Court Of Appeals Affirmed Dismissal Of Policyholders’ Class Action Breach Of Contract Claims Against Insurer

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Harden and Chambers v. State Farm Mutual Automobile Ins. Co.

(United States Court of Appeals, Eleventh Circuit, July 22, 2009)

 

Policyholders appealed from the dismissal of their class action breach of contract suit against insurer and for certification of a question of law to the Georgia Supreme Court to determine whether Georgia law prohibits the insurer from asserting set-offs in the payment of uninsured motorist personal injury claims.  Specifically, the policyholders argued that their failure to meet the condition precedent imposed by Ga. Code Ann. §33-7-11, requiring the insured to first obtain a judgment of liability against the uninsured motorist before bringing suit against the insurer, does not apply to their breach of contract action. 

The Court of Appeals concluded that the neither of the appellants obtained a judgment against the uninsured motorists involved in their accidents, wherein one never even attempted to sue the uninsured motorist and the other dismissed his complaint against the uninsured motorist when he settled his claim with State Farm.  Thus, under controlling law, the policyholders were barred from bringing a direct action claim against the insurer.  The court further held that neither policyholder pled that the insurer waived the condition precedent under Ga. Code Ann. §33-7-11.  Specifically, the court noted that while the offer of settlement from the insurer indicated that it would pay policyholder’s claim without further litigation, nothing alleged in the complaint could remotely lead one to believe that there was any kind of fraudulent conduct that might require estoppel or permit a finding of waiver; stating, “mere negotiation of settlement is not that type of conduct designed to lull the claimant into a false sense of security so as to constitute a waiver of the limitation defense.”  Consequently, because the appellants had not satisfied the statutory condition precedent under Georgia law, nor pled that State Farm somehow waived the condition precedent, or purposefully misled them, the court affirmed the district court’s dismissal of the claim. 

For a copy of the decision click here

By Paul C. Steck and Mary O'Keefe Massey    

https://www.goldbergsegalla.com/attorneys/Steck.html

https://www.goldbergsegalla.com/attorneys/Massey.html