This was a suit by Parks-Chambers, Incorporated against the American Casualty Company of Reading, Pennsylvania on a policy of multi-peril insurance issued by the defendant company to the plaintiff.
The petition alleged that the plaintiff had suffered a loss at 1258 Paces Ferry Road, N.W., Atlanta, Georgia, on or about April 27 to April 29, 1963, at an unknown hour, caused by vandalism, malicious mischief, robbery, burglary, and other events insured against and water damage to property in the amount of $20,036.27, as a result of such cause. The plaintiff sought to recover this sum and an additional sum of $9,009.06 as penalty and attorney’s fees for bad faith. Copies of the policy sued upon and of the proof of loss filed with the defendant company were attached to the petition as exhibits.
The defendant insurance company filed general and special demurrers to the petition which were overruled by the trial court, and the exception is to that judgment.
The allegations of the petition are sufficient to show that the plaintiff has suffered an insured loss under Section 1, Subsection II, Paragraph H, entitled “Vandalism and Malicious Mischief,” of the policy sued upon, General Accident &c. Corp. v. Azar,
The defendant insurer in grounds 2, 3, 4, and 5 of its special demurrers attacked this computation of loss on the ground that it was further alleged in paragraph 10 of the petition and in the attached proof of loss that the property of the alleged actual cash value of $32,709.06 had been purchased by the plaintiff at a cost of аpproximately 56 per cent of that sum; and that under the policy of insurance sued upon, a copy of which was attached to the petition as an exhibit, the original cost to the plaintiff is the basic measure of damages. It is thus contended by the defendant insurer that the pleadings affirmatively show that the plaintiff’s claim is substantially in excess of the coverage afforded by the policy as asserted in these grounds of demurrer.
A suit on a policy of insurance being a suit upon a contract, the measure of the insurer’s liability must be determined according to the terms of the contract. U. S. Fidelity &c. Co. v. Corbett,
The primary obligation of the dеfendant insurance company under these provisions was to insure the owner to the extent of the actual cash value of the property at the time of loss, the сorrect measure of its liability being the difference between the
It follows therefore that the basic measure of loss under this policy is not original cost or replacement value as contended by the defendant insurer, but is actual value which has been defined as fair market value of the property at the time of loss. National Fire Ins. Co. v. Banister,
The plaintiff insured in computing the amount of its claim against the defendant insurer was not therefore limited as a matter of law to the original cost of the property in dispute but was entitled to allege as a matter of ultimate fact the actual cash value placed by it on the subjеct property and to assert its claim within the language of the policy provisions, the determination of the actual cash value of the рroperty and of the amount of the loss being an issue for the jury under the pleadings. Millers Nat. Ins. Co. v. Waters,
The trial court did not err in overruling these grounds of special demurrer.
The plaintiff in paragraph 10 alleged that “damage to other property and additional losses, as stated in the said proof of loss, amounted to $1,913.32.” The defendant in ground 6 demurred to and moved to strike from the petition the sum of $1,913.32 on the grounds that the proof of loss referred to in paragraрh 10 (Exhibit B to the petition) showed that a portion of such amount, $1,042.10, was claimed as a shortage in inventory, an item of coverage not afforded by the policy sued upon.
The remaining grounds of special demurrer attack the allegations and prayer of the petition in which a recovery of the statutory penalty and attorney’s fees for bad faith is sought.
While the petition in this case stated a cause of action for a recovery in some amount against the defendant insurance company and was good as against general demurrer, it did not state a cause of action for the recоvery of the specific amount claimed by the plaintiff in view of the ruling in Division 3 of this opinion. Accordingly, since the plaintiff’s claim for damages for bad faith was not predicated upon an absolute denial of liability by the defendant insurer or upon a refusal of the company to make a bonа fide effort to effect a settlement of the claim, but was wholly predicated upon the failure of the company to pay the speсific sum claimed by the plaintiff, the petition did not state a cause of action for the recovery of the statutory penalty and attorney’s fеes for bad faith. “Refusal to pay in bad faith means a frivolous and unfounded denial of liability. If there is any reasonable ground for the insurer to contest the claim, there is no bad faith. . .” Dependable Ins. Co. v. Gibbs,
The trial court erred in overruling ground 7 (b) of the special demurrer.
Judgment affirmed in part; reversed in part.