THOMPSON v. HOMESITE INS. CO. OF GA.; And Vice Versa.

FIFTH DIVISION
MCFADDEN, P. J.,
BRANCH and BETHEL, JJ.
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
March 14, 2018
In the Court of Appeals of Georgia
A17A1938, A17A1940. THOMPSON v. HOMESITE INS.
COMPANY OF GA.; and vice versa.
BETHEL, Judge.
These cross-appeals arise from the trial court’s partial grant of a motion for
summary judgment filed by Homesite Insurance Company of Georgia on claims
brought against it by Tara Thompson. On appeal, Thompson argues that the trial court
erred by granting summary judgment to Homesite on her claim for bad faith failure
to pay an insurance claim under OCGA § 33-4-6. In its cross-appeal, Homesite argues
that the trial court erred by denying its motion for summary judgment on Thompson’s
claim for attorney fees under OCGA § 13-6-11, arguing that OCGA § 33-4-6 is the
only statute that permits recovery of attorney fees against an insurance company for
its failure to pay a claim. We affirm the trial court’s grant of summary judgment in
favor of Homesite on Thompson’s bad faith claims. However, because the trial court
erroneously denied Homesite’s motion for summary judgment on Thompson’s claims
for attorney fees under § 13-6-11, we reverse that portion of the trial court’s order.
Summary judgment is proper if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law[.] Summary
judgments enjoy no presumption of correctness on appeal, and an
appellate court must satisfy itself de novo that the requirements of
OCGA § 9–11–56 (c) have been met. In our de novo review of the grant
of a motion for summary judgment, we must view the evidence, and all
reasonable inferences drawn therefrom, in the light most favorable to the
nonmovant.
Cowart v. Widener, 287 Ga. 622, 623-24 (1) (a) (697 SE2d 779) (2010) (citations and
punctuation omitted); OCGA § 9-11-56 (c).
So viewed, the largely undisputed record before us reflects that Thompson’s
home was damaged in April 2011 when a tree fell on it during a storm. In addition to
the damage to her home requiring repair, she incurred expenses for the removal of
trees and other debris from her property.
2
Homesite provided insurance coverage for Thompson’s property, including
coverage for tree and debris removal. After the April 2011 storm, Thompson notified
Homesite of the damage. An adjuster reviewed the damage and completed an
estimate, and Homesite issued an initial payment to Thompson based on the adjuster’s
report totaling $1,812.33.
Homesite and Thompson were initially unable to agree on the amount of
reimbursement Homesite would provide to Thompson for tree and debris removal.
Throughout this process, Thompson made a number of complaints to and about
Homesite regarding the handling of her claims. Specifically, she filed a formal
complaint with the Georgia insurance commissioner regarding her dealings with
Homesite to which Homesite and the insurance commissioner responded. She also
sent a number of messages to representatives of Homesite between May 3 and May
18, 2011, inquiring about, and criticizing, the handling of her claims.
After receiving a request for documentation of the cost of the tree and debris
removal from a representative of Homesite on June 6, 2011, Thompson provided
Homesite with documentation of the expenses she had incurred to remove the trees
and other debris on June 9, 2011. Homesite acknowledged receipt of those documents
the same day. Homesite did not dispute the amounts submitted by Thompson for
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reimbursement or make any argument that such claims are not covered by
Thompson’s insurance policy. Homesite made a payment on the reimbursement claim
in the amount of $1,800.00 on October 6, 2011.
In a letter dated October 12, 2011, Thompson’s counsel demanded payment of
the reimbursement for Thompson’s tree and debris removal expenses. In that letter,
Thompson’s counsel threatened to file a bad-faith claim against Homesite pursuant
to OCGA § 33-4-6 if it did not properly reimburse Thompson for the tree and debris
removal expenses.
Homesite and Thompson were also unable to agree on the total value of
Thompson’s losses arising from the damage to her home, and, through the same
October 12, 2011 letter, Thompson notified Homesite that she did not agree with the
estimate stated in the adjuster’s report. Pursuant to Thompson’s insurance policy, she
and Homesite entered into an appraisal process in regard to the value of the damage
to her home. Appraisers hired by Thompson and Homesite both submitted competing
estimates to a third-party umpire. The umpire awarded Thompson a net amount of
$49,713.69. This award reflected Thompson’s total loss of $50,713.69 (as determined
by the umpire) less the $1,000 deductible in her policy.
4
Homesite issued a payment to Thompson on May 11, 2012 in the amount of
$47,101.36 as payment for in the umpire’s award. That amount was equal to the gross
appraisal award ($50,713.69) minus the amount of the previous payment made to
Thompson based on the adjuster’s report ($1,812.33) and the amount Homesite had
paid her in reimbursement for tree and debris removal ($1,800), totaling $3,612.33.
Homesite never made any additional payment to Thompson, and it contended that the
umpire’s award was meant to address all covered losses under Thompson’s insurance
policy, including the expenses she incurred for tree and debris removal. Homesite
further contended that offset of amounts previously paid under the policy, including
for tree and debris removal, against the umpire’s total award was proper.
Thompson filed suit against Homesite on May 19, 2015,1 claiming that
Homesite had unreasonably delayed reimbursing her for the tree and debris removal
expenses and that it had underpaid on the umpire’s award, subjecting Homesite to
liability under OCGA § 33-4-6, Georgia’s bad faith statute. She also brought claims
for breach of contract and for attorney fees. Homesite moved for summary judgment
on each claim brought by Thompson. The trial court granted Homesite’s motion with
1
Thompson filed an earlier lawsuit against Homesite in 2012 while the
appraisal process was still ongoing. She voluntarily dismissed that lawsuit in
November 2014.
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respect to Thompson’s bad faith claim, but denied the motion as to her remaining
claims. These cross-appeals followed.
Case A17A1938
1. We first examine whether the trial court erred by determining that
Thompson’s communications with Homesite were not, as a matter of law, sufficient
to support recovery under the bad faith statute. OCGA § 33-4-6 (a) provides, in
relevant part, that
In the event of a loss which is covered by a policy of
insurance and the refusal of the insurer to pay the same
within 60 days after a demand has been made by the holder
of the policy and a finding has been made that such refusal
was in bad faith, the insurer shall be liable to pay such
holder, in addition to the loss, not more than 50 percent of
the liability of the insurer for the loss or $5,000.00,
whichever is greater, and all reasonable attorney’s fees for
the prosecution of the action against the insurer.
Thus, this Court has held that to maintain a claim under this statute, the insured must
prove that her claim is covered by the relevant insurance policy, that a demand for
payment was made by the insured at least 60 days prior to filing suit, and that the
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insurer’s failure to pay was motivated by bad faith. See BayRock Mortg. Corp. v.
Chicago Title Ins. Co., 286 Ga. App. 18, 19 (648 SE2d 433) (2007).
In this case, the parties do not dispute that the expenses incurred by Thompson
for tree and debris removal were covered by her policy. Thus, the trial court’s
consideration of Thompson’s claim under OCGA § 33-4-6 (a) focused on whether her
communications with Homesite relative to those expenses satisfied the pre-suit
demand requirement.2 We agree with the trial court that they did not.
Because the statute imposes a penalty, its requirements are strictly construed,
and a proper demand for payment is essential to recovery. See Bayrock, 286 Ga. App.
at 19. This Court’s prior decisions have required more than an initial claim for
payment and instead have noted that “the demand must be made at a time when
immediate payment is due. An insured cannot legally demand immediate payment if
the insurer has additional time left under the terms of the insurance policy in which
to investigate or adjust the loss.” Stedman v. Cotton States Ins. Co., 254 Ga. App.
325, 327 (1) (562 SE2d 256) (2002) (citations omitted).
2
The trial court did not reach the issue of Homesite’s alleged bad faith. We
note that the question of bad faith on the part of the insurer is generally reserved for
a jury, absent a reasonable defense from the insurer explaining its delay in payment.
See St. Paul Fire & Marine Ins. Co. v. Snitzer, 183 Ga. App. 395, 397 (2) (358 SE2d
925) (1987).
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The record shows that, on more than one occasion, Thompson stated to
representatives of Homesite that she was not happy with Homesite’s handling of her
claim. She also filed a complaint with the Georgia insurance commissioner, which
prompted a response from Homesite. Homesite admitted that it was aware that
Thompson was not happy with the progress of her claim when she was lodging these
complaints. Because of that, Thompson argues that these communications should
have alerted Homesite that she was considering filing a bad-faith claim. We disagree.
As this Court has previously discussed, a demand made under OCGA § 33-4-6
must give the insurer notice that it is facing a bad faith claim. See Primerica Life Ins.
Co. v. Humfleet, 217 Ga. App. 770, 772 (1) (458 SE2d 908) (1995). The demand need
not contain specific language, but “the language used must be sufficient to alert the
insurer that it is facing a bad faith claim for a specific refusal to pay so that it may
decide whether to pay the claim.” Bayrock, 286 Ga. App. at 20 (citations and
punctuation omitted). As the trial court rightly noted, it is critical that the demand
made of the insurer not only express displeasure with the insurer’s handling of the
claims process but that such demand actually alert the insurer that the insured plans
to take legal action for bad faith if the claim is not paid.
8
Thompson’s communications with Homesite prior to October 6, 2011, as
shown in the record before us, failed to alert Homesite that she planned to bring legal
action if her claim was not paid. The only communication she had with Homesite in
which potential litigation was threatened was the October 12, 2011 letter sent by her
counsel. However, the threat of litigation pertained only to Homesite’s alleged failure
at the time to reimburse Thompson for tree and debris removal expenses. As
Homesite made payment to Thompson in the amount of $1,800 on October 6, 2011,
for those expenses, Homesite had already satisfied the specific demand made by
Thompson. There is no evidence in the record of any further demand by Thompson
for reimbursement of those expenses, accompanied by a threat to invoke OCGA § 33-
4-6. Nor is there evidence in the record that Thompson threatened to invoke OCGA
§ 33-4-6 in demanding any remaining portions of her claim with Homesite. We
therefore affirm the trial court’s grant of summary judgment in favor of Homesite on
Thompson’s bad faith claim.
Case A17A1940
2. Homesite argues that the trial court erred when it denied Homesite’s motion
for summary judgment on Thompson’s claim for attorney fees under OCGA § 13-6-
11. Homesite argues that the attorney fee provision in the bad faith statute, OCGA §
9
33-4-6, is the exclusive remedy for an insurer’s bad faith refusal to pay insurance
proceeds. Because the trial court erroneously ruled that Thompson can seek to
recover attorney fees from Homesite under OCGA § 13-6-11, we reverse the trial
court’s denial of Homesite’s motion for summary judgment on this count of the
complaint.
In this case, Thompson brought claims against Homesite not only for bad faith
but also for breach of contract based on Homesite’s alleged failure to pay losses, its
alleged breach of express provisions of Thompson’s insurance policy, and breach of
the implied covenant of good faith and fair dealing. Thompson’s first breach of
contract count alleges that her insurance policy obligated Homesite to pay any
appraisal award within 60 days and that Homesite breached this obligation by
refusing to pay the entire appraisal award to Thompson by the required deadline. The
second count for breach of contract alleges that her losses were covered by the policy
and that Homesite breached its obligations under the policy by refusing to provide
coverage and not acting in good faith when negotiating the extent of coverage it
would provide for her losses. The final count for breach of contract alleges that
Homesite’s actions breached the covenant of good faith and fair dealing implied in
all Georgia contracts, as her insurance policy is a contract under Georgia law.
10
As this Court has noted, “[t]he penalties contained in OCGA § 33-4-6 are the
exclusive remedies for an insurer’s bad faith refusal to pay insurance proceeds.”
Howell v. S. Heritage Ins. Co., 214 Ga. App. 536, 537 (2) (448 SE2d 275) (1994).
Even where the insured alleges other theories of recovery distinct from a bad faith
claim, absent a special relationship beyond that of insured and insurer, if such claims
are predicated on the insurer’s failure to pay a claim, OCGA § 33-4-6 is the exclusive
vehicle through which the insured may make a claim for attorney fees against the
insurer. See Great Sw. Exp. Co., Inc. v. Great Am. Ins. Co. of N.Y., 292 Ga. App. 757,
760 n.2 (2) (665 SE2d 878) (2008) (grant of summary judgment in favor of insurer
affirmed where insured brought claims for lost profits and punitive damages based
on alleged failure of insurer to pay). General penalty provisions under OCGA §
13-6-11 cannot be the basis of recovery where the General Assembly has provided
a specific procedure and a limited penalty for non-compliance. See McCall v. Allstate
Ins. Co., 251 Ga. 869, 871-872 (2) (310 SE2d 513) (1984). We therefore reverse the
trial grant’s denial of Homesite’s motion for summary judgment on Thompson’s
claim for attorney fees pursuant to OCGA § 13-6-11.
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Judgment affirmed in part and reversed in part. Branch, J., concurs.
McFadden, P. J., concurs fully in division two and concurs in part and dissents in
part in division one.*
* DIVISION ONE OF THIS OPINION IS PHYSICAL PRECEDENT ONLY. SEE
COURT OF APPEALS RULE 33.2 (a).
A17A1938, A17A1940. THOMPSON v. HOMESITE INSURANCE
COMPANY OF GEORGIA; and vice versa.
MCFADDEN, Presiding Judge, concurring in part and dissenting in part.
I concur in Division 2 of the majority opinion affirming the trial court’s
judgment in Case No. A17A1940, because I agree that Homesite was entitled to
summary judgment on Thompson’s claim for attorney fees under OCGA § 13-6-
11. And I concur in that part of Division 1 affirming the trial court’s judgment in
Case No. A17A1938 to the extent that the trial court granted summary judgment to
Homesite on Thompson’s bad faith claim pertaining to the tree and debris
removal.
But I respectfully dissent to that part of Division 1 affirming the trial court’s
grant of summary judgment on Thompson’s bad faith claim pertaining to the
appraisal award. I would reverse that part of the judgment in Case No. A17A1938,
because the email Thompson’s counsel sent to Homesite’s counsel on July 1, 2013
satisfied the requirement that a plaintiff seeking to recover for an insurer’s bad
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faith under OCGA § 33-4-6 (a) make “a demand for payment . . . against the
insurer within 60 days prior to filing suit[.]” BayRock Mtg. Corp. v. Chicago Title
Ins. Co., 286 Ga. App. 18, 19 (648 SE2d 433) (2007).
The record shows that on July 1, 2013, Thompson’s counsel sent an email to
Homesite’s counsel that stated the following:
Please look closely at the appraisal award and the amount paid to Ms.
Thompson pursuant to the award. Homesite made the unilateral
decision to offset “previous payments” made to Ms. Thompson.
However, the umpire report and appraisal award do not include such
offsets. Particularly, Homesite deducted the previous damage check
presented to Ms. Thompson and the payment for tree and debris
removal. The tree and debris removal were not a part of the appraisal
process, therefore this offset is wholly improper and constitutes a
breach of contract and bad faith failure to pay a covered loss.
(Emphasis supplied.) This language was “sufficient to alert [Homesite] that it
[was] facing a bad faith claim for a specific refusal to pay[.]” See BayRock Mtg.
Corp., supra at 20 (citations and punctuation omitted).
2
Thompson filed the instant action, which included her bad faith claim
regarding the appraisal award, on May 19, 2015, well more than 60 days after the
July 2013 email. The purpose of OCGA § 33-4-6 (a)’s demand requirement was
met here — “to adequately notify an insurer that it is facing a bad faith claim so
that it may make a decision about whether to pay, deny or further investigate the
claim within the 60-day [statutory] deadline.” Primerica Life Ins. Co. v. Humfleet,
217 Ga. App. 770, 772 (2) (458 SE2d 908) (1995).
The fact that the instant action is a renewal action does not make a
difference. “The renewal suit is an action de novo.” Hobbs v. Arthur, 264 Ga. 359,
360 (1994) (citation omitted). Homesite sought, and the trial court granted,
summary judgment on the renewal action, not on Thompson’s initial action.
Because the renewal action clearly was filed more than 60 days after Thompson
notified Homesite of her bad faith claim based on the appraisal award, Homesite
was not entitled to summary judgment on that claim.
3