Recent Georgia Court of Appeals Decision Strengthens Georgia as a Forum for Products Liability Cases

By D. Lee Clayton

A recent Georgia Court of Appeals case may discourage plaintiffs who are injured out of state from filing a products liability suit in Georgia. If an individual is injured by an allegedly defective product outside of Georgia, the individual may have the option of choosing whether to file suit in Georgia or the state where the injury occurred. Until recently, when a plaintiff

chose to file suit in Georgia for an out of state injury, there was no clear answer regarding what statute of repose would govern the suit. In a recent Georgia Court of Appeals case, the Court deemed the statute of repose to be procedural, thereby requiring the application of Georgia’s statute of repose for all cases filed in Georgia.

Unlike a statute of limitations, the statute of repose can bar a cause of action even before it arises. Under O.C.G.A. § 51-1-11, a products liability lawsuit for strict liability or negligent design must be brought within ten years from the date a product is sold as new. As such, if the injury occurs after the ten year time period has expired, a plaintiff’s cause of action under those theories would be barred.

In July 2001, a Georgia resident was involved in a one-vehicle motor vehicle accident on a Texas highway while driving her grandchildren and other individuals from Houston, Texas to Atlanta, Georgia in a 1991 Ford Aerostar van. Tragically, the van rolled over and fell off a bridge into a river killing five passengers.

Representatives of the accident victims sued Ford in Georgia alleging a design defect in the van which made it unstable and prone to roll over when fully loaded with passengers and/or luggage. Despite the plaintiffs’ claims that the fifteen-year Texas statute of repose should apply, the trial court applied Georgia’s ten-year statute of repose. As a result, the plaintiffs’ strict liability and negligent design claims were barred because the case was filed over twelve years after Ford first sold the van.

In affirming the trial court’s decision, the Georgia Court of Appeals agreed that Georgia’s ten year statute of repose applies to all suits filed in Georgia, deeming it a procedural rule rather than substantive law. The Court of Appeals declined to follow other jurisdictions that have held a statute of repose to be substantive, ensuring the statute of repose will apply uniformly to all suits in Georgia. In declining to apply the statute of repose of another state, the Georgia Court of Appeals ensures finality to products liability claims filed in Georgia regardless of where the injury occurred.

Bagnell v. Ford Motor Co., 297 Ga. App. 835 (2009).

Adams v. State Farm:More Changes to Uninsured Motorist Law

By Alicia A. Timm

The Georgia Court of Appeals, in a rare grant of a motion for reconsideration and reversal of its own decision, has joined with the state legislature to make 2009 a year of change in the uninsured/underin-sured (“UM”) law in the state of Georgia. The by-product of the Georgia Court of Appeals’ decision is an increase in the amount of exposure a UM provider may

have in a case and the number of cases in which a plaintiff may be entitled to UM benefits.

This case, Adams v. State Farm Mutual Automobile Insurance Company, 298 Ga. App. 249 (April 14, 2009), is factually simple and indistinct from many automobile personal injury cases in Georgia. Randolph Adams was involved in a motor vehicle incident with another vehicle. Mr. Adams sued the driver of the second vehicle (the “tortfeasor”) for injuries he sustained in the incident and during the course of the litigation settled with the tortfeasor’s automobile liability insurer for its $25,000 policy limits. The liability insurer paid a portion of the $25,000 to compromise a Georgia hospital lien incurred by Mr. Adams and paid the remaining amount to Mr. Adams.

After settlement, Mr. Adams sought additional compensation from State Farm under his UM coverage with a limit of $100,000. Mr. Adams and State Farm, however, disagreed as to how much coverage State Farm had available.

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The disagreement stemmed from the pre-2009 UM statute’s imprecise language describing the method for determining whether a tortfeasor is underinsured. Under the statute, if a tortfeasor’s available coverage under his liability policy is less than the plaintiff’s UM policy limits, then the tortfeasor is underinsured and the plaintiff can recover the difference between the available coverage under the liability policy and the limits of the UM policy. The statute defines available coverage as the limits of the liability policy reduced by “payment of other claims or otherwise.” O.C.G.A. § 33-7-11(b)(1)(D)(ii). It does not, however, define the terms “other claims or otherwise,” leaving parties and the courts to interpret these terms.

In Adams, State Farm contended that the payment of the hospital lien by the tortfeasor’s insurance company was not a payment which should be included in the definition of “other claims or otherwise” to reduce the available liability coverage and, therefore, it should be entitled to a set-off of the entire amount that the tortfeasor’s automobile liability insurance provider paid to Mr. Adams and on his behalf. Mr. Adams disagreed and contended that the payment of the hospital lien was “payment of other claims or otherwise” which reduced the amount of available liability coverage and, therefore, State Farm could only set-off the amount of the settlement that it paid directly to Mr. Adams. The trial court agreed with State Farm and Mr. Adams appealed the trial court’s decision. The Georgia Court of Appeals originally upheld the trial court’s decision.

After granting Mr. Adams’ motion for reconsideration, however, the Court, relying on precedent in Thurman v. State Farm Mutual Auto-mobile Ins. Co., 278 Ga. 162 (2004) and Toomer v. Allstate, 292 Ga. App. 60 (2008), held that State Farm’s payment of the hospital lien was “payment of other claims or otherwise” which reduced the amount of liability coverage available to Mr. Adams. The court reasoned that because payment of the lien resulted in the plaintiff being compen-sated in an amount less than his UM coverage, Georgia’s public policy of complete compensation was furthered by not allowing the UM insurer to receive a set-off for the amount paid to satisfy a hospital lien. Therefore, State Farm could not take credit for the payment made directly to the hospital by the tortfeasor’s liability carrier because the payment reduced the available liability coverage. As a result, State Farm could be liable to pay any amount up to the difference between its policy’s UM limits and the amount paid directly to Mr. Adams.

In Floyd v. American International South Ins. Co., 681 S.E.2d 216 (Ga. App. July 7, 2009), the Georgia Court of Appeals expanded Adams to allow an unpaid hospital lien to reduce available liability coverage for “purposes of evaluating the availability of UM coverage.” Id.

The Adams Court of Appeals decision, however, may not be the final decision in this case or on this issue. State Farm, after denial by the Court of its own motion for reconsideration on the second Court of Appeals decision, petitioned the Georgia Supreme Court to review the Court of Appeals decision. This petition is still pending in the Georgia Supreme Court.

Practically, these holdings increase the number of cases in which a plaintiff may be entitled to payment under a UM policy because it

alters the calculations required to determine if a tortfeasor is under-insured. Prior to these holdings, if a liability carrier had coverage of $25,000 and the plaintiff’s UM policy provided $25,000 in UM coverage, the tortfeasor would not be considered underinsured and the plaintiff could not recover under her UM policy. Thus UM insurer would not be required to participate in any litigation resulting from the incident. As the law in Georgia is now interpreted under Adams and Floyd, a tortfeasor may be considered underinsured and a plaintiff may be entitled to payment under her UM policy, requiring a UM insurer to participate in any resulting litigation, if she incurred any medical liens as a result of treatment for any alleged injuries.

Georgia Law Modified to Allow Stacking of Liability and Uninsured Motorist Coverage

By Myrece R. Johnson

In May 2008, the Governor signed SB 276 into law, thereby modifying several aspects of Georgia’s uninsured and under-insured motorist law. The new statutory provisions of O.C.G.A. § 33-7-11 apply to “policies issued, delivered, issued for delivery, or renewed in this state on and after [January 2009].” According to the introduction of the bill, one of the main

purposes of the statutory modifications was “to change the definition of ‘uninsured motor vehicle’ to allow uninsured motorist coverage to be stacked with other available liability coverages.” Allowing the insured to stack UM coverage brings Georgia insurance law in line with a growing number of states allowing this, including Alabama and Florida.

Prior to the statutory revisions, a UM carrier was able to reduce its exposure by taking the UM policy limit and reducing it by the total amount of all available liability coverage. The set off allowed insureds to recover as much insurance as they paid for but no more. Revised O.C.G.A. § 33-7-11(b)(1)(D)(ii)(II) retained this traditional type of coverage as an option for the insured. However, O.C.G.A. § 33-7-11(b)(1)(D)(ii)(I) was added to the statute to provide insureds with a second option. Under subsection (D)(ii)(I), a UM carrier is not allowed to set off any amounts paid by the tortfeasor’s insurance, and the insured is able to stack the entire limit of the UM policy on top of the payments received from the tortfeasor’s liability insurance. Under this provision, recovery of UM policy proceeds is limited to the total amount of economic and non-economic loss suffered. The insured will not be able to receive a windfall where total coverage is greater than total loss.

As a result of the statutory modification, insureds in Georgia have three options in reference to UM coverage: 1) traditional UM coverage at a similar premium; 2) stacked UM coverage at a likely higher pre-mium; or 3) no UM coverage, as nothing in the modified statute re-

The Tort Report | Winter 2009

quires an insured to have UM coverage. To demonstrate the differ-ences in application, consider the situation where B injures A in an accident, B has $25,000 in liability coverage, A has $25,000 in UM coverage and A’s total loss is $50,000. If A had traditional UM coverage under subsection (II), he would receive $25,000 from B and nothing from the UM carrier due to the offset of B’s $25,000 payment from the $25,000 UM policy. This would leave A with $25,000 in uncovered loss. Under the stacking provision of subsection (I), A would recover $25,000 from B and $25,000 from his UM carrier, suffering no uncovered loss. Finally, if A had no UM coverage, he would only receive $25,000 from B. Thus, whether the insured opts to stack coverage will have significant implications on UM carrier liability.

If the insured has not previously waived UM coverage in writing, O.C.G.A. § 33-7-11(b)(1)(D)(ii)(III) requires insurers send notice of the coverage options outlined above to insureds 45 days before the renewal of the policy. This notice will allow insureds to specifically opt in or opt out of the enhanced UM coverage. According to the statute, notice must be sent only to holders of policies insuring private passenger motor vehicles. The Office of Insurance and Safety Fire Commissioner suggests notice should also be sent for commercial automobile policies as well, even though it seems the legislative intent was to cover only personal private vehicles, because “private passenger motor vehicles” is not defined in the statute.

Beneke v. Parker: Traffic Citations as Mechanisms for Tolling the Statute of Limitations

By F. Xavier Balderas

Previously, a civil defendant involved in personal injury litigation stemming from an auto accident could confidently rely on the strength of a statute of limi-tations defense for a suit filed more than two years after the accident occurred. The Supreme Court of Georgia’s September 28, 2009 decision in Beneke v. Parker, 2009 Ga. LEXIS 491, *1 (Sept. 29, 2009),

has now modified the landscape of personal injury lawsuits by expanding the available mechanisms available to toll the statute of limitations. On April 27, 2005, a Plaintiff sustained serious injuries after the vehicle in which she was a passenger overturned after being struck from behind by Defendant’s vehicle. Following the accident, Defendant received a citation for following Plaintiff’s vehicle too closely, a violation of O.C.G.A. § 40-6-49 and, more importantly, technically a misdemeanor under Georgia criminal law. On May 11, 2007, Plaintiff filed a personal injury suit for negligence against Defendant. Arguing that O.C.G.A. § 9-3-33, Georgia’s personal injury statute of limitations, barred Plaintiff’s suit since she failed to timely file suit within two years of the April 27, 2005 accident, Defendant appro-

priately moved for summary judgment. Initially, the trial court granted the motion. Less than a month later, Plaintiff moved the trial court to reconsider its prior ruling arguing that the disposition of Defendant’s traffic citation tolled the statute of limitations. In support of her tolling argument, Plaintiff cited O.C.G.A. § 9-3-99, which provides that:

[t]he running of the period of limitations with respect to any cause of action in tort… shall be tolled from the date of the commission of the alleged crime or the act giving rise to the such action in tort until the prosecution of such crime or act has become final or otherwise terminated…

Utilizing this statutory provision, Plaintiff asserted an entitlement to a 22-day tolling of the statute of limitations, arguing that Defendant’s ticket did not become final until May 19, 2005. After reconsideration, the trial court vacated its prior order and thereafter denied Defendant’s motion for summary judgment.

The Court of Appeals upheld the trial court’s denial of summary judgment, but vacated the trial court’s order that Defendant committed a “crime” sufficient to trigger the tolling provision outlined in O.C.G.A. § 9-3-99 and instead held that such a decision should be left to a jury. Beneke v. Parker, 293 Ga. App. 186, 188 (2008). The appellate court determined that the tolling of the statute of limitations could only occur if the traffic accident had been either intentional or if Defendant’s acts constituted criminal negligence. Utilizing O.C.G.A. § 16-2-1 (b), the Court found that the Legislature had clearly defined “criminal negligence” in such a manner as to incorporate a mens rea component – a question of fact whose resolution could only be determined by a jury.

The Supreme Court of Georgia later affirmed the denial of summary judgment, but did so by finding that the plain language of O.C.G.A. § 9-3-99 included misdemeanor traffic violations as “crimes” sufficient to toll tort-based causes of action. The Court found that the Legislature, by its own construction, intended to treat violations of the Uniform Rules of the Road as misdemeanors. Since O.C.G.A. § 16-1-3 (9) defines a misdemeanor as “any crime other than a felony,” the court found a misdemeanor to have been clearly categorized as a “crime.” By making this determination, the Court removed the impediment of having a jury determine whether a “crime” involved either intent or criminal negligence. More importantly, this paved the way for a violation of the motor vehicle code to serve as a tolling mechanism for any personal injury lawsuit resulting from a traffic collision where the one is issued a citation.

The short-term implications of the Beneke decision involve a closer correlation between the civil and criminal components of litigation that spawns from a traffic accident. But the decision’s effect is farther reaching as a court would likely apply Beneke to boating litigation since violations of the nautical Rules of the Road also constitute misdemeanors. Moreover, it is not altogether clear how future courts will handle issues such as the effect a citation might have on a respondeat superior claim. The Beneke decision does serve as a reminder for potential civil litigants to involve counsel early in case evaluation in order to ensure procedural defenses can be properly preserved.

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Swift, Currie, McGhee & Hiers, LLP, offers these articles for informational purposes only. These articles are not intended as legal advice or as an opinion that these cases will be applicable to any particular factual issue or type of litigation. If you have a specific legal problem, please contact a Swift Currie attorney.

If you have any comments or questions regarding the material in this issue, please contact Brad Wolff at brad.wolff@swiftcurrie.com, Valerie Pinkett at valerie.pinkett@swiftcurrie.com or Pamela Lee at pamela.lee@swiftcurrie.com.

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Recent Decisions and VictoriesStephen L. Cotter and Pamela N. Lee recently received a favorable decision, via unanimous decision, in the case of Silman v. Associates Bellemeade, case S09G0490, a spoliation of evidence case. The Supreme Court reaffirmed and clarified its previous decision in Baxley v. Hakiel Indus., 282 Ga. 312 (2007) by stating that “[s]poliation refers to the destruction or failure to preserve evidence that is necessary to contemplated or pending litigation.” Silman v. Associates Bellemeade, - Ga. - (2009) (citing Baxley v. Hakiel Indus., 282 Ga. 312 (2007). Plaintiff had argued in the Silman case that the Baxley decision expanded the definition of spoliation to include destruction of evidence where there was any “potential for litigation.” The Supreme Court refused to expand the law in this manner.

Swift Currie partner Stephen L. Cotter and associate Yoon J. Ettinger recently secured favorable rulings for their client, Infinity General Insurance Company, on several issues before the United States Court of Appeals for the Eleventh Circuit. The case arose out of a single auto-mobile collision wherein two passengers suffered fatal injuries. The estates and the wrongful death beneficiaries of both decedents sought to recover the insured driver’s policy limits. Although the insured claimed he had mailed a premium payment, Infinity had not received it at the time of the collision and never did receive such a payment. Infinity filed an interpleader action or, in the alternative, a declaratory judgment action in the Northern District of Georgia seeking a dec-laration of non-coverage, or if coverage was found, the Court’s guidance in distributing the policy limits. After the parties filed cross-motions for summary judgment on jurisdictional grounds as well as substantive issues, the district court granted Infinity’s motion finding subject matter jurisdiction existed and a declaration of no coverage. The decedants’ estates and beneficiaries appealed. The Eleventh Circuit affirmed the district court’s finding of subject matter jurisdiction under both 28 USC § 1335 and 28 USC § 1332 and the district court’s finding that no genuine issue of fact existed on the issue of non-payment. As an issue of Georgia law remained on the effectiveness of the language within Infinity’s notice of cancellation, the Eleventh Circuit certified that question to the Georgia Supreme Court on June 8, 2009.

Other Recent Case UpdatesJane Doe and John Doe, individually and as parents and next friends of Richard Roe, a minor v. [Defendants], Case No. A09A0139 (Ga.App., May 6, 2009). The Court of Appeals affirmed the summary judgment for the Defendants in a case in which the Plaintiffs had sued the Defendants for negligence allegedly resulting in the sexual molestation of Plaintiffs’ five-year-old son by the 13 year-old boy for whom the Defendants were acting as parental guardians. Summary judgment was proper as there was no evidence that the Defendants were aware of the offender’s propensity to commit the specific type act of sexual molestation of a child prior to the offense in this case.

In Encompass Ins. Co. of America v. Friedman, 2009 Ga. App. LEXIS 672 (2009), the Court of Appeals determined an insured’s mold claims were barred by the one-year suit limitation clause contained in the insurance contract. In Friedman, the insured first learned of excessive

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condensation associated with the HVAC system in her home when she noticed discoloration of her ceiling. The insured had the home inspected and the company performing the inspection determined that condensation from the HVAC system caused the damage. Later, the insured had the home inspected for the presence of mold. The inspection revealed that the condensation from the HVAC system also caused excessive levels of mold and required remediation. The insured ultimately filed suit to recover damages associated with remediation. The suit, however, was filed more than a year after she noticed the water damage and was aware of the excessive condensation associated with the HVAC system. The suit, however, was filed within one year of the insured learning of the presence of mold. The court ultimately found summary judgment in favor of the insurer was appropriate. The court reasoned that all of the insured’s claims were based on problems associated with excessive condensation of the HVAC system and the insured was aware of this problem more than one year prior to filing suit.

In Mason v. Home Depot U.S.A., Inc., 2008 Ga. 271 (2008), the Georgia Supreme Court upheld the constitutionality of O.C.G.A. § 24-9-67.1, which parallels federal law and encourages Georgia courts to follow Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993) and its progeny in determining the admissibility of expert testimony. In Mason, the plaintiffs proffered two expert witnesses in a products liability suit. The defendant moved to exclude the experts’ testimony based on O.C.G.A. § 24-9-67.1. The plaintiffs contended the statute violated the equal protection clause, due process and the constitutional prohibition against retroactive laws. The Supreme Court held that two parts of the statute were, in fact, contradictory; however, these portions could be severed. The Court held the statute was otherwise consti-tutional and could be applied in all civil actions, even those filed before the effective date of the statute. Accordingly, the Court affirmed the exclusion of the plaintiffs’ proffered expert witnesses on the basis that their opinions were not the “product of reliable principles and methods.”