Court Opinion

ID: 5600905
Source: CourtListenerOpinion
Date Created: 2022-01-11 03:13:47.123719+00
Date Added: 2024-06-11T08:36:44.914301
License: Public Domain

Melton, Justice,
concurring specially in part and dissenting in part.
Contrary to the majority opinion, Georgia law does not broadly provide that “an insurer cannot both deny a claim outright and reserve the right to assert a different defense in the future.” As this pivotal statement of the law is incorrect and creates a new rule contrary to established precedent both in Georgia and a large majority of other jurisdictions, I disagree with all of the majority’s analysis.
1. For its integral, novel, and unprecedented proposition, the majority cites Browder v. Aetna Life Ins. Co., 126 Ga. App. 140 (190 SE2d 110) (1972), with a parenthetical quote stating “ultimate denial of liability on another ground constitutes a waiver of forfeiture based *409on the lack of timely notice.” This citation treatment makes it appear that this was a holding in Browder.
It was not.
The facts oí Browder show that, on June 13, 1967, the insurance company, Aetna Life, wrote a letter to its insured denying coverage based on his failure to provide adequate notice. Aetna’s claims department reconsidered, and, in July of 1967, an agent of Aetna wrote a letter to the insured explicitly stating that the notice requirement “would not have much bearing on this case.” At this time, the insured was required to procure certain medical information, which he did. On January 23,1968, Aetna sent its insured a separate letter stating that it was conducting further investigation under a full reservation of rights. Finally, on April 5, 1968, Aetna acted on the medical information it had been provided and wrote to its insured, denying liability on the sole ground that the injury was not the result of a compensable accident.
On these facts, the following holding was issued:
The position of the insurance company as of July, 1967 is contained in a letter to the plaintiff from the Wilcox agency stating the insurer’s claims department “have informed me that the 20 day clause for reporting your claim would not have much bearing on this case” and requesting information as to accidental injury because “the policy requires that you be totally disabled within 20 days.” The defendant admits that the letter “is a true copy of what it purports to be” but objects to it as hearsay and denies that the writer has any authority to speak for the defendant or interpret its policy. The letter is not hearsay. Whether it correctly relays the position and instructions of the home office is a matter for determination on the trial of the case. The relaying of the company’s instructions and position was, at the very least, within the apparent authority of the local agent. Acting on the information, the plaintiff procured the requested medical information. The insurer acted on this and declined liability on the sole ground that the disability did not result from accident. Under the ruling in Cordell v. Metropolitan Life Ins. Co., 54 Ga. App. 178 (1, 5) (187 SE 292) [(1936)], causing the insured to procure and transmit information of the type called for and received here amounts to a waiver of the timeliness of notice. “All this investigation would have been useless if the defendant intended to insist that the plaintiff could not maintain an action because of failure to comply with the conditions of the group policy in regard to *410notice, proof of disability and time of bringing action. Waiver is simply an election not to insist on the forfeiture of the insurance.” Id. at 185.
Browder, supra. In turn, Cordell, on which Browder’s holding is based, acknowledges that this is largely an estoppel concept. Therefore, the Georgia law actually set forth in Browder is that an insurance company implicitly waives a notice provision when, despite its knowledge of a notice problem, it requires the insured to undergo tests and procedures as if there is no intention to enforce the notice provision. On the other hand, “[e]ven without disclaiming liability and giving notice of its reservation of rights, any insurer who merely proceeds to investigate a claim with knowledge of facts which might otherwise constitute a defense to coverage is not estopped from thereafter setting up the defense.” (Emphasis in original.) Brazil v. Govt. Employees Ins. Co., 199 Ga. App. 343, 344 (2) (404 SE2d 807) (1991).
As an aside, Browder does observe generally:
And, to the effect that an ultimate denial of liability on another ground constitutes a waiver of forfeiture based on lack of timely notice, see also Paetz v. London Guar. &c. Co., 228 Mo. App. 564 (71 SW2d 826) [(1934)]; Blazek v. North American Life & Cas. Co., 251 Minn. 130 (87 NW2d 36) [(1957)]; American Cas. & Life Co. v. Butler, 215 SW2d 392 (Tex. Civ. App. [1948]).
This is not a statement of Georgia law. It is merely an observation of law in other jurisdictions. It was unnecessary to the holding in Browder, and it is equally unnecessary here.
In addition to the clear Georgia precedent cited above, a majority of other jurisdictions also hold that an insurer does not waive policy defenses such as notice simply because it does not list all such defenses in its letter denying coverage. Shahan v. Shahan, 988 SW2d 529, 534 (Mo. 1999) (filing by insurer of complaint that does not raise particular coverage defense does not constitute a waiver of that defense); Waller v. Truck Ins. Exchange, Inc., 900 P2d 619, 636 (C) (1) (Cal. 1995) (“of the 33 sister states to consider the issue, 32 agree” that “[a]n insurer does not impliedly waive coverage defenses it fails to mention when it denies the claim”); Guberman v. William Penn Life Ins. Co. of New York, 146 AD2d 8, 12 (538 NYS2d 571) (1989) (“rule of estoppel is limited in its application to those instances where the insured has suffered some degree of prejudice as a result of the insurer’s attempt to shift its defense from one basis to another”); *411Ladd Constr. Co. v. Ins. Co. of North America, 73 Ill. App. 3d 43, 50-51 (391 NE2d 568) (1979) (“An insurance company is not required to raise all possible defenses in its letter to the insured. Failure to raise all defenses does not result in a per se waiver of the same.”); Consolidated Rail Corp. v. Hartford Acc. & Indem. Co., 676 FSupp. 82, 85 (E.D. Pa. 1987) (“waiver cannot operate to expand coverage under an insurance policy”); State of Miss, ex rel King v. Richardson, 634 FSupp. 133, 136 (S.D. Miss. 1986) (reliance on another ground to deny coverage did not waive insurer’s right to deny coverage because of late notice); City of Pigeon Forge, Tenn. v. Midland Ins. Co., 788 F2d 368, 371 (II) (6th Cir. 1986) (defense of lack of timely notice not waived because it was not mentioned in the insurer’s declination of coverage letter).
The question in this case, then, is whether, in the light most favorable to EWES, the evidence points to some action or statement on the part of Maxum evincing an intent to waive the notice provision. “What would be material to the waiver issue is evidence that, after it finally received notice from [the insured], Maxum otherwise expressly or impliedly took a position indicative of its intent not to enforce satisfaction of the timely notice requirement.” Brazil, supra, 199 Ga. App. at 343 (1). Certainly, Maxum’s reservation of rights shows no such intent, as it explicitly references the policy’s notice requirement. Nonetheless, Maxum later filed a declaratory judgment action in which it appeared to abandon its notice defense, irrespective of its earlier reservation of rights. This is, at least, some evidence of Maxum’s intent to waive the notice defense which, under the required standard of review, would preclude a grant of summary judgment in Maxum’s favor. I agree, therefore, that the Court of Appeals erred in affirming the grant of summary judgment on this point as a question of fact remains.
2.1 also disagree with the ramifications of the majority’s reasoning behind its conclusion that, even if the Court of Appeals had been correct in allowing Maxum to both deny coverage and reserve its rights to assert other defenses in the future, Maxum’s attempted reservation of rights is defective. The majority reasons that: (1) the language purporting to reserve rights to assert defenses on other grounds in the future is ambiguous; (2) once the claim has been denied, Maxum would presumably have no reason to obtain additional information; and (3) as a result, EWES had no reason to believe that lack of timely notice would be a bar to coverage. This conclusion is illogical. In any contract litigation, the bare assertion of one defense does not waive every other defense available. Maxum would have every reason to obtain additional information to determine whether other grounds existed for denial of EWES’s claim. That is why a *412reservation of claims exists in the first place. In the context of any denial of any claim by any insurer, a reservation of rights to uncover additional defenses under the course of a challenge is not at all ambiguous. It is a standard and acceptable means of determining one’s rights, often through litigation and discovery, when facts become evident. Under the majority’s reasoning, an insurance company could deny a claim based on one defense, discover during litigation that, but for the fraud of the insured, it could have raised another defense, and be unable to raise the new defense simply because it was not explicitly asserted the moment that the claim was denied. The mere assertion of one defense cannot be considered the waiver of other defenses, absent some statement or conduct showing an intent to waive. That is the premise of the very case on which the majority bases its analysis. Browder, supra.
3. In turn, I disagree that Hoover was entitled to summary judgment that the notice issue had been waived. As stated above, in its reservation of rights, Maxum explicitly stated that it did not intend to waive its notice provision. Viewed in the light most favorable to Maxum on this issue, the evidence therefore raises a question of fact as to whether Maxum actually waived its defense. See, e.g., Mxenergy, Inc. v. Ga. Public Svc. Comm., 310 Ga. App. 630 (3) (714 SE2d 132) (2011) (waiver and notice are questions of fact). Summary judgment in favor of Hoover would be patently improper.
4. Furthermore, because a question of fact exists whether Maxum waived its notice defense, there is also a question of fact and law whether Maxum breached its duty to defend EWES. If the notice defense was not waived, Maxum would not have a duty to defend. If the notice defense was waived, it may have. In any event, this question cannot be decided without first addressing waiver. Moreover, this issue was not within our certiorari questions, was not briefed by the parties, and was not considered by the Court of Appeals. The majority’s premature consideration of this issue, therefore, is wholly unwarranted.
5. It must also be emphasized that the practical effects of the majority’s holding will be as far-reaching as they are negative. Based on the majority’s new rule of law, insurers who wish to deny coverage will be forced to attempt to list all defenses in their initial denial letter. They must do so blindly, in the absence of necessary information and the discovery later litigation might provide. This result helps neither the insurance company, which must scramble to come up with all possible defenses in good faith, nor the insured, who will have no good context of where he or she stands in the face of a laundry list of defenses. The result may also increase the number of instances in which an insurance company seeks to reserve rights, rather than *413deny a claim, and subsequently seek a declaratory judgment regarding coverage. This will only serve to further clog trial courts. Simply put, no good will come from the majority’s unprecedented new rule of law. That alone is good reason not to make it.
Decided June 18, 2012
Reconsideration denied July 26, 2012.
Robertson, Bodoh & Nasrallah, Mathew G. Nasrallah, Lance A. Cooper, for appellant.
Freeman, Mathis & Gary, Philip W. Savrin, Joshua B. Portnoy, for appellee.
For all of the reasons set forth above, I concur specially in part and dissent in part.
I am authorized to state that Justice Hines and Justice Nahmias concur in this opinion.