Case Name: SECURITY LIFE INSURANCE COMPANY OF AMERICA v. CLARK et al.
Court: Supreme Court of Georgia
Jurisdiction: Georgia
Decision Date: 2000-09-11
Citations: 273 Ga. 44
Docket Number: S00G0006
Parties: SECURITY LIFE INSURANCE COMPANY OF AMERICA v. CLARK et al.
Judges: All the Justices concur, except Benham, C. J., and Carley, J., who concur in part and dissent in part.
Reporter: Georgia Reports
Volume: 273
Pages: 44–52

Head Matter:
S00G0006.
SECURITY LIFE INSURANCE COMPANY OF AMERICA v. CLARK et al.
(535 SE2d 234)

Opinion:
Sears, Justice.
This Court has granted certiorari in this matter two times in as many years. In 1997, certiorari was granted to the Court of Appeals in order to consider three issues, and this Court issued an opinion that addressed those issues and left the remainder of the Court of Appeals' opinion untouched. Thereafter, on remand, the Court of Appeals vacated a division of its earlier opinion that had been left undisturbed by this Court, prompting us to now grant certiorari for a second time. As explained below, the Court of Appeals' action on remand violated the "law of the case doctrine," as well as other principles of appellate jurisprudence. Therefore, we reverse.
In 1994, the appellees Gordon and Clarice Clark purchased a health insurance policy underwritten by appellant Security Life Insurance Company. Fipps, as agent for Security Life, solicited the Clarks to purchase the policy. In response to questions on the insurance application, Mr. Clark disclosed a pre-existing heart condition to agent Fipps, but Fipps submitted a forged application to Security Life that failed to disclose the pre-existing condition. Based on the forged application, Security Life issued a policy to the Clarks. When the false information came to light after the Clarks submitted a claim, Security Life rescinded the policy. The Clarks sued Security Life for fraud based upon Fipps' forgery and Security's failure to comply with Georgia's insurance regulations, and also under Georgia's RICO Act, contending that Security Life (1) sold them a policy that violated Georgia insurance laws, and (2) participated in a scheme intended to avoid compliance with Georgia's insurance regulations. After the trial court denied Security Life's motion for directed verdict on the RICO claim, the jury found in favor of the Clarks, and judgment was entered in their favor.
Security Life appealed, and the Court of Appeals reversed in Security Life Ins. Co. v. Clark ("Security I"). In Security I, the Court of Appeals held that:
1. Security Life's failure to file the relevant insurance policy with the Georgia Insurance Department (as required by the Insurance Code) could not serve as the predicate act for a civil RICO claim ("the predicate RICO act issue");
2. There was no proof that Security Life's failure to file the relevant insurance policy with the Georgia Insurance Department had proximately caused harm to the Clarks ("the RICO proximate cause issue"); and
3. Security Life could not be held vicariously liable for agent Fipps' forgery of the Clarks' insurance policy ("the vicarious liability issue").
This Court granted certiorari, and in Clark v. Security Life Ins. Co. ("Security II") we affirmed in part and reversed in part. Regarding the three issues discussed above, the Security II opinion:
1. Affirmed the Court of Appeals' ruling on the predicate RICO act issue.
2. Did not address and therefore effectively affirmed the Court of Appeals' ruling on the RICO proximate cause issue.
3. Reversed the Court of Appeals' ruling on the vicarious liability issue, because the lower court applied an incorrect standard in evaluating the issue, and applying the proper standard revealed there was sufficient evidence to justify submitting the issue to a jury.
On remand, a plurality of the Court of Appeals vacated Security I's ruling on the RICO proximate cause issue, and reinstated the trial court's judgment in favor of the Clarks on the RICO claim ("Security IIF'). The Court of Appeals took this action because it concluded that Security II's ruling on the vicarious liability issue was inconsistent with Security I's ruling on the RICO proximate cause issue. This Court now has granted certiorari in this matter for a second time to address the holding in Security III.
1. "Under the 'law of the case' rule, 'any ruling by the Supreme Court or the Court of Appeals in a case shall be binding in all subsequent proceedings in that case in the lower court and in the Supreme Court or the Court of Appeals, as the case may be.' " It is apodictic that Georgia's appellate courts are required to adhere to the law of the case rule in all matters which they consider. Even where the law subsequently changes, appellate rulings remain binding as between parties to a case, so long as the evidentiary posture of the case remains unchanged, despite all contentions that prior rulings in the matter are erroneous.
Furthermore, when the Supreme Court affirms in part and reverses in part a decision of the Court of Appeals, any portions of the Court of Appeals' decision that are not considered by the Supreme Court are unaffected by the Supreme Court's opinion.
It follows from these established principles that when, in Security II, the Supreme Court reviewed the Court of Appeals' Security I decision and left Security I's ruling on the RICO proximate cause issue undisturbed, that portion of Security I became the law of the case. When, in Security III, the Court of Appeals vacated Security Fs ruling on the RICO proximate cause issue, it violated both the law of the case doctrine, and the jurisprudential principle that portions of a Court of Appeals' decision not considered when the Supreme Court reverses in part and affirms in part are left undisturbed. Accordingly, the Court of Appeals erred in vacating Security Fs ruling on the RICO proximate cause issue, and we must reverse and remand this matter yet again.
2. Furthermore, the Court of Appeals erred by concluding that Security II's ruling on the vicarious liability issue was inconsistent with Security Fs ruling on the RICO proximate cause issue.
In Security II, we held there was some evidence to show that "Security Life recklessly tolerated [Fipps'] forgery," thereby warranting submitting the vicarious liability issue to the jury. That conclusion, however, was not inconsistent with, and did not require vacating, Security Fs ruling on the RICO proximate cause issue. The voluminous record in this matter, when considered in its entirety, shows that the two issues are separate and distinct.
The record shows that at trial, the Clarks predicated their RICO claim upon Security's noncompliance with Georgia's insurance regulations and its resulting issuance of a defective policy to the Clarks. The vicarious liability issue, however, was based entirely upon agent Fipps' independent act of forgery, which was not an element of the alleged RICO scheme. This is most clearly demonstrated by the jury's finding that agent Fipps was not part of the alleged pattern of racketeering activity underlying the RICO claim. On the verdict form, the jury was asked to name those persons who had participated in the RICO scheme alleged against Security. In response, the jury listed 28 names, and agent Fipps' name was not one of those listed. Moreover, the jury's verdict form makes reference to only one set of RICO allegations — those alleged against Security for having sold the Clarks a defective insurance policy that did not comply with Georgia's regulations.
The evidence of record supports the jury's finding that Fipps' forgery was not part of the alleged RICO scheme. The evidence shows that Fipps acted alone when he forged the policy, and that in so doing, he sought to benefit only himself. Additionally, there is no evidence of record to indicate that, at the time he committed forgery, Fipps was even aware that regulatory defects existed in the policy he sold to the Clarks. In fact, it was only after coverage was denied and Fipps' forgery was revealed that the Clarks discovered there were regulatory defects associated with their policy.
Accordingly, we conclude that the record in this matter does not support making a connection between (1) the Clarks' allegation that Security participated in a scheme to sell insurance policies with regulatory defects, and (2) Fipps' single act of forgery. It follows that there is no overlap between the RICO proximate cause issue and the vicarious liability issue, and the Court of Appeals erred in finding an irreconcilable conflict between Security I's and Security II's rulings on those issues.
3. For the reasons discussed above, the Court of Appeals' ruling in Security III reinstating the trial court's judgment on the Clarks' RICO claim is reversed. This matter is remanded to the Court of Appeals for action consistent both with this opinion and with our decision in Security II.
Judgment reversed and remanded.
All the Justices concur, except Benham, C. J., and Carley, J., who concur in part and dissent in part.
Security Life Ins. Co. v. Clark, 229 Ga. App. 593 (494 SE2d 388) (1997).
Clark v. Security Life Ins. Co., 270 Ga. 165 (509 SE2d 602) (1998).
Security Life Ins. Co. v. Clark, 239 Ga. App. 690 (521 SE2d 434) (1999).
OCGA § 16-14-1 et seq.
An additional claim for breach of contract was voluntarily dismissed when Security, having confirmed Fipps' forgery, offered to reinstate the Clarks' insurance policy.
229 Ga. App. 593.
229 Ga. App. at 599-601.
229 Ga. App. at 601.
229 Ga. App. at 602.
270 Ga. 165.
270 Ga. at 168.
Certiorari was not granted to address this issue.
270 Ga. at 167-168.
Security Life Ins. Co. v. Clark, 239 Ga. App. 690.
DeHart v. Liberty Mut. Ins. Co., 270 Ga. 381, 387 (509 SE2d 913) (1998) (Carley, J., concurring, quoting OCGA § 9-11-60 (h)); see Jebco Ventures v. City of Smyrna, 259 Ga. 599 (385 SE2d 397) (1989).
See OCGA § 9-11-60 (h); DeHart, supra; Jebco Ventures, supra.
Widener v. Ashkouti, 239 Ga. App. 530 (521 SE2d 215) (1999).
See DeKalb County v. Wideman, 262 Ga. 210, 211 (416 SE2d 498) (1992).
See Ford v. Uniroyal Goodrich Tire Corp., 270 Ga. 730 (514 SE2d 201) (1999).
Security II, 270 Ga. at 168.
The jury did identify forgery in the first degree as a predicate act on the verdict form. However, as explained infra, that single act could not constitute the "pattern of racketeering activity" necessary for a successful RICO claim. See OCGA § 16-14-3 (8).
Even if we were to construe the vicarious liability claim as being a part of the RICO claim, a careful reading of Security II reveals that the vicarious liability claim would be fatally flawed. In Security II, we held that Security Life's failure to file an insurance policy with the Insurance Department could not form the basis of a RICO claim, which requires a "pattern [i.e. — at least two incidents] of racketeering." OCGA § 16-14-3 (8). It follows that agent Fipps' single act of forgery could not form "a pattern of racketeering" either, and thus could not, standing alone, support the Clarks' claim of civil RICO liability. Nothing in Security II supports such a conclusion, and the Court of Appeals erred in deciding otherwise.
For this same reason, the Court of Appeals erred in concluding that dicta in Security II that our ruling in that case did "not preclude a plaintiff from establishing a RICO claim through proof of an insurance fraud scheme if that scheme as a whole meets the [statutory] definition" found in the RICO Act, 270 Ga. at 168, does not support resurrection of the Clarks' RICO claim based upon Fipps' single act of forgery. Again, a successful RICO claim requires a showing of a pattern — that is "at least two instances" (OCGA § 16-14-3 (8)) — of racketeering activity. This case involves only one act of forgery.
Finally, we reject the Clarks' request that we parse Fipps' single act of forgery into two different criminal acts — forgery and mail fraud — so that they that might serve as the predicate for a RICO claim. "The fact that elements of two [different] crimes may have been present at two separate points in time does not create two predicate acts [for RICO purposes] out of what is in reality a single transaction." Stargate Software Intl. v. Rumph, 224 Ga. App. 873, 877 (482 SE2d 498) (1997).