Appellants Perry & Company and its president Richard C. Perry appeal from a jury verdict and judgment in favor of appellees New South Insurance Brokers of Georgia (New South) and Southern Insurance Company (Southern). New South, a general insurance agency, was hired by Southern, a Texas corporation, to sell and manage its insurance policies in the state of Georgia. New South contracted with Perry & Company to finance policies issued by Southern through the efforts of New South. The action was initiated by appellees against appellants on the grounds that appellants had committed fraud in the handling of insurance policy cancellations and had also engaged in certain conduct which constituted tortious interference with New South’s business, resulting in substantial losses. Perry & Company counterclaimed alleging that it had validly cancelled 852 insurance policies and was entitled to a refund of unearned premiums which appellees refused to pay.
The evidence before the jury was sufficient to establish that under the terms of the agreement entered into by the parties thousands of policies were written and financed by Perry. The insured would finance his policy by making a down payment to the agent who procured the policy, who would forward that to New South. The remainder of the policy was financed by the insured through an agreement with Perry signed at the time of the application. Perry would pay New South the balance of the premium owed and the insured was required to make monthly payments to Perry for his unpaid portion of the coverage. In the event the insured failed to make a monthly payment, Perry was entitled to begin cancellation procedures. Under the agreement between Perry and New South, Perry was to issue the insured a “ten day notice of intent to cancel,” with notice also to be sent to New South. However, there was evidence that Perry actually sent this notice only to the insured and the procuring agent and no documents concerning the ten-day notice of cancellation were ever sent directly to New South. If Perry failed to receive payment during the ten-day period, under the agreement it was to issue a cancellation notice to the insured and to New South. Under OCGA § 33-22-13 it was also required that Southern be notified of the cancellation. Unknown to appellees, however, Perry held its copy of the cancellation notice for an additional seven days, and if payment was received dur
The jury returned a verdict in favor of New South for $200,000 compensatory damages jointly and severally against Perry & Company and Richard C. Perry; $69,500 in punitive damages against Perry & Company and $1 in punitive damages against Richard C. Perry; $10,000 to Southern as compensatory damages against Perry & Company and Richard C. Perry jointly and severally; and $1 in punitive damages to Southern from both Perry & Company and Richard C. Perry. On Perry’s counterclaim against New South it was awarded $69,500.
1. Appellant Perry & Company contends that it was entitled to a directed verdict or judgment notwithstanding the verdict on its counterclaim in the amount of $135,646.68, because appellees admitted both in their pleadings and in testimony that this amount was owed as unearned premiums after cancellation of the policies of 852 insureds. New South alleged in its original complaint that after appellants’ purported scheme and fraudulent acts became known to it, it withheld payment of those unearned premiums which it believed to be validly cancelled. At trial a representative of New South testified that the claimed amount of $135,646.38, which was based upon figures and documents produced by Perry, “[sounded] right.” However, he also stated that it was appellees’ position that this amount was “not owed.” Moreover, the pre-trial order which controlled the course of the trial recited that although Perry contended that the amount of unearned premiums withheld by New South exceeded $139,000, “this amount remains uncertain.” The pre-trial order also specifically delineated as issues to be determined by the jury whether appellees withheld unearned premiums from Perry and, if so, how many dollars in unearned premiums were actually withheld.
Under the circumstances, we are unable to agree with appellants that either the pleadings or the cited testimony constituted an admission in judicio so as to mandate a recovery of the amount Perry claimed to be owed. A primary issue in the case was whether Perry was owed
any
amount of unearned premiums as a result of its actions
2. Nor do we agree with appellants that there could be no fraud as a matter of law from gratuitously permitting the insureds seven extra days to cure their past due payments after cancellation of their policies, because this practice was authorized by the loan agreement between Perry and the insured. This court made it clear in
Balboa Ins. Co. v. Hunter,
Once a policy was cancelled, any payments accepted by Perry became unearned premiums owed back to the insured. If not paid within 15 days, the cancellation was voided and Southern was obligated by Perry’s actions, of which it had no knowledge, to provide coverage. Moreover, if there was no cancellation Perry was not entitled to any refund of unearned premiums, and it was for these reasons that New South withheld the money that Perry asserted it was owed.
Perry’s argument that these provisions are not applicable here because it was operating as a bank rather than as a part of the insurance industry ignores the fact that by the exercise of the state’s regulatory powers over premium finance companies, their role has been recognized “as forming an integral part of the insured-insurer rela
The jury, by awarding Perry less than the amount it contended it was owed, must have concluded that many of the purported cancellations were in fact void. The evidence presented at trial was sufficient to authorize a determination that Perry had a long-standing policy of not cancelling on the date stated in the notice of cancellation, but of providing an additional seven days of coverage for the insured without the knowledge of the insurer. Thus the trial court correctly refused to direct a verdict or grant appellants’ motion for j.n.o.v. on this issue. Cf. Penn. Nat. Mut. Cas. Ins. Co. v. Person, supra.
3. Appellants’ enumerations of error based upon appellees’ failure to prove their allegations of fraud disclose no reversible or harmful error. The trial court charged the jury as to fraud and bad faith penalties and attorney fees. While we think appellees’ evidence was sufficient to entitle them to consideration of these issues, it is apparent that the jury did not base their verdict on any alleged fraudulent acts of appellants since it awarded no attorney fees for bad faith as sought. The evidence must be sufficient to support a recovery for fraud in order for the jury to make an award of attorney fees pursuant to OCGA § 13-6-11 for bad faith in making the contract. See
Seminole Peanut Co. v. Goodson,
4. Appellees’ amended complaint alleged a cause of action for tortious interference with New South’s contractual relations and prospective contractual relations. Perry asserts that there is no legally recognized cause of action for which relief can be granted for tortious interference with “prospective” contractual relations; and that there was no evidence to show that it interfered with any existing contractual rights, nor any proof of damages therefrom.
The evidence in this regard disclosed that the amount of
When 852 of these payments were withheld, Richard C. Perry wrote a letter to at least 100 insureds and some procuring agents in which he stated: “I think New South Insurance Brokers has held your money long enough!” The letters further suggested that the insureds and agents call New South and demand their refunds, and that the State Insurance Department be contacted if necessary. Prior to writing these letters Mr. Perry did not review the individual files to ascertain whether any money was actually owed the written insured or not, and at least one insured who had not been cancelled received a letter.
As a result of this conduct New South showed that it suffered a great reduction in its business. A number of procuring agents who had existing contracts with appellees but could place their business elsewhere reduced the amount of business placed with New South, and the renewal rate for insureds was severely affected. There was testimony that the relationship and reputation that New South had built with its agents and insureds was damaged because of the problems which ensued after Perry’s actions, and that appellees’ renewal rate of 60-70% dropped to 10-20% during this time. Broker statistics introduced in evidence showed substantial reduction in the procuring agents’ business. New South’s profits and loss statements showed a
“[T]he tort of the interference with contractual relations is not limited to the procurement of a breach of contract. . . [O]ne under a duty to render a performance has a property interest in the contract in that he has the right to render the required performance free from unjustified and unprivileged intentional invasions that retard performance or make the performance more difficult or expensive. Interference of that type constitutes an actionable tort which embraces within its scope all intentional invasions of contractual relations, including any act. . . interfering with the performance itself, regardless of whether breach of contract is induced. [Cits.] Interference with contractual relations is an
intentional
tort, and if intentional interference is to be required, it presupposes knowledge of the plaintiff’s interests or, at least, of facts that would lead a reasonable man to believe in their existence. [Cit.] . . . It is a question of fact, and thus for the jury, whether the defendant has played a material and substantial part in causing the plaintiff’s loss of any benefits of the contract.”
Piedmont Cotton Mills v. H. W. Ivey Constr. Co.,
The federal courts have held that under Georgia law, ‘[i]n establishing a cause of action for malicious interference with business relations, a plaintiff must demonstrate that the defendant (1) acted improperly and without privilege, (2) purposely and with malice with the intent to injure, (3) induced a third party or parties not to enter into or continue a business relationship with the plaintiff, and (4) for which the plaintiff suffered some' financial injury. [Cit.] ... A cause of action for tortious interference also encompasses interference with a prospective business relationship as well as existing ones, [cits.]; the liability results not only from disruption of the relationship but also from elimination of the injured party’s ability to perform. In order to establish a cause of action for interference with prospective business relations, the plaintiff must demonstrate that absent the interference, those relations were reasonably likely to develop in fact. [Cit.] . . . The Georgia Supreme Court has held that the term ‘malicious’ or ‘maliciously’ means any unauthorized interference or any interference without justification or excuse.
Luke v. DuPree,
Based upon this reasoning, we find appellants’ arguments that there was no showing here of tortious interference with contract to be unavailing. Not only was there testimony from three former insureds that they did not renew their policies with New South due to Perry’s actions, three of appellees’ officers also testified as to the amount of damage caused both by Perry’s scheme and in particular the letter. New South’s introduction into evidence of broker statistics, as well as “distributed balance sheets” and “distributed income and expense statements” also established “a proven ‘track record’ of profitability” sufficient to allow recovery. See
Stern’s Gallery of Gifts v. Corp. Property Investors,
Judgment affirmed.
Notes
The statute has been amended to preclude this result, now providing for a 25% penalty and interest rather than reinstatement of the policy. OCGA § 33-24-44 (c) (3) (Ga. L. 1984, p. 1345, § 4).