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## In the Court of Appeals of Georgia
A14A0242. HEN DERSON et al. v. GEORGIA FARM BUREAU MUTUAL INSURANCE COMPANY. JE-104

E LLI NGTON , Presiding Judge. Jennifer and Lee Henders on filed thi s action in the Super

ior Court o f Lincoln County against G eorgia

Farm Bu reau Mut ual Ins ura nce Compa ny, seeking ben efits undertheir home owners’ insurance policy for water dam age to thei r home a

nd for their loss of use, statutory penalties for Georgia Farm Bureau’s alleged bad

faith in refusing to pay benefits, an d attorney fees. A jury found in fa

vor of the H endersons and awar ded them $27,799 for

damage to the str

ucture not already

paid by Georgia Farm , $8,400 for their

loss of the use of the p roperty , $6,000 in penalty for Georgia Farm B ureau’ s bad faith

in refusin g to pay

a covere d loss, and $35,000 in a ttor ne y fees. Georgia Farm B ureaufiled a m otion for j udgmen

t notwithsta

nding the ver

dict,2

arguing, inter

alia, that there was no evidence that the Hendersons’ home sustained any wate r damage that was separate a nd distinct from mold dam age, for which Georgi a Farm

Bureau pa

id benefit s under a sp ecial ri der. Af ter a hea ring, the tria l court granted Georgia Farm B ure au’ s motio n for jud gment notwithsta

nding the verdict “ in its entirety[, ]” The Henders ons appeal, and, for the reas ons explaine d below, we revers e. A motion

pursuant to OCGA § 9 -11-50 ( b) for j udgmen t notwithsta

ndin g the verdic t may

be grante d only w

hen, wit hout weighing the credi bility of the evidence , there can be but o ne reason able conclusion

as to the proper judgment. W here there is co n flicting evidence, or there is insufficient evidence to make a “ one-way” verdict proper, judgm ent [notw ithstanding t he verdict] should not be a warded. (Citation and punctuation omitted.) Fertility T echnolog y Resources v. Lifetek Med., Inc. , 282 Ga. App. 148, 149 (637 SE2d 844) (2006). The app ellate standard f or reviewing the gra

nt of a j udgmen

t notwithsta

nding the verdict is whether the evidence, with all reasonab le deductions therefr

om, d eman ded a verd

ict cont ra ry to t hat retur ned by the factfin der. If

there is a

ny evid ence to supp ort the j ur y’ s verdict, viewing the evidence most favorably to the pa rty w ho secured

the verdict, it is error to g rant the motio n.3

(Citation s and

punctuation omitted.) Mosley v. Warnock , 282 Ga. 488 (1) (65 1 SE2d 696) (2007). Viewed in the light m ost favora

ble to the H endersons, the recor d shows the following. Georgia

Farm Bureau agreed to c over the H endersons “aga in st risks of directloss to pro per ty . . . if that loss is a physical loss of property[ .]” Losses caused by “[c]onstant or repea

ted seepage or leakage of water or t he presence

of condensati on or humidity, m oisture or vapor, over a per iod of weeks, months or years[,]” (hereina fter, “ seepage of water, etc.”) were in cluded am ong the Per

ils InsuredAgainst (hereinafter, “ the covered risks”) as long as such seepage of water etc. “and the result ing dam age is unknow

n to all ‘ insureds’ and

is hidden w ithin the walls or ceiling s or

beneath th e floors or

above the c eilings of a

structure .” Thepolicy limit for such se epage of water etc. was $153,500. Otherw ise, that is, for s eepage of water etc. and resu lting da mage that was kno wn to an insured or was not

hidden, the policy provi ded no cov erage for los ses caused by seepage of wate r etc. In addition to this coverage, the Hendersons, for an additional premium , opted for additional coverage for “ensuing mold, fungi or bacter ia caused by or r esulti ng fro m” one of the covered risks ( hereinaf ter, “ ensuing mold”); as n oted above, th e covered risks included seepage of water et c. where t he resulting damage was1 If the H endersons h ad not opted f or additiona

l coverag e for

en suing m old, fungi or bacter

ia caused by one o f the covered risks, Georgia Farm Bureau’ s standard policy excluded coverage for loss caused by “ [m]old, fungi or bacter ia[.” 4 unknown to all insureds and h idden as def ine d by t he p oli cy. 1 The limit of such additio nal coverag e for ensui ng mold was $32 ,675. On October 4, 2010, Jennifer Henders on discovered a puddle of water in her kitchen and

contacte d Georgia

Farm Bureau. Georgia

Farm Bureau’ s contractor tore out a section o f the floor a nd checked the kitch en, dinin g room, an d living room floors for m ois t ure but disc overed no pr oblem s other tha

n the area

of floorin g damaged by thepuddle. D ays la

ter, how ever, th e Hender sons removed another part of the floor in the

kitchen an d discovere d standing w ater and b lack m old underne ath. Georgia Farm Bureau’ s claim s adjuste r suggested that the H endersons s hould vacat e the house because b lack m old could be toxic, and the Henderson did so and were unable to return for o ne year. Over the course

of that year, the Hendersons’ home was inspected by numerous engineers , mold

rem ediation spe cialists, contract ors, and r epairmen, m any of

whom

were hired b y G eorgia Fa rm B ureau in th e course o f address ing the He ndersons’ claim for benef its. In a ddition

to areas of mo ld found under floors, behind wal ls, and

over ceilings, these workers found such damage as areas of flooring a

nd subflooring2 We note that there was some evidence that, as constructe d, the Henders ons’

ho me lacked certain im

provem ents intende d to limit seepage of wa ter or co llection of condensati on, such as , rain gut ters, “ French”drains, v apor barr ie rs in the crawlspace, and proper

ly installed (

right-side down) subfloor insulation. There was no evidence, however , that the Henders ons were

awareof those deficien cies, or the significa nce of suc h deficie ncies, be fore the water a nd mold damage occurr

ed.

3 It is undisputed th at the seepage o f water that cause d all of the

Henders ons’ pro perty damage was unkn own to them and hidden w ithin the w alls or ce iling s o r beneath the floors or above th e ceilings until the da y in October 20 10 that the Henders ons lifted part of the floor in the kitch en and saw st anding wat er and m old underneat h. 5 that were c omple tely

rotted thr ough, whe re one “ could just step through

the hole an d be under the h ouse[,] ” critic al rot to 90 percent of the flo or

joists, and a “trough” or “dry riverbed” in the cr

awlspac e, wher

e water flowed th

rough and co llected in puddles. 2 Ulti matel y, Georgia Farm B ureau conceded that the Hendersons had suffered losses caused b y m old in excess o f the lim it of their

additional mold c overage ($32,675) and tendered payment for such. Georgia Farm Bureau, however , denied t he Henders ons’ claim under coverag e fo r other (non-m old) damage from seepage o f water etc. (policy limit of $153,000). 3 Although the jury apparently re

jected Georgia F arm Bureau’s charac terizatio n of the Hend ersons’ los ses, the tri al court, afte r verdict, agreed w ith Georg ia Farm Bureau, finding tha

t6

[t]heoverwhe lming w eight of the evidence establishe d that t he ‘resulting damage’ w as not water damage. R ather, it was mold dam age. As a conseque nce, the

policy’s lim

ited mold c overage a

pplied, a nd [the Henders ons] c ould not rec over m ore than th e mold coverage

limit s unless they could identify and quantify

areas of the structure which were only damaged by w ater, no t mold. Thereis no eviden ce in the r ecord of any non-mold damage that can support an awa rdof dam age bey ond

the Mold Endorsem

ent Lim it, whic h wa s exhausted by Georgia Farm Burea u’s earlier payment before suit was fi led

. . . . [The H endersons] failed to show any damages that w ere caused solely by water or m

oisture that were separate and distinct from the m old dam ag e to the structure.

. . . Based on the evidence, the re was n o rem aining cove rage available underthe policy

be cau se the act

ual dam ages sustai

ned by [ the Henders ons] were e nsuing m old damages, all of which fe ll under[their] limited mold c overage a

nd had been p aid in full b y [G eorgia Farm Bureau]. 1. T he Hender sons contend that the tr ial court erred in f

ailing to apply th e policy according to its plain terms. Further, they contend that the trial

court er red in ruling that there was no evidence of water damage that w as separate from the m old dama ge f or which G eorgia Fa

rm B ureau pai d benefits to the m old coverage pol ic y limit

. Accordingly, they

contend that the trial courterred in granting Georgia Farm Bure au’s motion for judgment notwithstanding the verdict as to their claim fo r benefits for property dam age.7

As with any

other contract, where the term s of an insurance contract “are clear and unamb iguous, and

capable o f only one reaso nable inte rpretati on, the court i s to look to the contractalone to as certain th e parties’ int ent.” (Citation and punctua

tion omitted.) Fireman ’s Fund Ins. Co. v . Univ. of Georgia Athletic Ass’n, Inc. , 288 Ga. App. 355, 356 (65 4 SE2d 207) (2007). E ven when t

he trial c ourt is auth orized to construe an insuran ce contra ct, beca use a pert inent provis ion is am

biguous, the trial court must c onstrue str

ictly against the

insurer a ny am biguities in the contra ct and any exclusion from coverage sought to be invoked by the insurer as drafter o f the document and must read the ins urance c ontract in accorda nce with t

he reasona

ble expectati ons of th e insured where possi ble. Id. at 35 7. In concluding that the H endersons had faile d to come forward with evidence showingthat the pr

operty had been da

mage d by wa

ter only and not by mold, the court

was implicitly construing the policy of insurance to m ean that m old dam age is not and

can never be an item

of damage that results as a consequence of wate r seepage . This is perplexing

in light of t

he policy ’s express requir emen t that m old dam age ensue as a consequence of a covered risk, one of which is seepage of water etc. The trial cour

t’s inte rpretati on is also not dem anded by the evidence . Although the evidence showed thatall of the Henders ons’ mold dam age was m oisture da mage4 To the contrary, the H endersons tes tified th at their home had both water

damage and mold damage a nd that water had damaged the paneling on t

he walls a nd rottedthe wood su

pporting the

walls and floor. The contr actor wh o repaire d their ho me identifie d the required repairs as bein g for “ water da mage .” In add

it ion , witn esses testifie d that, “ [a]ny time you have

mold, water h as som ething to do with it[,]” and that “condensation occurr in g on the floo r sheathin g due to hum id air conditi ons in th e crawlspace” h ad, in turn , caused the mold growth. 8 (inthe sense t

hat mo ld growth a

nd resulting

damage only occurs in the presence of persistent or recur rent m oisture), the eviden ce did not show the reverse, that is, that all of the Hendersons’ water d amag e was mold da mage. 4 The Bartram, LLC v. Landmark

Americ an Ins. Co

. , 864 FSupp2d 1229, 1239 (III) (F) (N.D. Fla. 2012) (As used in a standa

rd builder ’s all- risk insura nce policy , an “ ensuing lo ss” is one that follows and flows proxim ately from an underly

ing cove red lo ss.). T

here wa s no evidence at all thatthe “trough” and “dry riverbed” in the cr

awlspac e resulte d from mold, that the rotted f

loor and subf

loor, thr ough which a

person coul d fall into th e crawlspace, resulted from mold, or thatthe critical failure of the floor joists resulted from mold , ev en i f th e mo isture that cause d these ite ms of destructi on might have also allowed mold to flourish

. Granted , the Henderso ns apparentl y were not litigation- savvy enough to require the co ntractor whom they hired to make their hom e habitable, after Georgia Far m Bureaurejected their c laim for non-m old benefit s, to provi de a line- item bill9

attributin g each ite m of r

epair to general see

page of water, etc. ve rsus to mold. (One wonders how much such

special a ccounting pr

actices w ould have added to the total cost of repairs.) Bu t, t h e evidence showed tha

t all of the

Henders ons’ prop erty damage was from the seepag e of water, etc. and that, of that damage, so me of it

was from ensuing mold. Geo rgia Far m wa s entitled to pay on ly $32, 675 for theportion of the Hendersons’ pro p erty dama ge that re sulted only

from the m old. But, for those damages resulting f

rom t he seepage

of wate r etc. t

hat was not

solely mold dam

age, a policy limit of $1 53,500 ap plied. The trial court’s order allows Georgia Farm Bureau to pen alize the Hender sons, having opted into so- called “ additional” mold coverage , for suf

fering fr omboth nonmold-related

wate r dama ge a nd mo ld- rela ted wate r dama ge. B ecau se t he ju ry’ s verdict was authorized by the evidence, the trial court applied an inapplicable legal standard in weighing

the evidence, and the trial court construed the policy contrary to its pl ain ter ms and in favo r of the insurer and against coverage, the trial court erred in granting G eorgia Fa

rm B ureau’ s motio n for judg ment n otwithsta

nding the verdict as to the jury’s aw ard for property damage. 2. The Hendersons contend that the trial court erred in granting Georgia Farm Burea u’s motion

for judg ment n otwit

hstand ing the ver

dict as to bad faith and10

atto rney’s fees, w

hich was b ased on its d eterm ination that

the parties had a bona

fide dispute as to cover

age for t he Hende rsons’ c laim

for prope rty da

mage . The question of bad faith i s generall y for the jury. Jimenez v. Chic ago Title I

ns. Co. , 310 Ga. A

pp. 9, 12 (2) (712 SE2d

531) (2011) ; Certain Underwriters &c. v. Rucker Constr., Inc. , 285 Ga. A

pp. 844, 85 0 (3) (648 S E2d 170) ( 200 7); First Financial Ins. Co. v. Americ an Sandblasting Co. , 223 Ga. A pp. 232, 23 3 (2) (477 S E2d 390) (1996) ; St. Paul Fire & Marine Ins. Co. v. Snitzer , 183 Ga. App. 395, 39 7 (2) (358 S E2d 925) (1987). As the Supreme Court of Georgia has explained, “ [t]he proper rule is that [a] judgm ent [against an insurer for damages and attorn ey fe es for bad faith in refusing to pay a claim ] should be

affirm ed if there is any

evidenceto support it unl ess it can be said as a m

atter of law that t he re was a

reasonabl e defense

which vindi cates the good faith of the insurer.” Colonial Lif e & Acc. I ns. Co. v. McClain , 243 Ga. 263, 265 ( 1) (253 SE2d 745) (1979). We discern no basis for concluding that Georgia Far m5 We note that t he jury h eard t he tes timony of Georg ia Farm Bu reau’s cla ims adjuster, Phillip K. Palacz , regar ding his initia

l recom menda tion that the

Henders ons’ claim be denied in its entire ty (in cluding the m old coverage the insurer later paid) and the later ha

ndling of their claim. See

Dissent a t *1-2 (2). The jur

y wa s responsibl e for assessing the credi bility of all of

the witne sses, inc luding Pala cz, and d eterm ining, in the context of

all of Ge or gia F arm Bureau’ s actions in the handling

of the Henders ons’ claim s, wheth er the insu rer’s decision to pay mold coverage, that w as capp ed bythe policy

at $32,675, and to then t ake the posi tion that suc h paym ent p recludedany c overage un der the ge neral pro perty damage coverage, that w as cappe d by the policy at

$153,500, arose from

a genuine b elief tha

t the policy

so provided o r whether it constituted a bad faith denial of coverage. 11 Burea u’s defense was rea sonable a s a matter of law. 5 Conse quently, the trial court erred in not defer

ring to the j ury’ s assessm ent. 3. The He ndersons contend that the trial court erred in granting in part Georgia Farm Bureau’ s motio n for sum

mary judgm ent relat

ing to bad fa

ith and atto rney’ s fees

. The record sh ows that th e trial c ourt grant ed Georg iaFarm Burea u’s motion for

summar y judgmen t in part, to the exte nt that the H endersons s ought a bad f aith penalty for the in surer’ s denial of their cla im fo r the loss of

the use of thei r home. Acco rdi ngl y, the issue of whether Georgia Farm Bureaudenied theHenders ons’ loss of u se cl aim in bad fait h was not sub mitt ed t o th e jur y. Under OCGA § 9-11-56 (c) [s]umm ary judgment is warranted if the pleadings, depositions, answers to interr ogat ories, a

nd adm issions on fil e, togeth er with t he affida vits,12

if any, show that t

here is no g enuine issue

as to any material fa ct and that the m oving party

is entitle d to a judgm

ent as a m

att er of law . We review the grant or denial of a motion for summ ary judgm ent de novo, and we vi ew the evide nce, and the reasonabl e inferences drawn therefr om, i n a light m

ost favora ble to the no nmovan

t. (Punctuat ion and footnotes omitted.) Assaf v. Cincinnati Ins. Co. , _ Ga. App. _ (Case No. A14A0145, decided Jun e 5, 2014). As with t he part of the Henders ons’ bad f

aith claim that was submitted to the j ury, se e Division 2, supra, we disce rn no basis f or concluding

that Geor

gia Farm Bureau’ s defensewas rea sonabl e as a matter of law. Con seq uen tly, the trial

court er red in grant ing i n part Georg ia Farm Bu reau’s motion for sum mary judgm ent. Judgment reversed. Phipps, C. J., B arne s, P. J ., and M cFadden, J., co ncur. Andrews, P. J. , Ray and

McMilli an, J J., c oncur specially and in jud gment only

as to Division 1 and dis sent as to Divisions 2 and 3.A 14A0 242. HENDERSON et al. v. GEORGIA FARM BUREAU

MUTUAL INSURANCE COMPANY. CWM-0 13

M C M ILL IAN , Judge, con cu rring spec ially in part and in judgment only

and dissenting in

part. 1. Pursuant

to Court of Appeals Rule 33 ( a), I c oncur spec ially and in judg ment only as to Divi sion 1. 2. I mus t respect fully dissent fr om Divisons 2 and 3 o f the m ajority ’s opinion because the recor

d demo nstrates t

hat the Henders ons failed to prove that they were entitled to recove r a bad fa ith penalty

or attorney fee s. The H endersons a ssert that the trial court er

red in gra nting a JNO V as to the ir claim for bad f aith and at

torney fees. Spe cifi call y, the Hendersons clai m that GFB ac ted in bad f

aith beca use Palac z2

initially applied an exclusion under the Policy to deny them coverage, a decision that

was overrul ed by

his superio rs after

the Hendersons m ade a wr itten dem and, and because GFB denied ad ditiona l coverage u nder the Water Da mage Co verage provisi on of the Po licy. To establish liability for penalties and attorney fees under OCGA § 33- 4-6, “theinsured must pr ove: (1) th at the claim is c overed under the pol icy, (2) that a

dema nd for pay

ment w as ma de against the in sur er within 60 days prior to f

iling suit, and

(3) th at the insu rer’s failure to pay was mot ivated b y bad faith.” Since it impo ses a p enalt y, the st atut e’s requirem ents are strictly

construed. (Citation s and punct uation o mitted.) Jimenez v. Chic ago Title I

ns. Co. , 310 Ga. App. 9, 11-12 (2) ( 712 SE2d

531) (2011) . “P enalties f or bad fai th and attorn ey fe es are not authorized where t

he insuranc e com

pany ha s any reasonable

ground to con

test the claim and where there i s a disputed question of f act. ” (Citation

and punctua

tion omitted.) Bell v. Liberty

Mu t. Fire

Ins. Co. , 319 Ga. App. 302, 307 (3) (73 4 SE2d 894) (2012) . And [t]hetest of ba d faith

within the meaning of the law in such cases is as of the timeof trial, in the final analy sis, and not at the time of

refusal to pay upon dem and. W

hatever t he facts are at the time of such refusal to pay if at thetrial the re was a

reasonab le ground f

or the insure r to contes t3

the claim there ca n be no finding against t

he insuranc e com

pany f or bad faith and a ttorney’s fees reg ardless of the outco me of the case. (Citation and punctuation omitted.) Fortson v. Cotton States Mut. Ins . Co. , 168 Ga. App. 155, 158 (1) (308 SE2d 382) (1983). “ Since it impose s a pen alty, th e stat ute’s requirem ents are s tri ctl y construe d.” (Citation and punctu ation omitted.) Jimenez , 310 Ga. App. at 12 (2). Here, although GF B initially refused c overage, it rever sed its position within 60 days of the Hendersons’ dema nd, and af ter invest igating to determ

ine the am

ount of the Hendersons’ da

mage s, it paid them i

n excess of

their polic y lim

its to cover th e full cost of remediation and other docum ented dam

age to fur niture. A lso, a genuine dis pute ex isted as to whether GFB owed any a mounts over and above the policy limit s under the M old

Coverage provision. I believe that GFB reasonably contested the issue of whether they were r equired to pay any additional am ounts un der the Water Dam age Cover

age provision w ithout proof of wate r dam age separ

ate and apart from mold damage. Accordingl y, I would find that the tr

ial court p roperly

granted a

JNOV a nd

summ ary j udgmen

t as to the H endersons’ bad faith c laims

.4

I am authorized to state that Presiding Judge And rews and Judge Ray j oin in this opinion.