Frey v. Nationwide Mut. Ins. Co.

901 S.E.2d 730

FREY et al.

v.NATIONWIDE MUTUAL INSURANCE COMPANY.

A24A0284

Court of Appeals of Georgia.

May 15, 2024

Michael C. Ford, Atlanta, for Appellant,

Colin Kamrath Kelly, Timia A. Skelton, Atlanta, for Appellee.

Barnes, Presiding Judge.

[1–4] William Michael Frey was fatally injured in an automobile accident when his motorcycle was struck by another vehicle. His widow, Irish Angela Frey, individually and as executrix of his estate, sued Nationwide Mutual Insurance Company, contending that a commercial general liability insurance policy that Nationwide issued to the other driver provided coverage for the accident.¹ Nationwide moved for judgment on the pleadings, contending that the insurance policy clearly and unambiguously excluded coverage for the automobile accident. The trial court agreed with Nationwide and entered a final order granting the motion. Irish now appeals, asserting that the trial court misconstrued the insurance policy’s automobile exclusion. For the reasons discussed below, we affirm.

On appeal from a grant of judgment on the pleadings, we conduct a de novo review of the trial court’s order to determine whether the undisputed facts appearing from the pleadings entitle the movant to judgment as a matter of law. The grant of a motion for judgment on the pleadings under OCGA § 9-11-12 (c) is proper only where there is a complete failure to state a cause of action or defense. For purposes of the motion, all well-pleaded material allegations by the nonmovant are taken as true, and all denials by the movant are taken as false. But the trial court need not adopt a party’s legal conclusions based on these facts. Moreover, in considering a motion for judgment on the pleadings, a trial court may consider exhibits attached to and incorporated into the pleadings, including exhibits attached to the complaint or the answer.

(Citation and punctuation omitted.) Schumacher v. City of Roswell, 344 Ga. App. 135, 138, 809 S.E.2d 262 (2017).

Guided by the aforementioned principles, we turn to the facts alleged in Irish’s complaint as amended and in the exhibits attached thereto and to the answer. On the evening of June 4, 2017, Michael C. Jesperson, who allegedly had been drinking, was driving his pickup truck down a state highway when he attempted to make a left turn into the path of a funeral procession. While attempting the left turn, Jesperson struck a motorcycle driven by William, who died as a result of the injuries he sustained. Following the accident, Irish, Individually and as executrix of William's estate, brought a personal injury and wrongful death action against Jesperson. After a trial, the jury returned a verdict finding Jesperson liable for the accident and awarding $1,655,647 in damages to Irish. Based on a limited liability release agreement, the judgment entered on the verdict specified that it was "only enforceable against any remaining liability insurance and/or underinsured motorist insurance coverage which provide[d] coverage for the claims contained within [the] case."

At the time of the accident, Jesperson had an automobile insurance policy with State Farm Mutual Automobile Insurance, and he had a commercial general liability insurance policy with Nationwide (the "CGL Policy"). William had insurance policies with Liberty Mutual Fire Insurance Company and Progressive Insurance Company that provided uninsured motorist ("UM") coverage. Irish received insurance proceeds from William’s two UM carriers² and from Jesperson’s au- tomobile insurance carrier, State Farm. However, Nationwide disputed whether there was coverage for the automobile accident under Jesperson’s CGL Policy and declined to pay out any insurance proceeds.

Jesperson assigned any rights he might have under his CGL Policy to Irish. Based on that assignment, Irish commenced the present suit against Nationwide, seeking a declaratory judgment that the CGL Policy covered the automobile accident and that no policy exclusions applied. Irish also sought to recover damages from Nationwide for the remaining unpaid amount of the judgment entered against Jesperson in the wrongful death suit, plus interest. Nationwide answered, denying that there was insurance coverage for the automobile accident, and attached a copy of the CGL Policy as an exhibit.

Nationwide subsequently moved for judgment on the pleadings, contending that the CGL Policy excluded coverage for any bodily injury that arose out of use of the insured’s (i.e., Jesperson’s) automobile, such that all of Irish's claims failed as a matter of law. In response to the motion, Irish argued that the automobile exclusion reasonably could be construed more narrowly as only applying when the insured's automobile was used by or entrusted to a third party, and that any ambiguity In the contractual language should be construed in her favor. The trial court rejected Irish's argument, concluding that the CGL Policy unambiguously excluded coverage under the facts as alleged in this case. As a result, the trial court granted Nationwide's motion for judgment on the pleadings, and this appeal followed in which Irish contends that the court misconstrued the automobile exclusion.

[5–13] "Under Georgia law, insurance companies are generally free to set the terms of their policies as they see fit so long as they do not violate the law or judicially cognizable public policy," and "a carrier may agree to insure against certain risks while declining to insure against others." (Citation and punctuation omitted.) H. J. Russell & Co. v. Landmark American Ins. Co., 369 Ga. App. 6, 7, 891 S.E.2d 531 (2023). It is well-established that

insurance is a matter of contract, and the parties to an insurance policy are bound by its plain and unambiguous terms. Thus, when faced with a conflict over coverage, a trial court must first determine, as a matter of law, whether the relevant policy language is ambiguous. As this Court has explained, an ambiguity is duplicity, indistinctness, or an uncertainty of meaning or expression, and a word or phrase is ambiguous when it is of uncertain meaning and may be fairly understood in more ways than one. Where a term of a policy of insurance is susceptible to two or more reasonable constructions, and the resulting ambiguity cannot be resolved, the term will be strictly construed against the insurer as the drafter and in favor of the insured. If a policy exclusion is unambiguous, however, it must be given effect even if beneficial to the insurer and detrimental to the insured. We will not strain to extend coverage where none was contracted or intended. Whether ambiguity exists in a contract is a question of law for a trial court.

(Citations and punctuation omitted.) Sharma v. City of Alpharetta, 361 Ga. App. 692, 695, 865 S.E.2d 287 (2021). Guided by these principles, we turn to the CGL Policy.

The CGL Policy attached to Nationwide’s answer identifies the named insured as Jesperson "dba Mike the Glass Guy," lists his business as "custom glass work," and provides $1,000,000 in insurance coverage per occurrence. The CGL Policy specifies that Nationwide "will pay those sums that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies," but it includes an exclusion for "Aircraft, Auto or Watercraft" that provides in part:

This insurance does not apply to: … "Bodily injury" or "property damage" arising; out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation[.]

(the "Automobile Exclusion"). "Auto" is defined in part as "[a] land motor vehicle … designed for travel on public roads."

[14] The parties’ interpretive dispute centers on the circumstances under which use of the insured’s automobile excludes coverage under the CGL Policy. Nationwide argues that the Automobile Exclusion unambiguously excludes coverage for bodily injury arising out of the use of the insured’s automobile, irrespective of whether the automobile is used by the insured or someone else. In contrast, Irish argues that the Automobile Exclusion is ambiguous and reasonably can be construed in her favor as excluding coverage only when the insured’s automobile is used by or entrusted to someone other than the insured.

[15, 16] We conclude that the Automobile Exclusion is susceptible of only one reasonable construction, and it is the one advanced by Nationwide. By its plain language, the Automobile Exclusion excludes coverage under the CGL Policy for bodily injury "arising out of the … use … of any … auto … owned … by … any insured." (Internal punctuation omitted.) And the Automobile Exclusion does not contain any language limiting or qualifying who must be using the insured’s automobile when the bodily injury occurs. "Because the words in this contract are plain and obvious, they must be given their literal meaning and no new terms can be inserted." Wilbanks v. Mai, 232 Ga. App. 198, 199, 501 S.E.2d 513 (1998). "Where the contractual language is explicit and unambiguous, the court’s job is simply to apply the terms of the contract as written[.]" (Citation and punctuation omitted.) Ga. Farm Bureau Mut. Ins. Co. v. Smith, 298 Ga. 716, 719, 784 S.E.2d 422 (2016). Accordingly, based on the unambiguous language of the Automobile Exclusion, the CGL Policy does not provide coverage where the bodily injury arose out of use of the insured’s automobile, regardless of whether the automobile was used by the insured or someone else. See Strickland v. Auto-Owners Ins. Co., 273 Ga. App. 662, 666 (2), 615 S.E.2d 808 (2005) (concluding, in case involving the identical automobile exclusion, that the language of the exclusion was "clear" and applied broadly to automobile accidents involving the insured’s equipment or drivers); Drain Dealers Mut. Ins. Co. v. Pat’s Rentals, 228 Ga. App. 854, 855-856 (a), 492 S.E.2d 702 (1997) (...