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RESIDENTIAL DEVELOPMENTS, INC. v. MERCHANTS INDEMNITY COMPANY OF NEW YORK et al.
45304.
Declaratory judgment. Fulton Superior Court. Before Judge Wofford.
JORDAN, Presiding Judge.
The trial judge properly dismissed the petition as failing to state a claim upon which relief can be granted. An alleged insured, as distinguished from its alleged liability insurers, is not entitled to a declaration of rights to determine the obligations of the alleged insurers in respect to settling or defending a pending tort action against the alleged insured.
Residential Developments, Inc., the plaintiff in the present action for declaratory judgment, is one of several alleged tortfeasors named as defendants in a pending action in the same trial court brought by Dodd, one of the defendants in the present action.
Dodd, as a landowner, alleged in his action that Residential Developments and the other defendants in that action created a nuisance and have damaged his land by grading and developing land lying at a higher elevation. The remaining defendants in the present action are the alleged insurers of Residential Developments who allegedly successively provided liability coverage to the plaintiff for its operations in developing five tracts of land adjacent to Dodd's land.
Merchants Indemnity Company, whose liabilities have been assumed by United States Fidelity & Guaranty Company, hereafter referred to as Merchants, allegedly provided coverage from August 2, 1962, through August 2, 1964. Pacific Employers Insurance Company, whose liabilities have been assumed by Insurance Company of North America, hereafter referred to as Pacific, allegedly provided coverage from August 2, 1964, which was canceled effective June 7, 1965. Home Indemnity Company allegedly provided coverage from June 7, 1965, but accepted the risk with the understanding that coverage was limited to occurrences damaging the property of others from the development of Unit 5, the last tract to be developed.
Residential Developments further alleges that all damage to Dodd's land before June 7, 1965, was caused by the development of Units 1, 2, 3, and 4, and that any new damage after June 7, 1965, was from the development of Unit 4, but that any condition which occurred before June 7, 1965, to increase the flow of water on Dodd's land continued to exist thereafter, and continued to contribute in some degree to Dodd's property damage. Following negotiations with the alleged insurers, Merchants and Pacific agreed to defend the action by Dodd without qualification, each to accept coverage up to the limits of its policy for the period the policy was in force. Home refused to accept coverage, allegedly on the premise that Residential Developments failed to give notice of the claim, the refusal thereby allegedly being frivolous and in bad faith.
Residential Developments also alleges that Dodd offered to settle his action for an amount within the combined policy limits of Merchants and Pacific, that the other defendants in Dodd's case also offered to make contributions commensurate with damages allegedly caused by each, but that Merchants and Pacific refused to contribute an amount sufficient to effect settlement and are attempting to coerce Residential Developments into contributing its own funds toward a settlement. It is further alleged that these insurers contend they are not liable for any judgment for punitive damages against Residential Developments, and also contend that Residential Developments will have to contribute toward a settlement unless Home accepts liability and contributes enough to settle the case.
By amendment Residential Developments shows that Dodd has in fact amended his petition, seeking $150,000 in punitive damages unless the litigation is settled promptly.
For relief Residential Developments seeks to restrain Dodd from prosecuting his action pending a declaration of its rights, and seeks declarations to the effect that Home is liable for damage from grading operations on or after June 7, 1965; that Merchants and Pacific have a duty to protect petitioner from a judgment in excess of policy limits or for punitive damages, irrespective of whether some damage was caused from grading after June 7, 1965; and that Merchants and Pacific are liable for damages caused by grading operations during the period each provided coverage, but not limited to damages actually occurring within the policy period. The plaintiff further seeks reasonable expenses, including attorney's fees, for bringing this action against each of its insurers, or in lieu thereof, declarations that each of the insurers has acted in bad faith so as to render them liable for the expenses of litigation.
Residential Developments appeals from an order of the lower court dismissing the petition for failure to state a claim upon which relief can be granted. In the order the trial court specifically referred to a defense filed by each defendant which was treated and considered as a motion to dismiss, which was sustained.
Antedating the 1959 amendment to the declaratory judgment statute and the more recent civil practice statute this court distinguished an action by an insurer to determine liability before defending an action against its alleged insured from one brought by the alleged insured, as follows: "In that type of case the insurance company is faced with the problem of spending money to defend an action which it could not recover if it wore later found to be not liable under the policy issued by it. However, such is not the case here where the insured is seeking the declaratory judgment, for if the insured defends the action, and certainly the insured wants any action against it defended, and the insurer is not liable the insured has lost nothing for it would have only spent money to defend an action brought against it which was not covered by the insurance policy, and, if the insurer is liable, the insured can recover any sums spent by it to defend the action, and, if a judgment is rendered against it, the amount of the judgment up to the limits of the policy in a breach of contract suit against the insurer." U. S. Casualty Co. v. Ga. S. & F. R. Co., 95 Ga. App. 100, 103 97 SE2d 185). Later, on a second appeal in the same case following amendments to the petition alleging uncertainty and insecurity in respect to settlement of the pending tort action. this court rejected any basis for a declaratory judgment in respect to a settlement made in good faith. Ga. S. & F. R. Co. v. U. S. Cas. Co., 97 Ga. App. 242 (102 SE2d 500). Subsequently, this court stated that the 1959 amendment to the declaratory judgment statute (Ga. L. 1959, pp. 236, 237; Code Ann. 110-1101 (c)) "does not change the requirement that in order to be entitled to a declaratory judgment the plaintiff must show facts or circumstances whereby it is in a position of uncertainty or insecurity because of a dispute and of having to take some future action which is properly incident to its alleged right, and which future action without direction from the court might reasonably jeopardize its interest." Phoenix Assurance Co. v. Glens Falls Ins. Co., 101 Ga. App. 530, 532 (114 SE2d 389). And, in 1966, the court followed the ruling in U. S. Casualty Co. v. Ga. S. & F. R. Co., supra, to affirm the dismissal of a petition by an insured against an alleged insurer seeking a determination of whether the insurer was obligated to defend a pending tort action. Jacobs v. Ga. Farm Bureau Mut. Ins. Co., 114 Ga. App. 296 (151 SE2d 187). It is settled law that there is no provision in the law for a declaratory judgment which is merely advisory. Hawes v. Cordell Ford Co., 223 Ga. 260, 263 (154 SE2d 599). Also, see Pinkard v. Mendel, 216 Ga. 487, 490 (117 SE2d 336).
We think it is obvious from the allegations of the petition that no claim for relief exists against Dodd except that of ancillary relief to restrain him from prosecuting his tort action which is necessarily conditioned upon a showing of a claim against the other defendants, and that no claim is pleaded against these defendants unless it is a claim for declaratory judgment. Viewing the petition in the light of the requirements for declaratory judgment, as outlined above, and further recognizing that the petition must be viewed in the light of the present liberalized civil practice requirements for stating a claim (see Southeastern &c. Fire Ins. Co. v. State Farm Mut. Auto. Ins. Co., 118 Ga. App. 861, 862 (165 SE2d 887)) we think the petition is nevertheless insufficient to state a claim.
In this aspect the pleaded facts disclose nothing more than a dispute between the plaintiff and its alleged liability insurers concerning the nature and extent of coverage provided and in the case of one, whether there is any coverage, in respect to a pending tort action as to which the direct obligation of the plaintiff in the present action must be determined, either by settlement or an adverse judgment, by events which have occurred and which have no relation whatsoever to the presence or absence of insurance coverage or the obligation of any insurer to settle or defend the tort action.
The trial judge properly dismissed the petition.
Judgment affirmed. Eberhardt, J., concurs. Pannell, J., concurs in the judgment.
Henning, Chambers, Mabry & Crichton, G. Thomas Crichton, King & Spalding, Kirk McAlpin, N. Forrest Montet, Long, Wineberg, Ansley & Wheeler, Palmer H. Ansley, John E. Talmadge, for appellees.
Woodruff, Savell, Lane & Williams, Edward L. Savell, for appellant.
ARGUED MAY 5, 1970 -- DECIDED SEPTEMBER 8, 1970 -- REHEARING DENIED SEPTEMBER 29, 1970 -- CERT. APPLIED FOR.
Friday May 22 17:05 EDT


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