Ronald Lee v. Mercury Insurance Company of Georgia
343 Ga. App. 729
| Ga. Ct. App. | 2017Background
- Ronald Lee purchased a Riverdale, GA house in 2007, allowed former owner Constable and family to live there rent-free, and stayed there intermittently while working out of state. Constable and family occupied the house; Constable later died in the fire.
- Lee applied for homeowner's insurance through agent Lawrence Arnold; the typed application listed the property as "Primary" and "Occupied by Named Insured," and Lee testified he did not personally sign the application.
- In May 2012 the house was destroyed by accidental fire; Lee submitted claims and gave recorded statements and an examination under oath disclosing he lived in South Carolina and the Riverdale house was a secondary residence.
- Mercury denied coverage in December 2012 asserting (1) the application misrepresented the residence as Lee's primary residence and (2) the policy required the insured to reside at the residence premises. Mercury later returned premiums and voided the policy.
- Lee sued; the trial court granted Mercury summary judgment and denied Lee's cross-motion. On appeal the Court of Appeals reversed in part: it held coverage exists under the policy language and found genuine issues of fact as to misrepresentation, dual agency, and estoppel, but affirmed dismissal of Lee's bad-faith claim and upheld discovery rulings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the policy covers the dwelling despite insured not residing there full-time | Lee: policy language is ambiguous and covers a dwelling "used principally as a private residence" shown in Declarations; "residence premises" can be read alternatively so secondary homes are covered | Mercury: policy requires the insured to "reside" at the residence premises (i.e., primary domicile), so no coverage for Lee's secondary use | Court: Reversed trial court; policy ambiguous due to punctuation/structure and must be construed for coverage — granted Lee summary judgment on coverage issue (but recovery still blocked by other factual issues) |
| Whether misrepresentations in the application void the policy under OCGA § 33-24-7 | Lee: even if application contained misstatements, Mercury failed to prove materiality or good faith reliance; underwriter affidavit alone insufficient; expert says primary/secondary status not dispositive | Mercury: underwriter affidavit states insurer would not have issued policy or charged same premium had true facts been known | Court: Reversed trial court; affidavit alone cannot establish good faith or materiality; genuine issues of material fact exist about materiality and whether Mercury would have refused or charged more |
| Whether the agent (Arnold) was a dual agent, imputing knowledge to Mercury | Lee: evidence shows Arnold could bind Mercury, sign binders, issue evidence of insurance and thus may have been Mercury's agent as well as Lee's | Mercury: Arnold was an independent agent and not Mercury's agent for these purposes | Held: Genuine issues of material fact exist as to dual agency (cannot decide as a matter of law) |
| Whether Mercury is estopped/waived from voiding the policy given delay and renewal | Lee: Mercury knew facts by May–Aug 2012 statements and renewed the policy and continued form letters until counsel's demand; delay and renewal created detrimental reliance/estoppel | Mercury: investigation justified delay; statute protects insurer's investigation without waiver | Held: Genuine issues of fact exist on estoppel/waiver — insurer's unexplained delay and renewal raise triable issues |
Key Cases Cited
- First Fin. Ins. Co. v. Am. Sandblasting Co., 223 Ga. App. 232 (court construes insurance policies for insured when ambiguous)
- Case v. RGA Ins. Svcs., 239 Ga. App. 1 (uncontradicted underwriter affidavit insufficient alone to decide good faith at summary judgment)
- Lively v. Southern Heritage Ins. Co., 256 Ga. App. 195 (materiality and waiver/estoppel issues for rescission can present fact questions)
- Ga. Int'l Life Ins. Co. v. Bear's Den, 162 Ga. App. 833 (material misrepresentation test and when statements may be construed disjunctively)
- Hill v. Nationwide Mut. Fire Ins. Co., 214 Ga. App. 715 (punctuation and clause interpretation in "residence premises" definitions)
- Woods v. Independent Fire Ins. Co., 749 F.2d 1493 (objective test for materiality in misrepresentations)
- Binns v. MARTA, 250 Ga. 847 (good faith is a jury question; factual determination)
- Auto-Owners Ins. Co. v. Neisler, 334 Ga. App. 284 (no bad-faith penalties when insurer has reasonable grounds to contest claim)