THIRD DIVISION

MILLER, P. J.,

MCFADDEN and MCMILLIAN, JJ.

NOTICE: Motions for reconsideration must be

physically received in our clerk’s office within ten

days of the date of decision to be deemed timely filed.

http://www.gaappeals.us/rules

November 14, 2016

In the Court of Appeals of Georgia

A16A1372. OCCIDENTAL FIRE AND CASUALTY OF NORTH

CAROLINA v. GOODMAN et al.

McF-053

A16A1373. GOODMAN et al. v. STOVER et al. McF-054

MCFADDEN, Judge.

The main appeal in this case challenges a trial court’s order granting summary

judgment to plaintiffs on their claims for breach of contract and reformation of an

insurance policy to name the correct insured and denying summary judgment to the

defendants as to all claims. However, the trial court correctly ruled that the insurance

policy must be reformed to correct the mutual mistake of the parties naming the

wrong insured and correctly found that there exist genuine issues of material fact as

to the remaining claims. Accordingly, we affirm the summary judgment rulings. The

cross-appeal challenges the trial court’s order dismissing certain of the plaintiffs’

claims as time-barred by the statute of limitation. However, the trial court correctly
ruled that the claims were filed after the statute of limitation had expired, so we

affirm.

Case No. A16A1372

Summary judgment is proper when there is no genuine issue of material fact

and the movant is entitled to judgment as a matter of law. Norton v. Cobb, 284 Ga.

App. 303 (643 SE2d 803) (2007). This Court reviews de novo a grant or denial of

summary judgment, viewing the evidence, and all reasonable conclusions and

inferences drawn from it, in the light most favorable to the nonmovant. Id. at 303-

304. 

So viewed, the evidence shows that on November 17, 2008, R & R Spirits of

Atlanta, LLC entered into an agreement with Irish Bred Pub & Grill V, Inc., for the

purchase of all the assets and interests of a bar and restaurant business in

McDonough, Georgia known as Irish Bred Pub & Grill. On February 26, 2009,

Anthony Jones, the sole member of R & R, signed an application for commercial

insurance coverage for the newbar and restaurant business. The application identified

the insureds as Irish Bred Pub & Grille V, Inc., and Irish Bred Pub & Grill. On that

same date, Jones signed an acceptance of a written proposal for insurance coverage

from Occidental Fire & Casualty of North Carolina for Irish Bred Pub & Grill V, Inc.

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and Irish Bred Pub & Grill. Thereafter, Occidental issued an insurance policy,

effective February 27, 2009, listing the insured as Irish Bred Pub & Grill V, Inc. 

On March 8, 2009, Gregory Ryan Gilliam was fatally stabbed at the Irish Bred

Pub & Grill. In April of 2009, R & R was served with a lawsuit filed by the parents

and estate of Gilliam (hereinafter, “the plaintiffs”), seeking wrongful death damages.

R & R requested that, pursuant to the policy, Occidental provide R & R with a

defense in the wrongful death suit. But Occidental denied coverage and refused to

provide a defense on the basis that R & R was not listed as, and did not come within

the definition of, an insured under the policy. 

After Occidental denied coverage, R & R entered into a settlement agreement

with the plaintiffs, whereby R & R assigned all of its claims against Occidental to the

plaintiffs. On July 26, 2012, a default judgment was entered against R & R, and on

April 25, 2013, an order was entered reflecting that the judgment was entered against

R & R d/b/a Irish Bred Pub & Grill.

On August 19, 2013, the plaintiffs filed their original complaint against

Occidental and others. Then on April 24, 2014, plaintiffs filed their first amended

complaint against Occidental and others, asserting, among other things, claims for

reformation of the insurance policy and breach of contract. The plaintiffs claimed that

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the former owner of the business, not the current owner R & R, was identified as the

insured due to mutual mistake of the parties. The plaintiffs moved for summary

judgment on their reformation claim and partial summary judgment on their breach

of contract claim, while Occidental filed an opposing motion for summary judgment

on all claims. The trial court granted the plaintiffs’ motions, finding that there was an

enforceable contract between R & R and Occidental. The trial court held that the

amount of damages caused by the breach of contract was an issue for the jury. The

trial court denied Occidental’s motion for summary judgment on the plaintiffs’

claims. Occidental appeals from the trial court’s summary judgment order.

1. Reformation. 

Occidental argues that the trial court erred in reforming the policy to identify

the owner of the business, R & R, rather than the former owner, as the insured. We

disagree. 

Reformation of a contract is an equitable remedy for correcting an

instrument to make it express the true intention of the parties, where

from some cause, such asfraud, accident, or mistake, it does not express

such intention. The remedy is not available for the purpose of making

a new and different contract for the parties, but is confined to

establishment of the actual agreement. Where reformation is sought on

the ground of mutual mistake, it must, of course, be proved to be the

mistake of both parties. 

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Anthony v. Grange Mut. Cas. Co., 226 Ga. App. 846, 847 (487 SE2d 389) (1997)

(citations and punctuation omitted). “The cause of the defect is immaterial so long as

the mistake is common to both parties to the transaction. And the negligence of the

complaining party will not defeat his right to reformation if the other party has not

been prejudiced.” Curry v. Curry, 267 Ga. 66, 67 (1) (473 SE2d 760) (1996)

(citations omitted). Furthermore, “[a]lthough the evidence as to the mistake must be

clear, unequivocal and decisive, there is no rule thatreformation will be denied unless

the mistake be admitted by both parties.” Fox v. Washburn, 264 Ga. 617, 618 (1) (449

SE2d 513) (1994) (citations omitted). 

In this case, the initial cause of the defect was Jones’ application for insurance

coverage, in which he mistakenly identified the prior corporate owner of the business

and Irish Bred Pub & Grill, rather than current owner R & R, as the party to be

insured. Jones explained in his affidavit that he did this because he knew R & R

owned the assets and interests of the business so he believed “that by listing Irish

Bred Pub & Grill that [the] bar and restaurant would be completely covered under the

Occidental policy.” He further deposed that he thought R & R had purchased all the

names associated with the business, including Irish Bred Pub and Grill V, Inc., and

that he did not know R & R had to be listed on the insurance application. 

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Thereafter, Occidental, in issuing the policy for commercial general liability

coverage for the bar and restaurant business, labored under the same misconception

that the name of the insured should be the prior corporate owner’s name. Occidental

has pointed to no evidence in the record creating a genuine issue of material fact as

to why either Jones or Occidental would have intended for the policy to provide such

coverage to the prior owner who no longer had any interest in the business, rather

than the actual current owner. Asthe trial court correctly found, the clear intent of the

contracting parties was to provide “insurance coverage for the new business which

was owned by R & R and not [by] Irish Bred Pub & Grill V, Inc.” Thus, the trial court

correctly concluded that the mistake was mutual in that Occidental relied on Jones’

mistake in issuing the policy in the name of the former owner of the business. “Asthe

mistake was one common to both parties, that is both parties were laboring under the

same misconception[,] and as this common mistake existed at the time of the

execution of the . . . contract of insurance, it was mutual rather than unilateral.”

Brannen v. Gulf Life Ins. Co., 201 Ga. App. 241, 244 (3) (410 SE2d 763) (1991)

(citations omitted). Accordingly, Occidental has not shown that the trial court erred

in reforming the policy on this ground. 

2. Prejudice. 

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Occidental contends that it was prejudiced by reformation of the policy.

However, “[r]egarding the question of prejudice, the Supreme Court of Georgia [has]

explained that a party cannot be hurt by reforming the instrument, so as to keep them

from getting what they did not buy.” Ledford v. Smith, 274 Ga. App. 714, 727-728 (4)

(618 SE2d 627) (2005) (citation and punctuation omitted). Here, Occidental agreed

to insure the operations of the bar and restaurant, accepted payment to do so, and now

seeks to avoid such coverage. Under these circumstances, “we find [Occidental,]

rather than being prejudiced by the negligence of [Jonesin misidentifying the correct

name of the insured,]stands, in fact, to obtain a windfall not bargained for absent the

equitable remedy of reformation.” Brannen, supra at 244 (4) (citations omitted).

Accordingly, the trial court did not err in granting reformation. 

3. Breach of contract. 

Occidental enumerates that there was no enforceable contract between it and

R & R, and thus the trial court erred in denying Occidental’s motion for summary

judgment and in granting the plaintiffs’ motion for summary judgment on the breach

of contract claim. But as explained above, the trial court correctly reformed the

contract to name R & R as the insured under the policy. Therefore, this enumeration

fails. 

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4. Post-judgment interest. 

The trial court entered judgment against Occidental for post-judgment interest

on the 2012 judgment entered against R & R, as provided for in the policy. Occidental

claims that this ruling is contrary to the terms of the policy, which states that such

interest is covered only with respect to any lawsuit against an insured which

Occidental defends. Since Occidental did not defend R & R in the prior suit which

was settled and resulted in the 2012 judgment, Occidental contends that it has no

obligation under the policy to pay interest on that judgment. The contention is

without merit. 

[Occidental]is essentially arguing thatsimply because itsinsured

agreed to settle a claim for which [Occidental] refused to provide either

coverage or a defense, [Occidental] is relieved of its obligation to pay

under the policy. This argument, however, is at odds with both our

precedent and learned treatises. . . . [A]n insurer has a . . . duty to defend

its insured against all claims covered under a policy, even those that are

groundless, false, or fraudulent. An insurer that refuses to indemnify or

defend based upon a belief that a claim against its insured is excluded

from a policy’s scope of coverage does so at its peril, and if the insurer

guesses wrong, it must bear the consequences, legal or otherwise, of its

breach of contract. 

Southern Guar. Ins. Co. v. Dowse, 278 Ga. 674, 676 (1) (605 SE2d 27) (2004)

(citations and punctuation omitted). 

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In this case, rather than defend the action with a reservation of rights as to

coverage, Occidental simply denied coverage and refused the request to provide a

defense to the lawsuit based on its incorrect belief that the claim against R & R was

not covered by the policy. Under these circumstances, Occidental must bear the

consequences of its decision not to defend the suit and must pay for its breach of the

contract. Accordingly, the trial court correctly awarded post-judgment interest as

provided for in the policy. See Empire Fire & Marine Ins. Co. v. Driskell, 262 Ga.

App. 447, 448-449 (585 SE2d 657) (2003) (insurer required to pay post-judgment

interest on claim it refused to defend where it incorrectly argued that party against

whom judgment was entered was not an insured under the policy). 

5. Standing. 

Contrary to Occidental’s argument, the plaintiffs, as assignees of R & R, have

standing to bring the reformation and breach of contract claims. See Insurance

Agency of Glynn County v. Atlanta Cas. Co., 255 Ga. App. 323, 324 (1) (565 SE2d

547) (2002) (reformation of written instruments may be had by the immediate parties

thereto and those standing in privity with them, such as their successors). See

generally Cherokee Nat. Life Ins. Co. v. Coastal Bank of Ga., 239 Ga. 800, 803 (3)

(238 SE2d 866) (1977). 

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6. Breach of fiduciary duty and attorney fees. 

Occidental contendsthat the trial court erred in denying its motion for summary

judgment on the plaintiffs’ claims for breach of fiduciary duty and attorney fees.

These contentions are premised entirely on Occidental’s assertion that R & R was not

insured under the policy. But as explained above, R & R was the correct insured

under the reformed policy, and therefore these enumerations of error fail. 

Case No. A16A1373

In addition to suing Occidental, the plaintiffs also brought claims against

Shannon Stover and Insurance Office of America, Inc (hereinafter “IOA”), for

negligence and breach of fiduciary duty in failing to procure liability insurance for

R & R. Stover and IOA moved to dismiss the claims against them on the basis that

they were time-barred by the four-year statute of limitation set forth in OCGA § 9-3-

31. The trial court granted the motion to dismiss. The plaintiffsfiled this cross-appeal,

arguing that the trial court erred in dismissing the claims against Stover and IOA. We

hold that the statute of limitation began to run when Occidential denied coverage. So

we affirm the trial court’s order. 

The plaintiffs contend that the issue in this case is controlled by the Georgia

Supreme Court’s decision in Hoffman v. Ins. Co. of North America, 241 Ga. 328 (245

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SE2d 287) (1978), which found that the tort claim against an insurance agent for

negligent procurement of coverage was not barred by the statute of limitation. In

Hoffman, the Supreme Court stated:

The statute of limitation beginsto run on any given claim on the date the

claim accrues – in other words, on the date that suit on the claim can

first be brought. When the question is raised as to whether an action is

barred by a statute of limitation[], the true test to determine when the

cause of action accrued is to ascertain the time when the plaintiff could

first have maintained his action to a successful result.

Id. at 329 (citation and punctuation omitted). The court further explained:

The test to be applied in determining when the statute of limitation[]

begins to run against an action sounding in tort is in whether the act

causing the damage is in and of itself an invasion of some right of the

plaintiff, and thus constitutes a legal injury and gives rise to a cause of

action. If the act is of itself not unlawful in this sense, and a recovery is

sought only on account of damage subsequently accruing from and

consequent upon the act, the cause of action accrues and the statute

begins to run only when the damage is sustained; but if the act causing

such subsequent damage is of itself unlawful in the sense that it

constitutes a legal injury to the plaintiff, and is thus a completed wrong,

the cause of action accrues and the statute begins to run from the time

the act is committed, however slight the actual damage then may be. 

Id. at 330 (citations and punctuation omitted). In short, “[t]he action in tort for

negligence depends upon the presence of damages and, therefore, may not be

maintained until the principal suffers a loss.” Id. at 329 (citation omitted). 

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The plaintiffs contend that R & R did not suffer a loss from Stover and IOA’s

negligence in failing to procure coverage until there was a judgment against it on July

26, 2012. But contrary to this contention, Hoffman did not hold that a negligent

procurement claim against an insurance agent accrues only when there is a final

judgment against the insured. Instead, the crux of Hoffman was to reject and reverse

this court’s ruling in Hoffman v. Ins. Co. of North America, 144 Ga. App. 420 (241

SE2d 303) (1977), which relied on the rule in attorney malpractice cases that the

claim accrues and the statute of limitation begins to run from the date of the breach

of the duty rather than from the date the resulting damage occurs. Hoffman, 241 Ga.

at 328. The Supreme Court in Hoffman noted that in an even earlier declaratory

judgment case involving the same parties, Hoffman v. Ins. Co. of North America, 130

Ga. App. 777 (204 SE2d 520) (1974), this court had held that the insured’s action

could not be maintained until actual damages had been sustained, and thus both of

this court’s rulings were in direct conflict and put the insured “in the untenable

position of never being able to bring his action; it has at all times been either too early

or too late.” Hoffman, 241 Ga. at 330. While it is apparent that the Supreme Court in

Hoffman held that the statute of limitation in such a tort case begins to run from the

date damage was sustained, not from the date of the breach, the Supreme Court did

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not expressly hold, asthe plaintiffs propose, that damage issustained onlywhen there

is a final judgment of liability against the insured. Id. 

And while we are not bound by federal authority, we find persuasive the

decision of a federal court which analyzed thisissue, including the Hoffman case, and

found that

Georgia law appears to indicate that the statute of limitation[] does not

begin to run until the insurer refuses to honor the beneficiary’s claim.

The Court is further persuaded by the rationale of other state courts that

have addressed negligent procurement claims and reached the same

conclusion. See Bush v. Ford Life Ins. Co., 682 So.2d 46, 47 (Ala. 1996)

(concluding that a negligent procurement claim against a credit-life

insurance policy provider did not accrue until the insurer’s refusal to

honor the beneficiary’s claim); Blumberg v. USAA Cas. Ins. Co., 729

So.2d 460, 462 (Fla. Dist. Ct. App. 1999) (finding that the statute of

limitations began to run on an insured’s claimfor negligent procurement

when he learned that coverage had been denied)[.]

Saye v. Unumprovident Corp., Civil Action File No. 1:07-CV-31-TWT, 2007 U.S.

Dist. LEXIS 58901 *14-15 (II) (A) (2) (N.D. Ga. 2007). See also Plaza Bottle Shop

v. Al Torstrick Ins. Agency, 712 SW2d 349, 350 (Ky. Ct. App. 1986) (stating that a

cause of action for negligent procurement began to run when insured was informed

that it had no coverage, not when judgment was rendered against it).

In this case, we find that the plaintiffs’ claims against Stover and IOA for

allegedly failing to procure insurance accrued, and the statute of limitation began to

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run, on the date Occidental denied coverage to R & R, which was May 27, 2009. See

generally Vara v. Essex Ins. Co., 269 Ga. App. 417, 418 (a) (604 SE2d 260) (2004)

(insurer’s notice that there was no coverage under policy and that it would not defend

lawsuit gave plaintiffs the right to institute third-party action against insurer to

determine whether insurer had duty to indemnify insureds in the suit). As assignees

of R & R’s claims, the plaintiffstherefore had four yearsfromthat date, until May 27,

2013, to bring the negligence and breach of duty claims against Stover and IOA. But

the plaintiffs did not initiate this action until August 2013. “A motion to dismiss

barred claims is properly granted when a complaint shows on its face that the statute

of limitation has run and there is no further showing by amendment or by affidavit

that a tolling of the statute is possible.” Harpe v. Hall, 266 Ga. App. 340 (596 SE2d

666) (2004) (citation and punctuation omitted). Accordingly, the trial court did not

err in granting the motion to dismiss the claims against Stover and IOA. 

Judgment affirmed in Case Nos. A16A1372 and A16A1373. Miller, P. J., and

McMillian, J., concur. 

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