Nationwide Mutual Fire Insurance Company v. Wiley

Court of Appeals of Georgia, Case No. A96A0112, decided February 9, 1996, reconsideration denied March 5, 1996. Beasley, Chief Judge, wrote for the Court; Birdsong, P. J., and Blackburn, J., concurred. Counsel of record were Simpson, Gray & Carter, with Ralph F. Simpson and Joseph I. Carter, for Nationwide, and Carl A. Bryant for Ms. Wiley. 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 — the docket line, the caption “NATIONWIDE MUTUAL FIRE INSURANCE COMPANY v. WILEY.”, and the parallel-citation line “(469 SE2d 302)” — the archive’s bracketed label naming the opinion’s author, and the decision-date, reconsideration-denied and counsel-of-record lines, which the scan drops in between the fourth and fifth divisions; all of that is stated in this line instead. Every repair made to the remaining text, in full: (1) the scan misreading “was not simply a bricked-up mobile home arid that while the base” restored to “and that while the base”; (2) a doubled comma in “issues raised for the first time on appeal,, because” reduced to one; (3) the judge’s name line set in bold; (4) a bracketed label added before the reporter’s single footnote, which the archive prints as an unlabeled paragraph after the concurrence line. Left exactly as printed: the reporter’s typographic quotation marks and apostrophes. No word of the Court’s has been changed, condensed, reordered, or paraphrased.

The full opinion

Beasley, Chief Judge.

Nationwide Mutual Fire Insurance Company appeals from a judgment based on a jury verdict in favor of its insured, Debra Wiley. The seven enumerated errors primarily dispute the denial of motions for directed verdict on several issues. For the reasons that follow, we affirm.

Nationwide issued Wiley a homeowner’s insurance policy in 1992, and less than one month later, the home was destroyed by fire. When Nationwide failed to pay her claim, Wiley sued. Following a four-day jury trial, a jury awarded Wiley $72,000 for the destroyed dwelling, $40,000 for the contents, and $20,000 for loss of use. The $132,000 total was subject to a set-off of $32,655.79 for Nationwide’s payment to the mortgagee.

1. Nationwide contends it was due a directed verdict as to the entire claim because Wiley materially misrepresented her ownership interest on the proof of loss forms, in that the property was owned by her husband who had died intestate in 1989 and the title was never placed in her name. Nationwide further claims that Wiley told the insurance agent she was the owner of the property when, in fact, she was not the sole owner. It argues that Wiley failed to accurately complete the paperwork and should have written, “Debra Wiley and children” or “the estate of Emmitt Wiley.”

When a policy of insurance is issued “where the agent has full and actual disclosure of the ownership of the property, the insurer waives its rights under the policy and is estopped to claim an avoidance of responsibility under the contract as written because of noncompliance with the conditions as to ownership which preclude coverage under the terms of the contract.” Barnum v. Sentry Ins., 160 Ga. App. 213, 217 (3) (286 SE2d 445) (1981). Holliday, the agent who arranged Wiley’s coverage, testified she knew Wiley was a widow with two minor children and that Wiley was acting on behalf of herself and her children in obtaining the insurance coverage. Holliday testified she actively solicited Wiley’s homeowner’s insurance coverage business and advised Wiley, “You need to do these things [obtain sufficient homeowner’s insurance coverage] to protect you and your family.” This knowledge estopped Nationwide from avoiding its contractual responsibility. Barnum, supra at 217. Moreover, there is no evidence to fulfill the requirement that “ ‘[i]t must appear that (an insured’s) false statements were made wilfully and intentionally for the purpose of defrauding the insurer.’ [Cit.]” Ga. Farm &c. Ins. Co. v. Richardson, 217 Ga. App. 201, 204 (457 SE2d 181) (1995).

2. Nationwide urges that Wiley made another coverage-precluding material misrepresentation in her application for insurance. Wiley told the agent the dwelling was a brick veneer house, purchased in 1989, but in fact it was a repossessed and renovated mobile home. The agent testified that had she known the residence was a mobile home, she could not have written an Elite II policy on it because it would not have qualified for that coverage.

Wiley presented evidence that the dwelling was not simply a bricked-up mobile home and that while the base was at one time part of a mobile home, the house was built by Wiley’s late husband as new construction. Wiley testified in explicit detail explaining with great specificity how her husband had used the mobile home as a starting point but had extensively renovated, customized and altered both the interior and exterior. The jury heard evidence from both parties as to the nature of the home and viewed photographs taken both prior to and after the fire. Nationwide’s own agent took photos and inspected the home before the policy was ever issued. The jury resolved the conflicting evidence of fact in Wiley’s favor when it determined the policy covered the type of structure of Wiley’s home.

“There is a presumption in favor of the validity of verdicts. [Cits.] And ‘after rendition of a verdict, all the evidence and every presumption and inference arising therefrom, must be construed most favorably towards upholding the verdict.’ [Cit.]” Pepsi Cola Bottling &c. v. First Nat. Bank of Columbus, Ga., 248 Ga. 114, 115 (281 SE2d 579) (1981). A directed verdict was not appropriate.

3. Nationwide claims it was error to refuse to direct a verdict in its favor because Wiley failed to present any evidence as to the replacement cost or value of her home at the time it was destroyed by fire. It contends Wiley had the burden of proving the actual loss sustained pursuant to OCGA § 33-32-5, because the fire occurred within 30 days of the original effective date of the policy. In the alternative, the insurer argues that the judgment should be reduced by the difference between the property tax assessed value for the dwelling $42,053, and the policy amount for the dwelling $72,000.

The policy provided the measure of damages for the loss as being the replacement cost of the dwelling for equivalent construction. Wiley presented evidence of the county property tax assessment, and she testified without objection that the property was worth $75,000. As the basis for her valuation, she explained she was familiar with the value of properties in her area and that C. T. Financial Service had performed a professional appraisal of her home. The record also contains the real estate inventory form prepared for the probate court indicating the property was valued at $62,500 in 1990, several years earlier. Wiley testified extensively regarding the renovations her husband and his helpers installed, including the roofing, plumbing, electrical wiring, a sunroom, and new appliances. In great detail, she explained the layout and composition of the house, including its bay windows, double French doors, encased garden tub, and custom built-in cabinetry. All witnesses who saw the property after the fire agreed that the home and all of its contents were a total loss. This constituted evidence of the loss sustained.

It is undisputed that Nationwide denied Wiley’s claim. An absolute refusal by an insurer to pay within the time frame required under the contract waives the right of the insurer to insist upon compliance with the proof of loss provisions in a policy. Walker v. General Ins. Co., 214 Ga. 758 (107 SE2d 836) (1959); Ins. Co. of the West v. Dills, 145 Ga. App. 183 (243 SE2d 549) (1978); Gazaway v. Secured Ins. Co., 109 Ga. App. 428 (136 SE2d 531) (1964); General Accident Fire &c. Corp. v. Azar, 103 Ga. App. 215 (119 SE2d 82) (1961).

Moreover, the standard of appellate review of the denial of a directed verdict is the “any evidence” test. Southern Gen. Ins. Co. v. Holt, 262 Ga. 267, 268 (1) (416 SE2d 274) (1992). Because the record includes evidence from which the jury could determine the value of Wiley’s home, this enumeration fails.

4. Nationwide contends the court erred in entering the judgment for loss of use in the amount of $20,000 because Wiley presented no evidence to support it. The policy provided for payment of additional living expenses as follows: “If a covered loss requires you to leave the residence premises, we cover the required increase in living expenses you incur to maintain your normal standard of living. Payment will be for the shortest time required to repair or replace the premises.”

There was evidence that Wiley had been out of her home since the date of the fire on April 15, 1992. She testified she stayed in a hotel and in a rented house. Wiley testified that her monthly rental expense ranged between $500 and $550.

Furthermore, the record fails to show that Nationwide ever moved for a directed verdict on this loss of use issue although it sought seven separate directed verdicts on others. The motion for a directed verdict on the entire claim was based solely on the ground that Wiley did not accurately state her interest on the proof of loss forms. See Division 1. We do not consider issues raised for the first time on appeal, because the trial court has not had opportunity to consider them. Dupree v. State, 206 Ga. App. 4, 5 (2) (424 SE2d 316) (1992).

5. Nationwide claims it was entitled to a directed verdict for the amount of its advance payments to Wiley ($2,000) and to a $2,000 reduction in the jury verdict for the loss of use payments previously made. The jury heard Wiley testify she received a total of $2,000 from Nationwide for additional living expenses (loss of use). Because the jury did not award the policy limit on the loss of use claim, the record does not show that the jury did not reduce its award by that sum.

Judgment affirmed.

Birdsong, P. J., and Blackburn, J., concur.

[The reporter’s footnote, printed in the source as an unlabeled paragraph after the concurrence line:]

At the time of the fire, Debra Wiley was the administratrix of her late husband’s estate and she is the natural guardian of two minor children, who were ages seven and nine.

What it decided

Debra Wiley was a widow with two minor children, ages seven and nine. Her husband Emmitt had died intestate in 1989 and title to the house had never been changed into her name; she was the administratrix of his estate and the children’s natural guardian. Nationwide wrote her a homeowner’s policy in 1992. Less than a month later the house burned to the ground. Nationwide did not pay. She sued, and after a four-day trial a jury awarded her $72,000 for the dwelling, $40,000 for the contents and $20,000 for loss of use — $132,000, less a set-off of $32,655.79 that Nationwide had paid the mortgagee. Nationwide appealed seven rulings and the Court of Appeals affirmed all of them.

Telling the agent the truth binds the company. Nationwide argued the whole claim failed because Wiley called herself the owner on the proof of loss forms when the estate and the children had interests too. The agent who wrote the policy, Holliday, testified she knew Wiley was a widow with two minor children and that Wiley was acting for herself and her children, and that she had actively solicited the business and told Wiley, “You need to do these things [obtain sufficient homeowner’s insurance coverage] to protect you and your family.” Under the rule the Court quoted from Barnum v. Sentry Insurance, where “the agent has full and actual disclosure of the ownership of the property, the insurer waives its rights under the policy and is estopped to claim an avoidance of responsibility under the contract as written.” And separately, there was no evidence the statements “were made wilfully and intentionally for the purpose of defrauding the insurer.”

What kind of building it was, was a jury question. Nationwide said the house was a repossessed mobile home that had been bricked up, and that it could not have written the policy it wrote on a mobile home. Wiley testified in detail that her late husband had used the mobile home as a starting point and built new construction around it, and both sides put on photographs, including photographs Nationwide’s own agent took when she inspected the home before the policy issued. The jury believed Wiley, and verdicts carry a presumption of validity on appeal.

The homeowner’s own testimony was evidence of the value. This is the ruling the case is here for. Nationwide argued Wiley put up no evidence of replacement cost or value, that she carried the burden of proving her actual loss because the fire occurred within 30 days of the policy’s original effective date, and that the judgment should at least be cut to the county’s tax assessment of $42,053 instead of the $72,000 dwelling limit. The Court of Appeals walked through what was in the record: the county property tax assessment; Wiley’s own testimony, admitted without objection, that the property was worth $75,000, resting on her familiarity with values in her area and a professional appraisal by C. T. Financial Service; the real estate inventory prepared for the probate court valuing the property at $62,500 in 1990; her extensive testimony about the roofing, plumbing, electrical wiring, sunroom and new appliances her husband and his helpers installed; and her detailed description of the layout and composition of the house, “including its bay windows, double French doors, encased garden tub, and custom built-in cabinetry.” Every witness who saw the property after the fire agreed the home and contents were a total loss. “This constituted evidence of the loss sustained.” Because the standard for reviewing the denial of a directed verdict is the “any evidence” test, that was the end of it.

A refusal to pay costs the carrier the proof-of-loss defense. In the middle of that same division the Court restated a rule with a long Georgia pedigree: “An absolute refusal by an insurer to pay within the time frame required under the contract waives the right of the insurer to insist upon compliance with the proof of loss provisions in a policy.”

Loss of use. The policy covered “the required increase in living expenses you incur to maintain your normal standard of living,” for “the shortest time required to repair or replace the premises.” Wiley had been out of her home since the April 15, 1992 fire, staying in a hotel and then a rented house, at $500 to $550 a month. The Court recited that evidence and then added the point that decided the division: Nationwide “never moved for a directed verdict on this loss of use issue although it sought seven separate directed verdicts on others,” and issues raised for the first time on appeal are not considered. Its last argument — that it should get credit for $2,000 in advances — failed because the jury did not award the policy limit on loss of use, so the record does not show the jury failed to deduct it.

What it did NOT decide

• It did not hold that an owner’s say-so is always enough. Wiley built a foundation before she gave her number: familiarity with property values in her area, a professional appraisal, a tax assessment, a probate inventory, and a room-by-room description of the house and the work done to it. Her testimony also came in without objection, and the appellate court was applying the “any evidence” test after a verdict — not deciding value from scratch.
• It did not decide the loss-of-use award on the merits. The Court listed the evidence, then rested on Nationwide’s failure to move for a directed verdict on that issue in the trial court. Do not read Wiley as authority that $20,000 in additional living expense can be collected without a month-by-month record. Allstate v. Baugh is the case that shows what happens when the months are not proved: the judgment gets cut.
• It did not resolve who bears the burden under the 30-day proviso in Georgia’s valued policy statute. Nationwide raised it; the Court answered by pointing to the policy’s own replacement-cost measure and to the presence of evidence, and went no further.
• It did not decide that a tax assessment sets value. The assessment was one item of evidence among several, and the Court refused Nationwide’s request to reduce the judgment to it.
• It did not touch bad faith or penalties. No claim under O.C.G.A. § 33-4-6 appears in the opinion. Nothing here says whether Nationwide’s refusal was reasonable.
• It did not make proof-of-loss conditions meaningless. The waiver rule has a trigger: an absolute refusal to pay within the time the contract requires. Short of that, the conditions still bind you. See Cotton States v. Walker for how Georgia handles a late proof of loss, and Auto-Owners v. Ogden for the limits of waiver.

Why it matters to policyholders

“You don’t have an expert, so you can’t prove your number” is not Georgia law. A homeowner may testify to what her own property was worth. Debra Wiley did it, a jury believed her, and the Court of Appeals let a $72,000 dwelling award stand over a carrier’s insistence that the tax assessment of $42,053 was the ceiling.

What makes that testimony hold up is the foundation under it, and the opinion is a checklist. Say why you know what property in your area is worth. Bring the appraisal if one exists. Bring the tax record. Bring any earlier valuation, even an old one — hers was a probate inventory from two years before. And then describe the actual house: the roofing, the wiring, the sunroom, the appliances, the bay windows, the French doors, the built-in cabinetry. Value testimony that is a bare number is easy to attack. Value testimony attached to a described house is evidence.

The second lesson is the one carriers hate. If the company flatly refuses to pay within the time its own contract allows, it gives up the right to fight you over proof-of-loss paperwork. That does not make the paperwork optional — file it, on time, and keep proof that you filed it — but it does mean a denial letter is not a free reset that lets the company litigate your forms instead of your loss.

The third lesson is about the day the policy is written. Wiley won her biggest fight because she had told the agent the truth: widow, two minor children, buying coverage to protect the family. The agent’s knowledge was the company’s knowledge, and the company could not later disown the policy it sold. Tell your agent exactly who owns the property and exactly what the building is, and keep a record of that conversation. For the underlying rule that a policy pays the loss rather than a number on a schedule, see American Casualty v. Parks-Chambers.

Assembling that record — the inventory, the valuations, the description of the building, the living-expense ledger — is a public adjuster’s job, and it is the work that gives a homeowner’s number weight. Getting testimony admitted at trial and litigating bad faith is attorney work, and we refer it out. The rest of the shelf is at the Georgia claim library.

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