SOUTHERN TRUST INSURANCE COMPANY v. CRAVEY Et Al.

THIRD DIVISION
ELLINGTON, P. J.,
BETHEL, J., and SENIOR APPELLATE JUDGE PHIPPS
NOTICE: Motions for reconsideration must be
physically received in our clerk’s office within ten
days of the date of decision to be deemed timely filed.
http://www.gaappeals.us/rules
May 14, 2018
In the Court of Appeals of Georgia
A18A0301. SOUTHERN TRUST INSURANCE COMPANY v.
CRAVEY et al.
BETHEL, Judge.
The primary question this Court must answer in this case is whether a valid and
enforceable insurance contract was created between Southern Trust Insurance
Company (Southern Trust) and Ronald E. Cravey. Cravey and Auto-Owners
Insurance Company (Auto-Owners), who seek to benefit from the existence of such
a contract, argue that a valid contract does exist. Southern Trust, which disputes the
existence of a valid and enforceable insurance contract, argues that it does not, that
Auto-Owners therefore cannot bring a subrogation claim against it, and that the trial
court’s summary judgment order should be reversed accordingly. Southern Trust
further argues that the trial court should have considered deposition testimony from
another case in deciding the motions for summary judgment. We find that Southern
Trust’s arguments lack merit for the reasons set forth below, and we affirm.
At the outset, we note that insurance in Georgia is a matter of contract, and this
Court has long held that such contract disputes are “well suited for adjudication by
summary judgment because construction of a contract is ordinarily a matter of law for
the court.” Maxum Indem. Co. v. Jimenez, 318 Ga. App. 669, 669 (734 SE2d 499)
(2012) (citation omitted). Summary judgment is proper when there is no genuine
issue of material fact and the movant is entitled to judgment as a matter of law.
OCGA § 9-11-56 (c).
The record shows that the underlying suit involved a house fire on a property
located in Helena, Georgia. The property was Cravey’s primary residence until
approximately 2011. On February 9, 2013, Cravey entered into a rent-to-own contract
with Kim Clark and Jay Floyd, wherein Cravey agreed to transfer ownership of the
property to Clark and Floyd upon receipt of $92,500.00. Cravey maintained insurance
coverage for the house with Auto-Owners up to a limit of $104,000. However, Cravey
told Clark and Floyd that they would have to obtain renter’s insurance.
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Clark did not obtain renter’s insurance, but instead sought to obtain an
additional homeowner’s policy. On March 21, 2013, Southern Trust issued an
insurance policy to Clark, covering the house up to a total limit of $175,000. The
policy listed Cravey as an additional insured, noting his interest to be: “Insured is
purchasing home from Eddie Cravey.” Cravey did not ask Clark to obtain this policy
on his behalf, and he did not know initially that Clark had obtained it or that he had
been listed as an additional insured.
On June 15, 2013, a fire destroyed the house and its contents. Cravey submitted
a proof of loss to Auto-Owners, which paid for the loss. Cravey did not submit a
claim to Southern Trust.
Southern Trust claimed that the insurance policy had been cancelled as of May
20, 2013, and that notice had been provided to Clark. However, Southern Trust
conceded that Cravey, as an additional insured, had not been “properly notified of the
cancellation” and that the cancellation therefore did not apply to him. However,
Southern Trust indicated that recovery of any benefits from the policy would be
secondary to the policy Cravey maintained with Auto-Owners. Finally, Southern
Trust noted that Cravey’s policy with Auto-Owners appeared to fully indemnify him
for the loss. Southern Trust later disclaimed that Cravey was entitled to any benefits
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under the policy, asserting that Clark had made misrepresentations in securing
coverage and no valid policy existed.
Auto-Owners, as a subrogee of Cravey, demanded that Southern Trust pay its
share of the claim pursuant to OCGA § 33-4-6. Southern Trust refused. Auto-Owners
then brought suit against Southern Trust to recover these amounts, and the parties
filed cross-motions for summary judgment. Following a hearing,1 the trial court
granted Auto-Owners’ and Cravey’s motion for summary judgment, but denied
Southern Trust’s motion. The trial court found that Southern Trust had failed to
cancel the policy as to Cravey, who was a third party additional insured. Thus, the
trial court ruled that the policy remained valid and enforceable as it relates to Cravey.
This appeal followed.
1. Southern Trust first argues that the trial court erred in finding a valid
insurance policy with respect to Cravey because Clark did not have actual or apparent
authority to procure the policy on his behalf, Cravey never ratified the policy, and
Cravey could not have been a third party beneficiary to the insurance contract. In
response, Auto-Owners argues that the trial court correctly found Cravey to be a
1
The transcript of the hearing is not part of the record before this Court.
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third-party beneficiary to the insurance contract between Southern Trust and Clark.
We agree with Auto-Owners.
“The beneficiary of a contract made between other parties for his benefit may
maintain an action against the promisor on the contract.” OCGA § 9-2-20 (b). “A
third party has standing to enforce a contract under OCGA § 9-2-20 if it clearly
appears from the contract that it was intended for his benefit; the mere fact that he
would benefit from performance of the contract is insufficient.” City of Atlanta v.
Atlantic Realty Co., 205 Ga. App. 1, 6 (3) (421 SE2d 113) (1992) (citation omitted).
“A contract is intended to benefit a third party when the promisor engages to the
promisee to render some performance to a third person.” Scott v. Mamari Corp., 242
Ga. App. 455, 457 (1) (530 SE2d 208) (2000) (citation omitted).
Here, Cravey is specifically named on an endorsement as an additional insured
on the Southern Trust policy. That endorsement extends the definition of “insured”
to include Cravey with respect to the applicable coverage provisions. Thus, the
contract was clearly intended, on its face, to benefit Cravey. See, e.g., City of Atlanta,
205 Ga. App. at 5-6 (3) (party intended to be named as an insured on insurance
policies required by the applicable contract is a third party beneficiary). See also
Hicks v. Continental Ins. Co., 146 Ga. App. 124, 125 (245 SE2d 482) (1978) (party
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entitled to be an insured or additional insured under an automobile policy is a third-
party beneficiary). It is irrelevant whether Clark had actual or apparent authority to
procure the policy on Cravey’s behalf or whether Cravey ratified the policy 2. Cravey
was still a third-party beneficiary to the Southern Trust insurance contract under the
terms of the endorsement. The trial court did not err in denying Southern Trust
summary judgment on these grounds.
2. Southern Trust next argues that Auto-Owners was not entitled to
subrogation. More specifically, Southern Trust argues that it would be inequitable to
permit subrogation under the facts of this case because Cravey did not know of the
policy, did not request or authorize the policy, and did not pursue coverage under the
policy when he discovered its existence.
The doctrine of contribution “between co-insurers is based upon the ground
that where several policies in different offices insure the same party upon the same
subject-matter against the same risk, as there can be but one loss and one indemnity,
the several offices, as between themselves, must contribute proportionably to the loss,
though each is liable to the insured for the entire loss, unless there is a special
2
To the extent Southern Trust argues that Clark must have had actual or
apparent authority to make Cravey a third party beneficiary to the insurance contract,
we find no support for this assertion.
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agreement that each shall be liable only for its proportional part.” Fireman’s Fund
Ins. Co. v. Pekor, 106 Ga. 1 (2) (31 SE 779) (1898) (citation omitted). See also Couch
on Insurance § 218:3 (3d ed. 2017) (“In the context of multiple concurrent insurance,
contribution is only appropriate where the policies insure the same entities, the same
interests in the same property, and the same risks”). Thus, we must look to the
language of the applicable policies to determine the nature of the risks assumed by
each respective insurer.
Here, as stated in Division 1 above, Cravey is a third-party beneficiary to the
Southern Trust insurance policy, and Auto-Owners made a claim for coverage on his
behalf. Further, both the Southern Trust and Auto-Owners policies insure the same
residence against the loss sustained here, though in differing amounts, and list Cravey
as an insured. Moreover, the policies contain similar “Other Insurance” clauses, both
of which express a preference for contribution on a pro rata basis. The Auto-Owners
policy provides, in pertinent part, that:
If both this and other insurance apply to a loss, we will pay our share.
Our share will be the ration of this insurance to the total amount of all
insurance which applies.
Similarly, the Southern Trust policy provides, in pertinent part, that:
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Other insurance, we will pay only the proportion of the loss that the
limit of liability that applies under this policy bears to the total amount
of insurance covering the loss[.] Auto-Owners is therefore entitled to
bring a subrogation claim seeking pro rata contribution for Cravey’s loss
against Southern Trust. See Continental Ins. Co. v. Federal Ins. Co., 153
Ga. App. 712, 714 (266 SE2d 351) (1980). The trial court did not err on
these grounds with respect to its ruling on the respective parties’
motions for summary judgment.
3. Finally, Southern Trust argues that the trial court erred by not considering
Clark’s deposition testimony in another case, and relatedly, in denying its request to
include that deposition in the record for appeal. We disagree.
Depositions relied on in support of a motion for summary judgment must be
filed 30 days prior to the hearing. See Gunter v. Hamilton Bank of Upper East Tenn.,
201 Ga. App. 379, 381 (411 SE2d 115) (1991); see also OCGA §§ 9-11-6 (d); 9-11-
56 (c). The trial court noted in its order that Southern Trust failed to meet this
requirement and that the deposition was never formally introduced into evidence. See
Kaplan v. Krosco, Inc., 167 Ga. App. 197, 197 (1) (306 SE2d 88) (1983) (“In the trial
of a case in the superior court the court can no more take judicial notice of the record
in another case in the same court, without its formal introduction into evidence, than
if it were a record in another court” (citations omitted)). Finally, as the trial court
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indicated in its order that because it did not consider the deposition in deciding the
motions for summary judgment, inclusion of the deposition on appeal would be
unnecessary and improper. We find no error here.
Judgment affirmed. Ellington, P. J., and Senior Appellate Judge Herbert E.
Phipps concur.
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