Williams v. Mayflower Insurance Co., Ltd.
Court of Appeals of Georgia, No. A99A1249, decided June 16, 1999 (Johnson, C. J.; Pope, P. J., and Eldridge, J., concurring). The complete opinion appears below, transcribed from the reported decision; only print artifacts (page headers, footers, and reporter page markers) have been removed. The reporter’s citation line and the counsel appearance block are kept as published, and the court’s own footnote appears at the end under “Notes.”
The full opinion
WILLIAMS v. MAYFLOWER INSURANCE COMPANY, LTD. Court of Appeals of Georgia (June 16, 1999). No. A99A1249. 238 Ga. App. 581, 519 S.E.2d 506.
Lee, Black, Scheer & Hart, Steven E. Scheer, Christopher L. Rouse, Savannah, for appellant. Brannen, Searcy & Smith, Beverly G. O’Hearn, Atlanta, for appellee.
Johnson, Chief Judge.
This case involves a suit to recover on an insurance policy. Larry Williams was injured when an oven exploded in a house owned by Clinton Williams, his brother. At the time of the injury, Clinton Williams had a homeowner’s insurance policy with Mayflower Insurance Company, Ltd. Larry Williams submitted a claim for benefits under his brother’s insurance contract. Since the policy excluded coverage for “bodily injury to you or a relative,” Mayflower denied benefit payments.
Subsequently, Larry Williams sued his brother, and a jury awarded him $250,000. The brothers then executed a covenant not to enforce judgment, in which Larry Williams promised not to pursue the judgment against his brother and his brother purported to assign all rights in his insurance contract to Larry Williams. The assignment gives Larry Williams “all claims and/or causes of action [the policyholder has] against any entity providing liability insurance to [him] arising out of such coverage and any denial of coverage.” However, the insurance policy states that “you cannot transfer your interest under your policy to anyone else unless we agree to the transfer. Our agreement must be in writing.” It is undisputed that Clinton Williams never requested consent from Mayflower to transfer his rights under the policy to his brother and that Mayflower did not consent to the assignment.
Larry Williams sued Mayflower for an alleged breach of contract and bad faith refusal to pay benefits, relying upon the purported assignment to provide the requisite standing needed to pursue Mayflower directly.[1] The breach of contract claim is premised on the allegation that Mayflower breached its contract by refusing to pay benefits to Larry Williams for personal injuries suffered on the insured property. Mayflower moved for summary judgment based on the non-assignability clause of the insurance contract and Larry Williams’ lack of standing. The trial court granted Mayflower’s motion. For reasons which follow, we affirm.
On appeal of the grant of summary judgment, this court applies a de novo review of the evidence to determine whether any question of material fact exists. Moore v. Food Assoc., 210 Ga.App. 780, 781, 437 S.E.2d 832 (1993). Summary judgment is appropriate where the moving party can show that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. OCGA § 9-11-56(c). A defendant meets this burden by “showing the court that the documents, affidavits, depositions and other evidence in the record reveal that there is no evidence sufficient to create a jury issue on at least one essential element of plaintiff’s case… All of the other disputes of fact are rendered immaterial. [Cit.]” Lau’s Corp. v. Haskins, 261 Ga. 491, 405 S.E.2d 474 (1991).
Larry Williams contends the trial court erred in determining that the contract claim was not a transferable property right. However, a review of the record reveals that the trial court did not rule that the underlying contract claim was non-transferable. The trial court merely upheld the policy’s non-assignability clause in which the insured contracted away his right to transfer an otherwise transferable property right unless he obtained the insurer’s written consent to the transfer.
It is axiomatic that parties are bound by the terms of their insurance contracts. See Sapp v. State Farm Fire &c. Co., 226 Ga.App. 200, 201(1)(a), 486 S.E.2d 71 (1997). Contractual limitations are valid and will be enforced by the courts. Dailey v. Cotton States Mut. Ins. Co., 207 Ga.App. 139, 140, 427 S.E.2d 109 (1993). Most significantly, Georgia law expressly provides that insurers may limit the assignability of rights under policies through the use of non-assignability clauses. OCGA § 33-24-17.
In the present case, Mayflower introduced the contract at issue, which specifically and unambiguously stated that any assignment must be consented to in writing. There is no dispute that Mayflower was not informed of the assignment and did not consent to the assignment. Once this evidence was presented to the trial court, Larry Williams could not rest on his pleadings, but rather was required to point to specific evidence giving rise to a triable issue. OCGA § 9-11-56(e). Larry Williams failed to do this.
According to Larry Williams, the non-assignability clause has been rendered nugatory since his brother had paid his premiums and, therefore, performed his obligations under the contract. See Mail Concepts v. Foote & Davies, Inc., 200 Ga.App. 778, 781(3), 409 S.E.2d 567 (1991) (once a party to the contract performs its obligations so that the contract is no longer executory, its right to enforce the other party’s liability under the contract may be assigned without the other party’s consent even if the contract contains a non-assignment clause). However, pretermitting the merits of this issue, our review of the record indicates that it was not raised or decided in the trial court. Thus, we will not consider this issue for the first time on appeal. See Vickers v. Coffee County, 255 Ga. 659, 661, 340 S.E.2d 585 (1986) (addendum).
Moreover, even if the issue was preserved and the holding in Mail Concepts applies to the present situation, the record is devoid of any evidence regarding Clinton Williams’ payment of premiums. It was incumbent upon Larry Williams, not Mayflower, to establish that Clinton Williams had fully performed under the contract and to provide the trial court with any evidence showing why the non-assignment clause may be nugatory. See Hill Aircraft &c. Corp. v. Planes, Inc., 169 Ga.App. 161, 165(2), 312 S.E.2d 119 (1983). The trial court did not err in granting summary judgment to Mayflower.
Judgment affirmed.
POPE, P.J., and ELDRIDGE, J., concur.
Notes:
- Larry Williams conceded that he lacked standing to pursue the bad faith refusal to pay benefits claim and abandoned this claim.
What it decided
Larry Williams was hurt when an oven exploded in a house owned by his brother Clinton. Clinton carried a Mayflower homeowner’s policy that excluded “bodily injury to you or a relative,” so Mayflower refused to pay Larry’s claim. Larry sued his brother, and a jury returned a $250,000 verdict. The brothers then signed a covenant not to enforce the judgment, and Clinton “purported to assign all rights in his insurance contract” over — an instrument giving Larry “all claims and/or causes of action [the policyholder has] against any entity providing liability insurance to [him] arising out of such coverage and any denial of coverage.” Larry sued Mayflower directly, standing on that paper.
The policy said what many policies say: “you cannot transfer your interest under your policy to anyone else unless we agree to the transfer. Our agreement must be in writing.” Clinton never asked for consent. Mayflower never gave it. The trial court granted Mayflower summary judgment and the Court of Appeals affirmed, on two settled propositions: parties are bound by the terms of their insurance contracts, and “Georgia law expressly provides that insurers may limit the assignability of rights under policies through the use of non-assignability clauses. OCGA § 33-24-17.” Once Mayflower put the clause and the undisputed absence of consent in front of the court, Larry had to come forward with specific evidence creating a triable issue. He did not.
Hold the shape of this case in mind, because everything else follows from it. Williams is a third-party liability dispute. Larry was never Mayflower’s insured. He was the injured claimant, holding a judgment against the insured, trying to reach the insured’s liability carrier after that carrier had denied under an exclusion. He also conceded he had no standing to bring the bad faith count, and abandoned it.
What it did not decide
Carriers reach for Williams as though Georgia now requires written consent before a policyholder can assign anything to anyone. The opinion says considerably less than that, and in places says the opposite.
- It did not hold the claim untransferable — the court corrected that reading itself. “[T]he trial court did not rule that the underlying contract claim was non-transferable. The trial court merely upheld the policy’s non-assignability clause in which the insured contracted away his right to transfer an otherwise transferable property right unless he obtained the insurer’s written consent to the transfer.” Read “an otherwise transferable property right” twice. That is the court describing what an insurance claim is in Georgia.
- It left the fully-performed argument open on purpose. Larry argued the clause was nugatory because his brother had paid the premiums and had therefore performed, invoking Mail Concepts v. Foote & Davies: once a party performs so that the contract is no longer executory, “its right to enforce the other party’s liability under the contract may be assigned without the other party’s consent even if the contract contains a non-assignment clause.” The court declined to rule, “pretermitting the merits of this issue,” because the argument was never raised in the trial court. It added that the record was “devoid of any evidence regarding Clinton Williams’ payment of premiums.” Larry lost that point on preservation and proof. The doctrine came through untouched.
- It was aimed at the policy, not at an accrued property loss. What Clinton signed over was his interest under the policy and every cause of action against any liability insurer. The clause it collided with governs transferring “your interest under your policy,” and O.C.G.A. § 33-24-17 governs whether a policy “may be assignable or not assignable, as provided by its terms.” A fixed sum owed for damage that already happened is not what changed hands, and the opinion never discusses one.
- It did not disturb Georgia’s post-loss assignment rule. Williams cites neither Georgia Co-operative Fire Ass’n v. Borchardt (Supreme Court of Georgia, 1905) nor Santiago v. Safeway (Court of Appeals, 1990), and it does not purport to overrule anything. A three-judge division resolving a standing question on a bare record did not quietly reverse the rule Georgia had followed since 1905.
- It never reached the denial. The judgment rests on the transfer clause and on Larry’s lack of standing. Whether Mayflower’s relative exclusion actually defeated the underlying claim is nowhere in the opinion.
Why it matters to policyholders
This is the decision carriers reach for whenever a claim shows up in hands other than the named insured’s, most often when a roofer or a water-mitigation contractor has a homeowner sign an “assignment of benefits” inside the work authorization. Both readings belong on the table, because both get used.
- The carrier’s reading is legitimate as far as it goes. Section 33-24-17 lets an insurer write a consent requirement into its policy, and Williams is a Georgia court enforcing one. No written consent, no standing for the assignee. Anyone who takes an assignment of policy rights without first reading the transfer clause is building on sand, and anyone who signs one without advice may be giving up more than they think.
- The policyholder’s reading is that Williams sits in a different lane than the one carriers put it in. Georgia’s rule for benefits owed on a loss that has already happened comes from Borchardt and Santiago, and it runs the other way.
Borchardt, in 1905: “After the loss occurs, a sale of the property and transfer of the policy does not affect the liability of the insurer, but the assignee may recover.” A policy condition barring post-loss assignment without consent is, in that court’s words, “null and void, as inconsistent with the covenant of indemnity and contrary to public policy.” Santiago applied the same principle in 1990 to an assignment of benefits, in a case where the policy said the insured’s rights “may not be assigned without our written consent” and the carrier had not consented. The assignment still held, because it moved “only the benefits due the insureds after the loss had already occurred,” not the policy, and so “did not in any way affect the risk insured by the policy.”
Notice which statute Santiago opens with. The same one Williams closes with: O.C.G.A. § 33-24-17, quoted there as “[An insurance] policy may be assignable or not assignable, as provided by its terms.” The statute answers whether the policy is assignable. It does not answer what happens to a claim that has already accrued, which is how two Georgia decisions can both cite it and land in different places on different facts. Four judges concurring specially in Santiago put the line in one sentence: an assignment of the policy and an assignment of the claim for loss “are distinct and different.”
A carrier will point out that the Williams assignment came after the oven exploded and after the verdict, so it was post-loss too. That is fair, and it is worth answering directly. The answer is on the face of the instrument. Clinton did not assign a fixed sum owed for damage to his own house. He assigned his interest under the policy and every claim he might have against any liability insurer, in a fight where the carrier’s obligation to anyone was contested and the assignee was a stranger to the contract holding a judgment against the insured. That is the transfer § 33-24-17 lets an insurer condition. It is not the accrued first-party claim Borchardt and Santiago protect.
So the honest line is this: after a loss has occurred, Georgia law has long treated the accrued claim differently from the policy itself. Williams did not change that, and it did not say it was changing it.
None of which makes an assignment a small thing to sign. Read your own transfer clause first and get advice before you sign anything, because an assignment is a decision, not paperwork — it hands someone else the right to be paid, and to sue, on that piece of your claim, and an assignment the carrier fights can leave you in the middle of two disputes instead of one. Representation is a different arrangement entirely. A licensed public adjuster works for you under a state-regulated contract (O.C.G.A. § 33-23-43.2), documents the loss, and negotiates it, while the claim stays yours. An assignment of proceeds is also not a license to run a claim: Georgia regulates who may adjust or negotiate on your behalf separately, including restrictions on residential roofing contractors. And if the refusal to pay on a claim you still own is unfounded, that is the territory of O.C.G.A. § 33-4-6 and cases like Hanover v. Hallford. Filing that suit is attorney work; we document it, press it in negotiation, and refer the litigation out.
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