Georgia Injury Lawyers Blog

Insurance Litigation: Special Issues

September 2, 2015 | by Slappey & Sadd, LLC

Other Issues Involved In Insurance Litigation

All litigation regarding an insurer’s bad faith necessarily involves other issues associated with the law of insurance contracts and insurance coverage. For example, an insurer’s bad-faith failure to settle under the common law may have its genesis in the insurance company’s decision not to provide a defense to an insured, the lack of defense resulting in a large judgment in excess of policy limits. With respect to statutory bad faith, issues may arise as to whether the insurer’s decision not to pay a property damage claim is caused by the insurer’s failure to conduct an adequate investigation. Finally, any time there is litigation involving any type of insurance policy, certain issues – like timely notice – might come into play.

Duty To Give Notice And Liability Policies

Bad Faith Procedural Aspects: Declatory Judgments

August 31, 2015 | by Slappey & Sadd, LLC

The Georgia Declaratory Judgment Act

Many lawsuits involving insurance coverage or an insurer’s bad faith unfold in the context of a declaratory judgment. This addresses those issues specific to a declaratory judgment action involving insurers and insureds. The Georgia Declaratory Judgment Act, O.C.G.A. § 9-4-1 et seq. provides a mechanism to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations.

In Georgia, “a declaratory judgment is permitted to determine a controversy before obligations are repudiated or rights are violated.” The petitioner is not entitled to a declaratory judgment where the rights of the parties have already accrued and there are no circumstances showing any necessity for a determination of the dispute to guide and protect the petitioner from uncertainty and insecurity with regard to the propriety of some future act or conduct. A declaratory judgment action makes no provision for a judgment which is advisory.

Bad Faith Cases: Procedural Aspects

August 28, 2015 | by Slappey & Sadd, LLC

Parties

As in any litigation, an insured filing suit against its insurer must name the proper party. Litigation involving insurance companies can present challenges in this regard, as many insurers operate myriad companies under similar names. For example, the Georgia Secretary of State website lists no fewer than eight entities beginning with the words “State Farm,” six of which would appear to be underwriters of insurance policies. Accordingly, special care must be taken to avoid dismissal for failure to name the proper party. The declarations page of the insured’s policy should state the correct name of the insuring company. Further research is advisable, as insurers frequently merge, are acquired or simply change names. Most insurers maintain detailed websites with information about their companies, and a simple Google search will turn up such information. Information found during such searches should be confirmed by reference to records of the appropriate secretary of state. The Georgia Safety Fire & Insurance Commissioner’s website provides a “company search” form. The search form will provide detailed information about the company, including the type of company, the date it was licensed to do business in Georgia, the status of the company’s license, the insurer’s agents (if any), contact information, and lines of authority (what types of insurance the insurer is licensed to write). In addition, the Georgia Secretary of State’s website should reveal current agents for service of process for most companies.

Venue

Insurance Bad Faith: The “Set-Up” Myth

August 26, 2015 | by Slappey & Sadd, LLC

The Holt court observed that “[a]n insurance company does not act in bad faith solely because it fails to accept a settlement offer within the deadline set by the injured person’s attorney.” Quoting a federal district court applying Oregon law, the Holt court went on to state as follows:

Nothing in this decision is intended to lay down a rule of law that would mean that a plaintiff’s attorney under similar circumstances could “set up” an insurer for an excess judgment merely by offering to settle within the policy limits and by imposing an unreasonably short time within which the offer would remain open.

What Is The “Set-Up” Myth?

Insurance Bad Faith: Safe Harbor

August 24, 2015 | by Slappey & Sadd, LLC

“Safe Harbor”: Liens Involved

The Georgia Court of Appeals has recently created a “safe harbor” for an insurer presented with an opportunity to settle a claim that involves certain healthcare liens. S. Gen. Ins. Co. v. Wellstar Health Sys., Inc., provides a typical example of the manner in which a hospital lien could complicate efforts between the claimant and the insurer to settle claims against the insured. In Wellstar, the insured injured a bicyclist. The insured’s liability limits were insufficient to compensate the bicyclist for his damages. A healthcare provider (Wellstar) asserted a lien. The bicyclist accepted policy limits to settle the tort claim against the insured but would not agree to indemnify the insurer. The insurer paid the claimant anyway. The healthcare provider succeeded in enforcing the lien against the insurer in the trial court. The insurer appealed, arguing that the familiar law of offers and counteroffers as applied in Frickey v. Jones conflicted with the potential liability to settling parties arising out of hospital lien law. Although declining to find any such conflict, the court in Wellstar created a “safe harbor” for insurers in the situation in which Southern General found itself.

What Is “Safe Harbor”?

Bad Faith Insurance: The Rules Of Meaning

August 21, 2015 | by Slappey & Sadd, LLC

The Rule Of Plain Meaning

The insurer and the insured are bound by the plain and unambiguous terms of the insurance contract. In construing a contract, a court first “determine[s] if the instrument’s language is clear and unambiguous.” “If the language is unambiguous, the court simply enforces the contract according to the terms, and looks to the contract alone for the meaning.”

The plain terms of an unambiguous policy are given full effect even though they are beneficial to the insurer and detrimental to the insured. The cardinal rule of contract construction is to ascertain the parties’ intent, so that when the terms of the contract are clear and unambiguous, the court looks to the contract alone to determine that intent. Construction and interpretation of contracts are generally matters of law for the court.

Bad Faith: Statute Of Limitations And Attorney Fees

August 19, 2015 | by Slappey & Sadd, LLC

Statute of Limitations

Actions upon written contracts must be brought within six years. The six-year period of limitations applies to insurance policies. On its face, O.C.G.A. § 33-4-6 does not include its own statute of limitations. The six-year statute of limitations for simple written contracts applies to bad-faith actions, because the action is “based upon rights arising from [the] contract of insurance.” Care should be taken, however, because some insurance policies contain contractual terms that effectively limit the statute of limitations.

Amount of the Bad-Faith Penalty

Bad Faith Litigation: Expert Witnesses

August 17, 2015 | by Slappey & Sadd, LLC

EXPERT WITNESSES IN COMMON-LAW BAD-FAITH ACTIONS

bad faith insurance and witnesses
The crux of the typical common-law bad-faith lawsuit turns on the reasonableness of the insurer’s decision to decline an opportunity to settle within policy limits. In some cases expert testimony regarding the insurance company’s actions could be helpful for the trier of fact in determining whether the insurer behaved as an “ordinarily prudent insurer” in determining whether to settle a lawsuit. Although questions as to the appropriateness of a particular expert would be a fact-intensive analysis tailored to a specific case, a few reported cases offer some guidance.

The Daubert Standard

The Time-Limited Demand: Acceptance and Rejection

August 13, 2015 | by Slappey & Sadd, LLC

Acceptance and Rejection of The Time-Limited Demand

The law of contract formation with respect to offers, counteroffers and rejections informs whether an insurer fails to take advantage of an offer to settle within policy limits. Accordingly, when negotiating a possible settlement within policy limits, the following rules apply:

The offeror is master of his offer and may condition the terms under which an offer may be accepted.

Insurance Bad Faith: Opportunity To Settle

August 12, 2015 | by Slappey & Sadd, LLC

The common occurrence of a written Holt demand notwithstanding, there is no requirement under Georgia law that the insurer’s failure to settle within policy limits be proven by the insurer’s failure to accept a formal, written demand within a stated time. Rather, the law requires an inquiry into “whether the insurer had an opportunity to make an effective compromise.” Although refusing to place an “affirmative duty on the company to engage in negotiations concerning a settlement demand that is in excess of the insurance policy’s limits,” the Georgia Supreme Court has not required that the “opportunity to make an effective compromise” be in any particular form.

Settling Within Policy Limits

The “argument that an insurer may not be held liable for tortious refusal to settle in the absence of a settlement demand from the plaintiff is not supported by Georgia law.” Indeed, the Georgia Court of Appeals has held that in the appropriate situation an insurer may have a duty to make an offer: “The failure either to settle within policy limits or to make an offer of settlement creates an issue of bad faith of the insurer, because the issue arises whether the insurer places its financial interest superior to the interests of its insured who is placed at great risk for an excess judgment.”