R&G INVESTMENTS & HOLDINGS, LLC v. AMERICAN FAMILY INSURANCE COMPANY.
A16A0399
Court of Appeals of Georgia
DECIDED JUNE 9, 2016
RECONSIDERATION DENIED JUNE 28, 2016
787 SE2d 765
BARNES, Presiding Judge.
bаsis for its damages. Consequently, the trial court committed no error in denying the DSE Parties’ motions for directed verdict and j.n.o.v. on Legacy‘s counterclaim to recover lost advertising fees.
In summary, in Case No. A16A0174, we conclude that the trial court should have granted the Legacy Parties’ motions for directed verdict and j.n.o.v. on the DSE Parties’ claims for negligent misrepresentation and negligence under
Judgment affirmed in part and reversed in part, and case remanded with direction in Case No. A16A0174. Judgment affirmed in Case No. A16A0175. Boggs and Rickman, JJ., concur.
DECIDED JUNE 9, 2016 — RECONSIDERATION DENIED JUNE 28, 2016.
Gregory, Doyle, Calhoun & Rogers, Charles L. Bachman, Jr., for appellants.
Ichter Kresky & Associates, Cary Ichter, William D. Davis, for appellees.
R&G Investments & Holdings, LLC sued American Family Insurance Company, seeking insurance payments and bad faith penalties for American Family‘s refusal to pay claims for losses to certain residential apartment buildings caused by vandalism and water damage. Following discovery, R&G Investments moved for partial summary judgment on its claim related to one of the vandalized buildings (Building S) and for summary judgment on American Family‘s
On appeal, R&G Investments challenges these summary judgment rulings by the trial court. For the reasons discussed below, we conclude that the uncontroverted evidence of record showed that Building S was under renovation at the time it was vandalized, and that, as a result, the insurance policy‘s vacancy exclusion did not bar coverage of the vandalism loss to that building. Accordingly, we reverse the trial court‘s denial of summary judgment to R&G Investments on American Family‘s vacancy-exclusion defense to that specific claim.1 We affirm the trial court‘s summary judgment rulings in all other respects.
Summary judgment is proper if the pleadings and evidence “show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a mattеr of law[.]”
So viewed, the record reflects that R&G Investments owns a residential apartment complex insured by American Family. When American Family issued the insurance policy in December 2011, R&G Investments had only recently bought the apartments and had decided to renovate them.
In February 2012, the apartment complex was unoccupied and undergoing extensive renovation at the direction of R&G Investments. The renovations to the individual apartment buildings were in various stages of completion. One night that month, several of the unoccupied apartment buildings, including Building S, were dam- aged by vandalism. R&G Investments sought coverage for the loss from American Family.
In November 2012, a water pipe burst in one of the apartment units in Building T, causing flooding in that unit and several adjacent ones. The renovations to Building T had been completed by that time, but only one of the eight units in the building had been leased to a tenant. R&G Investments also sought coverage for this loss from American Family.
R&G Investments ultimately sued American Family, seeking payment оf the insurance proceeds for the vandalism and water damage to the apartment buildings, as well as bad faith penalties and attorney fees for American Family‘s refusal to pay the claims. American Family answered, denying liability, and asserted several defenses, including that coverage of the losses was barred by the policy‘s vacancy exclusion and by R&G Investments‘s failure to fully cooperate with American Family‘s investigation of the claims.
Following discovery, R&G Investments moved for partial summary judgment on Count 4 of its complaint, which sought recovery for the vandalism loss to Building S, and for summary judgment on several of American Family‘s related defenses.2 R&G
The trial court denied R&G Investments‘s summary judgment motion and its subsequent motion for reconsideration. The trial court concluded that the vacancy exclusion was applicable to R&G Investments‘s apartment buildings and that genuine issues of material fact precluded the grant of summary judgment to R&G Investments on the remaining matters.
R&G Investments later moved for partial summary judgment on Count 5 of its complaint, which sought recovery for the loss to Building T caused by the burst water pipe. American Family filed a cross-motion for summary judgment on that count, contending that the uncontroverted evidence showed that coverage for the loss was barred by the policy‘s vacancy exclusion. The trial court denied R&G Investments‘s motion for partial summary judgment and granted American Family‘s cross-motion for summary judgment on Count 5 of the сomplaint. This appeal by R&G Investments followed.
1. At the outset, we note that R&G Investments has set forth several enumerations of error related to the trial court‘s summary judgment rulings, but the argument in its brief fails to follow the order and number of the enumerations of error, as required by Court of Appeals Rule 25 (c) (1). Our requirements for briefs
were created not to provide an obstacle, but to aid parties in presenting arguments in a manner most likely to be fully and efficiently comprehended by this Court; a party will not be granted relief should we err in deciphering a brief which fails to adhere to the required form.
(Punctuation and footnote omitted.) Currid v. DeKalb State Court Probation Dept., 274 Ga. App. 704, 706 (1) (618 SE2d 621) (2005). “Accordingly, if we have missed something in the record оr misconstrued an argument, the responsibility rests with counsel” for R&G Investments. (Citation and punctuation omitted.) Pruitt v. State, 323 Ga. App. 689, 690 (1) (747 SE2d 694) (2013).
We also note that by order dated November 5, 2015, this Court denied R&G Investments‘s motion to exceed the 30-page limit for briefs in civil cases. See Court of Appeals Rule 24 (f). While R&G Investments‘s brief complies with this page limitation, R&G Investments at several places in its brief points to the page limitation and refers to pages of the record from the trial court where it raised additional arguments. To the extent that R&G Investments is attempting to incorporate by reference those additional arguments into its appellate brief, that “practice is not approved by this Court[,] and we decline to look in the record for matters which should have been set forth in the brief.” (Punctuation and footnote omitted.) Ellison v. Burger King Corp., 294 Ga. App. 814, 815 (1) (670 SE2d 469) (2008).
2. R&G Investments argues that the trial court erred in concluding that the policy‘s vacancy exclusion applied to its residential apartment buildings. We disagree.
“In Georgia, insurance is a matter of contract, and the parties to an insurance policy are bound by its plain and unambiguous terms.” Richards v. Hanover Ins. Co., 250 Ga. 613, 614 (1) (299 SE2d 561) (1983). “In construing an insurance contract, a court must consider it as a whole, give effect to each provision, and interpret each provision to harmonize with eаch other.” York Ins. Co. v. Williams Seafood of Albany, Inc., 273 Ga. 710, 712 (1) (544 SE2d 156) (2001). If a provision
Among other provisions, the insurance policy at issue in this case excluded coverage for property damage caused by vandalism or water if the insured building was “vacant” for more than 60 consecutive days before the loss or damage occurred, but provided that a building under renovation was not considered vacant for purposes of the exclusion. The vacancy exclusion provided that when the policy is issued to the owner of the insured building, the building is considered vacant
unless at least 31% of its total square footage is: (i) Rented to a lessee or sub-lessee and used by the lessee or sub-lessee to conduct its customary operations; and/or (ii) Used by the building owner to conduct customary operations.
The policy defined “operations” as “business activities occurring at the described premises.”
“Under Georgia law, an insurance company is free to fix the terms of its policies as it sees fit, so long as they are not contrary to the law, and it may insure against certain risks while excluding others.” (Citation and punctuation omitted.) Sorema North American Reinsurance Co. v. Johnson, 258 Ga. App. 304, 306 (574 SE2d 377) (2002). A vacancy exclusion “is intended to protect the insurer from the higher risk of loss associated with property that is not attended.” Id. Consequently, vacancy exclusions worded like the provision in the present case “contemplate[] that customary operations occur on the insured premises.” (Emphasis in original.) Id.
R&G Investments argues that the vacancy exclusion is a form contract provision inapplicable as a whole to its insured residential apartment buildings. According to R&G Investments, a residential apartment building is not occupied by its tenants or its owner for their customary business activities; rather, such buildings are occupied principally for the non-commercial activities (such as cooking, cleaning, sleeping, etc.) of its residents. Because the vacancy exсlusion contemplates that customary business activities would be conducted on the premises, R&G Investments maintains that the parties did not intend for the exclusion to have any application to the residential apartment buildings insured in the present case.
R&G Investments‘s construction of the vacancy exclusion is unreasonable. A construction of the vacancy exclusion that renders it inapplicable as a whole to residential apartment buildings would have the result of reading the provision entirely out of the parties’ insurance policy, given that all of R&G Investments‘s insured buildings were residential apartments. The construction of an insurance contract that renders a provision mere surplusage clearly should be avoided under our rules of construction, and therefore we must reject R&G Investments‘s proposed interpretation. See Magnolia Estates, Inc., 286 Ga. App. at 185.
In construing the terms of an insurance contract, we look to “what a reasonable person in the insured‘s position would understand them to mean.” Gulf Ins. Co. v. Mathis, 183 Ga. App. 323, 324 (358 SE2d 850) (1987). Under the insurance policy issued in this case, American Family agreed to insure apartment buildings which R&G Investments intended to renovate and use for residential leasing purposes. Under the vacancy exclusion, which appliеd if an insured building was vacant for more than 60 consecutive days before the loss, a building was considered vacant unless it was under renovation or at least 31 percent of its square footage was being used by the owner for its customary business activities. The customary business activity of the owner of a residential apartment building, of course, is the leasing of apartments to tenants for profit. Accordingly, bearing in mind the purpose behind a vacancy exclusion, we conclude that a reasonable person in R&G Investments‘s position would have understood the exclusion to mean that
3. After concluding that the vacancy exclusion applied to R&G Investments‘s residential apartment buildings, the trial court found that there were genuine issues of material fact as to whether there had been any renovations to the unoccupied Building S at the time of the vandalism, and thus аs to whether the building was “vacant” for purposes of the exclusion. The trial court relied on the affidavit of American Family‘s senior field adjuster in deciding that genuine factual issues existed. On appeal, R&G Investments argues that the uncontroverted evidence showed that Building S was under renovation when the vandalism occurred and that the trial court erred in relying upon the senior field adjuster‘s affidavit, which contained inadmissible hearsay and an attached exhibit that was not properly authenticated. We agree.
In moving for summary judgment on the issue of whether the vandalism loss to Building S was excluded frоm coverage under the vacancy exclusion, R&G Investments submitted the affidavit of the current resident manager of the apartment complex to prove that Building S was under renovation at the time of the loss. The resident manager had assisted in the management of the apartment buildings in February 2012 when the vandalism occurred. She averred that during that month, the apartment complex was in the final stages of a complete renovation by R&G Investments, with the renovations completed in some buildings but ongoing in others. The manager further averred that the renovations to the apartment buildings on thе rear section of the property, which included Building S, were still in the process of being completed in February 2012 when the vandalism occurred.
The resident manager also was examined under oath about the renovations by counsel for American Family. During her examination under oath, the manager testified that she would “walk the property” to observe the status of the renovations on the buildings, and that the renovations to Building S had been started but not completed before the vandalism occurred.
In response, American Family submitted the affidavit of its senior field adjuster assigned to the vandalism claim. The field adjuster averred that after the claim was reported to him, he requested an onsite inspection of the property by Americlaim in March 2012. In the next paragraph of his affidavit, the field adjuster stated, without any further explanation, “On April 10, 2012, I received Mr. Dierker‘s report on the Building S, including photographs taken during his site inspection. (Copy of Erik Dierker‘s report is attached hereto as Exhibit ‘A‘).” The next paragraph stated, “Mr. Dierker advised me that in the course of his inspection as to Building S, there did not appear to be any renovation work completed on that building.” Thе field adjuster never averred that he had any personal knowledge regarding Building S or of the onsite inspection that had been conducted there.
Attached to the senior field adjuster‘s affidavit as Exhibit A was a multi-page report with photographs under a cover page listing “Eric Dierker” as the “Claim Rep” and “Estimator” for a company named “Adjustment Services Inc.” Among other things, the cover page of the report listed the “Property” as Building S, the “Date Inspected” as March 16, 2012, and stated, “This is a repair estimate only.” American Family did not submit an affidavit from Mr. Dierker or any other emplоyee of Adjustment Services as part of its opposition to summary judgment.
In its reply brief in further support of its motion for summary judgment, R&G Investments argued that American Family had failed to submit any competent evidence creating a genuine issue of material fact regarding the renovation of Building S. R&G Investments asserted that the senior field adjuster‘s affidavit contained inadmissible hearsay and failed to lay a proper foundation for the admission of the report and photographs attached as an exhibit thereto.3
The trial court‘s reliance on the senior field adjuster‘s affidavit was in error. “A party opposing a motion for summary judgment, where the moving party has presented evidence of the necessary certitude, must, in [its] opposing affidavits, set forth specific facts showing a genuine issue to be decided.” (Citations and punctuation omitted.) Bogart v. Wisconsin Institute for Torah Study, 321 Ga. App. 492, 495 (3) (739 SE2d 465) (2013).
[T]o be considered by the trial court, affidavits opposing summary judgment must be made on personal knowledge and must set forth such facts as would be admissible in the evidence. All hearsay evidence, unsupported conclusions,
and the like, must be stricken or eliminated from consideration in a motion for summary judgment.
(Citation and punctuation omitted.) Smith v. Dill‘s Builders, 332 Ga. App. 491, 493 (2) (773 SE2d 444) (2015).4 See Holcomb v. Norfolk Southern R. Co., 295 Ga. App. 821, 822 (673 SE2d 268) (2009) (“Rules as to the admissibility of evidence are applicable in summary judgment proceedings, since the statute provides that all affidavits, depositions, etc. shall set forth such facts as would be admissible in the evidence, and shall show affirmatively that the affiant is competent to testify to the matters stated therein.
Here, the single statement as to the status of the renovation work to Building S in the senior field adjuster‘s affidavit was the recitation of a statement made to the adjuster by Mr. Dierker that “there did not appear to be any renovation work completed on that building.” The adjuster‘s recitation of this out-of-court statement clearly constituted inadmissible hearsay and should not have been considered on summary judgment. See
Nor should the report and photographs attached as Exhibit A to the senior field adjuster‘s affidavit have been considered. The field adjuster made no effort in his affidavit to lay a proper foundаtion for the admission of the exhibit as a business record or otherwise, and the exhibit was not self-authenticating under any of the categories enunciated in
Because the senior field adjuster‘s affidavit did not include any admissible evidence regarding the status of the renovation work to Building S, the trial court erred in relying upon the affidavit to find that genuine issues of material fact existed on the issue of renovation. And given that there was no other evidence in the record that rebutted the affidavit and testimony of R&G Investments‘s rental manager that Building S was under renovation when the vandalism occurred, the
4. The insurance policy required R&G Investments to produce relevant documents, submit to an examination under oath, and otherwise fully cooperate with American Family‘s investigation of a claim.6 Undеr Georgia law, an insured is required “to provide any material information to the insurer that the insurer is entitled to receive under the insurance policy,” and a failure to provide the requested information, “absent an excusable failure to do so, constitutes a breach of the insurance contract” that bars recovery by the insured. (Punctuation omitted.) Hines v. State Farm Fire & Cas. Co., 815 F.2d 648, 651 (11th Cir. 1987), citing Halcome v. Cincinnati Ins. Co., 254 Ga. 742, 744 (334 SE2d 155) (1985). See Allstate Ins. Co. v. Hamler, 247 Ga. App. 574, 576-578 (545 SE2d 12) (2001). However, if there are factual questions regarding the degree of the insured‘s compliance with the insurer‘s request for information or the reasonableness of the insured‘s explanation for noncompliance, a jury must resоlve whether the insured sufficiently cooperated with the insurer‘s request. See United Acoustical & Drywall Systems v. Fidelity & Cas. Co. of N.Y., 222 Ga. App. 824, 827 (2) (476 SE2d 277) (1996); Diamonds & Denims v. First of Ga. Ins. Co., 203 Ga. App. 681, 683 (417 SE2d 440) (1992).
In opposing summary judgment, American Family contended that R&G Investments had not fully cooperated in its investigation of the vandalism claim because it failed to produce documentation
reflecting the renovations performed on each of the damaged apartment buildings, thereby preventing American Family from determining what specific renovations were performed to Building S and when they were done. American Family also contended that R&G Investments should have designated a corporate rеpresentative other than its resident manager to submit to the examination under oath because other employees had more relevant information about the specific renovations. R&G Investments disputed these points, and the trial court held that whether R&G Investments sufficiently cooperated with American Family‘s investigation was a factual question to be resolved by the jury.
On appeal, R&G Investments contends that the trial court erred in denying its motion for summary judgment on the issue of whether it sufficiently cooperated with American Family‘s investigation of its vandalism claim. Specifically, according to R&G Invеstments, American Family could not rely on the insurance policy‘s provisions requiring cooperation with its investigation of the vandalism claim as a defense to this suit because American Family (a) never made a proper demand for an examination under oath to R&G Investments; (b) waived and was estopped from relying on the cooperation provisions; and (c) was not harmed by R&G Investments‘s alleged failure to cooperate because the vacancy exclusion did not apply to the residential apartment buildings. We will address these arguments each in turn.
(a) R&G Investments‘s argumеnt that the uncontroverted evidence showed that American Family never made a proper demand for an examination under oath is without merit. Counsel for American Family submitted an affidavit with accompanying exhibits detailing the specific requests made to R&G Investments to submit to an examination under oath, identify a corporate representative fully competent to testify on behalf of the company about the renovations to the property and the vandalism loss, and produce relevant documents in connection with the
(b) We likewise reject R&G Investments‘s argument that the uncontroverted evidence showed that American Family waived and was estopped from relying on the policy‘s cooperation provisions. Although somewhat unclear from its brief, R&G Investments appears to argue that because American Family investigated the vandalism claim without a proper reservation of rights, it waived and was estopped from rаising any potential defenses to that claim, including any defenses based on R&G Investments‘s failure to cooperate. But a reservation of rights is a term of art applicable in the specific context where an insurer undertakes a defense of its insured. See Hoover v. Maxum Indem. Co., 291 Ga. 402, 405 (1) (730 SE2d 413) (2012). In contrast, “[e]ven without disclaiming liability and giving notice of its reservation of rights, any insurer who merely proceeds to investigate a claim with knowledge of facts which might otherwise constitute a defense to coverage is not estopped from thereafter setting up the defense.” (Emphasis omitted.) Brazil v. Govt. Employees Ins. Co., 199 Ga. App. 343, 344 (2) (404 SE2d 807) (1991). See
(c) R&G Investments also appears to contend that because the vacancy exclusion was inapplicable as a whole to its residential apartment buildings, American Family had no basis for investigating whether the exclusion barred coverage of the vandalism claim, and thus was not harmed by R&G Investments‘s alleged failure to fully cooperate in the investigation of that claim. But, as discussed supra in Division 2, the vacancy exclusion applied to R&G Investments‘s apartment buildings, and therefore American Family was entitled to investigate whether the exclusion barred the vandalism claim.
5. R&G Investments also argues that the trial court erred in denying its motion for summary judgment on the issue of whether it was entitled to bad faith penalties under
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 ... Penalties for bad faith are not authorized where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact.
(Footnote omitted.) Assurance Co. of America v. BBB Svc. Co., 259 Ga. App. 54, 57 (2) (576 SE2d 38) (2002). “Bad faith is shown by evidence that under the terms of the policy upon which the demand is made and under the facts surrounding the response to that demand, the insurer had no good cause for resisting and delaying payment.” (Punctuation and footnote omitted.) Atlantic Title Ins. Co. v. Aegis Funding Corp., 287 Ga. App. 392, 393 (651 SE2d 507) (2007). The question whether the insurer acted in good or bad faith is normally for the jury. Id.
As previously noted, there are disputed questions of faсt as to whether R&G Investments sufficiently cooperated with American Family‘s investigation of the vandalism claim, and thus whether it breached the insurance policy and was barred from recovery on that basis. Thus, at a minimum, a factual question remains as to whether American Family had a reasonable ground for contesting the vandalism claim and good cause for resisting payment to R&G Investments. Summary judgment thus was properly denied to R&G Investments on the issue of bad faith penalties.
Judgment affirmed in part and reversed in part. Boggs and Rickman, JJ., concur.
DECIDED JUNE 9, 2016 — RECONSIDERATION DENIED JUNE 28, 2016
Kenneth C. Pollock, for appellant.
Fain, Major & Brennan, James F. Taylor III, for appellee.