Lead Opinion
Joseph Alton Bowers sued the Continental Insurance Company (Continental) to recover certain optional personal injury protection (PIP) benefits allegedly due him under two no-fault policies issued by Continental. The United States District Court for the Northern District of Georgia granted Continentаl’s motion for summary judgment and motion to strike Bowers’ request for attorney’s fees, statutory penalties and punitive damages. We affirm.
Bowers is covered by two Continental no-fault insurance policies, each providing $5,000.00 in basic and $45,000.00 in optional PIP coverage. On August 24, 1981, while riding in a truck insured by the Aetna Insurance Company (Aetna), he was involved in an accident as the result of which he incurred over $100,000.00 in medical expenses.
Aetna paid to Bowers $43,750.00 in PIP benefits.
Bowers submitted copies of medical bills in excess of $92,000.00 along with a demand letter to Continental on April 26, 1982. On July 27, 1982, he filed a complaint in the State Court of DeKalb County, Georgia, against Continental seeking $42,-419.10 in insurance benefits and, because of the lateness of the payment allegedly due from Continental, a statutory penalty of $10,604.79, reasonable attorney’s fees and рunitive damages. Continental removed the case to the United States District Court for the Northern District of Georgia on the grounds of diversity. The district court later denied Bowers’ motion to remand the case back to the state court.
The district court granted Continental’s motion for summary judgment, and awarded Bowers $6,250.00, the amount Continental conceded it owed. In a later order the eourt granted Continental’s motion to strike Bowers’ request for attorney’s fees, statutory penalties and punitive damages. This appeal followed.
Bowers first urges that the district court erred in denying his motion to remand the case back to the state court. According to Bowers, the suit was not removable because it falls under the direct action provision of 28 U.S.C. § 1332(c):
[I]n any direct action against the insurer of a policy оr contract of liability insurance ... to which action the insured is not joined as a party-defendant, such insurer shall be deemed a citizen of the State of which the insured is a citizen, as well as of any State by which the insurer has been incorporated and of the State where it has its principаl place of business.
28 U.S.C. § 1332(c). Bowers argues that the district court lacked jurisdiction because, under the statute, his domicile must be imputed to Continental, thus destroying diversity.
At first glance, the literal language of the statute appears to support Bowers’ contention. It is generally acceрted that claims under no-fault insurance contracts may be considered “direct actions” within the meaning of section 1332(c). See, e.g. Ford Motor Co. v. Insurance Co. of North America,
Nonetheless, we do nоt believe that section 1332(c) applies to this action. The general rule has always been that the direct action proviso does not affect suits brought by an insured against his own insurer. See, e.g. White v. United States Fidelity and Guaranty Co.,
Bowers next claims that he is еntitled to recover PIP benefits in an amount greater than $50,000.00, the highest coverage on any one policy. In Voyager Casualty Insurance Co. v. King,
Finally, Bowers asserts a claim for statutory penalties, attorney’s fees and рunitive damages. Georgia law provides that insurance benefits must be paid within thirty days after the insurer receives reasonable proof of the fact and amount of the loss obtained or the insurer shall be liable for a penalty not exceeding twenty-five percent of the amount due plus reasonable attorney’s fees. In addition, if the delay exceeds sixty days the insurer is subject to punitive damages. In either case, the insurer may avoid liability by proving that the failure to pay was in good faith. O.C. G.A. § 33-34-6.
In interpreting this statute, a part of Georgia’s no-fault automobile insurance act, Georgia courts have drawn on eases construing O.C.G.A. § 33-4-6, a similar law applying generally to bad faith refusals to pay by insurers. See, e.g., Bituminous Casualty Corp. v. Mowery,
Continental has met its burden of showing good faith in withholding payment of the $6,250.00 between April 26, 1982, and July 27, 1982. It is undisputed that during this time Continеntal reasonably believed that Aetna had paid Bowers $50,-000.00 rather than $43,750.00.
AFFIRMED.
Notes
. The benefits included $5,000.00 for basic PIP coverage and $38,750.00 for optional PIP coverage.
. See, e.g., Supp. Record, vol. 1, p. 12 (letter); Reсord at 266 (joint status report).
. On April 26, 1982, Bowers' attorney sent a letter to Continental in which he stated that "my client has previously recovered personal injury protection benefits exhausting the $50,000 statutory amount of that policy from the insurance carrier insuring the motor vehicle which my client wаs operating at the time of the accident of August 24, 1981.” Record at 29; see also Record at 171 (Continental’s Response to Order of March 28, 1983) ("plaintiff received $50,000 in personal injury protection no fault benefits under the Aetna policy”). Bowers does not challenge Continental’s original belief that Aet-na paid him $50,000.00.
. The true amount of Aetna's payment was contained in Bowers’ answers to Continental's interrogatories. These answers were mailed on April 29, 1983, and filed in the district court May 2, 1983. See Record at 189-93.
. See note 2, supra.
. The tendered check contained a statement that the payment was for the "[rjelease of all claims on [Bowers’ policy].’’ Supp. Record, vol. 1, p. 14. The check was accompanied by a release form and a draft order of dismissal. Id. at 15-16.
. Although constituting direct actions, the cases cited as contrary authority did not involve an insured suing his own insurer. For example. Ford Motor Co. v. Insurance Co. of North America,
. Basic PIP coverage may not be "stacked" under Georgia law. See, e.g., Georgia Casualty & Surety Co. v. Waters,
. Georgia law provides:
(b) Benefits required to be paid without regard to fault shall be payable monthly as loss accrues. The benefits are overdue if not paid within 30 days after the insurer receives reasonable proof of thе fact and the amount of loss sustained____ In the event the insurer fails to pay each benefit when due, the person entitled to the benefits may bring an action to recover them and the insurer must show that its failure or refusal to pay was in good faith, otherwise the insurer shall be liable for a penаlty not exceeding 25 percent of the amount due and reasonable attorney’s fees, (c) In addition to all other penalties provided for in this Code section, in the event an insurer fails or refuses to pay a person the benefits which the person is entitled to under this chapter within 60 dаys after proper proof of loss has been filed, the person may bring an action to recover the benefits; and, if the insurer fails to prove that its failure or refusal to pay the benefits was in good faith, the insurer shall be subject to punitive damages.
O.C.G.A. § 33-34-6(b), (c).
. Bowers' claim for statutory damagеs attributable to Continental’s refusal to pay an amount greater than $6,250.00 is without merit given the holding of the Georgia Court of Appeals in Voyager establishing that he is not entitled to this additional amount.
. An insured may salvage a premature suit for statutory damages by dismissing it and refiling, see Piedmont Southern Life Ins. Co. v. Gunter,
We also note that there are some differenсes in the statutory language of O.C.G.A. § 33-34-6, which is applicable here, and O.C.G.A. § 33-4-6, from which we draw controlling precedent. For example, the former statute shifts the burden to the insurer to show good faith. None of these differences, however, lead us to conclude that Georgia courts would construe the former statute differently from the latter on the issues relevant to this case.
. See note 3, supra. Although the question of good or bad faith is generally for the jury, it may properly be decided by the court when there is no evidence of a frivolous or unfounded refusal to pay. See Georgia Farm Bureau Mutual Ins. Co. v. Pendley,
Concurrence Opinion
concurring:
I join in the opinion, but would add the following:
The Supreme Court has in recent years made quite a point of always giving federal statutes their literal interpretation as written, absent special factors such as reaching an absurd result, associatеd with pretty plain indications that Congress intended something different and of lesser scope. Such well known cases have so held as Tennessee Valley Authority v. Hill,
The answer here is that from the beginning of § 1332(c) “direct action” was on the order of a term of art, not of one in common speech. It meant the right, given then by but two states, for motor vehicle tort plaintiffs to skip suing the tоrt feasor and sue directly his insurance carrier. Such appears in the legislative history. Senate Rep. No. 1308, 88th Cong., 2d Sess. (1964), reprinted in 1964 U.S.Code Cong. & Ad. News 2778. It calls such a statute a “direct action” statute, the words “direct action” in quotes at 2778. It refers to the two states as states which have “direct action” statutes. There is a detailed analysis of the spectacular effect of the Louisi
This is the kind of thing I think the Supreme Court would accept as justifying a departure from its rule of strict and literal statutory construction.
To buttress further my belief that “direct action” and “direct action statutes” are, semantically, terms of art that refer not to any statute authorizing suit against an insurance company, but only the special kind of which Louisiana and Wisconsin furnished the first examples, I refer to 12 Couch on Insurance 2d § 45:775 & ff (1964) where such statutes are described and right away in § 45:776 the writer starts calling them “direct action statutes.” See also id, 1980 Supplement, § 45:777 telling one that a direct action statute is not to be used to get an insurer into federal court when both the plaintiff and the insured are residents of the same state.