Judge Ken Hodges, Georgia Court of Appeals. (Photo: John Disney/ALM)
Reversing a trial judge, the state Court of Appeals has tossed out a case against an insurer sued after it denied coverage for a middle Georgia couple's home destroyed in a 2015 fire, ruling that—even though they had made payments to the insurance agent who sold them the policy—they did not send them directly to the company as instructed.
Though the opinion didn't mention it, the agent in question was arrested later that year on 10 counts of insurance fraud for pocketing clients' premiums and subsequently pleaded guilty.
According to the opinion written by Judge Kenneth Hodges III with the concurrence of Chief Judge Christopher McFadden and Presiding Judge Sara Doyle, in 2013, Charlie and Wanda Lancaster purchased an American Reliable Insurance farm owner's insurance policy for their property in Eastman. They bought the policy through agent Macie Yawn of Eastman's Charles Robinson Insurance Agency.
Their premium payments were always made to Yawn, as provided by the initial policy.
Toward the end of 2014, the insurer mailed the Lancasters a renewal notice directing them to ,make subsequent payments directly to the company by mail or online.
"Paying premiums to Yawn or her insurance agency was not listed as a manner by which premiums could be paid," the opinion said. "The Lancasters contend that they never received this notice."
In December 2014 American Reliable sent the Lancasters a cancellation notice that their coverage would end if the premium wasn't paid by January 4, 2015
"Again, payment of premiums to Yawn or her insurance agency was not listed as a permissible method of payment," Hodges wrote. "The Lancasters contend that they never received the cancellation notice, but American Reliable produced a certificate of mailing from the United States Postal Service."
The couple continued to make payments to Yawn, but none were ever received by American Reliable.
In May 2015, the Lancasters' house was totally destroyed by a fire. They reported the loss to American Reliable, which denied coverage due to nonpayment of the premiums.
They sued the insurer and Yawn in Bleckley County Superior Court in 2017, where American Reliable moved for summary judgment; Yawn never responded and was declared in default.
Judge C. Michael Johnson denied the insurer's motion "on the basis that genuine issues remained as to the agency status of Yawn" but allowed the insurer to file an interlocutory appeal.
In reversing Johnson, the appellate panel found that, while Yawn was not an American Reliable employee, she had been permitted to accept payments on its behalf during the initial policy period.
"The record also demonstrates, however, that, despite what Yawn may have told the Lancasters, American Reliable rescinded any agency status it previously extended to Yawn to accept policy premiums for the Renewal Policy," Hodges wrote.
"The renewal notice and cancellation notice both indicated that premium payments were to be made directly to American Reliable and make no provision for payment to Yawn," he said.
The panel also agreed with the insurer that there was no coverage in place at the time of the fire, given their decision that Yawn was not an agent of American Reliable.
"Accordingly, the uncontradicted evidence demonstrates that the Lancasters did not make any Renewal Policy premium payments," Hodges wrote.
American Reliable is represented by Seth Kirby and Jessica Stamford of Freeman, Mathis & Gary, who declined to comment.
The Lancasters are represented by Warner Robins, Georgia, solo Stephen Hollomon, who did not immediately respond to a query Friday afternoon.
As to Yawn, Oconee Circuit District Attorney Timothy Vaughn said she pleaded guilty in 2018 and was sentenced to serve 20 years on probation and ordered to pay restitution and a fine.
Greg Land
Greg Land covers topics including verdicts and settlements and insurance-related litigation for the Daily Report in Atlanta.