Yeomans & Associates Agency, Inc. v. Bowen Tree Surgeons, Inc.

Citations: 618 S.E.2d 673; 274 Ga. App. 738Docket: A05A0637, A05A0638

Court: Court of Appeals of Georgia; July 15, 2005; Georgia; State Appellate Court

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The case involves appeals from a jury verdict favoring George Bowen and Bowen Tree Surgeons, Inc. against their insurance agency, Yeomans Associates Agency, Inc., and its insurer, Canal Indemnity Company. Yeomans argues that the trial court erred in admitting certain evidence and in jury instructions, while Canal disputes the grant of partial summary judgment to Bowen and claims it should have received a directed verdict, as well as challenging the exclusion of evidence.

The background of the case centers on a December 18, 2000, vehicle collision involving Michael S. Black, who was driving for Bowen Tree Surgeons. The Cowarts, injured in the accident, filed a lawsuit alleging negligence against Black and Bowen Tree Surgeons under the doctrine of respondeat superior. At the time of the incident, Bowen had multiple insurance policies through Yeomans, including a motor vehicle policy from Auto-Owners and a commercial general liability policy from Canal.

Lisa Bertoch, an agent from Yeomans, managed Bowen’s insurance claims and communications with insurers. Bertoch routinely submitted claims to a brokerage firm, Strickland General Agency, which processed them with Canal. Yeomans instructed its agents to file claims with all potentially liable insurers if there was uncertainty about coverage. Bowen had no direct communication with Strickland or Canal regarding his insurance matters. After being notified of the Cowart lawsuit, Bowen informed Bertoch, who assured him she would handle it. However, Bertoch only forwarded the notice to Auto-Owners, believing Canal would not cover the incident, ultimately leading to the disputes in the case. The court affirmed the lower court's decisions, finding no errors in the trial proceedings.

Bertoch, an insurance agent, based her decision on her training and experience without reviewing the Canal policy or investigating Bowen Tree Surgeons' coverage. After being notified of the Cowart lawsuit, Auto-Owners informed Bowen Tree Surgeons that it would not provide coverage or defense and advised Mr. Bowen to contact Black's insurance carrier. Mr. Bowen, believing Bertoch had forwarded the notice to Canal, did not hire an attorney since he trusted Bertoch to manage his claims. Yeomans did not inform Mr. Bowen that the notice had not been sent to Canal, resulting in Canal not defending Bowen Tree Surgeons in the lawsuit. Consequently, a default judgment of $1,250,000 was issued against Bowen Tree Surgeons. After learning of the judgment, Mr. Bowen and Bowen Tree Surgeons settled with the Cowarts, agreeing to dismiss their motion to set aside the judgment, citing financial inability to pay and the potential for bankruptcy. They later sued Canal and Yeomans for the default judgment amount, alleging breach of coverage and failure to investigate the Cowart suit adequately. The trial court granted summary judgment in favor of Canal, concluding there was no evidence of Yeomans being Canal's agent. However, upon appeal, the court reversed this decision, stating that a jury should determine the nature of Yeomans' relationship with Canal and whether Yeomans could accept notice of claims on Canal's behalf.

In Bowen Tree Surgeons v. Canal Indemnity Co., the plaintiffs sought partial summary judgment regarding Canal's obligation to defend and provide insurance coverage for Bowen Tree Surgeons in the Cowart lawsuit. The trial court granted this motion, determining that the Cowart complaint and Mr. Bowen's statements indicated a claim for an 'occurrence' under the Canal policy, with no applicable exclusions. Consequently, the court ruled that Canal was required to defend Bowen Tree Surgeons in the Cowart suit. A jury later found Canal had constructive notice of the suit and awarded the plaintiffs $1,550,000 against Yeomans. Canal and Yeomans appealed, challenging the trial court's ruling on the summary judgment. The appellate court upheld the trial court's decision, affirming that insurance policies are contracts, and the obligation to defend is determined by the policy terms. It noted that an insurer must defend against all claims covered by the policy, regardless of whether the claims are groundless. The Canal policy provided general liability coverage, including a duty to defend against claims for bodily injuries resulting from an 'occurrence,' defined as an accident. However, it excluded coverage for injuries arising from the use of an automobile owned or operated by an insured. It was acknowledged that Bowen Tree Surgeons' employee was driving his own vehicle for personal reasons, not within the scope of employment, at the time of the incident with the Cowarts.

Black was not considered an 'insured' under the Canal policy, thus the exclusion for bodily injuries from automobile use by an insured was not applicable. No other policy exclusions were relevant in this case. Bowen Tree Surgeons, as a named insured, was sued by the Cowarts for alleged responsibility regarding the incident. The trial court correctly determined that the Cowarts’ injuries constituted an 'occurrence' under the Canal policy. The obligations of the insurer to pay and defend are distinct. The question of Bowen Tree Surgeons' liability under respondeat superior for Black's actions is irrelevant to Canal's duty to defend the business in the Cowart lawsuit. If Canal had defended Bowen Tree Surgeons, it could have argued that Black was outside the scope of employment during the incident. Canal's potential defense success does not negate its obligation to provide a defense. Judge Andrews’ dissent, asserting that Canal had no duty to defend due to the Cowarts' unlikely success, misinterprets precedent. Similarly, Judge Blackburn’s dissent, claiming that coverage for the Cowart collision contradicts the intention of Canal and Bowen Tree Surgeons, is flawed; clear and unambiguous contract language governs. The parties agree the policy language is not ambiguous, and thus the trial court's finding that the Cowart collision was an 'occurrence' should stand. Even if ambiguities existed, they must be construed against the insurer. Judge Blackburn's assertion about Mr. Bowen's intent for 'seamless, non-duplicative coverage' lacks evidentiary support and was not raised in the trial court, nor suggested on appeal.

Judge Blackburn's reliance on Strickland v. Auto-Owners Ins. Co. is deemed inappropriate because that case involved a motor common carrier with established industry practices for obtaining separate insurance policies for different risks, unlike the tree surgeon context here, where no such practices are evident. In Strickland and Grain Dealers Mut. Ins. Co. v. Pat's Rentals, the insured parties were driving their own vehicles, covered under their business vehicle policies, and did not intend for their general liability policies to overlap. In contrast, during the collision in question, Black was not driving a vehicle owned by Bowen Tree Surgeons, meaning there was no coverage under the Auto-Owners business vehicle policy, eliminating concerns of unintended overlap.

The situation parallels Judge Blackburn's opinion in Guaranty Nat. Ins. Co. v. Brock, where a school administrator's professional liability insurance covered a claim arising from a situation excluded from coverage, highlighting the issue of coverage availability. If Bowen Tree Surgeons' general liability policy were interpreted to exclude coverage for the Cowart collision, it would leave the business without any insurance for claims related to employee negligence, contradicting the purpose of obtaining such coverage.

Canal's argument against its duty to defend Bowen Tree Surgeons relies on the Cowart complaint's allegations that Black was acting within the scope of his employment. However, Mr. Bowen clarified that Black was off duty and driving his own vehicle at the time. When the complaint suggests no coverage but additional facts indicate potential coverage, the insurer must investigate these facts to determine its defense obligations. Therefore, Canal cannot solely depend on the complaint's language to deny its duty to defend. The trial court correctly concluded that the Cowart collision constituted an "occurrence" under Canal's policy, thus obligating Canal to defend Bowen Tree Surgeons in the Cowart suit.

Canal argued for a directed verdict regarding the existence of an agency relationship with Yeomans, asserting that the trial court erred in denying this request. The appellate court employs the 'any evidence' test to evaluate such denials, focusing on whether there is any evidence supporting the jury's verdict. The court previously reversed a summary judgment favoring Canal, establishing that Yeomans’ actions, such as accepting premiums and claims on Canal's behalf, could signify an agency relationship. The court found sufficient evidence for a jury to determine if such a relationship existed and if Canal received constructive notice of the Cowart suit. 

Additionally, Canal contested the trial court's exclusion of evidence related to a settlement agreement between Bowen Tree Surgeons and the Cowarts, which was ruled irrelevant and prejudicial. Canal maintained that this evidence was pertinent to demonstrate that Bowen Tree Surgeons breached Canal's policy by settling without consent. However, Canal had denied any obligation to defend Bowen Tree Surgeons in the Cowart suit, which undermined its argument regarding the relevance of the settlement.

Canal's failure to defend Bowen Tree Surgeons resulted in a default judgment that drove the business into bankruptcy. Consequently, Mr. Bowen took actions he deemed necessary to safeguard his business interests. Canal is estopped from claiming that the plaintiffs violated the insurance policy by settling a claim without its consent, as Canal itself breached the policy by not defending Bowen Tree Surgeons in the Cowart suit. According to Georgia law, an insurer that denies coverage and refuses to defend waives the right to contest a settlement made by the insured. The trial court's decision to exclude evidence of the settlement agreement was not an abuse of discretion. Yeomans, in its appeal, argued that the trial court erred in its rulings on motions in limine and the admission of evidence, specifically a summary judgment order that determined the Canal policy covered Bowen Tree Surgeons in the Cowart suit and that Canal had a duty to defend. Yeomans contended that this order was irrelevant since the jury had already heard testimony claiming no coverage existed. However, the trial court found the summary judgment order relevant to the issues of coverage, Yeomans' duty to forward the Cowart suit notice to Canal, and whether Yeomans' failure to do so caused damages, including the default judgment against Bowen Tree Surgeons. Therefore, the trial court's admission of the order was upheld as it was pertinent to the case.

Yeomans argues that the trial court erred by not excluding the testimony of the plaintiffs' expert witness, asserting the witness lacked qualifications due to not being an independent insurance agent or licensed in Georgia. On appeal, Yeomans questions the credibility and weight of the expert's testimony, which contradicted Yeomans' own witnesses. The document explains that an expert witness is defined as someone with specialized knowledge that exceeds that of an average juror, and it is the trial court's responsibility to determine a witness's qualifications. While licensure in Georgia does not inherently affect qualification, it may influence the jury's assessment of the expert's credibility. The appellate review of the trial court's decision on expert qualifications is limited to instances of clear abuse of discretion. The expert, with over 32 years in the insurance industry, provided testimony regarding the roles and responsibilities within the insurance process but did not specifically address Yeomans' breach of duty. Yeomans cross-examined the expert, resulting in unfavorable testimony. The court found no abuse of discretion in allowing the expert's testimony, emphasizing that the jury determines its weight and credibility. 

Additionally, Yeomans claimed the trial court wrongfully excluded evidence of a settlement agreement from the Cowart suit, arguing it would demonstrate the plaintiffs' failure to mitigate damages and their comparative negligence. However, Yeomans did not provide legal authority to support this claim, leading the court to consider it abandoned. Thus, the trial court's decision to exclude the settlement agreement was affirmed as not being an abuse of discretion.

Yeomans claims that the trial court incorrectly instructed the jury on the potential damages for which Yeomans could be liable. The court previously ruled that if the jury determined Yeomans breached a duty to the plaintiffs, they could recover damages up to the full amount of a default judgment against Bowen Tree Surgeons, including interest and costs. At trial, the jury was instructed that an insurance agent could be liable beyond policy limits if they breached their duty to an insured. Bertoch, an agent, failed to notify Canal about the Cowart lawsuit, leading to a default judgment against Bowen Tree Surgeons, which the jury could find resulted from her negligence. Thus, damages from the default judgment were linked to Bertoch's actions rather than a lack of insurance coverage. The court found no error in this jury instruction, referencing similar cases where insurers were held liable for not providing timely defense. 

In dissent, Judge Andrews argued that the trial court improperly granted a motion for partial summary judgment regarding insurance coverage, asserting that the incident involving Black and the Cowarts was not covered under the Canal policy. Andrews contended that Bowen Tree did not prove Yeomans was Canal's agent for notice purposes, warranting a directed verdict for Canal. Additional details included that both Bowen and Bertoch were surprised by the lawsuit since Black was off-duty during the incident. After Bertoch submitted the lawsuit to Auto-Owners Insurance, they denied coverage, advising Bowen to contact Black's insurance carrier for defense.

Bowen was advised to retain an attorney to protect his interests in ongoing litigation but failed to do so, neglecting to contact Yeomans, his insurer, or Canal directly. Instead, Bowen allowed the Cowarts' lawsuit against Bowen Tree to go into default. After attempting to set aside the default judgment, Bowen and Bowen Tree settled with the Cowarts, withdrew their motion, and subsequently sued Yeomans and Canal without notifying Canal of the settlement. The Canal policy names Bowen Tree Surgeons, Inc. as the insured and outlines coverage for bodily injury or property damage resulting from occurrences within the coverage territory. It specifies conditions for the insurer’s obligation to defend claims, including timely notification of occurrences or claims and restrictions on voluntary payments by insured parties without consent. George Bowen testified that his office, including his wife, handled the policy details, while he focused on fieldwork. Yeomans obtained the Canal policy through the Strickland General Agency but did not possess a complete copy, only the Declarations page. Bowen stated that the Canal policy would apply only when the insured was actively working and clarified that he had not purchased insurance covering employees in accidents while driving personal vehicles. The Canal policy explicitly did not cover the incident involving Black and the Cowarts, and Bowen's unawareness of the policy terms did not negate this lack of coverage.

The insured has a duty to examine their insurance policy to understand the coverage it provides. If the policy does not meet their needs, they have the option to renegotiate or reject the policy upon delivery. Failure to review the policy renders it binding. In the case of Canal v. Bowen Tree, the trial court erred in granting Bowen Tree summary judgment regarding coverage. Bowen Tree did not provide the required notice to Canal, failed to establish that Yeomans acted as a dual agent for both Canal and Bowen Tree, and violated the Canal policy by settling a lawsuit without Canal's knowledge. Yeomans, an independent agent, was determined to represent Bowen Tree, not Canal, due to lack of a contractual relationship with Canal. Claims submitted by Yeomans were sent to Strickland, not Canal. For apparent agency to impose liability, there must be evidence that the principal represented the agent and that the reliance on this representation caused injury. Bowen Tree did not demonstrate that Yeomans served as both the insured's and insurer's agent, thus Canal was justified in seeking a directed verdict.

In the case of Southeastern Express Systems v. Southern Guaranty Ins. Co. of Ga., the dissenting opinion by Presiding Judge Blackburn argues against the majority's ruling regarding insurance coverage for an auto accident involving an off-duty employee of Bowen Tree Surgeons, Inc. The incident occurred on December 18, 2000, when employee Michael S. Black, while driving his personal vehicle, collided with Joel and Brenda Cowart, resulting in injuries. Following the accident, the Cowarts sued both Bowen and Black, and Bowen notified its insurance agent, Lisa Bertoch, about the lawsuit. Historically, Bowen had notified Bertoch, who would communicate with the insurers; however, in this instance, she only informed Auto-Owners Insurance Company, which subsequently denied coverage and defense.

Bowen did not take further action, leading to a default judgment of $1,250,000 in favor of the Cowarts in April 2002. In May 2003, Bowen sued Canal Indemnity, claiming coverage under its commercial general liability policy. The trial court granted Canal summary judgment, ruling that Bertoch was not an authorized agent for Canal, and thus, proper notice was not given. However, this decision was reversed by the appellate court on November 21, 2003, which focused solely on whether Bertoch had the authority to accept claims on behalf of Canal and directed the trial court to determine if Bowen was entitled to coverage.

On the same day, Bowen settled with the Cowarts, limiting recovery to potential sums from the Canal policy. Bowen then sought summary judgment, asserting that the Canal policy covered the accident. The trial court granted this motion on March 31, 2004, but the dissent argues this was incorrect due to the existence of overlapping insurance policies, referencing standards for such policies in the context of motor common carriers. The dissent emphasizes the complexity of insurance arrangements in this industry, suggesting that separate policies are often necessary to cover different risks effectively.

A commercial general liability policy excludes motor vehicle liability, necessitating a separate policy for such coverage to avoid duplicative premiums and overlapping coverage. In this case, Bowen obtained a motor vehicle liability policy from Auto-Owners and a separate general liability policy from Canal, which explicitly excluded motor vehicle collisions. This arrangement fixed Bowen's risk limits, as it knowingly accepted the exclusion and secured coverage for the excluded risk from Auto-Owners. The intent of the policies and their exclusions governs coverage, focusing on the underlying facts of the claim rather than the claim's formulation. The expectations of both the insured and insurers were that there would be two distinct policies without overlapping coverage. The trial court mistakenly ruled that the Canal policy covered a motor vehicle accident involving Bowen. Furthermore, Bowen's decision to settle after a default judgment negated Canal's duty to defend, as no litigation requiring defense occurred post-settlement. The accident was explicitly excluded under the Canal policy, confirming that Canal had no duty to defend or indemnify Bowen for related damages.