United States Fidelity & Guaranty Co. v. Reid ( 1997 )

491 S.E.2d 50 (1997) 268 Ga. 432

UNITED STATES FIDELITY & GUARANTY COMPANY
v.
REID.

No. S97G0257.

Supreme Court of Georgia.

October 6, 1997.

William H. Larsen, Thomas Peter Allen III, Martin, Snow, Grant & Napier, Macon, for United States Fidelity & Guaranty Company.

Charles M. Cork III, Macon, James Martin Lachance, Peterson, Dillard, Young, Asselin & Powell, Atlanta, for Karen Reid.

Walter Edwin Sumner, Atlanta, Frank Edward Jenkins III, Kirk Randall Fjelstul, Peter Ralph Olson, Jenkins & Nelson, P.C., Cartersville, for Amicus Appellant.

CARLEY, Justice.

In order to recover damages allegedly sustained in an automobile collision in December 1991, Karen Reid filed suit in February of 1993 against Spencer Lee Parker and Bobby Parker, who were insured by State Casualty Insurance Company. State Casualty was declared insolvent in January of 1994. In March of 1995, Ms. Reid served her uninsured motorist carrier (UMC), United States Fidelity & Guaranty Company (USF&G). Ms. Reid then voluntarily dismissed that suit and refiled the present renewal action within the six-month period contemplated by OCGA § 9-2-61. In the renewal action, USF&G moved for summary judgment, contending that the original suit was void as to it because the applicable two-year statute of limitations had expired before it was served or identified for service and, therefore, the renewal action was improper. The trial court granted summary judgment in favor of USF&G. The Court of Appeals reversed, concluding that the underlying action was merely voidable as to USF&G, not void. Reid v. U.S. Fidelity, etc., Co., 223 Ga.App. 204, 205(1), 477 S.E.2d 369 (1996). We granted certiorari to consider whether a suit in which a UMC is served after the running of the statute of limitations is subject to dismissal and renewal under OCGA § 9-2-61. Because we hold that a UMC may be served after the running of the statute of limitations in a valid renewal action, we affirm the judgment of the Court of Appeals.

"`The "privilege" of dismissal and renewal does not apply to cases decided on their merits or to void cases, but does allow renewal if the previous action was merely voidable.' [Cit.]" Hobbs v. Arthur, 264 Ga. 359, 360, 444 S.E.2d 322 (1994). The issue is not whether the previous suit was void or merely voidable as to each entity served in the renewal suit. Instead, the issue is whether the previous suit itself was or was not "wholly void." Cutliffe v. Pryse, 187 Ga. 51, 54(1), 200 S.E. 124 (1938); United States Casualty Co. v. American Oil Co., 104 Ga.App. 209, 212(1), 121 S.E.2d 328 (1961). Reid's previous suit clearly was not "wholly void," since service in that case was perfected and the trial court did not enter an order of dismissal. Hobbs v. Arthur, supra.

Although the previous suit was not wholly void and could, therefore, be renewed, a renewal action would be valid only if it was "substantially the same both as to the cause of action and as to the essential parties. [Cits.]" (Emphasis supplied.) Sheldon & Co. v. Emory Univ., 184 Ga. 440(1), 191 S.E. 497 (1937); Patterson v. Rosser Fabrap Int'l., 190 Ga.App. 657, 658, 379 S.E.2d 787 (1989).

The rule requiring substantial identity of essential parties has been held not to be violated: where a party in the later case is the successor trustee, or other representative, of an original party who occupied the same position as plaintiff or defendant; or where the first suit was dismissed for nonjoinder of one of the representatives of the estate, who is added as a party to the second suit; ... or where the difference is merely as to nominal or unnecessary parties. [Cits.]

Sheldon & Co. v. Emory Univ., supra at 440(1), 191 S.E. 497. See also Patterson v. Rosser Fabrap Int'l., supra. Indeed, where the original defendant dies, the plaintiff may voluntarily dismiss and renew the suit against the deceased's administrator, even though the plaintiff could have substituted the deceased's administrator as a party prior to the dismissal, but did not do so. Wofford v. Central Mut. Ins. Co., 242 Ga. 338, 249 S.E.2d 21 (1978). Similarly, although USF&G was a potential defendant in the previous proceeding, it never actually became a party to that case. Furthermore, Reid could not have forced USF&G to become a party to the previous suit, and USF&G is not a party, and cannot be forced to become a party, to the renewal suit. OCGA § 33-7-11(d). Therefore, this case is distinguishable from those renewal actions "in which two distinct parties are named as defendants." Heyde v. Xtraman, Inc., 199 Ga.App. 303, 305(1), 404 S.E.2d 607 (1991). Thus, the previous suit and this renewal suit do have the requisite "substantial identity of essential parties," and the renewal suit is, therefore, valid.

Not only is USF&G not a party to this renewal action, the requirement of service on USF & G or any UMC is entirely dependent upon the existence of a valid action against the owner or operator of any vehicle causing injury or damages. OCGA § 33-7-11(d). Thus, this court has consistently held that the UMC "must be served within the time allowed for valid service on the defendant in the tort action. [Cit.]" (Emphasis supplied.) Bohannon v. J.C. Penney Cas. Ins. Co., 259 Ga. 162, 163, 377 S.E.2d 853 (1989); Vaughn v. Collum, 236 Ga. 582, 224 S.E.2d 416 (1976). As indicated in Ga. Farm Bureau Mut. Ins. Co. v. Kilgore, 265 Ga. 836, 838, 462 S.E.2d 713 (1995), a plaintiff can wait to serve a UMC until he files a valid renewal suit after the running of the statute of limitations. In this valid renewal action, the Parkers were timely served, USF & G was served within the time allowed for service on the Parkers, and such service on USF & G was valid.

Moreover, it should be noted that even if a tort plaintiff does not dismiss the original suit and refile under the renewal statute, service on the UMC after expiration of the statute of limitations is not invalid as a matter of law. The pivotal case of Bohannon v. J.C. Penney Cas. Ins. Co., supra, does not bar recovery under uninsured motorist coverage in every case where the plaintiff does not serve the UMC within the statute of limitations. The plaintiff may be able to effectuate valid service on either the defendant or the UMC after expiration of the statute of limitations, and beyond the five-day "grace period" of OCGA § 9-11-4(c), so long as the plaintiff has perfected service in a reasonable and diligent manner. See Poloney v. Tambrands, Inc., 260 Ga. 850, 852(2), 412 S.E.2d 526 (1991); Peoples v. State Farm Auto. Ins. Co., 211 Ga.App. 55, 438 S.E.2d 167 (1993); Williams v. Colonial Ins. Co. of California, 199 Ga.App. 760, 406 S.E.2d 99 (1991); Clark v. Safeway Ins. Co., 198 Ga. App. 282, 401 S.E.2d 72 (1991); Johnson v. Shield Ins. Co., 189 Ga.App. 333, 375 S.E.2d 510 (1988).

Accordingly, we hold that the trial court erroneously granted summary judgment in favor of USF&G and that the Court of Appeals correctly reversed the judgment of the trial court.

Judgment affirmed.

BENHAM, C.J., SEARS, HUNSTEIN, and HINES, JJ., and Judge GEORGE NUNN concur.

FLETCHER, P.J., concurs specially.

THOMPSON, J., not participating.

FLETCHER, Presiding Justice, specially concurring.

The issue in this case is whether uninsured motorist carriers (UMC) deserve special treatment not accorded other defendants in the application of rules for service and the privilege of dismissal and renewal under O.C.G.A. § 9-2-61. Because I find no justification for treating UMCs differently, I concur in the affirmance of the court of appeals. I write separately because the majority's opinion fails to clarify the conflict between Bohannon v. J.C. Penney Casualty Ins. Co.^[1] and Hobbs v. Arthur,^[2] the issue for which certiorari was granted, and instead relies upon the difficult distinction between void and voidable cases.

1. USF&G contends that because heightened service rules apply to UMCs, it may raise as a defense in the renewal action the failure of the plaintiff to meet these heightened rules in the original action. In its petition for certiorari, USF&G relied on Bohannon^[3] to argue that a heightened rule for service applies to UMCs. In Bohannon, this court affirmed the granting of a UMC's motion to dismiss when the plaintiff served the UMC outside the statute of limitation. The court did so without conducting any analysis of whether the plaintiff acted diligently. Bohannon confirmed the approach taken in several Court of Appeals opinions in which the court affirmed judgments in favor of UMCs that had not been served within the two-year statute of limitations. In none of those cases did the Court of Appeals consider the diligence of the plaintiff in perfecting service.^[4]

The failure to consider diligence in cases involving UMCs contrasts with the analysis given other defendants. The courts generally apply a diligence standard to plaintiffs who timely file their complaint, but serve the defendant outside the statute of limitations in order to determine if the late service relates back to the filing of the complaint. In those cases, the rule has long been that if a trial court determines that a plaintiff did not act diligently, but was guilty of laches in perfecting service, then the trial court may exercise its discretion in finding that the service does not relate back and in dismissing the complaint.^[5]

Contrary to USF&G's contentions, there is nothing in Bohannon that exempts UMCs from this relation-back doctrine. O.C.G.A. § 33-7-11(d), which requires service of process on the UMC, contains no language requiring more stringent service requirements. On the contrary, the statute provides that service is to be made "as though the insurance company were actually named as a party defendant." Because a plaintiff has a "grace period" in which to serve party defendants, if the plaintiff acts with diligence, the plaintiff serving the UMC should have the same "grace period." Additionally, a UMC suffers none of the infirmities of other classes of defendants, such as minors and incompetents, for whom heightened service rules apply.^[6] Finding nothing in the statute nor in public policy to justify special treatment for UMCs, I would hold that the same service rules apply to UMCs that the courts apply to other types of defendants.

2. Having reasoned that there is no rationale for according UMCs special treatment, the issue of whether a UMC may raise as a defense in a renewal suit the plaintiff's lack of diligence in service in the original action is easily answered. In Hobbs,^[7] which did not involve a UMC, this court held that a plaintiff's lack of diligence in perfecting service in the original suit is not a defense in a renewal suit. While this Court's interpretation of O.C.G.A. § 9-2-61 in Hobbs may result in unfairness to defendants who are called upon to defend stale claims long after the statute of limitations has run, the unfairness cuts across the spectrum of potential defendants and, as with rules for service, there is no justification for carving out a special rule for UMCs. The solution lies in a legislative reconsideration of O.C.G.A. § 9-2-61 or a judicial reconsideration of Hobbs. Therefore, I would hold that a plaintiff serving a UMC is entitled to the escape hatch provided in Hobbs.

3. Admittedly, the equal application of Hobbs to UMCs weakens Bohannon and allows a plaintiff to do indirectly what it cannot do directly. It also provides judicial relief for a situation that the Bohannon court said required legislative action.^[8] Now there is no penalty for violating the rule set forth in Bohannon and a lawyer caught in a Bohannon trap who fails to dismiss and renew under Hobbs may well be facing a malpractice suit. Rather than ignore this conflict, the majority should address and resolve it after considering the competing public policy rationales.

4. I further disagree with the majority's suggestion that a plaintiff can wait to serve a UMC until he files a renewal suit. This statement in Georgia Farm Bureau Mut. Ins. Co. v. Kilgore^[9] must be taken in the context of that case. There the plaintiff had the opportunity to dismiss and file a renewal suit before the statute of limitations expired. If the plaintiff fails to serve the UMC in the original action and files a renewal suit after the running of the statute of limitations, then, as long as Bohannon has any vitality, the UMC would have the benefit of the bar of the statute of limitations.^[10]

NOTES

[1] 259 Ga. 162, 377 S.E.2d 853 (1989).

[2] 264 Ga. 359, 361, 444 S.E.2d 322 (1994).

[3] 259 Ga. 162, 377 S.E.2d 853 (1989).

[4] Williams v. Thomas, 183 Ga.App. 51, 357 S.E.2d 872 (1987) (summary judgment to UMC affirmed where plaintiff served UMC one month after statute of limitations ran); Harris v. Allstate Ins. Co., 179 Ga.App. 343, 347 S.E.2d 368 (1986) (affirming grant of UMC's motion to dismiss where UMC served two months after statute of limitations expired); Kemp v. Cotton States Mut. Ins. Co., 177 Ga.App. 460, 340 S.E.2d 26 (1986) (affirming grant of summary judgment to UMC that was served nine months after statute of limitations expired). But see Williams v. Colonial Ins. Co., 199 Ga.App. 760, 406 S.E.2d 99 (1991) (where complaint was filed on last day of statute of limitations, service on UMC within 5 business days relates back).

[5] See, e.g., Morse v. Flint River Community Hospital, 215 Ga.App. 224, 450 S.E.2d 253 (1994); Childs v. Catlin, 134 Ga.App. 778, 782, 216 S.E.2d 360 (1975); Hilton v. Maddox, Bishop, Hayton Frame & Trim Contractors, Inc., 125 Ga. App. 423, 425, 188 S.E.2d 167 (1972); Richard C. Ruskell, Davis & Shulman's Georgia Practice & Procedure (1995 ed.), § 8-8.

[6] See O.C.G.A. § 9-11-4(d)(3),(4); Brooks v. Young, 220 Ga.App. 47, 467 S.E.2d 230 (1996) (applying special rules for service on minors).

[7] 264 Ga. at 359, 444 S.E.2d 322.

[8] 259 Ga. at 163, 377 S.E.2d 853.

[9] 265 Ga. 836, 838, 462 S.E.2d 713 (1995).

[10] See Stout v. Cincinnati Ins. Co., 226 Ga.App. 220, 486 S.E.2d 195 (1997).