On August 8, 2001, John Vara was sued by his landlord, Ralph Hodges, for negligently causing a fire that started the sprinkler system that Vara negligently installed and maintained, and such negligent conduct damaged Hodges d/b/a Industrial Marine Diesel’s new and rebuilt parts inventory; also, the rental agreement contained an indemnification agreement. On September 13, 2001, Vara was served. The facts are set forth in more detail in
Hodges v. Vara,
*418 On October 15, 2001, Essex Insurance Company, the insurer, hired a lawyer to defend and an answer was filed. Subsequently on June 1, 2002, Hodges amended to add I. E. Lee, Inc., the named insured, as an additional defendant. Essex gave written notice to Vara and I. E. Lee, Inc. that there was no coverage; that Essex would not cover the claims; that it would not provide a defense; and that the attorney had been instructed to abandon the case. On November 8, 2002, Vara and I. E. Lee, Inc. filed their third-party action against Essex and Risi Insurance Services, Inc. On February 28, 2003, Essex answered, denying all liability.
Subsequently, Essex unilaterally asserted that “while agreeing to assume the defense of the claims alleged in the new Complaint, Essex reserves its rights to deny coverage under the above referenced policy” and “reserve [s] its right to deny that coverage exists for any and all claims made by the plaintiff in the new complaint. Such a denial may include a denial of the duty to indemnify the insured as well as a denial of the duty to defend the insured in this case.” Essex had been advised that some of the claims asserted by Hodges could come within the policy coverage. Neither Vara nor I. E. Lee, Inc. agreed to Essex’s attempt at reservation of rights.
Essex filed its motion for summary judgment as to the third-party action, contending that “the Insured suffered absolutely no prejudice during the time that the Insured defended themselves.” The trial court granted Essex’s motion for summary judgment.
The sole enumeration of error is that the trial court erred in granting summary judgment to the third-party defendant on the third-party plaintiffs claim for indemnity. We agree and reverse.
a. Essex gave written notice to Vara and I. E. Lee, Inc. that there was no coverage under the policy and that it would not defend further. Under
Munday v. State Farm Fire & Cas. Co.,
The question of impleading an insurer can arise only in that limited class in which the insurer has disclaimed liability and refused to defend on behalf of the insured.
Argonaut Ins. Co. v. Atlantic Wood Indus.,
*419
Thus, when the third-party action was instituted, Essex both denied indemnity and refused to defend. Having taken a legal position to deny coverage and a defense, the insurer has fixed its rights, because if there exists coverage under the terms of the policy, then it has breached the two duties under the agreement, i.e., the duty to indemnify and the duty to defend.
Argonaut Ins. Co. v. Atlantic Wood Indus.,
supra at 475. In
Drawdy v. Direct Gen. Ins. Co.,
Further, with full knowledge of the facts, an insurer who assumes and conducts an initial defense without written notification to the insured that such defense is tendered under a reservation of rights by the insurer, is deemed estopped to assert the defense of noncoverage and is deemed to have waived its right to deny liability under the policy.
State Farm &c. Ins. Co. v. Wright,
b. Under OCGA § 9-11-14, when the insurer has denied coverage to its insured and has refused to defend, the insured may implead into the suit the insurer, by a third-party action, because the insurance policy is an indemnity agreement that if there is coverage then such policy will indemnify the insured against the liability claims of the plaintiff-claimant and be an asset available to satisfy any judgment *420 against the insured. See Argonaut Ins. Co. v. Atlantic Wood Indus., supra at 476-477; see also Munday v. State Farm Fire & Cas. Co., supra at 386.
In applying the foregoing analysis to the facts in this case — specifically, [the insurer’s] denial of coverage coupled with its refusal to defend [the defendant/third-party plaintiff] in this action — we are persuaded that the trial court erred in dismissing appellant’s third-party indemnity claim against [the insurer]. We are buttressed in this holding by the policy of the Civil Practice Act, that it “shall be construed to secure the just, speedy and inexpensive determination of every action.” [OCGA § 9-11-1.] In expounding this policy, our courts have held that the impleader provisions are to be liberally construed to avoid multiplicity of actions, to save time and cost of reduplication of evidence and to assure consistent results from similar evidence and common issues.
(Citation, punctuation and emphasis omitted.)
Munday v. State Farm Fire & Cas. Co.,
supra at 386 (2). Thus, in
Kirsch v. Jones,
c. Whenever a contract has been breached, if there are no special damages that can be proven, then nominal damages are recoverable. OCGA § 13-6-6;
Hadden v. Southern Messenger Svc.,
Judgment reversed.