Atlanta Casualty Company brought a declaratory judgment action against its insured, Dimple B. Thomas, for not giving it notice of service of a renewal action in tort against her brought by Laura A. Maestas, which tort action resulted in a default judgment in excess of the minimum policy limits. Atlanta Casualty contended that it gave a reservation of rights notice to Thomas; however, there is no copy of any such notice in the record. Atlanta Casualty’s declaratory judgment action stated “that it is uncertain as to whether that policy affords coverage for the judgment entered against Thomas in the Renewal Action.” Thomas counterclaimed against Atlanta Casualty for bad faith in failing to settle the case for policy limits, which exposed her to a judgment in excess of the policy limits. Atlanta Casualty moved for summary judgment as to its declaratory judgment action and on Thomas’ counterclaim which the trial court granted. On September 27, 2000, Thomas filed a motion to dismiss the declaratory judgment action based upon
Morgan v. Guaranty Nat. Cos.,
For the voluntary dismissal to be effective, the opposite party must be served with it or have actual notice of the dismissal; until such notice, the dismissal is dormant.
Jones v. Jones,
While a plaintiff is entitled to voluntarily dismiss an action without prejudice despite the inconvenience and irritation to the defendant, this Court. . . has held that a plaintiff may not voluntarily dismiss his complaint after the defendant has filed defensive pleadings seeking affirmative or other relief.
(Citations and punctuation omitted.)
Avnet, Inc. v. Wyle Laboratories,
There was no uncertainty or insecurity with regard to future conduct for a declaratory judgment, and there existed material issues of fact as to the counterclaim; thus, we reverse.
1. The facts of this case are almost on all fours with Morgan v. Guaranty Nat. Cos., supra at 344, which held that a declaratory judgment action by the insurer after judgment had been taken against the insured whom it failed to timely defend did not present a case for declaratory judgment, because there was no uncertainty and insecurity as to fiiture conduct between the parties. OCGA § 9-4-1.
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Therefore, the threshold issue is whether there exists subject matter jurisdiction for a declaratory judgment action where all the rights of the parties had become fixed prior to suit, and Atlanta Casualty is merely asserting its defenses to a breach of contract action by the insured.
Morgan v. Guaranty Nat. Cos.,
supra at 345-346;
Cotton States Mut. Ins. Co. v. Stallings,
In this case, all rights had accrued and judgment had been entered against the insured after the insurer engaged in her untimely defense after notice by a third party. Either Thomas had been served in the underlying tort action and failed to notify Atlanta Casualty, although there is some evidence that the third party gave such notice prior to taking a default judgment, or there was a factual issue. Atlanta Casualty either had prior notice of the renewed suit prior to judgment given by the third party and either negligently failed to defend or to settle within policy limits after the insured’s demand or with conscious indifference it failed to timely defend by seeking to open a default, which may constitute bad faith, or it did not act in bad faith. Such issues of fact, which had already occurred, created no uncertainty as to what action Atlanta Casualty should take, because all rights had accrued among the parties so that it needed no guidance as to uncertainty from the trial court. Therefore, it could not use a declaratory judgment action to litigate its coverage defenses after the facts had taken place fixing everyone’s rights. Further, there is no evidence in the record that Atlanta Casualty proceeded under any reservation of rights with Thomas.
A declaratory judgment action will not lie where the rights between the parties have already accrued, because there is no uncertainty as to the rights of the parties and risk as to taking future action. See
Empire Fire &c. Ins. Co. v. Metro Courier Corp.,
The General Assembly has vested in the superior court subject matter jurisdiction to decide actual cases of uncertainty as to future conduct under the Declaratory Judgment Act under limited circumstances.
[S]ubject matter of which the court must have jurisdiction in order to enter a valid judgment is defined by the courts of this State as: “the power to deal with the general abstract question, to hear the particular facts in any case relating to this question, and to determine whether or not they are sufficient to invoke the exercise of that power.”
Williams v. Kaylor,
2. In determining Thomas’ compulsory counterclaim, this Court must also determine the issues raised in the declaratory judgment action because such issues are defenses to an action for bad faith. Therefore, Atlanta Casualty has maneuvered the trial court and this Court into deciding issues that should not have arisen absent suit by Thomas against Atlanta Casualty for bad faith, but are raised in this suit as a compulsory counterclaim, which counterclaim arose from the conduct of the insurer regarding an untimely defense after notice from a third party of the renewal suit. OCGA § 9-11-13 (a); contra
Colonial Penn Ins. Co. v. Hart,
3. The trial court erred in granting summary judgment on disputed issues of material fact raised by Thomas’ evidence.
(a) On March 14,1996, counsel for Maestas sent a certified letter to Atlanta Casualty with a copy of the renewed complaint, giving notice of the renewed action against Thomas; such notice was pro
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vided 392 days prior to any default judgment being taken. Thus, Atlanta Casualty’s untimely defense of Thomas becomes an issue of either negligence, intentional misconduct, or no liability. Thomas in her answer to the declaratory judgment action pled that Atlanta Casualty had received notice of the renewal suit from Maestas, because Thomas had no knowledge of service made upon her. Further to the contrary, on January 7, 1999, John Marshall’s affidavit alleges that Atlanta Casualty received the first notice of the renewal action from Maestas’ counsel, although on March 14, 1996, Maestas’ counsel had earlier provided notice and a copy of the suit, which creates a material issue of fact for jury determination. Such material issues of fact as to notice are for the determination not by the trial court but by the jury. OCGA § 33-7-15 (c);
Weekes v. Nationwide Gen. Ins. Co.,
(b) Under OCGA § 33-7-15 (c), where the insurer has received notice of the pending action not from the insured but from a third person, the insurer has not made out the defense of failure of notice of a pending action.
Ga. Farm &c. Ins. Co. v. Martin,
Where under OCGA § 33-7-15 (c), a third party gave notice to the insurer more than 30 days prior to judgment, as in this case, summary judgment as to notice should have been denied, leaving the issue of third-party notice up to a jury.
Ga. Farm &c. Ins. Co. v. Martin,
supra,
(c) Atlanta Casualty contended that Thomas breached her contractual duty to provide notice under the policy. Thomas denied service in her affidavit as well as the affidavit of family members, which created a jury question as to the return of service by the marshal. However, service of notice by a third party raises a jury question as to notice and as to prejudice to Atlanta Casualty where default judgment had not been taken and a motion to open default was possible. OCGA § 33-7-15;
Ga. Farm &c. Ins. Co. v. Martin,
supra, 209 Ga.
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App. at 238;
Chadbrooke Ins. Co. v. Fowler,
supra at 780. Counsel for the injured party can give the requisite notice of an accident under the policy to avoid a notice defense under the policy, because “it makes no difference who gives notice, so long as a reasonable and timely notice is given the company and it has actual knowledge of the pendency of a claim or suit.” (Citation and punctuation omitted.)
State Farm &c. Ins. Co. v. Sloan,
(d) On February 18, 1999, Thomas’ personal counsel made a demand upon Atlanta Casualty to settle the case within policy limits, because Atlanta Casualty had allowed the case to go to default judgment without defending even though it was on notice of the renewed suit since March 14, 1996. Instead of settling within the policy limits, Atlanta Casualty unsuccessfully sought to set aside the default judgment.
Although policy limits were the minimum coverage at $15,000, Atlanta Casualty in failing to timely defend and to pay policy limits after the default judgment was entered may be liable for bad faith and the full amount of the judgment where such consequential damages can be traced directly to the failure to timely defend. The issue of consequential damages, i.e., judgment in excess of the policy limits, and causation were matters for jury determination.
Leader Nat. Ins. Co. v. Kemp & Son, Inc.,
In this case, Atlanta Casualty did not attempt to open the default prior to a default judgment being taken; it sought to set aside the default judgment after it was entered. Where the insured is in default, has a meritorious defense, and has a legal excuse for the default, and the insurer has notice of both the pending action and the default of the insured prior to plaintiff taking a default judgment, a jury question arises as to whether the insurer’s failure to seek to open default constitutes bad faith, giving rise to liability. See generally
Ga. Farm &c. Ins. Co. v. Martin,
supra,
(e) The failure either to settle within policy limits or to make an offer of settlement creates an issue of bad faith of the insurer, because the issue arises whether the insurer places its financial interest superior to the interests of its insured who is placed at great
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risk for an excess judgment. “We think it clear that an even greater duty rests upon the [insurer] after a verdict in excess of the policy limitation has been returned and an offer of settlement within the policy is made.” (Citations and punctuation omitted.)
U. S. Fidelity &c. Co. v. Evans,
It is no longer open to question in this State that the claim of an insured under an automobile liability policy for damages on account of the bad faith tortious refusal of the insurer to settle a liability claim against [her] within the policy limits resulting in damage to [her] in the form of a judgment in excess of the policy limits being returned against [her] is a legitimate charge against the insurer upon which recovery may be had by the insured.
(Citations omitted.)
Shaw v. Caldwell,
Thus, finding Thomas with a default judgment against her, *206 Atlanta Casualty should have considered settlement to protect the insured instead of seeking a policy defense to void coverage which would expose the insured to liability on an excess default judgment.
(f) Where an insurer violates its fiduciary duty to its insured and puts its interests superior to its insured, such conduct may be found to be tortious, either negligent or bad faith.
Southern Gen. Ins. Co. v. Holt,
supra,
Where there has been such entire want of care amounting to a conscious indifference to the consequences, this may constitute tortious conduct making punitive damages authorized in any action for negligence or intentional tort of bad faith; this creates a jury question as to whether clear and convincing evidence exists as to such conduct by Atlanta Casualty. OCGA § 51-12-5.1;
Brown v. StarMed Staffing,
Judgment reversed.