On July 17, 1989, appellant/plaintiff Sharon Terry sustained bodily injuries in a motor vehicle collision. At the time of the collision, plaintiff was the named insured of an automobile policy issued by defendant/appellee State Farm Mutual Automobile Insurance Company. It is undisputed that the policy was in full force and effect at the time of the collision. On February 5, 1991, plaintiff brought this action alleging, inter alia, that defendant in bad faith refused to pay certain medical expenses in a timely manner and seeking to recover penalties and punitive damages pursuant to OCGA § 33-34-6 for defendant’s alleged failure to make timely payments.
At the time plaintiff filed suit, OCGA § 33-34-6 was part of the Georgia Motor Vehicle Accident Reparations Act, more commonly known as the No-Fault Act. After plaintiff filed this action, the Georgia legislature repealed the No-Fault Act effective October 1, 1991. The legislature did not indicate whether it intended the repeal of that *225 statute to have retroactive application. 1 Shortly thereafter, defendant filed a motion to dismiss or alternatively for summary judgment based upon the repeal of the No-Fault Act. The trial court granted defendant partial summary judgment on plaintiff’s claims for penalties and punitive damages pursuant to OCGA § 33-34-6. Plaintiff moved for reconsideration and the trial court denied that motion. Plaintiff appeals those rulings.
Plaintiff contends the trial court’s grant of partial summary judgment to defendant was error because the contract issued to her by defendant gives her a vested contractual right to seek penalties and punitive damages from defendant and the legislature’s repeal of that statute cannot impair that contractual right. That is, the plaintiff argues that her right to pursue penalties and punitive damages if defendant did not make timely payments as required by OCGA § 33-34-6 was a bargained-for element of her contract with defendant which vested upon her payment of the policy premium. The policy provision upon which plaintiff relies is as follows: “[State Farm] will pay in accordance with the No-Fault Act for bodily injury to an insured, caused by accident resulting from the maintenance or use of a motor vehicle. . . .” No-Fault Act is defined in the policy as meaning “the Georgia Motor Vehicle Accident Reparations Act and any amendments.”
It is well-settled in this state that repeal of a law authorizing recovery of a penalty defeats the right to recover such a penalty unless the right has become vested.
Spengler v. Employers &c. Ins. Co.,
*226
In support of her position that she has a vested contractual right to recover penalties and punitive damages against defendant, plaintiff relies heavily on our decisions in
Spengler,
supra, and
Sentry Ins. v. Echols,
Plaintiff, however, points to our recognition in Spengler that, although Georgia appellate courts have generally held that the repeal of a law imposing a penalty defeats the right to recover the penalty, nevertheless “ ‘if the right was a vested one, or was secured by contract, a repeal of the law could not take away the right.’ ” (Citations omitted.) Id. at 448. We hold, however, that the mere mention within a contract of an act which contains a statute authorizing penalties is not sufficient to secure the right to collect penalties by contract; parties to the contract must specifically include the right to collect penalties pursuant to a statute in the terms of the contract before the right can be considered vested by the contract. Any other interpretation of that language would be inconsistent with the aversion to forfeitures and penalties consistently recognized by the Georgia appellate courts.
Plaintiff cites Sentry Ins., supra, for the proposition that the penalty and punitive damages provisions set forth in OCGA § 33-34-6 are contractual in nature rather than statutory and therefore cannot be impaired by the subsequent repeal of the statute. In that case, we held that claims pursuant to OCGA § 33-34-6 were governed by the six-year statute of limitation applicable to contracts rather than the twenty-year limitation for actions for the enforcement of rights accruing to individuals under statutes. Sentry Ins. 174 Ga. App. at (2). We recognized that the additional recovery authorized by the statute was extra-contractual but was so entwined with the obligations arising from the contract between the parties that the same limitation period should apply to all claims. Id. We are not persuaded that the applicable statute of limitation is determinative of the nature of an insured’s claim against an insurer for penalties and punitive damages.
The appellate courts of this state have not had occasion to address the effect of a repeal of a statute authorizing penalties in an insurance context.
Teasley v. Mathis,
We hold that the privilege to seek penalties against insurers is not generally a bargained-for element of insurance contracts. “Generally, punitive damages are not recoverable for breach of contract, even though the breach may be in bad faith.” (Punctuation and citations omitted.)
Williamson v. Palmer,
Judgment affirmed.
Notes
On motion for reconsideration, plaintiff posits that the legislature indicated in the act which repealed the No-Fault Act it did not intend for the repeal to have retroactive application to actions to recover penalties and punitive damages. The legislature specifically provided in Section 3.1 of that act
“coverages
payable without regard to fault in motor vehicle insurance policies in existence on October 1, 1991, shall remain in effect until changed by specific request of the policyholder and reflected by the endorsement to the policy or until the renewal date of the policy
....’’
(Emphasis supplied.) Ga. Laws 1991, p. 1628. “The universal definition of ‘coverage’ is the amount and extent of risk contractually assumed by the carrier. E.g.,
Traders State Bank v. Continental Insurance Co.,