First Acceptance Ins. Co. of Ga. v. Watts

899 S.E.2d 849

FIRST ACCEPTANCE INSURANCE COMPANY OF GEORGIA

v.WATTS et al.

A24A0588

Court of Appeals of Georgia.

March 18, 2024

P. Michael Freed, James Benjamin Finley, Philip Wade Savrin, Atlanta, Daniel Preston Hendrix, Amy Camille Daugherty, for Appellant.

Ben C. Brodhead III, Orlando Paulino Ojeda Jr., Ashley Brooke Fournet, Atlanta, Kenneth Ray Bernard Jr., Douglasville, Brian DeVoe Rogers, Michael Atkinson Arndt, for Appellee.

Brown, Judge.

Kimberly Glancy filed a personal injury action against Angel Watts for injuries she sustained when Watts, while operating a vehicle owned by her mother Sheril Adams, collided with Glancy’s vehicle. While that suit was pending, First Acceptance Insurance Company of Georgia, Adams’ insurer, filed the present declaratory judgment action against Adams, Watts,¹ and Glancy, seeking a determination (1) that it has no duty to provide coverage, indemnity, or a defense ("Count I"), and alternatively (2) that Glancy’s settlement offer pursuant to OCGA § 9-11-67.1 in the underlying action is void ("Count II"). In response to various motions filed by the parties, the trial court denied First Acceptance’s motion for reconsideration to open default and its motion for summary judgment, but granted Glancy’s motion to dismiss Count II and motion to refuse judgment in the action pursuant to OCGA § 9-4-8. First Acceptance appeals, contending that the trial court erred in opening default and granting the motion to refuse judgment. Glancy, however, has filed a motion to dismiss the appeal, arguing that the issues raised by First Acceptance have become moot, depriving this Court of jurisdiction. For the reasons discussed below, we agree with Glancy. Accordingly, we grant Glancy’s motion and dismiss this appeal.²

1. Background Watts and Glancy were involved in a motor vehicle accident on February 16, 2020. At the time, Watts was driving a vehicle owned and insured by her mother, Adams. Adams was not in the vehicle at the time of the accident. First Acceptance insured Adams under an automobile liability policy, but Adams did not list Watts as a driver of the vehicle or resident of her household when she applied for insurance coverage and Watts was not listed on the insurance policy.

Several days after the accident, First Acceptance notified Watts and Adams that there was a question regarding coverage for the accident because Watts was using Adams’ vehicle at the time of the accident even though she was not listed on the policy, but that it was nonetheless handling the claim arising from the accident under a full reservation of rights to disclaim coverage. For the next several months, First Acceptance continued to investigate the matter of whether Watts qualified as a "regular operator" under the policy, and reminded Watts and Adams several times that it was continuing to handle the claim under a full reservation of rights. In January 2021, Glancy filed a personal injury action against Watts in the State Court of Douglas County. First Acceptance advised Watts and Adams of the lawsuit and again stated that it would continue to handle the claim and "defend you in the Lawsuit" subject to a full reservation of rights.

In March 2021, First Acceptance filed this declaratory judgment action, seeking a determination (1) that it has no duty to provide coverage, indemnity, or a defense ("Count I"), and, alternatively, (2) that Glancy’s settlement offer pursuant to OCGA § 9-11-67.1 in the underlying action is void ("Count II").³ The crux of its claim is that Watts lived with Adams prior to and at the time of the accident; that Watts operated Adams’ vehicle "with the frequency of a ‘regular operator,’ as that term is defined in the [p]olicy"; and that, therefore, there is no coverage under the policy because Adams failed to list Watts as a regular operator on her policy and First Acceptance "is not required to provide Respondents with coverage, indemnity, or a defense with respect to the Accident."

As the action progressed, the parties filed numerous motions. Glancy moved to dismiss Count II, alleging that declaratory judgments are not permitted for prospective or contingent matters, and that First Acceptance has not alleged the requisite uncertainty required by OCGA § 9-4-1. Watts and Adams filed a motion to open default, which was granted by the trial court.⁴ Glancy then filed a motion to refuse judgment pursuant to OCGA § 9-4-8,⁵ alleging that Count I is untenable because First Acceptance undertook a duty to settle her bodily injury claim and created tort exposure when it negligently failed to do so; the tort exposure moots the question of contractual obligations. Glancy further alleged that Count II posed no uncertainty for First Acceptance, as argued in the previously filed motion to dismiss. First Acceptance subsequently filed a motion for summary judgment, seeking a declaration that respondents are not entitled to coverage, indemnity, or a defense under Adams’ insurance policy because Watts did not qualify as an insured at the time of the accident. According to First Acceptance, the record evidence showed that Watts operated Adams’ vehicle on at least 18 occasions within the 90-day period preceding the accident, and that she qualified as a "regular operator" under the policy and that Adams should have notified First Acceptance or added Watts to the policy as a listed driver. First Acceptance also filed a motion to reconsider the order opening default.

Following a hearing on April 19, 2023, the trial court denied First Acceptance’s motions for reconsideration and summary judgment, and granted Glancy’s motions to dismiss and refuse judgment. On September 22, 2023, First Acceptance filed its notice of appeal challenging these rulings. On November 6, 2023, the trial court in the underlying personal injury action entered a final judgment in favor of Glancy in the amount of $8,500,000, based on a consent judgment between Glancy and Watts.⁶

2. Motion to Dismiss. On appeal, First Acceptance contends that the trial court made several erroneous rulings in its declaratory judgment action, including granting the motion to open default and granting Glancy’s motion to refuse judgment. Glancy has filed a motion to dismiss this appeal, alleging that in light of the consent final agreement settling the underlying tort action, the appeal in the declaratory judgment case is now moot. Because we agree that all issues relating to First Acceptance’s declaratory judgment claim are moot, we dismiss this appeal. See Clarke v. City of Atlanta, 231 Ga. 84, 84-85, 200 S.E.2d 264 (1973) (dismissing appeal of declaratory judgment action that became moot during pendency of the appeal); LabMD v. Admiral Ins. Co., 323 Ga. App. 906, 907-908 (1), 749 S.E.2d 11 (2013) (dismissing appeal where questions raised in appeal of declaratory judgment action had become moot, depriving this Court of jurisdiction). Cf. Thomas v. Atlanta Cas. Co., 253 Ga. App. 199, 201 (1), 558 S.E.2d 432 (2001) (concluding that no subject matter jurisdiction existed for a declaratory judgment action where judgment had been entered in underlying damages action because the rights of the parties had become fixed, and the insurer was "merely asserting its defenses to a breach of contract action by the insured") (physical precedent only), disapproved on other grounds, First Acceptance Ins. Co. of Ga. v. Hughes, 305 Ga. 489, 493 (1), n.4, 826 S.E.2d 71 (2019).

[1–5] As this Court enunciated in Richmond v. Ga. Farm Bureau Mut. Ins. Co., 140 Ga. App. 215, 231 S.E.2d 245 (1976), when an insurer is presented with notice of a claim and demand for a defense, the "proper and safe course of action … is to enter upon a defense under a reservation of rights and then proceed to seek a declaratory judgment in its favor." Id. at 217 (1), 231 S.E.2d 245. See also Kelly v. Lloyd's of London, 255 Ga. 291, 293 (2), 336 S.E.2d 772 (1985). Indeed, "[t]he purpose of the Declaratory Judgment Act is to settle and afford relief from uncertainty and insecurity with respect to rights, status, and other legal relations." (Punctuation omitted.) Drawdy v. Direct Gen. Ins. Co., 277 Ga. 107, 109, 586 S.E.2d 228 (2003), citing OCGA § 9-4-1.

However, where the rights of the parties have already accrued and there are no circumstances showing any necessity for a determination of the dispute to guide and protect the plaintiff from uncertainty and insecurity with regard to the propriety of some future act or conduct, which is properly incident to [its] alleged rights and which if taken without direction might reasonably jeopardize [its] interest, the plaintiff is not entitled to a declaratory judgment. The declaratory judgment action makes no provision for a judgment which is advisory.

(Citation and punctuation omitted.) Morgan v. Guar. Nat. Cos., 268 Ga. 343, 344, 489 S.E.2d 803 (1997). See also OCGA § 9-4-2 ("[i]n cases of actual controversy, the respective superior courts of this state … shall have power, upon petition or other appropriate pleading, to declare rights and other legal relations of any interested party petitioning for such declaration …"); Fourth Street Baptist Church of Columbus v. Board of Registrars, 253 Ga. 368, 369 (1), 320 S.E.2d 543 (1984) ("[a]bsent an actual controversy involving palpable insecurity, a court is without power to act by way of declaratory judgment"). In this regard, declaratory judgment is not available where a judgment cannot guide and protect the insurer with regard to some future act such as where the insurer has denied coverage, refused to provide a defense, or where a judgment has been entered in the underlying tort case. See Morgan, 268 Ga. at 344, 489 S.E.2d 803; Atlanta Cas. Co. v. Fountain, 262 Ga. 16, 18, 413 S.E.2d 450 (1992); LabMD, 323 Ga. App. at 908 (1), 749 S.E.2d 11 (all issues relating to grant of declaratory judgment were rendered moot where underlying damages case proceeded to judgment); Lumbermens Mut. Cas. Co. v. Moody, 116 Ga. App. 2,...