Thomas v. Atlanta Cas. Co.

Citation253 Ga. App. 199,558 S.E.2d 432
Decision Date19 December 2001
Docket NumberNo. A01A2171.,A01A2171.
PartiesTHOMAS v. ATLANTA CASUALTY COMPANY.
CourtUnited States Court of Appeals (Georgia)

OPINION TEXT STARTS HERE

Robert H. Benfield, Jr., Atlanta, Slappey & Sadd, James N. Sadd, Atlanta, for appellant.

Mabry & McClelland, DeeAnn B. Waller, Atlanta, for appellee. ELDRIDGE, Judge.

Atlanta Casualty Company brought a declaratory judgment action against its insured, Dimple B. Thomas, for not giving it notice of service of a renewal action in tort against her brought by Laura A. Maestas, which tort action resulted in a default judgment in excess of the minimum policy limits. Atlanta Casualty contended that it gave a reservation of rights notice to Thomas; however, there is no copy of any such notice in the record. Atlanta Casualty's declaratory judgment action stated "that it is uncertain as to whether that policy affords coverage for the judgment entered against Thomas in the Renewal Action." Thomas counterclaimed against Atlanta Casualty for bad faith in failing to settle the case for policy limits, which exposed her to a judgment in excess of the policy limits. Atlanta Casualty moved for summary judgment as to its declaratory judgment action and on Thomas' counterclaim which the trial court granted. On September 27, 2000, Thomas filed a motion to dismiss the declaratory judgment action based upon Morgan v. Guaranty Nat. Cos., 268 Ga. 343, 489 S.E.2d 803 (1997). After several continuances, the trial court set the motions for hearing at 9:30 a.m. on January 3, 2001. At 8:30 a.m., prior to the hearing at 9:30 a.m. on January 3, 2001, Atlanta Casualty dismissed its declaratory action with prejudice and served notice to Thomas by depositing a copy in the mail on January 3, 2001. The trial court went ahead and heard Atlanta Casualty's motion for summary judgment on all issues, ignoring in its order the voluntary dismissal, if it had notice. On January 22, 2001, the order granting the motion was filed after being prepared by the plaintiff, which indicated that the trial court had ruled in open court for the plaintiff and had directed the order's preparation by the prevailing party in open court on January 3, 2001, at the conclusion of the hearing and prior to the defendant's receipt of the dismissal in the mail as indicated by the certificate of service.

For the voluntary dismissal to be effective, the opposite party must be served with it or have actual notice of the dismissal; until such notice, the dismissal is dormant. Jones v. Jones, 230 Ga. 738, 739-740(2), 199 S.E.2d 239 (1973). When plaintiff's counsel announces to the trial court the intent to voluntarily dismiss, signed a voluntary dismissal that day, and served upon the defense by mail, the voluntary dismissal does not occur until it is filed with the clerk and received by defense counsel. Id.; Carter v. Digby, 244 Ga.App. 217, 535 S.E.2d 273 (2000). The oral announcement of a ruling on summary judgment in open court constitutes a verdict, which prevents a voluntary dismissal taking effect. OCGA § 9-11-41(a); Guillebeau v. Yeargin, 254 Ga. 490, 491-492(1), 330 S.E.2d 585 (1985). In this case, if the dismissal had been effective, then the trial court lacked subject matter jurisdiction to grant summary judgment on the declaratory judgment. Lakes v. Marriott Corp., 264 Ga. 475, 478, 448 S.E.2d 203 (1994); Lotman v. Adamson Contracting, 219 Ga.App. 898, 467 S.E.2d 224 (1996); Smith v. Mem. Med. Center, 208 Ga.App. 26, 28(1), 430 S.E.2d 57 (1993).

While a plaintiff is entitled to voluntarily dismiss an action without prejudice despite the inconvenience and irritation to the defendant, this Court ... has held that a plaintiff may not voluntarily dismiss his complaint after the defendant has filed defensive pleadings seeking affirmative or other relief.

(Citations and punctuation omitted.) Avnet, Inc. v. Wyle Laboratories, 265 Ga. 716, 717-718(1), 461 S.E.2d 865 (1995); accord Brown v. Liberty County, 247 Ga.App. 562, 568, 544 S.E.2d 738 (2001).

There was no uncertainty or insecurity with regard to future conduct for a declaratory judgment, and there existed material issues of fact as to the counterclaim; thus, we reverse.

1. The facts of this case are almost on all fours with Morgan v. Guaranty Nat. Cos., supra at 344, 489 S.E.2d 803, which held that a declaratory judgment action by the insurer after judgment had been taken against the insured whom it failed to timely defend did not present a case for declaratory judgment, because there was no uncertainty and insecurity as to future conduct between the parties. OCGA § 9-4-1.

Therefore, the threshold issue is whether there exists subject matter jurisdiction for a declaratory judgment action where all the rights of the parties had become fixed prior to suit, and Atlanta Casualty is merely asserting its defenses to a breach of contract action by the insured. Morgan v. Guaranty Nat. Cos., supra at 345-346, 489 S.E.2d 803; Cotton States Mut. Ins. Co. v. Stallings, 235 Ga.App. 212, 214, 508 S.E.2d 688 (1998); Chattahoochee Bancorp v. Roberts, 203 Ga. App. 405, 406, 416 S.E.2d 875 (1992).

In this case, all rights had accrued and judgment had been entered against the insured after the insurer engaged in her untimely defense after notice by a third party. Either Thomas had been served in the underlying tort action and failed to notify Atlanta Casualty, although there is some evidence that the third party gave such notice prior to taking a default judgment, or there was a factual issue. Atlanta Casualty either had prior notice of the renewed suit prior to judgment given by the third party and either negligently failed to defend or to settle within policy limits after the insured's demand or with conscious indifference it failed to timely defend by seeking to open a default, which may constitute bad faith, or it did not act in bad faith. Such issues of fact, which had already occurred, created no uncertainty as to what action Atlanta Casualty should take, because all rights had accrued among the parties so that it needed no guidance as to uncertainty from the trial court. Therefore, it could not use a declaratory judgment action to litigate its coverage defenses after the facts had taken place fixing everyone's rights. Further, there is no evidence in the record that Atlanta Casualty proceeded under any reservation of rights with Thomas.

A declaratory judgment action will not lie where the rights between the parties have already accrued, because there is no uncertainty as to the rights of the parties and risk as to taking future action. See Empire Fire &c. Ins. Co. v. Metro Courier Corp., 234 Ga.App. 670, 671-672(1), 507 S.E.2d 525 (1998); Hatcher v. Ga. Farm &c. Ins. Co., 112 Ga.App. 711, 716-717(3), 146 S.E.2d 535 (1965). An insurer cannot create a controversy for declaratory judgment action by filing a suit to determine rights that have already accrued from the prior action of the parties. Miller v. Southern Heritage Ins. Co., 215 Ga.App. 173, 174-175(1), 450 S.E.2d 432 (1994), overruled in part on other grounds, Hurst v. Grange Mut. Cas. Co., 266 Ga. 712, 470 S.E.2d 659 (1996). Declaratory judgment cannot confirm actions already taken by the insurer. Norfolk &c. Ins. Co. v. Jones, 124 Ga.App. 761, 763-764(2), 186 S.E.2d 119 (1971). Since the judgment of default has already been entered, the setting aside of the judgment denied, and defense of the insured already undertaken, then there exists no justiciable issue as to the duty to defend. Atlantic Wood Indus. v. Argonaut Ins. Co., 190 Ga.App. 814, 380 S.E.2d 504 (1989) ( determine duty to defend); State Farm &c. Ins. Co. v. Allstate Ins. Co., 132 Ga.App. 332, 334-335, 208 S.E.2d 170 (1974) (determination of duty to defend prior to judgment on tort action); Ditmyer v. American Liberty Ins. Co., 117 Ga.App. 512, 515-516(1), 160 S.E.2d 844 (1968) (determine obligation to defend).

The General Assembly has vested in the superior court subject matter jurisdiction to decide actual cases of uncertainty as to future conduct under the Declaratory Judgment Act under limited circumstances.

[S]ubject matter of which the court must have jurisdiction in order to enter a valid judgment is defined by the courts of this State as: "the power to deal with the general abstract question, to hear the particular facts in any case relating to this question, and to determine whether or not they are sufficient to invoke the exercise of that power."

Williams v. Kaylor, 218 Ga. 576, 580-581, 129 S.E.2d 791 (1963). When a purported declaratory judgment action does not meet the criteria for a declaratory judgment, the trial court must dismiss the action without prejudice for lack of subject matter jurisdiction or the appellate court will dismiss the action. Id. at 581, 129 S.E.2d 791; Morgan v. Guaranty Nat. Cos., supra at 344, 489 S.E.2d 803; Empire Fire &c. Ins. Co. v. Metro Courier Corp., supra at 673-674(2), 507 S.E.2d 525.

2. In determining Thomas' compulsory counterclaim, this Court must also determine the issues raised in the declaratory judgment action because such issues are defenses to an action for bad faith. Therefore, Atlanta Casualty has maneuvered the trial court and this Court into deciding issues that should not have arisen absent suit by Thomas against Atlanta Casualty for bad faith, but are raised in this suit as a compulsory counterclaim, which counterclaim arose from the conduct of the insurer regarding an untimely defense after notice from a third party of the renewal suit. OCGA § 9-11-13(a); contra Colonial Penn Ins. Co. v. Hart, 162 Ga.App. 333, 338(6), 291 S.E.2d 410 (1982) (tort case against insured did not arise out of the same transaction or occurrence to constitute a compulsory counterclaim to the insurer's declaratory judgment action to determine coverage). To avoid such procedural gamesmanship of who gets to the courthouse first, the trial court should have...

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