IN THE SUPREME COURT
STATE OF GEORGIA
KENNETH TERRY,
Plaintiff-Appellant,
v.
STATE FARM FIRE & CASUALTY INS. CO.,
Defendant-Appellee.
Case No. S98G0601
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BRIEF OF THE AMICUS CURIAE COMMITTEE
GEORGIA TRIAL LAWYERS ASSOCIATION
The Georgia Trial Lawyers Association is a voluntary
organization composed of some 2,700 Georgia trial lawyers. GTLA often
appears as amicus curiae before the appellate courts of Georgia and
before the federal courts, concerning issues of significance to the
administration of justice.
GTLA joins in this appeal because of its importance
to implementation of the uninsured motorist act. GTLA supports the
decision of the trial court granting summary judgment to Plaintiff-Appellant
Kenneth Terry, and urges reversal of the decision of the Court of
Appeals, which reversed the trial court. The terms of a standard-form
dismissal agreement between the parties cannot be read to require
a second round of litigation on the merits, after Plaintiff already
had obtained a judgment against an uninsured motorist.
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FACTS
Defendant-Appellee State Farm was an uninsured motorist
carrier for Plaintiff. Plaintiff had an accident with Undra Davis,
driver of a McFrugal Auto Rental car. McFrugal was self-insured up
to $50,000. Plaintiff sued Davis and served State Farm pursuant to
the uninsured motorist act, O.C.G.A. § 33-7-11. State Farm answered,
filed discovery, and then proposed to Plaintiff that State Farm be
dismissed without prejudice. State Farm drafted the dismissal.
Plaintiff obtained a judgment against Davis, believing
that she was covered by McFrugal's self- insurance; but after judgment,
McFrugal notified Plaintiff Terry that it was now insolvent. Plaintiff
so notified State Farm, which took the position that it was now entitled
to retry all issues of liability and damages. This Court has granted
certiorari to consider whether the language of the consent dismissal
is capable of supporting State Farm's interpretation.
The key language which this Court must consider
is found in just three sentences of the consent dismissal:
The parties consent and agree that State Farm will
waive any statute of limitations defense in the event that it becomes
necessary for State Farm to be re-joined in this litigation. In
the event that the plaintiff finds it appropriate to renew an uninsured
motorist claim, under circumstances including a withdrawal of coverage
by a liability insurer, State Farm will be served in the manner
authorized by law and have a full right to defend on liability and
damages in this case. Stipulations and defaults by, or Judgments
against, the individual defendant will not be binding upon or create
exposure by State Farm.
Dismissal Without Prejudice, at 1.
I. THE RULING OF THE COURT OF APPEALS VIOLATES
THE PUBLIC POLICY UNDERLYING THE UNINSURED MOTORIST ACT.
"The purpose of the uninsured motorist legislation
is ... 'to facilitate indemnification for injuries to a person who
is legally entitled to recover damages from an uninsured motorist,
and thereby to protect innocent victims from the negligence of irresponsible
drivers.' Uninsured motorist statutes are remedial in nature and must
be broadly construed to accomplish the legislative purpose."
Smith v. Commercial Union Ass. Co., 246 Ga. 50, 51, 268 S.E.2d 632
(1980). The Court of Appeals decision, somehow finding that a second
round of litigation was required by an agreement which refers to no
such second action, contravenes this protective legislative purpose
<thorn> especially as broadly construed by this Court in Smith.
To decide this case, the Court need not resolve
whether an uninsured motorist carrier ever may demand and an insured
explicitly may consent to a requirement of a separate action where
uninsured status becomes known only after judgment against the tortfeasor.
At the very least, if an uninsured motorist carrier wishes not to
participate in the underlying lawsuit, and seeks the protection of
a separate lawsuit on liability and damages as the price of any agreed
dismissal, the insurer should make clear it is exacting that price.
Once Terry's action was terminated by judgment against
Undra Davis, it was over and done with. Now that that action is terminated,
State Farm's demand for a new round of litigation can be satisfied
only by a separate lawsuit. Because the standard form agreement used
here and demanded by other insurers does not require a new lawsuit,
this Court should reverse the Court of Appeals.
II. THE PARTIES' DISMISSAL AGREEMENT REQUIRES
PLAINTIFF TO RE-JOIN DEFENDANT ONLY BEFORE JUDGMENT AGAINST DAVIS
The language of this consent dismissal cannot be
read to require a second round of litigation once judgment has been
obtained against the tortfeasor. The dismissal agreement as a whole
makes clear that only in the underlying litigation, and only if the
Undra Davis' uninsured status should appear before entry of judgment
in that litigation, was State Farm entitled to fresh notice and a
renewed opportunity to litigate over liability and damages.
"The cardinal rule of [contract] construction
is to ascertain the intention of the parties." O.C.G.A. §
13-2-3. In fulfilling that purpose, "the whole contract should
be looked to in arriving at the construction of any part." O.C.G.A.
§ 12-2-2(4). The whole of this contract shows that the parties
contemplated and required State Farm's renewed participation only
if Davis' uninsured status should emerge before judgment.
The first quoted sentence confirms this meaning
of the agreement, in a variety of ways. In that
first sentence, the parties contemplated only "the event that
it becomes necessary for State Farm to be re-joined in this litigation."
(Emphasis supplied) After judgment, however, it was no longer possible
"for State Farm to be re-joined in this litigation." The
parties could not have stated more clearly that their arrangement
applied only so long as the underlying litigation remained pending.
The temporal limitation of this first sentence is
very important not only in and of itself, but also because it applied
to and limited the protections afforded to Terry. The subject of this
sentence is State Farm's agreement to waive any statute of limitations
defense. That promise was absolutely necessary to protect Plaintiff,
so that he could claim under his uninsured motorist coverage even
if more than two years should have elapsed by the time it appeared
that Undra Davis lacked insurance coverage. Yet this key sentence
conspicuously does not promise to waive the statute if a new and different
lawsuit should have to be commenced against State Farm to establish
tort liability and damages.
It follows that these parties did not contemplate
and did not require a separate lawsuit against State Farm over tort
liability and damages. If the parties had intended to cover such an
eventuality, they would have provided for waiver of the statute of
limitations for that purpose also.
The second quoted sentence too contains very simple
language which confirms that any renewed right to defend applied only
during the pending action against Undra Davis. That sentence provides
only that "State Farm will ... have a full right to defend on
liability and damages in this case." (Emphasis supplied) Again,
the parties' wording could not be clearer in providing that no other
action against State Farm, and no other opportunity "to defend
on liability and damages," was either promised or required.
Additionally, this sentence contains mere "service"
requirements which are inconsistent with a separate suit requirement.
Specifically, this sentence says if "plaintiff finds it appropriate
to renew an uninsured motorist claim, ... State Farm will be served
in the manner provided by law." If the parties had intended to
require that Terry commence a separate action against State Farm alleging
tort liability and damages, they would have said so. Rather than require
a new suit, this sentence merely requires that State Farm be re-served
while the Undra Davis suit was pending.
Re-service of a prior lawsuit is categorically different
from beginning a new suit, as State farm demands. Georgia law is clear
that re-serving the same lawsuit has no effect and is a mere nullity
if a new lawsuit is required. Atkinson v. Holt, 213 Ga.App. 427, 444
S.E.2d 838 (1994). "A renewed lawsuit ... is an action de novo;
therefore, the procedural requirements of a new complaint and perfecting
service must be completed anew." McClendon v. 1152 Spring Street
Assoc., 225 Ga.App. 333, 484 S.E.2d 40, 43 (1997). If the parties
had intended a new lawsuit, they would have said so, instead of using
the language of "service."
The lawyers who drafted this agreement were capable
of finding and using wording to accomplish that result, if the parties
had so intended. The voluntary dismissal statute affords a model.
That statute avoids the bar of the statute of limitations if the plaintiff
"recommence[s]" the action within six months. O.C.G.A. §
9-2-61(a) (emphasis supplied). These parties did not provide for "recommencing"
the Undra Davis action against State Farm. They provided only for
State Farm to be "served in the manner authorized by law."
This phrase provides only for re-service.
Moreover, the parties' phrase invokes almost precisely
the language of the uninsured motorist act, O.C.G.A. § 33-7-11(d)
("a copy of the action and all pleading thereto shall be served
as prescribed by law upon the insurance company"). This wording
therefore indicates the parties' intent to parallel the Act's procedures.
Revealingly, the Act contemplates service upon and participation by
an uninsured motorist carrier only in a pending action against a known
tortfeasor. The Act does not create nor permit any separate action
against the insurer where the owner or operator of the other vehicle
is known. Thus the parties' invocation of language paralleling the
uninsured motorist act's service provisions (instead of language requiring
separate suit) is still another telling indication that they did not
require such a separate suit against State Farm.
In the face of this dismissal agreement's clear
limitation to the pending action against Davis, the Court of Appeals
held the final quoted sentence requires that State Farm have a separate
opportunity to defend on liability and damages issues. For at least
three compelling reasons, no such opportunity can be read into that
final sentence.
First, that sentence has no inherent nor intrinsic
meaning that makes sense. To recap, this sentence says that no "Judgment
against [Undra Davis] will [] be binding upon or create exposure by
State Farm." The Court of Appeals erroneously held that this
wording was capable of being read on its face to require a second
lawsuit. But this sentence has no meaning "on its face"
which carries out the parties' intent. If read literally, that sentence
would mean that any judgment which Terry might obtain against Davis
would be meaningless in case she became uninsured, even if State Farm
properly were re-served and participated in the Undra Davis lawsuit.
Given the balance of the agreement, not to mention ordinary notions
of fairness, this precisely literal reading cannot possibly have been
the parties' intent. Thus the final sentence carries no intrinsic
meaning. Its meaning has to be divined in light of what goes before
it.
Second, and of great importance, neither that sentence
nor any other part of the dismissal agreement makes any reference
whatsoever to any separate action concerning tort liability and damages
-- let alone requires such an action. The absence of any such requirement
is convincing evidence that the parties intended none. Indeed, the
very detail of the prior sentences (which set out the procedures required
when uninsured status should appear during the pendency of the underlying
action), is additional powerful evidence that the parties would have
been equally explicit if they had meant to require a new opportunity
for State Farm to defend.
Amazingly, State Farm offers an admission in this
Court that the parties did not contemplate (thus could not have required)
an additional, duplicative postjudgment lawsuit. After echoing Plaintiff
Terry's factual summary that "the parties did not contemplate
that the tortfeasor would become uninsured after a judgment was rendered,"
State Farm concedes that "[t]he parties may not have contemplated
this specific turn of events." (State Farm brief at 7)
Somehow, however, even in the face of this concession,
Defendant still maintains that the "parties did contemplate that
the plaintiff might become uninsured after entering of judgment."
(State Farm brief at 8) The agreement as a whole shows that the parties
did not contemplate this event.
Even if it were true that the parties "contemplated
this specific turn of events," it does not follow that the dismissal
agreement requires a new lawsuit. The third reason why this sentence
does not require a new action is that it must be read in light of
the balance of the dismissal agreement. This language must be interpreted
in view of the parties' limiting wording and exchange of limited protections
in prior sentences, covering only the underlying lawsuit against Davis.
O.C.G.A. § 13-2-2(4).
With that contract construction principle in mind,
this sentence easily can be interpreted to avoid reading into it the
requirement of a brand new action. The parties' intent was simply
that no judgment against Undra Davis would create exposure by State
Farm if Plaintiff failed to live up to his responsibility, as spelled
out in the previous sentences, to re-serve State Farm in case Davis
became uninsured prior to judgment. In other words, no judgment against
her would suffice without more, under circumst
ances where State Farm should have been brought in
prior to judgment but was not "re-joined in this litigation."
This interpretation avoids the absurd result of
a literal reading of this sentence, which would discharge State Farm
from responsibility even if it were re- served properly. It also implements
the parties' carefully articulated intent to require that State Farm
be re-served if needed during the pending lawsuit, but not thereafter.
III. ANY AMBIGUITY SHOULD BE INTERPRETED
AGAINST STATE FARM, WHICH DRAFTED THE PARTIES' DISMISSAL AGREEMENT.
Even if the Court should find that the last quoted
sentence is capable of the construction offered by either party, its
language clearly should be construed against the interests of State
Farm. In its brief in this Court, State Farm admits for the first
time on these appeals that it both sought the dismissal agreement
and drafted its terms. (State Farm brief at 2)
"If the construction is doubtful, that which
goes most strongly against the party executing the instrument ...
is generally to be preferred." O.C.G.A. § 13-2-2(5). Not
surprisingly, the rule of construing contracts against the drafter
is used more frequently in the appellate decisions of this State against
insurers than against any other group. See, e.g., Claussen v. Aetna
Cas. & Sur. Co., 259 Ga. 333, 380 S.E.2d 386 (1989).
State Farm drafted a clause which is at best ambiguous
as to its rights in case uninsured status should appear only after
judgment. State Farm could have protected itself by including, and
negotiating for, language clearly stating that it would have the right
to be sued separately and afresh in such event. By failing to include
such wording, State Farm assumed the risk that judgment might be entered
against an insured tortfeasor who would fall under the uninsured motorist
clause of its policy only after judgment.
CONCLUSION
This Court should reverse the decision of the Court
of Appeals and reinstate the decision of the trial court.
This 25th day of August, 1998.
/s/ David A. Webster
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