Source: https://law.justia.com/cases/georgia/court-of-appeals/1999/a99a2184-0.html
Timestamp: 2019-05-21 19:32:28
Document Index: 270429228

Matched Legal Cases: ['§ 34', '§ 120', '§ 120', '§ 34', '§ 33', '§ 120', '§ 10', '§ 23', '§ 120']

NAT. COUNCIL ON COMPENSATION v. Strickland :: 1999 :: Court of Appeals of Georgia Decisions :: Georgia Case Law :: Georgia Law :: US Law :: Justia
Justia › US Law › Case Law › Georgia Case Law › Court of Appeals of Georgia Decisions › 1999 › NAT. COUNCIL ON COMPENSATION v. Strickland
NAT. COUNCIL ON COMPENSATION v. Strickland
526 S.E.2d 924 (1999)
241 Ga. App. 504
No. A99A2184.
*925 Harman, Owen, Saunders & Sweeney, David C. Will, Atlanta, for appellant.
Smith, Wallis & Scott, Kenneth A. Smith, Carrollton, for appellee.
The National Council on Compensation Insurance, Inc. ("NCCI"), defendant-appellant, serves as the "Administrator" of the Georgia Workers' Compensation Assigned Risk Insurance Plan under contract with the Georgia Insurance Commissioner. See OCGA § 34-9-133; Rules & Regs. of the State of Ga., § 120-2-38. As Administrator, NCCI receives and reviews applications for eligibility to the Assigned Risk Pool and for completeness, which is the extent of its duties and powers. Rules & Regs. of the State of Ga., § 120-2-38-.09(4).
*926 In June 1995, Albert Strickland, plaintiff-appellee, sought workers' compensation coverage for himself and his company, Allstar Concrete, from defendant Matrix Insurance Agency ("Matrix"), and defendant Otis Jones. Jones was an insurance agent at Matrix. Plaintiff told Jones that he wanted workers' compensation coverage for himself and his business. Jones told the plaintiff that there would be a higher premium amount for his inclusion in coverage, which plaintiff agreed to pay. Jones took the information orally from the plaintiff and filled out the application for workers' compensation insurance, which plaintiff signed. The application plainly stated that plaintiff was included within the coverage requested.
After failing to obtain coverage with several insurers who refused to write coverage, Jones applied to NCCI for coverage through the Assigned Risk Pool. OCGA § 34-9-133. Jones sent the application to NCCI to assign coverage to an insurer.
1. NCCI contends that the trial court erred in holding that there was a question of fact as to whether NCCI was acting in a fiduciary capacity. We do not agree.
As Administrator under contract with the Insurance Commissioner, NCCI had specifically defined duties and powers; among them was the power to bind insurance coverage for those insurers within the Assigned Risk Pool and to transmit money to such insurer. Thus, each insurer within the Assigned Risk Pool automatically appointed the Administrator as its limited agent for binding coverage, receiving money, and transmitting money and binders. OCGA § 33-23-1(a)(3); Rules & Regs. of the State of Ga., § 120-2-38-.09(4). *927 However, NCCI voluntarily stepped aside from its duties as Administrator and gratuitously undertook duties to the plaintiff.
There exists a factual question for the jury as to the role NCCI occupied when it changed plaintiff's application. By changing plaintiff's application without his prior knowledge and consent NCCI acted on plaintiff's behalf as a voluntary agent for the limited purpose of obtaining workers' compensation insurance for the plaintiff's benefit only. See OCGA § 10-6-22; Simmerson v. Blanks, 149 Ga.App. 478, 479-480(2), 254 S.E.2d 716 (1979); Bell v. Fitz, 84 Ga.App. 220, 224-225(1), 66 S.E.2d 108 (1951); accord Armstrong, Cator & Co. v. Pease, 66 Ga. 70 (1880). "[A] gratuitous agent owes his principal the duty to exercise slight diligence, and a proper appraisal of the agent's conduct encompasses the knowledge which he professes to possess. [Cits.]" Simmerson v. Blanks, supra at 480, 254 S.E.2d 716. Failure to follow the instructions of the plaintiff in the application for his individual coverage raises an issue of fact as to gross negligence. See id.; Bell v. Fitz, supra at 224-225, 66 S.E.2d 108. There is a question of fact as to whether reliance by Matrix upon NCCI satisfied the element of reliance if the jury believes that someone at Matrix instructed NCCI to change the application on behalf of the plaintiff. If the jury finds that no one at Matrix instructed NCCI to change the application and that NCCI acted on its own, then there was no reliance to create a voluntary agency.
If the jury finds that NCCI acted as agent or subagent in changing plaintiff's signed application, then NCCI acted in a fiduciary capacity for the plaintiff, as his special agent for such limited purpose, with the assigned insurer, changing the coverage without plaintiff's knowledge or consent. OCGA § 23-2-58. Thus, NCCI acted with apparent authority in presenting the altered application for assignment with Lumbermen's Mutual Insurance Company, and it effected the legal relationship of plaintiff by such change in the application with the insurer's coverage. Brown v. Little, 227 Ga.App. 484, 487(2), 489 S.E.2d 596 (1997). Thus, the trial court properly found that there was a question of fact as to whether NCCI was acting in a fiduciary capacity. The trial court properly denied NCCI's motion for summary judgment.
(a) Fraud is not a viable cause of action against NCCI by the plaintiff, because there is no evidence of any misrepresentations made by NCCI to the plaintiff upon which he relied to his detriment. Brown v. Rowe, 178 Ga.App. 575, 577(2), 344 S.E.2d 245 (1986). Absent any communication between NCCI and the plaintiff, there could be no fraud. The trial court erred in failing to grant partial summary judgment on such issue of liability. Lau's Corp. v. Haskins, 261 Ga. 491, 495, 405 S.E.2d 474 (1991). Therefore, the trial court must vacate its order and enter partial summary judgment on this theory of liability.
(b) As Administrator, NCCI had the power and duty only to receive, review, and assign applications under the Assigned Risk Pool for workers' compensation insurance under its contract with the Insurance Commissioner. Rules & Regs. of the State of Ga., § 120-2-38-.09(4). In changing and altering the application, instead of rejecting it and requiring a written authorization for the declination of individual coverage by the plaintiff or a supplemental application form, NCCI exceeded its authority as Administrator and gratuitously assumed new duties as a volunteer with different non-contractual duties.
One who undertakes[ ] gratuitously ... to render services to another which he should recognize as necessary for the protection of a third person or his things[ ] is subject to liability to the third person for physical harm resulting from his failure to exercise reasonable care to protect his undertaking, if (a) his failure to exercise reasonable care increases the risk of such harm, or (b) he has undertaken to perform a duty owed by the other to the third person.... [Cit.]
(Punctuation omitted.) Huggins v. Aetna Cas. &c. Co., 245 Ga. 248, 249, 264 S.E.2d 191 *928 (1980); accord Stelts v. Epperson, 201 Ga. App. 405, 407, 411 S.E.2d 281 (1991); Cunningham v. Nat. Svc. Indus., 174 Ga.App. 832, 837-838, 331 S.E.2d 899 (1985); Housing Auth. of Atlanta v. Famble, 170 Ga.App. 509, 523-524(3), 317 S.E.2d 853 (1984); see also Mull v. Aetna Cas. &c. Co., 226 Ga. 462, 464(4), 175 S.E.2d 552 (1970) (Felton, J., dissenting).
Under such facts and circumstances, plaintiff had no reason to foresee NCCI's voluntary tortious actions, so that the failure to read the binder and policy are jury questions as to the defenses of contributory negligence, comparative negligence, causation, and mitigation of damages. Except in plain and palpable cases, summary judgment on these issues is not appropriate. See Robinson v. Kroger Co., 268 Ga. 735, 739-740(1), 493 S.E.2d 403 (1997). This is not such a case; the trial court properly denied summary judgment to NCCI.
(c) If NCCI was either the agent or subagent of the plaintiff so that a fiduciary duty existed, then plaintiff had a duty to read and examine the policy of insurance, contracted for through NCCI, to determine that the coverage from the readily apparent provisions, i.e., plain and unambiguous language of the policy, was correct. See Atlanta Women's Club v. Washburne, 207 Ga.App. 3, 5, 427 S.E.2d 18 (1992); Turner, Wood & Smith, Inc. v. Reed, 169 Ga.App. 213, 214, 311 S.E.2d 859 (1983); Ethridge v. Assoc. Mutuals, 160 Ga.App. 687, 688-689, 288 S.E.2d 58 (1981). This case involves the act of NCCI deleting coverage, i.e., an active tort, while the cited cases involve omission to act, i.e., failure to obtain the right coverage. In this case, the evidence was in dispute as to whether NCCI acted as an agent or subagent, so that summary judgment should not be granted as to plaintiff's failure to read the policy or binder or as to whether NCCI acted as a volunteer on its own, without the knowledge of either the plaintiff or Matrix, to change the application. Therefore, the trial court properly denied the motion for summary judgment on the basis of liability.