IN THE SUPREME COURT
STATE OF GEORGIA
KENNETH TERRY,
Plaintiff-Appellant,
v.
STATE FARM FIRE & CASUALTY INS. CO.,
Defendant-Appellee.
Case No. S98G0601

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.

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 circumstances 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