Hoover v. Maxum Indemnity Co.
291 Ga. 402
| Ga. | 2012Background
- Hoover sustained a serious brain injury on Oct. 20, 2004 while working for EWES; EWES had a Maxum liability policy with an Employer Liability Exclusion.
- EWES failed to notify timely; Hoover, via EWES, pursued a claim against Maxum for defense and indemnification.
- Maxum denied coverage relying on the Employer Liability Exclusion and did not defend.
- Hoover filed suit against Maxum pursuant to EWES’s assignment, asserting breach of duty to defend and seeking indemnification; underlying tort action filed Sept. 22, 2006.
- Maxum’s initial denial letter suggested reservation of rights but did not clearly inform EWES it would defend under rights while challenging late notice; dispute centered on whether late notice barred coverage.
- Georgia appellate court decision below held mixed on notice issue and duty to defend; supreme court granted certiorari to address waiver and notice prerequisites, ultimately reversing on notice waiver and duty to defend.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Maxum waived untimely notice defense. | Hoover argues Maxum waived by not clearly informing of notice defense. | Maxum contends denial plus reservation of rights could preserve defenses. | Waiver found; notice defense waived. |
| Whether timely notice was a prerequisite to Maxum’s duty to defend. | Hoover contends timely notice not required for defense when coverage arguable. | Maxum contends no defense duty absent timely notice. | Not prerequisite; duty to defend exists if complaint could bring within policy. |
| Whether Maxum’s 2006 letter properly reserved its rights to defenses. | Maxum’s letter purported to reserve rights but failed to clearly inform notice defense. | Reservation language ambiguous; allowed broader rights. | Reservation inadequate; invalid as proper notice. |
| Whether EWES’s claim fell within the Employer Liability Exclusion and Maxum had duty to defend. | Complaint could be construed as arising from Hoover’s employment duties. | Exclusion bars coverage for employee bodily injury arising from employment duties. | Trial court erred; exclusive issue of construction—Maxum breached duty to defend. |
| Whether Court of Appeals erred in analysis given waiver finding. | Hoover alleges proper standard of waiver; appellate misapplied law. | Maxum argues proper review of waiver issue. | Appellate error corrected; summary judgment reversed on waiver. |
Key Cases Cited
- Gant v. State Farm Mut. Auto Ins. Co., 109 Ga. App. 41 (Ga. App. 1964) (insurer may defend under reservation or deny with waiver considerations)
- Southern Guar. Ins. Co. v. Dowse, 278 Ga. 674 (Ga. 2004) (three options for insurer when claim against insured is pending)
- World Harvest Church, Inc. v. Guideone Mut. Ins. Co., 287 Ga. 149 (Ga. 2010) (reservation of rights must unambiguously inform insured)
- Richmond v. Georgia Farm Bureau Mut. Ins. Co., 140 Ga. App. 215 (Ga. App. 1976) (proper action is defense under reservation of rights with later declaratory judgment)
- Browder v. Aetna Life Ins. Co., 126 Ga. App. 140 (Ga. App. 1972) (ultimate denial on another ground not per se waiver; estoppel concepts used)
- Brazil v. Govt. Employees Ins. Co., 199 Ga. App. 343 (Ga. App. 1991) (illustrates limitations of waiver against ongoing defense)
- Penn-America Ins. Co. v. Disabled American Veterans, Inc., 268 Ga. 564 (Ga. 1997) (strict construction of policy exclusions; favor insured in forfeiture context)