ONLEY v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY
5:19-cv-00141
| M.D. Ga. | Jan 28, 2020Background:
- Plaintiff Willa Onley’s home suffered water damage on April 18, 2018; she sued Nationwide on behalf of herself and a putative class for failing to assess and pay for diminished market value (diminution-in-value).
- Nationwide had issued Onley’s homeowners policy since 2000 and in the July 2014 renewal added Endorsement H-6182-C, which purported to exclude diminished value.
- Georgia law (pre-2018 statutory definition) treated a “renewal” as a policy that provides no less coverage than the prior policy; reduction of coverage required a formal nonrenewal notice to the insured.
- Nationwide sent a one-time notice at renewal referencing the endorsement but described the transaction as a “renewal” and later retained the endorsement in subsequent policies without further nonrenewal notice.
- The central legal dispute: whether the 2014 endorsement validly excluded diminished value (i.e., whether Nationwide properly nonrenewed or instead improperly renewed, leaving coverage intact).
- Court found the 2014-15 policy was a renewal (so coverage remained) and, alternatively, even if Nationwide had nonrenewed, its misrepresentation that the policy was a renewal would prevent enforcement of the exclusion; summary judgment for Nationwide was denied and discovery resumed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Validity/effect of endorsement (renewal vs. nonrenewal) | The 2014 policy was a renewal; statutory renewal must preserve prior coverage, so the endorsement could not eliminate diminished-value coverage | The endorsement lawfully modified the policy to exclude diminished value beginning with the 2014 renewal | Court: 2014-15 policy was a renewal under O.C.G.A. §33-24-46 and thus retained diminished-value coverage; endorsement ineffective |
| Notice requirement for reducing coverage | Nationwide failed to give required written nonrenewal notice, so it could not lawfully reduce coverage | Nationwide contends actual notice or passage of time should validate the endorsement | Court: Failure to give statutorily/policy-required nonrenewal notice defeats the attempted reduction; actual notice here did not substitute for required notice |
| Misrepresentation / contract effect if Nationwide attempted nonrenewal | Even if Nationwide intended to nonrenew, it misrepresented the transaction as a renewal, which is a non‑technical breach affecting plaintiff’s decision to accept coverage | Nationwide treats the notice failure as technical and not dispositive | Court: Misrepresentation that policy was a renewal defeats enforcement of the endorsement; not a mere technical violation |
| Standing / causation from statutory violation | Onley challenges Nationwide’s claims handling and seeks recovery for underpayment of diminished-value losses | Nationwide argues Onley lacks standing to invalidate an otherwise disclosed policy term and that she must show injury from the statutory notice violation | Court: Onley has standing as she sues for failure to assess/pay diminished value; statute violation does not preclude her contract claim |
Key Cases Cited
- Royal Capital Dev. LLC v. Md. Cas. Co., 291 Ga. 262, 728 S.E.2d 234 (2012) (establishes that diminished market value is a covered component of property loss absent an effective exclusion)
- Thompson v. State Farm Fire & Cas. Co., 264 F. Supp. 3d 1302 (M.D. Ga. 2017) (same-court precedent holding insurer’s failure to give required nonrenewal notice renders attempted coverage reduction ineffective)
- Strickland Gen. Agency v. Puritan Ins. Co., 184 Ga. App. 286, 361 S.E.2d 186 (1987) (statutory nonrenewal notice requirement; absent compliant notice, policy is automatically renewed)
- Reynolds v. Infinity Gen. Ins. Co., 287 Ga. 86, 694 S.E.2d 337 (2010) (until statutory notice requirements are met, policy remains in effect)
- Danforth v. Gov't Employees Ins. Co., 282 Ga. App. 421, 638 S.E.2d 852 (2006) (distinguishes insurer-corrected policy modifications agreed to by insured from unilateral, notice-deficient changes)
- Williams v. Fallaize Ins. Agency, Inc., 220 Ga. App. 411, 469 S.E.2d 752 (1996) (renewed policy identical in material respects preserves prior exclusions; not on point where insurer attempted to reduce coverage)
- Anderson v. Am. Family Ins. Co., 350 F. Supp. 3d 1295 (M.D. Ga. 2018) (illustrative of issues proving diminished-value damages and insurers’ responses post-Royal Capital)