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Taylor v. Government Employees Insurance Co.

Court of Appeals of Georgia, Second Division

June 21, 2019

TAYLOR
v.
GOVERNMENT EMPLOYEES INSURANCE COMPANY.

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

          Reese, Judge.

         Beryl Taylor appeals from the trial court's grant of summary judgment to the Government Employees Insurance Company ("GEICO"), her uninsured motorist carrier. Taylor contends that the trial court erred in finding that there was no evidence of GEICO's frivolous or unfounded refusal to pay her demand for the $25, 000 limit of her uninsured motorist policy and, thus, she was not entitled to bad faith penalties under OCGA § 33-7-11 (j). For the reasons set forth infra, we affirm.

         Viewing the evidence in the light most favorable to Taylor, [1] the record shows that Taylor and Charles Edwards, Jr., [2] were involved in an automobile collision on December 22, 2013, in Clayton County. Edwards's insurance carrier tendered the limits of his policy - $25, 000 - to Taylor on March 3, 2015. In consideration, Taylor signed a limited release of Edwards's liability.

         At the time of the collision, Taylor held an uninsured motorist policy ("policy") with GEICO that had a $25, 000 coverage limit. On March 3, 2015, Taylor sent a demand letter to GEICO, pursuant to OCGA § 33-7-11, demanding the full amount of benefits under the policy. According to the letter, Taylor had "incurred more than $20, 800.00 in current medical expenses and lost wages and will incur future medical expenses related to her back and neck herniations. Although [Taylor] has endured more than ten months of physical therapy and objective testing, she continues to experience back and neck pain and will require future medical treatment."[3]

         On March 10, 2015, a GEICO claim examiner, Elizabeth Saucillo, received the demand letter and began her investigation of the claim. Based upon her investigation and calculations, and after consulting with her supervisor, on March 30, Saucillo contacted Taylor's attorney in response to the demand letter and offered Taylor $750 as an initial offer to settle. Taylor rejected the offer out-of-hand, did not make a counteroffer, and refused to negotiate further with GEICO. A few days later, on April 10, 2015, Taylor filed suit against Edwards to establish the amount of her damages ("underlying case"). The underlying case proceeded to trial in December 2016, and a jury ultimately awarded Taylor $120, 131.97. Based upon the jury verdict, GEICO paid Taylor the limits of the policy, $25, 000.

         Then, on January 2, 2017, Taylor filed suit against GEICO (the "bad faith claim"), asserting that GEICO's failure to pay her $25, 000 within 60 days of her demand letter constituted bad faith as a matter of law, and seeking a 25 percent bad faith penalty and attorney fees under OCGA § 33-7-11 (j). OCGA § 33-7-11 (j) provides, in relevant part, as follows:

If the insurer shall refuse to pay any insured any loss covered by this Code section within 60 days after a demand has been made by the insured and a finding has been made that such refusal was made in bad faith, [4] the insurer shall be liable to the insured in addition to any recovery under this Code section for not more than 25 percent of the recovery and all reasonable attorney's fees for the prosecution of the case under this Code section. The question of bad faith, the amount of the penalty, if any, and the reasonable attorney's fees, if any, shall be determined in a separate action filed by the insured against the insurer after a judgment has been rendered against the uninsured motorist in the original tort action.

         GEICO answered Taylor's complaint and moved for summary judgment, asserting that there was no evidence to support a finding that its refusal to pay Taylor the $25, 000 policy limit was made in bad faith or was otherwise frivolous or unfounded.[5] GEICO argued that, on the contrary, the undisputed evidence showed that its claims examiner had conducted a thorough investigation of the case and calculated the total amount of Taylor's anticipated damages before making the initial $750 settlement offer.

         After conducting a hearing on August 21, 2018, [6] the trial court granted summary judgment to GEICO, ruling that Taylor had failed to come forward with any evidence of GEICO's frivolous or unfounded refusal to pay that would authorize a bad faith penalty under OCGA § 33-7-11 (j). This appeal followed.

         In Taylor's sole allegation of error, she contends that the trial court erred in granting summary judgment to GEICO on her claim for bad faith penalties, arguing that a jury issue existed as to whether there was a frivolous or unfounded refusal to pay by GEICO. According to Taylor, the trial court erred in basing its denial of her claim for bad faith penalties "solely on [GEICO's] averment that it fairly evaluated [Taylor's] claim." These arguments lack merit.

Penalties for bad faith are not authorized where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact. Ordinarily, the question of bad faith is one for the jury. However, when there is no evidence of unfounded reason for the nonpayment, or if the issue of liability is close, the court should disallow imposition of bad faith penalties. Moreover, the mere fact of nonpayment is not evidence of bad faith, nor is any burden thereby cast on the insurer to prove good faith. Rather, bad faith is shown by evidence that under the terms of the policy upon which the demand is made and under the facts surrounding the response to that demand, the insurer had no good cause for resisting and delaying payment. In addition, a defense going far enough to show reasonable and probable cause for making it would vindicate the good faith of the company as effectually as would a complete defense to the action.[7]

         In this case, the record does not support Taylor's argument that the only evidence to support the court's finding that GEICO did not act in bad faith was GEICO's "averment that it fairly evaluated [Taylor's] claim." Instead, the undisputed evidence showed that Saucillo, an experienced GEICO claim examiner, began her investigation of the claim on March 10, 2015, the day she was assigned Taylor's case. As part of her investigation, Saucillo obtained information about the collision and Taylor's settlement with Edwards; contacted Taylor's employer and verified that Taylor had incurred $2, 661.13 in lost wages; requested that Taylor provide a recorded statement;[8] thoroughly reviewed Taylor's medical records; and consulted with a supervisor. Based upon the medical records and her investigation, Saucillo determined that Taylor had incurred $16, 429.67 in medical expenses and $2, 661.13 in lost wages, totaling $19, 090.80 in special damages. Saucillo then utilized GEICO's computer software program, "ClaimIQ," for estimating Taylor's general damages if the case proceeded to trial. ClaimIQ provided a range of $4, 650 to $6, 300 for Taylor's general damages, but Saucillo believed the estimate was too low, so she increased the upper estimate to $7, 500. Adding those amounts to Taylor's $19, 090 in special damages resulted in a range of $23, 590 to $26, 590 for Taylor's anticipated total damages. After subtracting the $25, 000 Taylor had already received from Edwards's insurance carrier, Saucillo arrived at a settlement range for GEICO of $0 to $1, 590, which she rounded to $1, 500. Thus, on March 30, Saucillo contacted Taylor's attorney in response to the demand letter and offered Taylor $750 as a starting point for settling the claim. Taylor rejected the offer out-of-hand, did not make a counteroffer, and refused to negotiate further with GEICO.

         Consequently, the record does not support Taylor's argument that GEICO avoided bad faith penalties merely by asserting "that it [had] fairly evaluated [Taylor's] claim." More importantly, Taylor has not identified what else, if anything, Saucillo or GEICO should have done - based on the information available to GEICO at that time - to avoid liability for bad faith ...


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