Case Name: WILDER et al. v. JEFFERSON INSURANCE COMPANY OF NEW YORK
Court: Court of Appeals of Georgia
Jurisdiction: Georgia
Decision Date: 2001-10-19
Citations: 252 Ga. App. 563
Docket Number: A01A1410
Parties: WILDER et al. v. JEFFERSON INSURANCE COMPANY OF NEW YORK.
Judges: Johnson, P. J., Ruffin and Ellington, JJ., concur. Eldridge, Barnes and Miller, JJ., dissent.
Reporter: Georgia Appeals Reports
Volume: 252
Pages: 563–574

Head Matter:
A01A1410.
WILDER et al. v. JEFFERSON INSURANCE COMPANY OF NEW YORK.
(555 SE2d 771)

Opinion:
Andrews, Presiding Judge.
Jefferson Insurance Company of New York ("Jefferson") brought a declaratory judgment action asking the trial court to declare that a tow truck leased by LaCosta Recovery Services, Inc. was not covered under a commercial vehicle policy issued by Jefferson to LaCosta. LaCosta was owned by C. T. DeFranks who operated a towing business with numerous tow trucks insured under the policy. The coverage question arose after the tow truck at issue was involved in an accident, and claims were made against DeFranks and LaCosta by Ella Wilder and others who were injured in the accident. Jefferson made alternative claims that there was no coverage because: (1) the tow truck at issue was never listed as an insured vehicle under the policy, or (2) even if the vehicle was covered under the policy, the policy was void from its inception because of fraudulent misrepresentations by the insured. In the event the second alternative was accepted and the policy was found to be void from its inception, Jefferson further characterized its action as a bill in the nature of an interpleader by which it tendered the entire amount of the policy premiums paid by the insured under the void policy. Jefferson asked the trial court to determine what portion of the tendered premiums should be refunded to the insured, and what portion was earned by Jefferson because of the requirement that it provide compulsory vehicle insurance.
The trial court granted summary judgment to Jefferson under the first alternative finding that the tow truck was not covered because it was never an insured vehicle under the policy. In the same order, the trial court also denied a motion to dismiss the declaratory judgment action which alleged there was no actual controversy to support the action because Jefferson had already declared the policy void. This appeal was taken by Wilder and other parties injured in the accident, who were named as defendants in the declaratory judgment action because of their interests in coverage under the policy. For the reasons set forth below, we find that the trial court correctly denied the motion to dismiss and correctly concluded that the tow truck was not covered by the Jefferson policy. Accordingly, we affirm the grant of summary judgment in favor of Jefferson.
1. The trial court correctly denied the motion to dismiss the declaratory judgment action.
After filing the declaratory judgment on October 11,1996, Jefferson notified its insured on October 25, 1996, that it was cancelling the policy effective November 29, 1996. As a reason for the cancellation, the notice stated:
At the time of issuing this Notice of Cancellation, Jefferson . . . hereby notifies you that it is asserting that [the policy] is void from inception because of fraud by the insured. You are hereby notified that Jefferson . is filing a declaratory judgment action . . . against the insured seeking a declaration of its rights under the policy and asserting that [the policy] is void from its inception for fraud. By cancelling this policy, Jefferson . . . does not in any way concede that this policy was operating as written from its effective date of December 05, 1995, to the date of cancellation, and specifically reserves the right to litigate that issue in the above-referenced Declaratory judgment action.
The appellants contend that, by giving this cancellation notice, Jefferson declared the policy void from its inception and cancelled the policy retroactively from its December 5, 1995 effective date. Since the accident at issue occurred on July 21, 1996, they argue that no uncertainty remained to be resolved by the declaratory judgment action and that the trial court erred by not dismissing the action.
To the contrary, the cancellation notice shows that Jefferson can-celled the policy, not retroactively from its December 5,1995 effective date, but prospectively as of November 29,1996. Moreover, a reading of all the relevant portions of the cancellation notice shows that Jefferson did not unilaterally declare the policy void from its inception for fraud, but merely notified the insured that it was litigating this issue in the declaratory judgment action. Under these circumstances, an actual controversy as to coverage remained, and the trial court correctly denied the motion to dismiss. Atlanta Cas. Co. v. Fountain, 262 Ga. 16 (413 SE2d 450) (1992).
2. The trial court also correctly ruled that the tow truck involved in the accident was not listed as an insured vehicle under the policy and was never covered by the policy.
The facts related to this issue show that the tow truck involved in the accident was a 1996 International truck with vehicle identification number 1HTSCAAM8TH346393. It is undisputed that this truck was not listed as a covered vehicle under the policy, was not added to the policy by endorsement, nor was any premium ever charged for this truck. Nevertheless, the appellants claim that a factual issue exists as to whether the truck was covered by the policy on the accident date because an insurance agency, Hamby & Aloisio (Hamby), acting on behalf of the insured, sent a written policy change request to Southern Insurance Underwriters (SIU), an insurance agency with binding authority for Jefferson, requesting that the tow truck at issue be added to the policy by endorsement effective February 23, 1996. This was approximately one month prior to the date that the insured leased the tow truck on March 26,1996. Jefferson contended that no such request was made until after the July 21 accident date.
Despite this request, no endorsement or premium charge was ever issued adding the tow truck to the policy. The record shows that, prior to the accident date, Hamby sent numerous requests to SIU on behalf of the insured asking that various vehicles be added or deleted from the policy. Endorsements were issued on some of these requests with addition or deletion of premiums, but no immediate action was taken on others. The record also shows that, even though the tow truck had not been added to the policy by endorsement nor had any premium been charged, Hamby prepared a certificate of insurance for a lienholder bank showing the truck was insured under the Jefferson policy and sent a copy of this certificate to SIU in March 1996. The certificate of insurance contained the following notice: "This certificate is issued as a matter of information only and confers no rights upon the certificate holder. This certificate does not amend, extend or alter the coverage afforded by the policies below." Contrary to the assertion in the dissent, there is no evidence that Jefferson issued an "insurance verification" showing coverage under its policy on the tow truck. The "insurance verification" referred to by the dissent is a document prepared by Coast to Coast Leasing Corporation, a company involved in the insured's lease of the tow truck. This document states under the heading "insurance information" that the leased truck is insured by Jefferson and states that the insurance agent is Hamby. Hamby, which issued the certificate of insurance on the truck, was the insured's agent, not Jefferson's agent, and had no authority to bind Jefferson to a contract of insurance.
In fact, the evidence shows that the insured was aware the truck at issue had not been added to the policy pursuant to the February 23 request. On July 22, 1996, the day after the July 21 accident, the insured asked Hamby if it had received a fax sent by the insured on July 19 asking that the truck at issue be added to the policy. Pursuant to that contact, Hamby sent another policy change request to SIU on July 22, 1996, requesting that the truck be added to the policy effective July 19, 1996. Hamby later sent SIU a letter on September 26, 1996, noting that several change requests were pending, including the one requesting that the tow truck at issue be added effective February 23, 1996, and asked to be advised on the status of the requests.
None of the above evidence creates a factual question on the issue of coverage. At best, this is evidence that prior to the accident Jefferson had knowledge through its agent, SIU, that the insured, through Hamby, requested that the truck be added to the policy and that Hamby, acting as the insured's agent, issued a certificate of insurance showing the truck was covered. Even if Jefferson had knowledge of these facts through its agent, this is not sufficient to support a claim that a contract of insurance was created covering the truck.
An application for insurance creates no binding contract of insurance until the insurer manifests its acceptance. Protective Life Ins. Co. v. Robinson, 193 Ga. App. 316, 317 (387 SE2d 603) (1989); Seibels, Bruce & Co. v. H. H. Burnet & Co., 154 Ga. App. 577, 579 (269 SE2d 40) (1980). Neither an insurer's silence in response to an application, nor its delay in passing upon an application has the effect of creating a contract of insurance, even when the insured has forgone seeking other insurance. Robinson, 193 Ga. App. at 318; Cohran v. Liberty Mut. Ins. Co., 258 Ga. 341 (368 SE2d 751) (1988).
In essence, the appellants are claiming that, because Jefferson knew about the coverage request and the insurance certificate issued by Hamby, it either waived defenses to coverage or is estopped from denying coverage. Although waiver or estoppel has been applied to establish coverage in some situations where the insurer knew certain facts about the insured or the claim and was deemed to have accepted the risk, neither doctrine has ever been applied "to create a liability not created by the contract and never assumed by the insurer under the terms of the policy." (Citations and punctuation omitted.) Sandner, Inc. v. Centennial Ins. Co., 189 Ga. App. 277, 280 (1) (375 SE2d 611) (1988), rev'd in part on other grounds, 259 Ga. 317 (380 SE2d 704) (1989); American Resources Ins. Co. v. Conner, 209 Ga. App. 885, 887 (434 SE2d 737) (1993); compare Corp. of the Royal Exchange Assurance &c. v. Franklin, 158 Ga. 644, 647-649 (124 SE 172) (1924) (insurer bound by waiver or estoppel where insurer or its authorized agent consents to change in policy and promises to make the necessary endorsement to the policy). Even if SIU had authority to bind Jefferson to a contract of insurance, it never did so. Moreover, neither SIU nor Jefferson did or said anything that could be construed as accepting the truck as covered under the policy or that induced the insured to believe the truck was covered. Compare Sutker v. Pennsylvania Ins. Co., 115 Ga. App. 648, 653 (155 SE2d 694) (1967) (failure to effect insurance pursuant to promise to modify policy); Seabrook v. Underwriters Agency, 43 Ga. 583, 586-587 (1871) (conduct which induced belief there was coverage). Accordingly, no coverage was created by waiver or estoppel.
The trial court also correctly held that the truck at issue was not covered under the after-acquired vehicle clause of the policy, which provided in relevant part that: "[I]f symbol 7 is entered next to a coverage in ITEM TWO of the Declarations, an 'auto' you acquire will be a covered 'auto' for that coverage only if: a. We already cover all 'autos' that you own for that coverage . . . and b. You tell us within 30 days after you acquire it that you want us to cover it for that coverage." The declarations page of the policy shows symbol 7 next to the applicable coverage provided under the policy. It follows that a vehicle acquired by the insured after the inception of the policy will be deemed insured for that coverage if all vehicles owned by the insured are already insured under the policy for that coverage, and within 30 days after the vehicle is acquired, the insured tells the insurer that he wants the vehicle to be insured under the policy for that coverage.
The record establishes that LaCosta Recovery Services, Inc., the named insured on the policy at issue, was not a corporate entity, but was actually one of several trade names under which DeFranks operated his towing business. DeFranks also operated under the trade name of Official Towing of Atlanta, Inc. Official Towing was the named insured on a second Jefferson policy which provided coverage at different rates for other tow trucks owned by DeFranks. As the trial court concluded, DeFranks, operating under the trade names, was the actual insured who owned vehicles insured under coverage provided by the policy at issue and owned other vehicles insured under coverage provided by a separate policy. Southern Guaranty Ins. Co. v. Premier Ins. Co., 219 Ga. App. 413, 414 (465 SE2d 521) (1995). Thus, he could not satisfy the requirement for application of the after-acquired vehicle clause that all the vehicles he owned were already insured under the policy at issue for that coverage.
The trial court correctly granted summary judgment to Jefferson on the basis that the tow truck at issue was not covered under the policy.
Judgment affirmed.
Johnson, P. J., Ruffin and Ellington, JJ., concur. Eldridge, Barnes and Miller, JJ., dissent.