Monday's opinion, authored by Justice John Ellington, noted the unique facts of the case involving a driver in a borrowed truck who hit a bicyclist and failed to tell the insurer when she was served with the lawsuit.

"The questions certified to us by the Eleventh Circuit," wrote Ellington, asked the justices "to analyze how Georgia law applies to an unusual set of circumstances at the intersection of contract and tort law, circumstances implicating both [the driver's] duty to give GEICO notice of suit and GEICO's duty to settle the claim" against her."

In answering the appellate court's questions, Ellington said, "we are unable to give unqualified 'yes' or 'no" answers … rather, we can answer the questions only in the context of the circumstances of this particular case."

As detailed in the opinion and other court filings, the case began in 2012 in Columbus, when a Ford pickup driven by Bonnie Winslett struck bicyclist Terry Guthrie. Guthrie was taken by ambulance to a hospital and accrued about $10,000 in hospital bills.

Winslett, described in court filings as having a history of mental and substance abuse issues, had borrowed the truck from Karen Griffis, Geico's policyholder. Winslett was cited for driving with a suspended license and failure to yield.

Guthrie's lawyer contacted Geico, which in March 2012 sent Winslett a letter saying it would "be handling this injury directly with attorney Charles Gower" and asking her to contact the insurer.

On May 5 Austin Gower sent Geico a 30-day time-limited offer to settle for its $30,000 limit.

Geico's adjuster valued Guthrie's claim between $12,409 and $15,9000, and offered the lower sum.

Geico's filings said it unsuccessfully tried to reach Gower to discuss a settlement but could only reach his paralegal.

On May 29, Guthrie sued Winslett in Muscogee County Superior Court. The next day a deputy served her with a copy of the complaint, which she testified she "wadded up, threw it away, and said 'to hell with this shit.'"

Winslett, who indicated that she may have been on drugs at the time, did not inform Geico of the suit. Two months later, Judge Beamon McBride III entered a default judgment for $2,916,204 against Winslett.

When it learned of the judgment Geico sought to have it set aside but McBride refused, and in 2013 the Georgia Court of Appeals upheld the trial court.

Guthrie filed a petition for involuntary bankruptcy against Winslett, and the bankruptcy court appointed Columbus attorney Fife Whiteside as trustee; he then filed a bad faith action against Geico in Georgia's Middle District Court.

Following a 2018 trial the jury found that Geico had failed to properly respond to Guthrie's offer to settle and that the failure was the proximate cause of the default judgment against Winslett.

The verdict form included the $2.9 million award as the measure of damages, and the jury said Geico bore 70% of the liability. Including interest, the final judgment was more than $2.7 million.

On appeal, the Eleventh Circuit panel said there were issues of state law that must be clarified and certified three questions to the Supreme Court:

• When an insurer has no notice of a lawsuit against its insured," does Georgia law "relieve the insurer of liability from a follow-on suit for bad faith?"
• If the answer is no, "can an insured sue the insurer for bad faith when, after the insurer refused to settle but before judgment was entered against the insured, the insured lost coverage for failure to comply with a notice provision?"
• And third, is there a right for a party to "contest actual damages in a follow-on suit for bad faith if that party had no prior notice of or participation in the original suit?"

Writing for all of the justices except Michael Boggs and Nels Peterson, who were disqualified, Ellington said the answers were: A "qualified" no, "qualified" yes" and no.

As to the first question, he said, neither the law nor policy provisions relieved Geico of liability for a bad faith or negligent failure-to-settle claim.

"At issue in the matter before us is not whether Winslett breached a condition precedent to coverage under the contract of insurance. Clearly she did," he said.

"Rather, in this tort action, the question is whether Winslett's breach was an intervening act sufficient to break the causal chain between GEICO's unreasonable rejection of Guthrie's settlement demand and the excess default judgment entered against Winslett."

The key is whether "GEICO reasonably should have foreseen Winslett's breach and the consequences flowing from it," he wrote.

After the accident Geico had written Winslett that it would be handling the matter with Guthrie's lawyer, and did not ask her to "forward to it any accident-related legal documents, even though its claims manual advised its claims examiners to do so," the opinion said.

Georgia insurance law applies to suits "brought against the insured for losses covered under the policy" on "behalf of the insured for the insured's liability to another."

Whiteside's suit, the opinion said, "does not relate to a liability claim under the policy; rather, it is a tort claim that arises from the contractual relationship. Whiteside's claim is not for damages resulting from a covered loss; rather, it seeks damages for a breach of GEICO's duty to settle."

Regarding the second question, whether a bad faith suit can be filed after the insurer refuses to settle but before the judgment was entered, Ellington said the answer here was yes.

The record showed Geico had "accepted responsibility for the accident and had determined that Winslett was insured as a covered permissive driver under the policy" before Guthrie's demand letter was sent.

"Given that Winslett was covered under the policy at that time, GEICO's duty to settle arose as soon as GEICO received Guthrie's time-limited, policy-limits settlement demand," the opinion said. "Based on the facts in the record before us, GEICO thereafter breached its duty to settle when it unreasonably rejected Guthrie's policy-limits demand."

Ellington said the answer to question three, whether a party with no prior knowledge of a lawsuit can contest a judgement in a follow-on bad faith suit, was clear.

"The law in Georgia is well-settled" that, after an insurer has been found liable for wrongful failure to settle a claim, the insured or his assignee is entitled to damages "equal to the amount by which the judgment exceeds policy coverage," he said.

Whiteside's appellate counsel includes Bondurant Mixson & Elmore partners Frank Lowrey IV, Michael Terry and Timothy Rigsby.

"The Supreme Court rendered a thorough and thoughtful analysis of Georgia law, as it applies to the facts of this case," said Lowrey via email.

Geico's appellate team includes Smith Gambrell & Russell partners Edward Wasmuth Jr., Leah Ward Sears and Colin Dang Delaney; they did not respond to a request for comment.