CARTER v. PROGRESSIVE MOUNTAIN INSURANCE (2014)

This Court granted a writ of certiorari to the Court of Appeals in Carter v. Progressive Mountain Ins., 320 Ga.App. 271, 739 S.E.2d 750 (2013), to determine if that Court properly applied the motor vehicle insurance limited liability release provision of OCGA § 33–24–41.1.¹ Finding that the Court of Appeals erred, we reverse that Court's judgment.

Velicia Carter (“Carter”) was injured in a February 22, 2010 automobile collision with Jeova Claudino Oliviera (“Oliviera”); it was alleged that Oliviera was under the influence of alcohol at the time. Oliviera had an auto liability insurance policy with GEICO General Insurance Company (“GEICO”) with a $30,000 per person liability limit. Carter was insured by Progressive Mountain Insurance Company (“Progressive”), including uninsured/underinsured motorist (“UM”) coverage of $25,000 per person. Carter sued Oliviera and served Progressive as her UM carrier, and entered into a settlement in which GEICO paid the $30,000 limit of Oliviera's policy, and Carter executed a limited liability release pursuant to OCGA § 33–24–41.1; it allocated $29,000 of GEICO's payment to punitive damages and $1,000 to compensatory damages. Progressive answered the suit as Carter's UM carrier and sought summary judgment on the UM claim, which the trial court granted, ruling that, by imposing the condition that $29,000 of the liability coverage limit be allocated to the payment of punitive damages, Carter failed to meet a prerequisite for recovery of the UM benefits. The Court of Appeals affirmed, finding that, by allocating a portion of the payment to punitive damages, rather than allocating all of the payment to compensatory damages, Carter failed to exhaust the limits of Oliviera's liability policy, and, therefore, forfeited the ability to make a claim on her UM policy, concluding that OCGA § 33–24–41.1 allows an injured party to settle a claim and then recover UM benefits “only to the claimant's actual injuries or losses and not to punitive damages.” Carter, supra at 274, 739 S.E.2d 750. Further facts can be found in the opinion of the Court of Appeals.

The Court of Appeals was correct that the legislative scheme for uninsured motorist insurance requires “that a party must exhaust available liability coverage before recovering under a UM policy.” Daniels v. Johnson, 270 Ga. 289, 290(1), 509 S.E.2d 41 (1998). And, that Court was also correct to note that

the limited release provisions of OCGA § 33–24–41.1 were enacted to provide a statutory framework for a claimant injured in an automobile accident to settle with the tortfeasor's liability insurance carrier for the liability coverage limit while preserving the claimant's pending claim for underinsured motorist benefits against the claimant's own insurance carrier. [Cits.] The statute authorizes the injured claimant to settle with the tortfeasor's insurance carrier by accepting payment of the carrier's limits of liability coverage in return for the claimant's execution of “a limited release applicable to the settling carrier and its insured based on injuries to such claimants․” OCGA § 33–24–41.1(a), (b). The limited release provided for in the statute releases the settling insurance carrier from any liability to the claimant, and releases the tortfeasor from personal liability while preserving the claimant's right to pursue claims to judgment against the tortfeasor for the purpose of collecting against other available insurance coverage including underinsured motorist coverage. OCGA § 33–24–41.1(b). [Cits.]

Carter, supra at 273–274, 739 S.E.2d 750. However, the Court of Appeals erred in holding that OCGA § 33–24–41.1 requires that there be no allocation of payments to punitive damages.

It is certainly true that punitive damages cannot be recovered under UM insurance, as the public policy involved is to provide for compensatory damages only. See State Farm Ins. Co. v. Weathers, 260 Ga. 123, 392 S.E.2d 1 (1990); Bonamico v. Kisella, 290 Ga.App. 211, 213, 659 S.E.2d 666 (2008); Roman v. Terrell, 195 Ga.App. 219, 219–222(2), (3), 393 S.E.2d 83 (1990). But that does not mean that there is a prohibition found in OCGA § 33–24–41.1 against an allocation such as that made in the release at issue. “When we consider the meaning of a statute, ‘we look first to the text of the [statute], and if the text is clear and unambiguous, we look no further, attributing to the [statute] its plain meaning.’ [Cit.]” Hendry v. Hendry, 292 Ga. 1, 2(1), 734 S.E.2d 46 (2012). And, examining the statutory language, we find that there is no prohibition on allocation of damages in the release, but only that it “shall” release the carrier from “all liability from any claims of the claimant or claimants based on injuries to such claimant or claimants” and “from all personal liability from any and all claims arising from the occurrence on which the claim is based except to the extent other insurance coverage is available which covers such claim or claims.” OCGA § 33–24–41.1(b)(1) & (2). This the release did, and it is uncontroverted that the $30,000 paid represented the limits of Oliviera's policy.

Progressive argues that payment for the punitive damages cannot be considered to be “based on injuries” to Carter, or to be “claims arising from the occurrence,” under OCGA § 33–24–41.1(b)(1) & (2). It is correct that “[p]unitive damages are not compensation for injury. Instead, they are private fines levied by civil juries to punish reprehensible conduct and to deter its future occurrence.” Hospital Auth. of Gwinnett County v. Jones, 259 Ga. 759, 762(2), 386 S.E.2d 120 (1989), vacated by the United States Supreme Court, judgment affirmed and reinstated on remand, 261 Ga. 613, 409 S.E.2d 501 (1991) (Citation and punctuation omitted.) See also OCGA § 51–12–5.1(c) (“Punitive damages shall be awarded not as compensation to a plaintiff but solely to punish, penalize, or deter a defendant.”) However, Progressive overlooks the fact that punitive damages must arise from and be based upon a compensable injury, as “[a] claim for punitive damages has efficacy only if there is a valid claim for actual damages to which it could attach. Punitive damages may not be recovered where there is no entitlement to compensatory damages.” Southern General Ins. Co. v. Holt, 262 Ga. 267, 269(2), 416 S.E.2d 274 (1992) (Citations and punctuation omitted.) Accordingly, nothing in OCGA § 33–24–41.1 precludes a statement in the release that a portion of the payment be allocated to punitive damages.

In its decision below, the Court of Appeals expressed concern that inclusion of an allocation to punitive damages in a release such as the one here would “force exhaustion of liability coverage” and “indirectly shift [ ] payment of punitive damages from the liability carrier to the underinsured motorist carrier, contrary to the purpose of underinsured motorist coverage.” Carter, supra at 274–275, 739 S.E.2d 750. However, such concern is ill-founded; the statutory scheme effectively prevents such a shifting. Under OCGA § 33–24–41.1(d)(2), “the amount paid [under a limited release] shall be admissible as provided by law as evidence of the offset against the liability of an uninsured motorist carrier and as evidence of the offset against any verdict of the trier of fact.” And, by the plain language of the statute, it is “the amount paid” that is admissible, not merely the amount attributed to compensatory damages. Further, preclusion of any such shifting of punitive damages to the UM carrier is also effected by OCGA § 33–7–11.² Under OCGA § 33–7–11(b)(1)(D)(ii)(I), recovery under the UM policy will be limited to “the insured's losses in addition to the amounts payable under any available [liability] coverages,” and, “the insured's combined recovery from the insured's uninsured motorist coverages and the available [liability] coverages ․ shall not exceed the sum of all economic and noneconomic losses sustained by the insured.” (Emphasis supplied .) Again, punitive damages do not represent “losses” by the insured, and regardless of any designation of such payments in the release, when the UM policy is brought into play, the combined recovery will not exceed the insured's economic and noneconomic losses. Similarly, if the insured selects coverage under OCGA § 33–7–11(b)(1)(D)(ii)(II), coverage will be limited to “the difference between the available [liability] coverages ․ and the limits of the uninsured motorist coverages provided under the insured's motor vehicle insurance policies.” Accordingly, the Court of Appeals erred in failing to recognize that the plain language of the statutory scheme achieves the goal of forbidding the shifting of punitive damages, and it was error to construe the release allocation as a failure to exhaust the limits of the liability policy, and thus to preclude recovery under the insured's UM policy.

Judgment reversed.

HINES, Presiding Justice.

All the Justices concur.