452 S.E.2d 548 | Ga. Ct. App. | 1994
Lead Opinion
Charles and Frances Roland were the named insureds in a Georgia Farm Bureau Mutual Insurance Company homeowner’s insurance policy. After the house identified in the policy was destroyed by fire, Georgia Farm Bureau denied the Rolands’ claims, and the Rolands filed separate actions which were joined by order of the trial court. Georgia Farm Bureau moved for summary judgment as to Frances Roland on the basis that she did not reside in the house at the time of the loss. That motion was denied.
Upon trial of the case, the jury returned a verdict for Charles Roland and Frances Roland for the insured value of the house and its contents, for Charles Roland for attorney fees, and for Frances Roland for bad faith penalties and attorney fees.
Georgia Farm Bureau appeals the denial of its motion for summary judgment on the issue of Frances Roland’s residence, the trial court’s failure to allow outside the presence of the jury a proffer of evidence regarding residence, and the trial court’s directed verdict in favor of Frances Roland on the issue of liability. Georgia Farm Bureau also appeals the denial of its motion for directed verdict on the issue of bad faith penalties and attorney fees.
The policy contains a “special provision” that requires “the residence premises [must be] the only premises where the named insured or spouse maintains a residence other than business or farm properties.” (Emphasis supplied.)
1. The issue of Frances Roland’s failure to maintain exclusive residence in the insured premises at the time of the fire is controlled by the decisions of this court in Schroeder v. Ga. Farm &c. Ins. Co., 211 Ga. App. 302 (439 SE2d 18) (1993) and Ga. Farm &c. Ins. Co. v. Kephart, 211 Ga. App. 423 (439 SE2d 682) (1993) (involving identical policy language). Because the evidence established that the policy unambiguously required Frances Roland, as a named insured, to live at the “residence premises,” and she was not living there at the time of the fire, no coverage existed for her claim. Id. at 425 (1) (c).
The dissent would overextend the application of OCGA § 33-32-1 (a) and the decisions interpreting it, and it would overrule sub silentio such decisions as Schroeder and Kephart. The dissent relies upon Fireman’s Fund Ins. Co. v. Dean, 212 Ga. App. 262, 265 (1) (441 SE2d 436) (1994), but it involved a substantially different issue: the protection of an insured’s estate from policy language which held it responsible for the misconduct of another insured (arson and murder of the innocent insured). The dissent seeks to expand that decision to all-inclusive proportions, in effect holding that OCGA § 33-32-1 (a) forbids any alteration or addition to the wording of the Standard Fire Policy which conceivably could limit the insurer’s obligations under the policy, even though alterations and additions are provided for in the standard form itself. This constitutes a substantial and unprecedented restriction of the right to contract and a violation of the well-established public policy of this state. See Jefferson Pilot Life Ins. Co. v. Clark, 202 Ga. App. 385, 389 (2) (414 SE2d 521) (1991); Nat. Consultants v. Burt, 186 Ga. App. 27, 32 (2) (366 SE2d 344) (1988).
However, the Standard Fire Policy itself, Ga. Comp. R. & Regs., § 120-2-19.01, provides ample authority for the policy language relied upon by Georgia Farm Bureau here. For example, the language omitted by the dissent from its quotation of the permitted “conditions suspending or restricting insurance” reads as follows: “Unless other
The Standard Fire Policy at page 282, lines 1-6, also provides for voiding the policy on the basis of a material misrepresentation. The special provisions section of the policy quoted above constitutes a representation in clear and unambiguous terms that the insured property is the only residence of the insureds. This court must construe the insurance contract as made, and the Rolands’ failure to comply with this policy provision voided the policy as a matter of law. Schroeder, supra, 211 Ga. App. at 304-305. See also Kephart, supra, 211 Ga. App. at 425 (1) (c).
Finally, by prefacing the relevant section with the qualifier “[ujnless otherwise provided in writing,” the Standard Fire Policy clearly recognizes that the parties to the insurance contract may agree to special conditions varying from the standard language. This is consistent with the right of parties in Georgia to contract as they wish and to make the provisions of policies of insurance meet the facts and circumstances of the individuals insured, the property insured, the risk, and the premium charged therefor. To create a Procrustean bed of an unamendable Standard Fire Policy would not only change the longstanding law of Georgia, but do a profound disservice to both insurers and insureds.
While the result in this case appears harsh, it is the agreement contracted for by the parties. As observed in Presiding Judge Beasley’s special concurrence in Kephart, the condition of residence extends throughout the life of the policy. 211 Ga. App. at 426-427. A change in the residence of the insureds contrary to the Special Conditions in the policy can result in an increase in hazard or risk to the insurer. The circumstances testified to here, showing at the minimum a potential for violence and vengeful acts growing out of the insureds’ separation and divorce, demonstrate this amply. The trial court erred in denying Georgia Farm Bureau’s motion for summary judgment with respect to Frances Roland.
2'. In light of our decision in Division 1, the trial court erred in refusing to direct a verdict in favor of Georgia Farm Bureau with respect to Frances Roland’s claim for bad faith penalties and attorney fees. With respect to the award of attorney fees to Charles Roland, the trial court also erred in refusing to direct a verdict in favor of Georgia Farm Bureau.
OCGA § 33-4-6 provides 60 days after a demand for payment has been made for the insurer to investigate the claim. As it imposes a
There was strong evidence that the fire was of incendiary origin, including multiple points of origin, low-level burning, the presence of kerosene, and the presence of a stepladder giving access to one of the points of origin.
The dissent’s position places too great a burden on the insurer under the terms of OCGA § 33-4-6. It acknowledges that the insurer found “strong evidence of arson and some evidence that Charles Roland had a motive.” However, the dissent concludes that there was no reasonable defense as a matter of law, because there was no evidence of a delayed triggering device and Roland testified he had left the house “approximately 24 hours” before the fire began.
Under the dissent’s reasoning, an insurer must not only show reasonable and probable cause for making a defense, but must prove its defense, before trial and within 60 days of demand. This places an insurer in an impossible position: it must gather conclusive proof of each and every element of all potential defenses in a 60-day period or run the risk of imposition of bad faith penalties. All that is required by the law is reasonable and probable cause, and “[penalties for bad faith are not authorized where the insurance company has any rea
Judgment reversed.
Charles Roland admitted to placing the ladder in the house.
As noted above, this testimony was disputed by another witness.
Dissenting Opinion
dissenting.
It had appeared that in Fireman’s Fund Ins. Co. v. Dean, 212 Ga. App. 262, 265 (1) (441 SE2d 436), this Court had finally breathed life into OCGA § 33-32-1 (a) by holding that, pursuant to this statute, the Standard Fire Policy (Rules of Comptroller General, Insurance Department, § 120-2-19-.01) sets forth the minimum coverage upon which an insured can rely, and that fire insurance coverage must be conformed to that provided by the Standard Fire Policy. It would thus have become an integral part of the construction of any Georgia fire insurance policy to determine if the mandate of the Standard Fire Policy is satisfied by the contractual language. Yet, in the case sub judice, the majority has in effect rendered OCGA § 33-32-1 (a), a nullity and limited the decision in Fireman’s Fund Ins. Co. v. Dean, 212 Ga. App. 262, supra, to the specific facts of that case. The majority holds that the issue of whether coverage continued for Frances Roland after she terminated her residence in the insured house is controlled by the opinions of this court in Schroeder v. Ga. Farm &c. Ins. Co., 211 Ga. App. 302 (439 SE2d 18) and Ga. Farm &c. Ins. Co. v. Kephart, 211 Ga. App. 423 (439 SE2d 682), two cases which involve only issues of contract construction and do not mention, much less address, the impact of the statutory language provided in OCGA § 33-32-1 (a) and presented as an issue in this case by plaintiff Frances Roland. As I disagree with the conclusion of the majority on this and other issues, I respectfully dissent. With the exception of the awards for bad faith penalties and attorney fees, I would uphold the judgment in favor of plaintiff Frances Roland.
The relevant portion of the Standard Fire Policy begins with line 28: “Conditions suspending or restricting insurance. Unless otherwise provided in writing added hereto this Company shall not be liable for loss occurring . . . while a described building, whether intended for occupancy by owner or tenant, is vacant or unoccupied beyond a period of sixty consecutive days. . . .” The mandate of OCGA § 33-32-1
In my view, the majority has also misconstrued the Standard Fire Policy in several respects. First, the majority maintains that the change in residency of Frances Roland increased the hazard or risk insured so as to void the policy. However, this proposition is not based upon any factual assertion within the record of the case sub judice but upon a reference in the Kephart case to an increase in risk created by a violation of the terms of an insurance policy. The reference in Kephart is to an increase in risk to the insured not the insurer and is meaningless in relation to the issue in the case sub judice.
The majority is also mistaken in suggesting that there was any material misrepresentation in connection with the residency provisions of the insurance policy at issue in the case sub judice. This hypothesis is based upon an incorrect assumption that the residency provision contained in the insurance policy between the parties is valid.
Finally, in my view, the majority errs in holding paramount the rights of the parties to contract as they wish when to do so undermines a statutory scheme designed to protect the public from oppressive contracts of adherence. In my view, the Standard Fire Policy is not unamendable, but, pursuant to OCGA § 33-32-1 (a), may be amended only in a manner favorable to insureds.
I also disagree with the majority concerning the awards of bad faith penalties and attorney fees to plaintiff Charles Roland. “ ‘To support a cause of action under OCGA § 33-4-6, the insured bears the burden of proving that the refusal to pay the claim was made in bad faith. A defense going far enough to show reasonable and probable cause for making it, would vindicate the good faith of the company as effectually as would a complete defense to the action.’ (Citations and punctuation omitted.) Massachusetts Bay Ins. Co. v. Hall, 196 Ga. App. 349, 355 (395 SE2d 851) (1990). Furthermore, ‘our courts have consistently held that no bad faith exists where there is a doubtful question of law involved.’ (Citations and punctuation omitted.) Schoen v. Atlanta Cas. Co., 200 Ga. App. 109, 111 (407 SE2d 91) (1991). This is especially true where the case presents issues of first
Under these circumstances, I would hold that a jury could find a reasonable defense which indicates the good faith of the insurer. While defendant had strong evidence of arson and some evidence that Charles Roland had a motive, it had no evidence that he had any opportunity to set the fire which began approximately 24 hours after he had departed from the house. I would hold that the question of defendant’s good faith or lack thereof in regard to Charles Roland was properly submitted to the jury and that the award of bad faith penalty and attorney fees to this plaintiff was authorized by the evidence.
I am authorized to state that Judge Blackburn joins in this dissent.