Court Opinion

ID: 9576018
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:19:49.629037+00
Date Added: 2024-06-11T12:55:13.669177
License: Public Domain

*223On Motion for Rehearing.
In their motion for rehearing appellants contend that Division 1 of our opinion is contrary to the holdings in the cases of Jones v. Ga. Cas. &c. Co., 89 Ga. App. 181 (78 SE2d 861); State Farm Mut. Auto. Ins. Co. v. Anderson, 104 Ga. App. 815 (123 SE2d 191); and Winters v. Government Employees Ins. Co., 132 Ga. App. 756 (209 SE2d 32). It is urged that our decision removes from an insured the right to control and manage his own defense and enables an insurer to prejudice an insured by a withdrawal from a defense after it is undertaken. These assertions are without merit. Similar contentions having been made in other recent cases indicate we should enlarge upon our original opinion.
Home Indem. Co. v. Godley, 122 Ga. App. 356 (1) (177 SE2d 105) (overlooked in our initial opinion) held that an insurer was not estopped to deny coverage where its attorney entered an appearance in the case but thereafter withdrew when investigation revealed noncoverage, and no prejudice resulted to the insured, even though the original actions were thereafter dismissed by the plaintiffs and new actions filed. In that case at p. 361 this court quoted from 7A Appleman, Insurance Law and Practice, § 4693 at pp. 529, 530. " 'An entry of an appearance for the insured by the insurer does not of itself constitute a waiver of available defenses, but the insurer is entitled to a reasonable time in which to investigate the facts. And the insurer may withdraw from the defense upon learning of facts which constitute a policy breach, and no waiver or estoppel will arise. But the insurer is required to act seasonably in disclaiming liability and it could not delay its decision so long that the insured’s rights were prejudiced thereby.’ ”
The per curiam opinion in Godley distinguished two of the cases appellants rely on, noting: "In the Jones case the insured defended the case until final judgment without any reservation of rights. The Anderson case held for the insurer on the theory that there had been a valid reservation of rights even though the case was defended up to and through the final judgment.” 122 Ga. App. 360.
*224The third case, Winters v. Government Employees Ins. Co., is similarly inapposite. There the insurer prepared a reservation of rights agreement "for the stated purpose of investigation and determination of sound value and damage...” which made no mention of a possible coverage question. Then five months after it had filed defense pleadings the insurer sought a declaratory judgment as to coverage. This court decided that the question of the insurer’s right to continue the defense for five months with knowledge of facts possibly constituting noncoverage depended upon a factual determination of the intent of the parties and whether there was "a knowing acceptance by the insured of defense of the tort action under a reservation of rights by the insurer.” 132 Ga. App. 760. The court recognized that "[u]nder the particular circumstances of this case, the insurer had no notice of accident until after suit was filed and the necessity for action was immediate. The reservation of rights of investigation and determination of damages certainly protected it as to the immediate action.”
Winters did not stand for the proposition that an insurer may not under any condition withdraw from a defense once undertaken, or that a defense once undertaken estops the insurer to deny coverage, or even that an insured’s consent is necessary to every defense under a reservation of rights. We sought to deal with these recurring problems in our opinion hereinbefore, where we held on p. 219 that "An insurer may not give an insured a unilateral notice of reservation of rights and thereupon proceed with a complete defense of the main claim absent insured’s express or implied consent. This course of action may well result in prejudice to an insured.” We thereupon set forth as suggestive guidance the procedure an insurer should follow in order to protect both its rights and those of its putative insured.

Motion for rehearing denied.