In the last few months, the Georgia Court of Appeals has delivered two opinions testing the limits of the one-year suit limitation clause.
In the last few months, the Georgia Court of Appeals has delivered two opinions testing the limits of the one-year suit limitation clause. In both cases, even in the face of increasingly pro-insured facts, the Court of Appeals enforced the one-year suit limitation. Even though both of these decisions predate the changes in the one-year suit limitation (making it a two-year suit limitation) enforced by the Georgia Insurance Commissioner, the factual patterns of both these cases should be very relevant.
In Thornton v. Georgia Farm Bureau Mutual Insurance Company, Case No. A08A1801, F.C.D.R. 1229 (3/27/09), the court had before it a fire loss occurring on February 28, 2006. In Thornton, Georgia Farm Bureau immediately started investigating this loss as a suspicious fire. Nevertheless, on the same day of the loss, Georgia Farm Bureau advanced $1,500 to the Thorntons, though with an agreement stating that there was no admission of liability and that all the terms of the policy would still be in effect.
Significantly, on March 7, 2006, Georgia Farm Bureau sent another letter specifically stating that any action against it must be filed within one of the date of the loss. Thornton then received another advance of $5,000 in March 7, 2006. In April of 2006, Georgia Farm Bureau informed Thornton that the cause of the fire was determined to be incendiary and Thornton was examined under oath on June 19, 2006 and again on July 12, 2006. In September 2006, Georgia Farm Bureau again advanced $6,000 to Thornton, with the same written understanding that none of the policy provisions were being waived.
On October 30, 2006, Georgia Farm Bureau notified Thornton that it was denying coverage under the policy for arson and fire. Thornton did not file suit until March 15, 2007.
In enforcing the one-year suit limitation, the Georgia Court of Appeals cited to O.C.G.A. § 33-24-40, a statute which expressly provides that the insurer does not waive any provision of the policy merely by investigating a claim or engaging in negotiations toward a possible settlement of the claim. Similarly, the Court of Appeals explained that without express authority from the insurance company, neither a local agent nor a claims adjuster had the power to waive a policy provision that any action against the insured must be filed within one year of the date of loss. (Citing to Auto-Owners Insurance Company v. Ogden, 569 S.E.2d 833 (Ga. 2002)). What makes this case most significant, however, is the court’s treatment of Thornton’s argument that the period of limitation should have been tolled for the 60 days following the submission of the proof of loss because the policy provided that Georgia Farm Bureau was not obligated to pay a claim or deny coverage for the period before the 60 days period. While noting that this argument had already been rejected by Georgia courts (Citing SunTrust Mortgage v. Georgia Farm Bureau Mutual Insurance Company, 416 S.E.2d 322 (Ga.App. 1992)), on the issue of tolling during the proof of loss period, the court stated:
Although binding precedent requires that we reach the result that we have, the time has come for the General Assembly to examine whether the limitation period for suits against an insurance company should be tolled while a claim is being processed. . . . Therefore the General Assembly should consider whether tolling should be adopted in this state.
As can be seen, the Court of Appeals is chafing under precedent that it wants the Georgia Assembly to liberate it from.
The second case of note involving the one-year suit limitation is Aaron v. Georgia Farm Bureau Mutual Insurance Company, Case No. A09A0354, F.C.D.R. 1373 (4809).
In this case, we find the following timeline:
· September 29, 2001: Insured’s house struck by a moving vehicle;
· June 2002: Agreement reached with contractor concerning the scope of damages;
· July 3, 2002: Counsel for insured writes to Georgia Farm Bureau taking exception to the repair estimate;
· July 5 & 23, 2002: Georgia Farm Bureau communicates with insured about the damages;
· August 2002: More letters exchanged concerning the scope of damages;
· September 26, 2002: Georgia Farm Bureau writes a letter to insured’s counsel indicating that they would like to settle the claim;
· SEPTEMBER 30, 2001: The one-year suit limitation expires;
· October 8, 2002: Insured’s counsel responds to Georgia Farm Bureau’s letter threatening to take the case to court;
· February 28, 2003: Insured’s counsel writes the Georgia Farm Bureau that they would accept an earlier offer;
· March 20, 2003: Georgia Farm Bureau rejects offer to settle and states that the one-year suit limitation has been violated;
· April 23, 2003: Insured’s counsel invokes the appraisal clause;
· July 22, 2003: Georgia Farm Bureau again rejects any offer to settle and the appraisal provision since the one-year suit limitation has run;
· July 30, 2004: Counsel for insured files suit.
The two issues raised in this case by the insured’s counsel to try and defeat the one-year suit limitation were as follows:
First, the insured’s counsel tried to argue that the earlier offer to resolve the matter was a binding contract that could be accepted outside the one-year suit limitation. The court factually found that there was, in fact, no meeting of the minds on the contract, and found the one-year suit limitation controlling.
The second argument was that the appraisal provision is not governed by the one-year suit limitation. The court found that this argument had already been determined under Georgia law, citing to Shelter American Corporation v. Georgia Farm Bureau Mutual Insurance Company¸ 433 S.E. 140 (Ga.App. 1983). The court went on to explain that this provision does not establish liability under the policy. Any claim for liability under the policy expired under the one-year suit limitation.
Once again, in these two recent cases, the Georgia courts continue to support the one-year suit limitation.