Carter v. Progressive Mountain Insurance
295 Ga. 487
| Ga. | 2014Background
- Velicia Carter was injured in an auto collision allegedly caused by Jeova Claudino Oliviera, who had a $30,000 liability policy with GEICO.
- Carter had $25,000 uninsured/underinsured motorist (UM) coverage with Progressive and sued Oliviera.
- Carter settled with GEICO for the $30,000 policy limit and executed a limited liability release under OCGA § 33-24-41.1, allocating $29,000 to punitive damages and $1,000 to compensatory damages.
- Progressive (UM carrier) sought summary judgment denying UM benefits on the ground that Carter failed to exhaust the tortfeasor’s liability coverage because most of the settlement was allocated to punitive damages.
- Trial court and Court of Appeals granted/affirmed summary judgment for Progressive; Georgia Supreme Court granted certiorari to resolve whether such an allocation defeats UM recovery under the statute.
Issues
| Issue | Carter's Argument | Progressive's Argument | Held |
|---|---|---|---|
| Whether OCGA § 33-24-41.1 precludes allocating a settling liability payment to punitive damages | Allocation to punitive damages in the limited release is permissible; the release satisfied the statute and paid the policy limit | Allocation to punitive damages defeats exhaustion because punitive damages are not compensatory and thus cannot trigger UM coverage | The statute does not prohibit allocating part of the settling payment to punitive damages; the release complied with § 33-24-41.1 when it paid the policy limits |
| Whether an allocation to punitive damages unlawfully shifts punitive liability to the UM carrier | No impermissible shift occurs because other statutes limit combined recovery to compensatory losses | Allocation would indirectly cause UM carrier to pay punitive damages, contrary to UM purpose | No improper shifting—the UM statutory scheme (OCGA § 33-7-11) and § 33-24-41.1’s admissibility/offset rules prevent UM recovery from exceeding compensatory losses |
| Whether the allocation means the liability policy was not "exhausted" for purposes of triggering UM coverage | The liability limit was paid in full (exhausted) regardless of internal allocation | Because most of the payment was labeled punitive (non-compensatory), exhaustion of liability coverage for compensatory losses did not occur | Payment of the tortfeasor’s policy limit satisfies exhaustion; labeling part as punitive does not defeat exhaustion when the release meets statutory terms |
Key Cases Cited
- Daniels v. Johnson, 270 Ga. 289 (establishes exhaustion requirement before UM recovery)
- State Farm Ins. Co. v. Weathers, 260 Ga. 123 (punitive damages are not compensatory and are not recoverable under UM coverage)
- Southern Gen. Ins. Co. v. Holt, 262 Ga. 267 (punitive damages depend on underlying compensatory claim)
- Hospital Auth. of Gwinnett County v. Jones, 259 Ga. 759 (explains the punitive-damage purpose: punishment and deterrence)
- Bonamico v. Kisella, 290 Ga. App. 211 (UM policy excludes punitive damages)
- Roman v. Terrell, 195 Ga. App. 219 (case law on punitive vs compensatory damages and insurance recovery)