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Auto-Owners Insurance Co. v. Tracy

Court of Appeals of Georgia, Second Division

October 30, 2017

AUTO-OWNERS INSURANCE COMPANY
v.
TRACY.

          MILLER, P. J., DOYLE and REESE, JJ.

          Reese, Judge.

         This appeal arises from a suit initially filed in magistrate court by a subcontractor for nonpayment of services. The general contractor's commercial general liability ("CGL") insurer, Auto-Owners Insurance Company (hereinafter "Auto-Owners") seeks review of the denial of several of its motions, including a motion to dismiss based on lack of privity of contract. For the reasons set forth, infra, we reverse the denial of Auto-Owners' motion to dismiss and affirm the denial of Auto-Owners' motion for attorney fees.

         Proceeding pro se, the subcontractor, Jerod Tracy d/b/a Tracy Transport, LLC ("Tracy"), filed a breach of contract action in magistrate court, alleging that he had entered into a contract with the general contractor, Holli Bortz d/b/a JL Hardscapes ("Bortz"), to do certain work at a residence. According to the complaint, after Tracy completed the agreed-upon work, Bortz refused to pay the amount due. Seeking payment in full, Tracy's suit named as defendants "Holli Bortz d/b/a JL Hardscapes, " as well as the owner and the occupier of the residential property.

         After the magistrate court entered a default judgment against "Holli Bortz d/b/a JL Landscapes, "[1] the court transferred the suit to superior court. Tracy, represented by counsel, then added as defendants on his breach of contract claim: "James Lally, " "James Lally d/b/a JL Hardscapes, " and Auto-Owners. Tracy identified James Lally as "now known to be d/b/a JL Hardscapes, " and thereupon asserted a theory that "James Lally and James Lally d/b/a JL Hardscapes held himself out to be an authorized agent and co-owner for the company, JL Hardscapes, and inasmuch, contracted with sub-contractors, [such] as [Tracy]." Tracy identified Auto-Owners as the CGL insurer of Lally and JL Hardscapes, and thereupon claimed that the insurance company also owed him the damages sought on his breach of contract claim. These damages included lost wages and other income, the loss of his dump truck, and the loss of his business, due to the nonpayment of services.

         The amended complaint incorporated a joint motion to implead third parties, along with supporting brief and exhibits.[2] Exhibit O to the motion is a "Certificate of Liability Insurance" for a CGL policy, listing the insured as "James Lally, dba JL Hardscapes." Exhibit T is designated as "Acknowledgment of Notice of Claim from Auto-Owner's Insurance to Plaintiff's counsel" and includes a declaration page designating the insured ("James Lally dba JL Hardscapes") as an "individual."

         Auto-Owners filed a motion to dismiss for failure to state a claim, arguing that, because Tracy lacked privity of contract with Auto-Owners and had not obtained a monetary judgment against its insured, Lally, Tracy could not maintain a direct action against Auto-Owners. Auto-Owners also filed a motion for summary judgment, additionally arguing that the policy did not provide coverage for the type of damages that Tracy sought; a motion to quash Tracy's subpoena duces tecum; and a motion for attorney fees.

         After oral argument, the trial court denied the motions. Following the grant of its application for interlocutory review, Auto-Owners appeals from the orders denying all four motions.

         "This appellate court reviews de novo a trial court's ruling on a motion to dismiss. A motion to dismiss may be granted where a complaint lacks any legal basis for recovery."[3] "[W]e view all of the plaintiff's well-pleaded material allegations as true, and view all denials by the defendant as false, noting that we are under no obligation to adopt a party's legal conclusions based on these facts."[4] With these guiding principles in mind, we turn now to the specific claims of error raised by Auto-Owners.

         1. Auto-Owners contends that the trial court erred in denying its motion to dismiss because a non-insured plaintiff cannot bring a direct action against a liability insurer absent an unsatisfied judgment against the insured or a statute or policy provision allowing such suit. We agree.

         "Generally, a party not in privity of contract may not bring a direct action suit against the liability insurer of the party alleged to have caused damage absent an unsatisfied judgment against the insured, legislative mandate, or as permitted by a provision in the insurance policy in issue."[5]

         The amended complaint does not allege privity of contract between Tracy and Auto-Owners; in fact, the complaint acknowledges that Tracy was not an insured of Auto-Owners or otherwise a party to a contract with Auto-Owners.[6] Second, Tracy has not shown that he has obtained "an unsatisfied judgment against the insured."[7]The magistrate court entered a default judgment against "Holli Bortz d/b/a J L Landscapes." However, according to the declarations page, incorporated in the amended complaint, the policy named "James Lally, dba JL Hardscapes" as the insured. Because Tracy failed to demonstrate that "Holli Bortz d/b/a J L Landscapes" was an insured of Auto-Owners at the time his claim arose, Tracy's reliance upon the default judgment entered against "Holli Bortz d/b/a J L Landscapes" is unavailing.

         "A trade name is merely a name assumed or used by a person recognized as a legal entity. A judgment against one in an assumed or trade name is a judgment against him as an individual. An undertaking by an individual in a fictitious or trade name is the obligation of the individual."[8] In light thereof, the default judgment against "Holli Bortz d/b/a J L Landscapes" is not an "unsatisfied judgment against the insured."[9]

         Third, Tracy makes no assertion that his direct action against Auto-Owners is specifically authorized by statute. And fourth, Tracy has cited no provision of the policy in his amended complaint that specifically permits him to bring a ...


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