention thereof. Langford v. Royal Indemnity Co., 208 Ga.App. 128(3)(b), 430 S.E.2d 98 (1993). The underlying purpose of uninsured motorist legislation, namely, the protection of innocent victims from the negligence of irresponsible drivers, Smith v. Commercial Union Assurance Co., 246...