Court Opinion

ID: 9579608
Source: CourtListenerOpinion
Date Created: 2023-08-21 21:56:41.615442+00
Date Added: 2024-06-11T13:35:37.407705
License: Public Domain

Evans, Judge,
dissenting. I cannot agree to Divisions 1 and 3, or to the corresponding headnotes. I therefore dissent from the judgment of reversal. The jury had evidence of the fact that the insurer started out representing him under the policy, but in the course of events of this case in the various courts it ceased to do so. "A liability insurer, which with knowledge of a ground of forfeiture or non-coverage under an insurance policy assumes and conducts the defense of an action brought against the insured, is thereafter estopped in an action upon the policy from asserting such forfeiture or noncoverage. However, the insurer may avoid the estoppel by giving timely notice fairly informing the insured that, notwithstanding its defense of the action, it disclaims liability and does not waive the defenses available to it against the insured.” State Farm Mut. Auto. Ins. Co. v. Anderson, 104 Ga. App. 815 (123 SE2d 191). See also Jones v. Ga. Cas. &c. Co., 89 Ga. App. 181, 185 (78 SE2d 861). The jury had for consideration various testimony and evidence as to whether there was a timely notice to the insured that the insurer felt it had no coverage and was not required to defend. "The general rule supported by the great weight of authority is that if a liability insurer, with knowledge of a ground of forfeiture or noncoverage under the policy, assumes and conducts the defense of an action brought against the insured, without disclaiming liability and giving notice of its reservation of rights, it is thereafter precluded in an action upon the policy from setting up such ground of forfeiture or noncoverage. The insurer’s conduct in this respect operates as an estoppel to later contest an action upon the policy, regardless of the fact that there has been no misrepresentation or concealment of material facts on its part, and notwithstanding the facts may have been within the knowledge of the insured equally as well as within the knowledge of the insurer. The reason which impels the insurer to defend the suit or its good faith in doing so is likewise *370immaterial. Indeed, the fact that the insurer’s conduct may have been due to a mistake of law does not in and of itself prevent such an estoppel of the insurer. Furthermore, an invitation to the counsel for the insured, refused by said counsel, to participate in the preparation and trial of the action brought against the insured, will not prevent an estoppel or waiver. Moreover, if the insurer in fact retains control over the defense of the action brought against the insured, an estoppel on its part to say that the injury was not one covered by the policy is not prevented by reason of the fact that the insured is permitted to, and does, participate in the defense through its or his own attorney.
"While some cases in this respect require prejudice to the insured to be shown, or proved, other cases hold that prejudice to the insured is conclusively presumed, or that the loss of the right to control and manage the case is itself sufficient prejudice to the insured. It has been deemed that the undertaking to defend may be of no value, but of great danger, to the insured if, after abandoning all control of the suit, he may yet be liable for a judgment against him. 29 AmJur 672, 673, Insurance, §878.” Jones v. Ga. Cas. &c. Co., 89 Ga. App. 181, 185, supra. See also 44 AmJur2d 436-438, §§ 1553-1555.
While the insurer in the case sub judice explained its reasons for no longer representing the insured, the jury, from its examination of all the evidence, was authorized to find the insurer departed from the case in bad faith and was estopped to now assert forfeiture or noncoverage. It follows from the above that the lower court did not err in charging on estoppel, bad faith, and penalties as provided by the Insurance Code. I find no error sufficient to authorize reversal thereon, nor do I find any error in the court’s failure to charge as to the effect of the dismissal of the suits in Georgia and the subsequent filing of the suits sued to judgment in Florida as the same would apply to the doctrines of waiver, estoppel and claims for damages of bad faith and penalties.
Plaintiff charged and proved the insurer "summarily withdrew from the defense of said case and disclaimed any duty to plaintiff arising from said insurance contract.” He charges the insurer not only with bad faith but negligence in that the insurer failed to exercise ordinary care, but should have settled said claim within *371the policy limits. The insurer knew that it could have settled said claim within the policy limits. The failure to do so resulted in the great damage inflicted upon the plaintiff because the defendant-insurer "acting in bad faith, not only refused to settle said claims, although demand had been made of it to do so.” It withdrew from the case and left its insured exposed to suffer the judgment against him. The plaintiff alleged and proved that he "never executed any non-waiver agreement with said insurance company.” The conduct of the insurance company in taking over and investigating and subsequently filing defensive pleadings for him caused plaintiff "to rely upon their performing their obligation and duties under said contract of insurance.” Thus this suit is not merely for "bad faith” but for out-and-out negligence by reason of the actions of the insurer in dropping him in mid-stream. “The insured’s suit is not upon the contract but rather in tort and naturally involves a duty and an alleged breach of that duty.” (Emphasis supplied). U. S. Fidel. &c. Co. v. Evans, 116 Ga. App. 93, 94 (156 SE2d 809).
The cases cited by the majority are all based upon the good faith rule as opposed to the "bad faith” rule which requires "a frivolous and unfounded denial of liability.” The bad faith rule is not applicable to this case for the insurer rejected offers to settle within the policy limits, filed defensive pleadings and entered into defense of this case without obtaining a "non-waiver agreement” or making a "reservation of rights stipulation.” Thus we have bad faith and negligence in this case, plus estoppel. The insurance company here cannot escape by claiming "no lack of good faith unless its actions were frivolous.” The insurer should be held to account, and was held to account for its negligence, in making paramount its interests rather than those of the insured. It utterly failed to accord the interests of its insured the same faithful consideration it gave its own interests. Thus the rule that if there is "any reasonable grounds for contesting the claim there is no bad faith” does not apply to the factual situation here.
It should be borne in mind that when the suits were initially filed, the insurance company had 30 days in which to make an investigation as to whether its coverage was effective before filing any defenses. If more time was needed, it had the right to file a defense under a "non-waiver agreement” with the insured, or if *372the insured would not sign such "non-waiver agreement,” then it had the right to arbitrarily give him a notice that it was defending under a "reservation of rights” stipulation. See: Jones v. Ga. Cas. &c. Co., 89 Ga. App. 181, 185, supra; State Farm Mut. Auto. Ins. Co. v. Anderson, 104 Ga. App. 815, 818, supra; s. c., 107 Ga. App. 348 (2) (130 SE2d 144). It did neither, but peremptorily filed the defense, thereby, in effect, assuring the insured that his coverage was effective. While it is true that these suits were later dismissed and new suits were filed, the insurance company had already "elected its position” and was estopped to thereafter take a different position, even though these first suits were dismissed and the second suits were filed. Board of Educ. of Glynn County v. Day, 128 Ga. 156 (6) (57 SE 359). See the discussion in the Day case near bottom of page 164 through 166 where the "election of positions” was made by plaintiff. The rule works both ways, and is just as binding on a defendant who "elects his position.”
As to citation of textbooks and suggested foreign authorities, of course, our Georgia decisions take precedence. See Hard v. Housing Authority of the City of Atlanta, 219 Ga. 74, 81 (132 SE2d 25).
The insured sought here not merely to recover from insurer the face value of the automobile liability policy to which he was entitled under his contract under'Georgia law, but for damages to him far in excess of this amount which resulted from the complete and absolute failure of the insurer to protect him. If it was caused by legally culpable neglect or bad faith of an agent of the insurer (attorney at law hired by insurer to defend suit), the plaintiff would be entitled to recover. Smoot v. State Farm Mut. Auto. Ins. Co., 299 F2d 525; State Farm Mut. Auto. Ins. Co. v. Smoot, 381 F2d 331. Indeed there was evidence authorizing the jury to find there was wilful misconduct — entire want of care — which would raise a presumption of conscious indifference to the consequences. See Code § 105-2002. We do not here have merely a bad faith case but one of absolute negligence. The insurer first came in, defended, then summarily departed the case, thereby showing sufficient conduct to create an estoppel. The jury was authorized to find under the evidence not only a violation of the contract but negligence in representing the insured. The tort liability by reason thereof was the injury to the insured far in excess of the policy, *373authorizing punitive damages and attorneys’ fees as well by reason of its wilful misconduct. It is true all of this was not .demanded by the evidence but was authorized by the evidence. The trial judge correctly charged the law. The insured during the entire litigation was honest in making his affidavits and in aiding the insurer. Thus his testimony could not be said to be contradictory or equivocal. He never tried to hide anything in regard to the three cars involved. His policy was broad enough to cover him in driving his mother’s car when his other vehicle, which he would have been driving, was "withdrawn from normal use because of its breakdown” (flat tire). This clause was written in the policy for his protection, and having paid for it, he is entitled to it. I would affirm the judgment.