Auto-Owners Insurance Company v. Ogden

Supreme Court of Georgia, Case No. S02G0232, decided September 16, 2002, reconsideration denied October 11, 2002. Fletcher, Chief Justice, wrote for a unanimous Court. The case came up on certiorari from the Court of Appeals. Our text comes from the Caselaw Access Project (case.law), Harvard Law School’s open archive of published U.S. case law. Removed: the reporter’s head-matter block (docket number, case caption, parallel-citation line), the Caselaw Access Project’s bracketed opinion label, and the reporter’s decision-date and counsel lines, which the scan dropped into the middle of Division 2 — the decision date and reconsideration date appear above, and counsel were Bullard, Moody, Long & Garcia, with Daniel Bullard IV and Miguel A. Garcia, Jr., for the appellant, and Lane & Jarriel, with Thomas F. Jarriel, for the appellee. Scan repairs, complete list: (1) four dates printed without a space after the comma — “March 17,1993,” “April 8,1993,” “August 18,1993,” and “September 30,1994” — were spaced normally; (2) the judge’s name line was bolded. Nothing else in the body was changed. Left as printed: the opinion refers once to “Kelly” without introducing that person anywhere in the text. The Court’s footnotes are printed in the source as an unnumbered block after the judgment line; we kept that placement and added the bracketed label.

The full opinion

AUTO-OWNERS INSURANCE COMPANY v. OGDEN.

Fletcher, Chief Justice.

A fire damaged Ronald Ogden’s house in May 1992, and he sued Auto-Owners Insurance Company on his homeowners policy in September 1994. The trial court granted summary judgment to the insurer based on a contractual provision requiring that the insured bring a claim within 12 months of the loss. The Court of Appeals for the State of Georgia reversed, finding a disputed issue of fact concerning whether the insurer waived the contractual limitation period through its adjuster’s actions after the expiration of that period. We granted the petition for the writ of certiorari to consider whether an insurance adjuster can waive a policy provision requiring suit to be brought within 12 months of the loss after the limitation period has already expired. Relying on long-standing precedent, we hold that an independent insurance adjuster cannot waive the limitations provision in the insurance contract after it has expired without express authority from the insurance company. Nevertheless, we agree with the court of appeals that there are disputed issues of fact concerning whether the insurance company waived the limitations period by admitting liability and offering to settle the claim. Therefore, we affirm its decision reversing the trial court’s grant of summary judgment to the insurance company.

Construing the facts in the light most favorable to the insured as the party opposing summary judgment, the record shows that a fire damaged Ogden’s house on May 25, 1992. He filed a timely claim under his Auto-Owners’ homeowners policy, which provided coverage of $49,500 for the building. Auto-Owners prepared a proof of loss statement showing that the full cost to repair or replace the building was $45,595. With Auto-Owners’ approval, Ogden entered into a contract with Livingston Construction Company to reconstruct the house. Auto-Owners issued two checks totaling $32,506.42 to Ogden, his contractor, and his mortgage company for the repairs, and Livingston began construction. On December 21, 1992, Kelly asked Ogden to sign and return the proof of loss to receive the “holdback” in the amount of $12,689. On March 17, 1993, the claims adjuster wrote Ogden that he would need to return the proof of loss on the dwelling within 15 days to collect the $12,689 check. Ogden responded on April 8, 1993, but the claims adjuster treated the response as a rejection. As a result, Auto-Owners closed the file without paying Ogden the withheld check. On May 25, 1993, the 12-month period for filing a suit on the policy ended. On August 18, 1993, a new claims adjuster wrote Ogden that the statute of limitations had run on his time to recover the withheld depreciation of $12,689. The same adjuster subsequently wrote on March 3, 1994, “With regard to the withheld depreciation on the dwelling of $12,689.00, it is possible that Auto Owners Insurance Company would consider payment.”

Ogden sued Auto-Owners on September 30, 1994, alleging that it failed to pay for his loss as provided in his homeowners policy. The trial court granted summary judgment to the insurer based on the policy provision that “[n]o suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity … unless commenced within twelve months next after inception of the loss.” The court of appeals reversed, finding that the insurance adjuster’s actions raised a question of fact since he continued to discuss the claim with Ogden after the limitation period expired and stated in March 1994 that Auto-Owners might consider payment.

1. This Court has held that neither the local agent nor claims adjuster for an insurance company has the power to waive a policy provision that suit must be brought within 12 months from the date of loss without the express authority from the insurance company. Unless the agent perpetrates some fraud that induces the insured to delay bringing the lawsuit until after the time for bringing suit has expired, the insured cannot rely on the agent’s conduct as an excuse for the failure to sue. Once the time for bringing an action lapses, the forfeiture has taken place, the contract becomes a “dead letter,” and an agent cannot revive it by an acknowledgment or new promise. Adhering to this precedent, we hold that Auto-Owners’ adjuster could not waive the policy provision requiring Ogden to bring suit within 12 months after the contract’s limitation period had already expired. Therefore, we disagree with the court of appeals’ contrary decision finding a disputed issue of fact based solely on the adjuster’s actions after May 25, 1993.

2. Although the adjuster could not unilaterally waive the limitation period by his actions after that period expired, Ogden contends that the insurance company waived its right to rely on the contractual provision by its course of conduct before May 25, 1993. Specifically, he argues that Auto-Owners admitted liability under its policy, and he is seeking money owed to him as a result of its settlement of his claim.

An insurance company may waive the contractual limitation provision “where the company leads the insured by its actions to rely on its promise to pay, express or implied.” The court of appeals has held that the 12-month contractual period does not bar an insured from filing suit when the insurance company promised to pay certain amounts and the insured is only seeking the payments offered. “If the insurer never denied liability, but continually discussed the loss with its insured with a view toward negotiation and settlement without the intervention of a suit, whether or not this lulled the insured into a belief that the 12-month clause in the contract was waived by the insurer can become a disputed question of fact” for the jury.

In this case, Auto-Owners never denied liability. Instead, it agreed with Ogden that his loss was covered under its homeowners policy and executed a proof of loss stating that the full cost to repair or replace the building would be $45,595. Auto-Owners paid $32,506 for building repairs, and the contractor began construction. The insurance company drafted a check in December 1992 for the remaining amount owed. In support of its summary judgment motion, the company asserts that it issued a final check to Ogden in the amount of $12,689, but that his attorney rejected the check and returned it to the claims adjuster. In response, Ogden denies that he or his attorney ever received the check or returned it. Because the record presents disputed issues of fact concerning whether Auto-Owners and Ogden settled his claim and Auto-Owners promised to pay the additional $12,689 as part of the settlement, we agree with the court of appeals that the insurance company was not entitled to summary judgment based on the contractual limitation period.

Judgment affirmed.

All the Justices concur.

[Footnotes to the opinion, printed in the source as an unnumbered block following the judgment line:]

See Ogden v. Auto-Owners Ins. Co., 251 Ga. App. 723 (554 SE2d 575) (2001).

See Graham v. Niagara Fire Ins. Co., 106 Ga. 840, 844 (32 SE 579) (1899).

See Underwriters’ Agency v. Sutherlin, 55 Ga. 266, 267 (1875).

Id.; see Gibraltar Fire & Marine Ins. Co. v. Lanier, 64 Ga. App. 269, 274-275 (13 SE2d 27) (1941).

See Graham, 106 Ga. at 844; see also Corporation of Royal Exch. Assur. v. Franklin, 158 Ga. 644 (124 SE 172) (1924) (insurance adjuster may waive filing of proof of loss by his statements and conduct before the expiration of the time for the filing of a proof of loss under the policy).

Georgia Farm Bureau Mut. Ins. Co. v. Mikell, 126 Ga. App. 640, 642 (191 SE2d 557) (1972).

See Lee v. Safeco Ins. Co., 144 Ga. App. 519, 521 (241 SE2d 627) (1978).

See Edwards v. Atlantic Ins. Co., 203 Ga. App. 608, 611 (417 SE2d 410) (1992).

What it decided

Two rules, pointing in opposite directions, and the whole case is knowing which one your facts sit under.

Rule one, against the policyholder: after the deadline passes, the claim is dead and a friendly adjuster cannot bring it back. The Court states it without hedging: “Once the time for bringing an action lapses, the forfeiture has taken place, the contract becomes a ‘dead letter,’ and an agent cannot revive it by an acknowledgment or new promise.” Neither a local agent nor a claims adjuster can waive the suit-limitation provision after it has expired “without the express authority from the insurance company.” There is one exception, and it is narrow: fraud by the agent that induced the insured to delay suing. On this point the Supreme Court expressly disagreed with the Court of Appeals, which had found a jury question based on the adjuster’s post-deadline conduct alone.

Rule two, for the policyholder: the company itself can waive the deadline by how it handled the claim before the deadline ran. An insurer “may waive the contractual limitation provision ‘where the company leads the insured by its actions to rely on its promise to pay, express or implied.’” And the Court quotes the rule that decides most of these cases: “If the insurer never denied liability, but continually discussed the loss with its insured with a view toward negotiation and settlement without the intervention of a suit, whether or not this lulled the insured into a belief that the 12-month clause in the contract was waived by the insurer can become a disputed question of fact” for the jury.

Applying rule two, Auto-Owners lost its summary judgment. The facts the Court lined up are worth memorizing, because they are a checklist: the insurer never denied liability; it agreed the loss was covered; it executed a proof of loss putting the full repair cost at $45,595; it paid $32,506 and construction started; and in December 1992 — five months before the deadline — it drafted the check for the remaining $12,689. Whether that added up to a settlement and a promise to pay was a disputed fact, so the case went back.

The result: the Supreme Court affirmed the Court of Appeals’ reversal of summary judgment, but on the company’s pre-deadline conduct rather than the adjuster’s post-deadline conduct.

What it did NOT decide

It did not decide that Ogden won. Reversing summary judgment sends the waiver question to a factfinder. Nothing in the opinion says the insurer waived anything — only that a jury could find it did.

It did not create a general rule that talking tolls a deadline. Waiver and tolling are different doctrines and Georgia treats them differently. Ogden is about waiver by the company’s own course of conduct. The one clearly verified Georgia tolling rule on the shelf is different: an agreement to appraise stops the clock while the appraisal is pending, which is Peeples v. Western Fire. Do not merge them, and do not assume that ordinary back-and-forth with an adjuster buys you time.

It did not address how long the deadline had to be. Ogden’s was a fire loss, and the opinion applies a flat 12-month “Suit Against Us” clause without ever discussing Georgia’s Standard Fire Policy suit-limitation minimum. Our page on White v. State Farm explains that the statutory two-year floor reaches the fire side of a homeowners policy and not the wind, hail, or theft side. Ogden decides a waiver question; it is not authority on the length of your clause. Read your own policy and know which peril you are claiming.

It did not define “express authority.” The Court says an adjuster needs express authority from the company to waive the provision after expiration. It does not say what that would look like, who at the carrier could give it, or whether it must be in writing. If an adjuster ever tells you a deadline has been extended, that statement is worth almost nothing standing alone — and this opinion does not tell you what would make it worth something.

Why it matters to policyholders

The deadline is the one date that cannot be argued with later. Everything else in a property claim is negotiable in some fashion — the extent of the damage, the method of repair, depreciation, the price of a square of shingles. The suit-limitation clause is not. When it runs, Georgia calls the contract a “dead letter.” Find the clause in your policy in the first week of your claim, write the date on the file, and treat it as immovable.

Be honest with yourself about what an adjuster’s kindness is worth. The second adjuster in this case wrote Ogden in August 1993 that his time had run, then wrote again in March 1994 that “it is possible that Auto Owners Insurance Company would consider payment.” Read as a human being, that is an opening. Read as Georgia law, it is nothing — the claim was already dead in May 1993, and the Court said so. If a carrier wants more time, the extension has to come from the company, in writing, before the date.

The waiver argument is built out of the carrier’s own paper, and it is built before the deadline. Look at what saved Ogden’s case: a proof of loss the insurer prepared, a stated full repair cost, partial payments, an approved contractor, a drafted final check. Every one of those is a document. This is the practical reason to keep a claim in writing — you are not being difficult, you are building the record that shows the insurer never denied liability and kept promising to pay. Where the carrier has an obligation to be specific, Georgia’s claim-handling regulation requires a denial to reference the specific policy provision it relies on, which is exactly the kind of paper that later tells a court whether liability was ever denied at all.

Where this case leaves a public adjuster and where it leaves a lawyer. A public adjuster documents the loss, prices it, presents it, and negotiates the amount — and should be the one flagging the suit deadline out loud, early, in writing. But waiver, estoppel, and a lawsuit filed before a clause expires are attorney work, and a claim approaching its limitation date needs a lawyer looking at it, not an adjuster hoping the carrier stays friendly. Georgia’s bad-faith penalty also lives on a 60-day demand clock that has to fit inside the suit deadline, which is another reason the calendar comes first. The rest of Georgia’s claim law is on the state shelf.

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