Southern Fire & Casualty Co. v. Freeman

474 S.E.2d 195, 222 Ga. App. 308

• Court: Court of Appeals of Georgia
• Decided: November 22, 1996
• Docket: A96A0596, A96A0597
• Status: Published

Opinions

Blackburn, Judge.

In Case No. A96A0596, Southern Fire & Casualty Company (Southern Fire) appeals the trial court’s order granting Sarah Freeman’s motion for summary judgment on the issue of Southern Fire’s compliance with former OCGA § 33-34-5 (b) in the application for automobile insurance at issue. In Case No. A96A0597, Sarah Freeman appeals the trial court’s order granting Southern Fire’s motion for summary judgment on the issue of bad faith damages provided for by OCGA § 33-4-6.

1. Freeman, the insured, contended that Southern Fire’s application failed to meet the mandates of former OCGA § 33-34-5 (b) and thus the policy provides additional coverage for her. In granting her motion for summary judgment, the trial court agreed.

“The legislature enacted the former OCGA § 33-34-5 (b) to draw a bright line between cases where applicants effectively rejected optional coverages and cases where the applicant did not. Southern Guaranty Ins. &c. v. Goddard, 259 Ga. 257 (379 SE2d 778) (1989). That Code section, which was in effect at the time [Freeman] applied for insurance coverage with [Southern Fire], required that ‘(e)ach initial application for a new policy of motor vehicle liability insurance sold in this state after November 1, 1982, shall contain a statement in boldface type signed by the applicant indicating that the optional coverages listed in subsection (a) of this Code section have been explained to the applicant.’ Accordingly, ‘for there to be an effective rejection of additional coverage, the application must (1) contain a statement that the optional coverage required by the statute to be offered has been explained to the applicant, (2) that the statement be in bold face, and (3) that the statement be signed by the applicant.’ Id. at 258.” Travelers Indem. Co. v. Holtz, 218 Ga. App. 83 (460 SE2d 300) (1995). In Southern Guaranty Ins. Co. v. Goddard, supra at 258, the Georgia Supreme Court determined that “[t]he common sense definition of boldface is that print which exhibits a face sufficiently heavy in appearance to cause it to be more conspicuous than the print which surrounds it.”

In the present case, Southern Fire’s application contained an “Offer of Additional Optional No-Fault Coverage” on a separate page marked off in its own box. See Exhibit A to this opinion. Below the offer of additional coverage, set off in its own paragraph, and in bold type is the language: “The Additional Optional Coverages Above Have Been Explained To Me.” This statement is followed by two short lines, also in boldface type, containing the definitions of PIP and ACV: “PIP means personal injury protection and ACV means actual cash value.” Freeman’s signature, as applicant, follows these definitions.

Our review of the application indicates that although the statement required by law to be in boldface type, is in boldface type, additional surrounding language is also in boldface type. This additional language is not required by law to be in boldface type. Furthermore, other language on the form is printed in such a way as to make it conspicuous, e.g., “For Georgia Residents” at the top of the form is in boldface type and in a larger sized font than the language around it. Under the facts of this case, we find that the mandates of former OCGA § 33-34-5 (b) and the requirements of our Supreme Court in Goddard, supra, have not been met because the statement required by law to be “different enough to be conspicuous” is not. Windsor Ins. Co. v. Jeffery, 204 Ga. App. 557, 558 (420 SE2d 15) (1992). The dissent ignores the Supreme Court’s specific requirement that the print be more conspicuous than the print which surrounds it. The reason for this requirement is that the effect of boldfacing could be easily defeated by simply boldfacing the surrounding material. Rather like in hiding a tree, the best place to do so is in a forest. Goddard, supra at 258. We have no authority to overrule the Supreme Court and are bound to follow its specific requirements. Therefore, the trial court correctly granted Freeman’s motion for summary judgment.

2. In her cross-appeal, Freeman contends the trial court erred in granting Southern Fire’s motion for summary judgment on her claims for bad faith penalties and attorney fees.

“To support a cause of action under OCGA § 33-4-6, the insured bears the burden of proving that the refusal to pay the claim was made in bad faith. A defense going far enough to show reasonable and probable cause for making it, would vindicate the good faith of the company as effectually as would a complete defense to the action. [Furthermore,] [penalties for bad faith are not authorized where the insurance company has any reasonable ground to contest the claim and where there is a disputed question of fact.” (Citations and punctuation omitted.) Southern Fire &c. Ins. Co. v. Northwest Ga. Bank, 209 Ga. App. 867, 868 (434 SE2d 729) (1993).

In the present case, we cannot say that the trial court erred in determining that Southern Fire’s defense was not frivolous or an unfounded denial of liability. This Court is unaware of any case directly interpreting the insurance application at issue. Although the trial court relied on Henry v. Gulf Ins. Co., 214 Ga. App. 516 (1) (448 SE2d 230) (1994), to determine that the present application did not comply with former OCGA § 33-34-5 (b), that case is distinguishable. In Henry, we determined that an application which contains the acknowledgment in all capital letters with the same ink density as the remaining type on the page was not sufficient to meet the mandates of former OCGA § 33-34-5 (b). Id. at 517. Because the acknowledgment in the present case is in boldface type, our analysis in the Henry case does not directly apply, and is not a basis to assert that the issue presented in the present case has previously been determined.

Although Southern Fire’s defense did not prevail, the insured must prove that the defense was frivolous and unfounded. The insured failed to carry this burden. Therefore, the trial court correctly granted Southern Fire’s motion for summary judgment.

Judgments affirmed.

McMurray, P. J., Pope, P. J., and Johnson, J., concur. Birdsong, P. J., and Ruffin, J., concur in the judgment only. Beasley, C. J., Andrews and Smith, JJ, dissent.