Certiorari to the Court of Appeals of Georgia -- 328 Ga.App. 674.
Magill Atkinson Dermer, David M. Atkinson, Ariel E. Shapiro, for appellant.
Larry E. Stewart, for appellee.
HUNSTEIN, Justice. All the Justices concur.
In this dispute over recovery under an uninsured motorist (UM) insurance policy, we granted certiorari to consider the burden of proof on summary judgment as between the insured plaintiff and the UM carrier, where the UM carrier has denied coverage based on a claim that the at-fault driver was not " uninsured" as defined in the UM policy because the driver's liability carrier had not " legally denied" coverage. We conclude that the Court of Appeals erred in placing the burden of proof on the UM carrier in this instance, and we therefore reverse.
In connection with a 2009 car accident, Appellee Luis Castellanos obtained a judgment against Jose Santiago for compensatory and punitive damages. In the tort litigation, Santiago was defended by his insurer, United Automobile Insurance Company; Santiago was absent from trial. After the trial, United offered to settle with [297 Ga. 175] Castellanos for an amount less than the total judgment, claiming that punitive damages were not covered under Santiago's policy. After Castellanos rejected United's offer, United denied coverage to Santiago on the ground that he had failed to cooperate in defending the lawsuit as required under his policy.
Castellanos then sought payment of the judgment from his uninsured motorist carrier, Travelers Home and Marine Insurance Company. Travelers had participated in discovery in the underlying tort suit and its counsel had attended the trial. The Travelers policy provides coverage for, inter alia, compensatory damages that an insured is " legally entitled to recover from the owner or operator of an 'uninsured motor vehicle.' " An " uninsured motor vehicle" is defined, in pertinent part, as a motor vehicle " [t]o which a liability bond or policy applies at the time of the accident but the bonding or insurance company ... [l]egally denies coverage."  Castellanos made a written demand for payment under his UM policy, but Travelers never responded to the demand. Castellanos thereafter sued Travelers for bad faith refusal to pay under its policy. See OCGA § 33-7-11 (j) (authorizing suit for recovery of penalties and attorney fees for insurer's bad faith refusal to pay covered loss). As part of its defense, Travelers contends that United did not " legally deny" coverage under Santiago's policy, such that Santiago was not an " uninsured motorist" and Castellanos' accident was not covered under the UM policy.
On cross-motions for summary judgment, the trial court agreed with Travelers, concluding that Castellanos had " failed to present evidence that there was a 'legal denial' of coverage by United." A fractured Court of Appeals reversed the award of summary judgment to Travelers, holding that the trial court had improperly shifted the burden onto Castellanos to come forward with evidence to rebut Travelers' defense. Castellanos v. Travelers Home & Marine Ins. Co., 328 Ga.App. 674 (1) (760 S.E.2d 226) (2014). The majority concluded:
Although evidence may exist that United's denial of benefits (on the basis that Santiago failed to cooperate with the defense) was not legally sustainable (for example, if United never requested his cooperation), once Castellanos met his
threshold burden of showing that he was entitled to UM benefits, Travelers had the burden of presenting such [297 Ga. 176] evidence to justify its denial of coverage, as ...