Georgia Court of Appeals Overturns Massive $54M Verdict Against Avis for Crash Following Employee’s Theft of Vehicle

In a recent pair of companion cases, Avis Rent A Car System v. Johnson, 352 Ga.App. 858 (2019) and Avis Rent A Car System v. Smith, 353 Ga.App. 24 (2019), the Georgia Court of Appeals reversed massive jury verdicts totaling $54M on the grounds that an Avis employee’s theft of a rental vehicle cut off Avis’s liability for the employee’s subsequent crash that injured the bystander plaintiffs.

The two plaintiffs’ respective cases arose from the same incident where an Avis employee stole a rental SUV after hours from a downtown Atlanta branch and then later fled from the police before crashing into a brick wall where both plaintiffs were sitting. The plaintiffs suffered significant injuries and filed suit against Avis, a regional security manager, the operator of the Avis location, the operator’s owner, and the operator’s employee who stole the vehicle.

At the trial court level, the juries found that Avis was vicariously liable for the employee’s negligence in causing the crash and, in the Smith case, found that Avis was also vicariously liable for the fault that was apportioned to the operator and its owner. Avis filed a motion for a judgment notwithstanding the verdict or, in the alternative, for a new trial; the trial court denied the motions.

Avis appealed the holdings and last year the Georgia Court of Appeals reversed the verdicts and held that only the car thief employee could be held liable for the plaintiffs’ injuries. In both appeals cases, the Court of Appeals held that the at-fault employee’s criminal acts – namely, his after hours theft of the vehicle and high-speed flight from the police some five hours later – were intervening acts that severed Avis’s liability for the incident. The Court further recognized Georgia’s long line of appellate decisions holding that a car thief’s criminal acts were the sole proximate cause of plaintiffs’ injuries in those cases 

Further, in the Smith case, the Court found that Avis, the operator, and its owner could not be liable for negligent hiring and retention of the car thief employee because the employee was not acting under the color of his employment when the theft and subsequent accident occurred.

However, the two cases did not end at the Court of Appeals, as the Georgia Supreme Court granted certiorari and heard oral argument last December. The Supreme Court’s pending holding could very well dramatically alter the landscape of vicarious liability law in Georgia, so we encourage you to keep an eye on this space for further analysis once the Supreme Court issues its ruling.

No Pre-Suit Notice Required to Sue Cities for Intentional Acts

In West v. City of Albany, 2017 WL 875033 (Ga. March 6, 2017), the Georgia Supreme Court addressed whether an injured party was required to provide notice of intent to sue a city when the alleged wrongdoing was intentional rather than negligent. In an historic decision, the Court unanimously held that the ante litem (pre-suit) notice required for bringing suit against a municipality applies only to allegations of negligence, not to intentional acts.

The case involved a lawsuit against the City of Albany by an individual who claimed to have been fired pursuant to the Georgia Whistleblower’s Act (O.C.G.A. § 45-1-4). The plaintiff, Ms. West, sued the city for money damages, alleging that she had been the victim of retaliation after she reported financial irregularities in the city’s utility department.

The City of Albany moved to dismiss the lawsuit because Ms. West failed to comply with the pre-suit requirements set forth in O.C.G.A. § 36-33-5 (b). In pertinent part, the statute requires that “[W]ithin six months of the happening of the event upon which a claim against a municipal corporation is predicated, the person, firm, or corporation having the claim shall present the claim in writing to the governing authority of the municipal corporation for adjustment, stating…the negligence which caused the injury.” The Court held that the six month pre-suit requirement does not apply to whistleblower cases, because a clear reading of the statute limits the notice prerequisite to negligence cases.

The holding in West is significant because historically, Georgia courts have applied this municipal six month pre-suit notice to claims alleging both negligent and intentional acts. In West, the Court held that the “statute’s plain language demonstrates it applies only to damages caused by negligence, not intentional acts.”

One of the purposes of the ante litem statute is to preserve public funds by limiting municipal exposure for monetary damages. Now that the Court has narrowly interpreted the statute, the Georgia legislature may move to amend O.C.G.A. § 36-33-5 (b) to comport with the manner in which it has long been interpreted: requiring notice for allegations of both negligent and intentional wrongdoing. Otherwise, going forward, plaintiffs need only provide the statutory ante litem notice to municipalities for allegations of negligence.

Georgia Supreme Court Holds Lead Paint Excluded by Absolute Pollution Exclusion

The Georgia Supreme Court recently held in Georgia Farm Bureau Mutual Insurance Co. v. Smith et al., No. S15G1177 (Ga. March 21, 2016), that lead paint unambiguously qualifies as a pollutant and that personal injuries from ingesting the paint were excluded from coverage by the plain language of the commercial general liability (CGL) policy’s absolute pollution clause.

In this case, Amy Smith, individually and as next friend of her daughter, sued her landlord, Bobby Chupp, for injuries her daughter sustained after ingesting lead paint. The rental home was insured by Chupp under a CGL policy issued by Georgia Farm Bureau Mutual insurance Company. Georgia Farm Bureau argued the policy’s absolute pollution exclusion clause excepted coverage.

Pollution exclusion clauses were originally developed by insurers as a response to environmental regulations enacted by Congress in the 60’s and 70’s and were directed specifically at environmental pollutants. These clauses were later broadened to exclude pollution beyond the natural environment to pollutants originating from places such as the rental property at issue in this case. The broadened clauses are known as “absolute exclusion clauses.”

Georgia courts have repeatedly upheld such clauses and found they extend beyond traditional environmental pollution to include for instance, carbon monoxide leaking from a furnace in a rental home, asbestos released from floor tiles during renovation, and smoke emanating from the premises. Importantly, Georgia courts enforced absolute pollution exclusion clauses without requiring the specific pollutant to be explicitly identified in the policy.

In the Smith case, the Georgia Supreme Court looked to the plain language of the policy and found lead paint to be unambiguously qualified as a pollutant as defined in the policy, even though it was not specifically named in the policy. The policy language upheld by the Georgia Supreme Court and which should be kept in mind when drafting absolute pollution exclusion clauses is as follows:

This insurance does not apply to:
(f) Pollution (1) “Bodily injury” or “property damage” arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of “pollutants: (a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to, any insured

Pollution was defined as “any solid, liquid, gaseous or thermal, irritant or contaminant, including smoke, vapor, soot, fumes, acids, alkalis, chemicals and waste.”

The Smith case was a big win for Georgia insurers and further fortified that the plain language of the policy controls policy coverage.

Burden on The Insured/Plaintiff to Prove the at-Fault Driver Was an Uninsured Motorist

The Georgia Supreme Court recently clarified that it is the insured/plaintiff, not the UM carrier, who has the burden of proof as to whether the at-fault driver was in fact an uninsured motorist under the plaintiff’s UM policy. In Travelers Home & Marine Ins. Co. v. Castellanos, Case No. S14G1878, 2015 Ga. LEXIS 350 (Ga. S. Ct., June 1, 2015), the defendant did not appear at trial in the underlying case. After the plaintiff obtained a judgment, the defendant’s liability carrier, United Auto, denied coverage to the defendant based on a failure to cooperate in the defense. The plaintiff then sought payment from Travelers, his UM carrier, and eventually filed suit against Travelers for bad faith refusal to pay a covered loss. Travelers raised the defense that United Auto did not “legally deny” the underlying defendant’s liability coverage and, therefore, the defendant was not an “uninsured motorist” under the policy.

The parties filed cross motions for summary judgment. The trial court granted summary judgment to Travelers, holding the plaintiff had failed to present evidence of a legal denial of coverage by United Auto. On appeal, the Georgia Court of Appeals held the trial court had improperly shifted the burden to the plaintiff to produce evidence that would rebut Travelers’ affirmative defense. The Georgia Supreme Court, in turn, reversed the Court of Appeals and upheld the trial court’s grant of summary judgment to the UM carrier.

The Court held that the plaintiff has the burden of proof to show (1) the existence of the UM policy, and (2) that the at-fault driver was an uninsured motorist. Travelers’ policy defined “uninsured motor vehicle” to include a vehicle which is insured but the insurer “legally denies coverage.” Thus, the plaintiff had the burden to show United Auto’s denial of coverage was “legally sustainable.” To do that, the plaintiff had to establish the same elements an insurer needs to justify a denial of coverage based on non-cooperation: (1) the insurer made a reasonable request for cooperation in defending the case, (2) the insured willfully failed to cooperate, and (3) the failure to cooperate prejudiced the defense.

The Court first noted that the uninsured motorist statutes are remedial and must be broadly construed to provide coverage where possible. The Court also acknowledged the difficulty a plaintiff might have in procuring evidence where he is “a stranger to the relationship between the tortfeasor and its insurer.” The solution-and liability insurers should take note-is for the plaintiff to obtain discovery “from the insurer regarding its efforts to contact its insured and its lack of success in securing cooperation.” Although the Court found a presumption of prejudice resulted from the underlying defendant’s absence from trial, the Court held that the plaintiff had failed to show that the liability insurer had reasonably requested the defendant’s cooperation or that the defendant willfully refused to cooperate. Other than statements in the pleadings, the only evidence presented was an unauthenticated letter from United Auto to its insured stating that it was denying coverage because of his non-cooperation. The Court held this was simply not enough because it said nothing about United Auto’s efforts to contact its insured. The plaintiff failed to meet his burden of proof to show that United Auto had legally denied coverage, and the UM carrier was entitled to summary judgment.

Georgia Supreme Court Weighs in on Discovery Dispute Over Reasonableness of Plaintiff's Medical Bills

Discovery issues rarely reach the Georgia Supreme Court, but in the case of Bowden v. Medical Ctr., Inc., No. S14G1632, *1-25 (June 15, 2015), a discovery dispute centered around a plaintiff’s medical bills merited a 25-page unanimous opinion. Briefly, the case arose from a car accident involving a 21-year-old plaintiff, Danielle Bowden, who was treated at The Medical Center, Inc. (TMC), without health insurance, for a broken leg and subsequently received physical therapy. TMC billed her $21,409.95 for her care and filed a hospital lien for that amount. Bowden sought to invalidate the lien on the grounds that the charges were grossly excessive and did not reflect the reasonable value of the care she received. Enterprise, the insurer of the defendant, tendered its $25,000 limits, but because TMC and Bowden were unable to agree on how to apportion the settlement proceeds, Enterprise filed a complaint in interpleader against both Bowden and TMC. As part of Bowden’s answer to the interpleader action, she filed a cross-claim against TMC. It is against this procedural backdrop that this discovery dispute arises.

Bowden, as part of her cross-claim, requested information from TMC (e.g., pricing agreements with various insurance companies and Medicaid/Medicare; TMC’s total gross revenues, the percentage of patients who paid certain rates, blank forms which reflected contractual service charge agreements, etc.) targeted at proving she was charged more than other patients for similar injuries. TMC objected on the grounds of relevancy. The Georgia Supreme Court disagreed, holding, “where the subject matter of a lawsuit includes the validity and amount of a hospital lien for the reasonable charges for a patient’s care, how much the hospital charged other patients, insured or uninsured, for the same type of care during the same time period is relevant for discovery purposes.” Id. at *2. The Court went on to explain that under Georgia discovery rules, courts must interpret “relevant” broadly, as opposed to the narrower evidentiary standard used at trial, and specifically, that the discovery Bowden sought “may have some relevance to the reasonableness of TMC’s charges for her care.” Id. at *18. In dicta, the Court also rejected the notion that the mere existence of an agreement by a patient to pay hospital charges does not prove that the charges themselves are reasonable.

On a very basic level, this case is merely a reaffirmation of the broad scope of discovery entitled to litigants but it should also help the defense side of the bar access the records of medical financing companies like ML Healthcare. But discovery aside, this case could also have far-reaching, perhaps even unintended ramifications for attacking the reasonableness of medical bills. In the meantime, Defendants might want to use the Bowden decision to argue that plaintiffs have incurred unreasonably excessive medical bills which are not reflective of the value of services provided, in order to gain leverage in settlement negotiations.