Auto-Owners Insurance v. Neisler
334 Ga. App. 284
| Ga. Ct. App. | 2015Background
- Neisler owned a recently-purchased single-family rental property insured by Auto-Owners; before he obtained a tenant the property was burglarized and fixtures (water heater, HVAC components, wiring) were removed.
- Policy expressly provided coverage for "vandalism or malicious mischief" but excluded loss "by theft, burglary or larceny." It separately provided coverage for "damage by burglars" but excluded "any property taken by burglars."
- Neisler sought recovery for (a) damage to the dwelling caused by removal of fixtures (including labor to replace/repair, but not the stolen items themselves) and (b) loss of normal rent for the period premises were unfit to live in despite having no tenant at time of loss.
- Auto-Owners paid what it believed covered, but contested labor and lost-rent claims; Neisler rejected the check and sued. Both parties moved for summary judgment.
- Trial court held the burglary-related coverage/exclusion language ambiguous and granted Neisler partial summary judgment for dwelling damage (including labor) and lost rent; it found a factual issue on bad-faith refusal to pay.
- Court of Appeals: affirmed coverage for burglary-related dwelling damage (including labor to repair), reversed recovery for lost rent (policy requires there be a tenant at time of loss), and affirmed in part/reversed in part as to bad-faith penalties under OCGA § 33-4-6.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether policy covers cost to repair/replace fixtures removed by burglars (labor, not value of stolen items) | Neisler: ambiguous vandalism/burglary provisions should be construed for insured; damage caused by burglars is covered, so labor to repair is recoverable | Auto-Owners: theft/burglary exclusion bars losses from burglary including damage associated with removal | Court: ambiguous provisions construed against insurer — recovery allowed for repair labor and damage to dwelling, not for stolen property value |
| Whether policy covers "loss of normal rents" when no tenant occupied property at time of loss | Neisler: "normal rents" ambiguous and should be read to cover anticipated rents or vacancy periods | Auto-Owners: provision unambiguously limits rent recovery to rents actually being received (property rented at time of loss) | Court: provision unambiguous — lost-rent recovery requires the property to be rented at time of loss; reversal of summary judgment for Neisler on this claim |
| Whether insurer is entitled to summary judgment on bad-faith claim under OCGA § 33-4-6 | Neisler: Auto-Owners had no reasonable basis to deny coverage for burglary-related dwelling damage after being notified of ambiguity | Auto-Owners: had reasonable grounds to contest both labor and lost-rent claims, so no bad faith as a matter of law | Court: denied summary judgment as to bad-faith claim for burglary-damage denial (no reasonable defense as a matter of law); granted summary judgment for insurer as to bad-faith claim regarding lost rent (reasonable ground to contest) |
Key Cases Cited
- Blake v. KES, Inc., 329 Ga. App. 742 (standard of de novo review on appeal from summary judgment)
- Michna v. Blue Cross & Blue Shield of Ga., Inc., 288 Ga. App. 112 (contract construction is a question of law; court decides if language is unambiguous)
- Payne v. Twiggs Cty. Sch. Dist., 269 Ga. 361 (parties free to set policy terms; unambiguous policy language enforced as written)
- Ga. Farm Bureau Mut. Ins. Co. v. Meyers, 249 Ga. App. 322 (ambiguities strictly construed against insurer; exclusions narrowly construed)