Primerica Life Insurance Co. v. Humfleet

Court of Appeals of Georgia, decided July 10, 1995 (Blackburn, J.; Andrews, J., concurring; McMurray, P.J., concurring specially and in the judgment only). The complete opinion — majority and special concurrence — appears below, transcribed from the reported decision; only print artifacts (page headers and footers) have been removed, and the reporter’s one footnote appears as an indented block where it falls in the text.

The full opinion

PRIMERICA LIFE INSURANCE COMPANY v. HUMFLEET. Court of Appeals of Georgia (Jul 10, 1995). Docket No. A95A0807.

Blackburn, Judge.

This is an appeal of the trial court’s denial of Primerica Life Insurance Company’s (Primerica) motion for summary judgment opposing the imposition of bad faith civil penalties pursuant to OCGA § 33-4-6.

The evidence viewed in the light most favorable to the nonmovant, appellee Constance Humfleet (Humfleet), shows Humfleet is the widow of decedent Charles Humfleet. On or about October 2, 1992, Primerica issued a policy of life insurance to Charles Humfleet for a face amount of $150,000. Humfleet was listed on the policy as the primary beneficiary, and a number of Charles Humfleet’s other relatives were listed as contingent beneficiaries. On September 23, 1993, Charles Humfleet was killed in an armed robbery. It is undisputed that the policy in issue was in effect at the time of his death.

On September 25, 1993, two days after her husband’s death Humfleet informed Primerica of her claim and requested disbursement of the proceeds as quickly as possible in order to pay her husband’s burial expenses. Apparently in response to Humfleet’s call, Primerica forwarded her a claim form that required, among other things, a certified copy of her husband’s death certificate. Humfleet submitted her completed claim form and corresponding documents to Primerica on October 18, 1993. By letter of October 25, 1993, Primerica acknowledged receipt of Humfleet’s claim and notified Humfleet of its intent to conduct an investigation into the circumstances of her husband’s death. This investigation was permitted under the general provisions of the policy.

The investigation revealed that while the police had no evidence tying Humfleet to her husband’s death, she had not been ruled out as a suspect. On November 29, 1993, after payment was not forthcoming, Humfleet commenced the instant action for the face amount of the policy and for civil penalties under OCGA § 33-4-6. In seeking the penalty, Humfleet asserted that Primerica’s failure to promptly pay her the policy’s proceeds was motivated by bad faith. Particularly, Humfleet averred that Primerica had no evidence that she was associated with her husband’s death and that the investigation was merely a ruse designed by Primerica to delay or forego payment of the insurance proceeds.

Primerica answered the complaint, asserting that if Humfleet were involved in her husband’s death, the contingent beneficiaries would be entitled to the proceeds, and, accordingly, immediate payment of the proceeds to Humfleet without further investigation could place the company at risk of receiving conflicting claims. Shortly after responding to the present suit, Primerica filed an interpleader action in the United States District Court for the Middle District of Georgia and deposited the proceeds of the policy into the court’s registry. Pursuant to a consent order entered in the interpleader action between Humfleet and the contingent beneficiaries, Humfleet was paid the proceeds of the policy.

At the time of the filing of the interpleader action, two of the contingent beneficiaries resided outside the State of Georgia.

After payment of the proceeds to Humfleet, Primerica moved for summary judgment in the underlying action on the remaining issue of its bad faith. Primerica asserted that no proper demand had been lodged as required by the statute and that its failure to pay the claim was motivated, not by bad faith, but rather by Humfleet’s status as a suspect in her husband’s death and by the potential claims of the contingent beneficiaries.

Following oral arguments, the trial court denied the motion, finding that genuine issues of material fact remained for jury resolution. We subsequently granted Primerica’s application for interlocutory review.

In order to prevail on a claim for an insurer’s bad faith, the insured must prove two conditions: (1) that a demand for payment was lodged against the insurer at least 60 days prior to filing suit and (2) that the insurer’s failure to pay was motivated by bad faith. As the statute imposes a penalty, it is strictly construed. Howell v. Southern Heritage Ins. Co., 214 Ga. App. 536, 537 (448 S.E.2d 275) (1994).

1. Primerica asserts that 60 days did not elapse from the time it received a proper demand and the filing of the suit. A close review of the record reveals that the only verifiable communication to predate the complaint by sixty days was the telephone call placed to Primerica by Humfleet two days following her husband’s death. It has long been the law that in order to serve as a bad faith demand, the demand must be made at a time when immediate payment is due. Napp v. American Cas. Co. of Reading, PA, 110 Ga. App. 673, 675 (139 S.E.2d 425) (1964) citing American Nat. Ins. Co. v. Brantley, 38 Ga. App. 505 (144 S.E. 332) (1928). In the present matter, at the time Humfleet lodged her demand, Primerica had yet to receive any formal evidence of Humfleet’s loss, including the death certificate. Also, Primerica had no opportunity to commence an investigation of the death as it was permitted to do under the policy. As no payment was immediately due at the time of Humfleet’s demand, no bad faith penalties can arise by virtue of OCGA § 33-4-6.

Moreover, even if immediate payment had been due, Humfleet’s demand was insufficient. Clearly, the purpose of the statute’s demand requirement is to adequately notify an insurer that it is facing a bad faith claim so that it may make a decision about whether to pay, deny or further investigate the claim within the 60-day deadline. While Georgia law recognizes that no particular language is required to constitute a demand, the language must be sufficient to alert the insurer that bad faith is being asserted. See Cotton States Mut. Ins. Co. v. Clark, 114 Ga. App. 439, 447 (151 S.E.2d 780) (1966) (court action threatened when insurer refused to pay loss). In the present matter, Humfleet’s “demand” consisted of a request to receive payment of the policy’s proceeds as quickly as possible, a sentiment commonly expressed by those making an insurance claim. Nothing in Humfleet’s statement raises the additional specter of bad faith necessary to put Primerica on notice.

Due to the inadequacies of Humfleet’s demand, we find that the trial court erred in denying Primerica’s motion for summary judgment.

2. Based upon our decision in Division 1, we need not address the issue of whether Primerica’s decision to not immediately pay the claim was based on bad faith.

Judgment reversed. McMurray, P.J., concurs specially and in the judgment only. Andrews, J., concurs.

Decided July 10, 1995.

McMurray, Presiding Judge, concurring specially and in the judgment.

I concur specially and in the judgment because I agree that Constance Humfleet’s telephonic demand for payment of benefits was premature because it was asserted before Primerica had proof of the insured’s death, i.e., a condition for payment under the policy. I do not agree, however, with the majority’s conclusion that the demand “must be sufficient to alert the insurer that bad faith is being asserted.” Georgia law has never required such specificity, Hanover Ins. Co. v. Hallford, 127 Ga. App. 322, 323 (1a) (193 S.E.2d 235). And contrary to the majority’s reliance, Cotton States Mut. Ins. Co. v. Clark, 114 Ga. App. 439, 446 (8), 447 (151 S.E.2d 780), does not provide otherwise. In fact, even though the insured in Clark said nothing about statutory damages when he requested payment under a fire insurance policy, this Court held that the insured’s verbal threat of court action against his insurance carrier was sufficient to invoke the 60-day period prescribed by OCGA § 33-4-6.

What it decided

Constance Humfleet’s husband was killed in an armed robbery. Two days later she called Primerica, his life insurer, asking for the $150,000 in proceeds as quickly as possible to cover burial expenses. She submitted her completed claim form and death certificate about three weeks after that. Primerica opened an investigation — the police had not ruled her out as a suspect — and when payment had not arrived by November 29, she sued for the proceeds and for bad-faith penalties under OCGA § 33-4-6. Primerica interpleaded the money in federal court; she was paid through a consent order; the penalty claim was all that remained. The trial court denied Primerica summary judgment on the penalty, finding jury questions. The Court of Appeals reversed:

• The statute’s two conditions, strictly construed. To recover the penalty, the insured must prove “(1) that a demand for payment was lodged against the insurer at least 60 days prior to filing suit and (2) that the insurer’s failure to pay was motivated by bad faith.” Because § 33-4-6 imposes a penalty, “it is strictly construed.”
• A demand only counts when immediate payment is due. The only communication 60 or more days before suit was the phone call two days after the death — before Primerica had any proof of loss, including the death certificate, and before it had a chance to conduct the investigation the policy permitted. “As no payment was immediately due at the time of Humfleet’s demand, no bad faith penalties can arise by virtue of OCGA § 33-4-6.”
• The contested second ground. The majority added that a demand’s language “must be sufficient to alert the insurer that bad faith is being asserted,” and that a routine request for fast payment does not do that. McMurray, P.J., concurring specially, rejected that statement outright: “Georgia law has never required such specificity,” citing Hanover v. Hallford, and noting that in Cotton States v. Clark a verbal threat of court action — with no mention of statutory damages — was enough to start the 60-day clock.

The court never reached whether Primerica actually acted in bad faith; Division 2 was expressly left unaddressed.

What it did NOT decide

• It did not decide whether Primerica acted in bad faith. Division 2 is one sentence: “Based upon our decision in Division 1, we need not address the issue of whether Primerica’s decision to not immediately pay the claim was based on bad faith.” Humfleet’s charge that the investigation was “merely a ruse designed by Primerica to delay or forego payment” was never weighed by anyone.
• The content rule was an alternative ground, and it did not carry the panel. The judgment rests on timing: “As no payment was immediately due at the time of Humfleet’s demand, no bad faith penalties can arise by virtue of OCGA § 33-4-6.” Only after that does the majority add, “Moreover, even if immediate payment had been due, Humfleet’s demand was insufficient.” One of the three judges concurred in the judgment only and wrote that “Georgia law has never required such specificity.” The later decision that repeats the alert-the-insurer language, Thompson v. Homesite (2018), is marked physical precedent on that very division.
• It did not require a written demand. The opinion never says a demand must be in writing. It says the phone call was “the only verifiable communication to predate the complaint by sixty days,” and it repeats that “no particular language is required to constitute a demand.” Writing solves the proof problem the opinion exposes; it is not a rule the opinion announces.
• It did not fix when payment becomes due on a property claim. This is a life policy, and “due” turned on facts peculiar to it — no death certificate in hand, and an investigation the policy expressly permitted into a beneficiary the police had not ruled out. Nothing here sets a date for a fire, wind, or water claim. Georgia’s claim-handling clock runs on its own track, in Rule 120-2-52-.03.
• It did not hold that paying the claim ends the penalty exposure. Primerica interpleaded the proceeds, Humfleet was paid through a consent order, and the penalty count still had to be fought. The statute says as much: the action “shall not be abated by payment after the 60 day period” (O.C.G.A. § 33-4-6). This case ended on the demand, not on the payment.
• It did not pass on the interpleader or the investigation. Whether interpleading was a fair answer to competing beneficiaries, and whether investigating the widow was reasonable, are recited as background and resolved nowhere in the opinion.

Why it matters to policyholders

Georgia’s bad-faith statute is the main financial lever against an unreasonable refusal to pay: up to 50% of the loss or $5,000, whichever is greater, plus attorney’s fees. Humfleet is the case carriers cite to knock the penalty out on demand technicalities before a jury ever hears the claim. The rule that carried the judgment is about timing: a demand made before payment is contractually due — before the proof of loss is in, while the insurer’s investigation window is still open — never starts the 60-day clock, no matter how sincere it is.

Be careful with the second half. Carriers sometimes quote the majority’s “must be sufficient to alert the insurer that bad faith is being asserted” line as if it were settled doctrine requiring magic words. The panel itself was split on that: one of the three judges concurred in the judgment only and wrote separately to say Georgia law has never demanded such specificity, pointing to Clark, where a plain threat of court action sufficed. The safe practice costs nothing and sidesteps the whole fight: put the demand in writing, send it after the proof of loss when payment is actually due, state plainly that the § 33-4-6 penalty will be pursued if the covered loss is not paid, and let the full 60 days run before any suit is filed. One more honest note: the penalty itself is decided in litigation, which is attorney work — a public adjuster’s role is building the loss documentation and the demand record that make the case, and referring the lawsuit out. And Humfleet is not a ruling that the carrier behaved well or badly; the court stopped at the demand’s prerequisites and never reached the bad-faith question at all.

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