United States District Court,

N.D. Georgia, Atlanta Division.

R.J. KOLENCIK, individually and as Administrator of the Estate of Melissa

Kolencik, Plaintiff,

v.

THE STRATFORD INSURANCE COMPANY, Defendant.

No. Civ.A.1:05CV0007-GET.

March 31, 2006.

TIDWELL, J.

The above-styled matter is presently before the court on:

(1) defendant's motion for summary judgment [docket no. 49];

(2) plaintiff's cross-motion for summary judgment [docket 54];

(3) defendant's motion to strike plaintiff's cross motion for summary judgment [docket no. 58];

(4) defendant's motion to compel discovery and for sanctions [docket no. 25];

(5) motion to withdraw as attorney for plaintiff [docket no. 60];

(6) defendant's motion to strike [docket no. 37] plaintiff's response in opposition to motion to compel [docket no. 35].

Plaintiff filed this action to recover on a judgment obtained against defendant's purported insured in the Superior Court of Cobb County, Georgia, as well as tort and consequential damages for defendant's alleged failure to comply with Georgia statutory requirements related to motor carriers. On May 23, 2005, plaintiff filed a motion for summary judgment on the grounds that the attempted cancellation of coverage alleged by defendant was legally ineffective and that plaintiff is entitled to extra-contractual damages from defendant. On June 9, 2005, defendant filed a motion to compel discovery and for sanctions, as well as a motion to extend time to respond to plaintiff's motion for summary judgment until after the court rules on its motion to compel.

On June 29, 2005, the court held a hearing on defendant's motion to compel/motion for sanctions. At the hearing, the court directed the defendant to respond to plaintiff's motion for summary judgment as to the cancellation issue only and stayed defendant's motion to compel pending this court's ruling on the cancellation issue. On November 28, 2005, the court issued an order denying plaintiff's motion for summary judgment.

Defendant now has filed a motion for summary judgment as to all of plaintiff's claims. Plaintiff also filed a second motion for summary judgment, which defendant has moved to strike.

Motion to strike

Defendant moves to strike plaintiff's cross-motion for summary judgment on the grounds that plaintiff's second motion for summary judgment does not identify any additional material facts or legal theories that might warrant summary judgment in plaintiff's favor. Local Rule 7.1B requires that "any party opposing a motion shall serve the party's response ... not later than ten (10) days after service of the motion," and further provides that, "[f]ailure to file a response shall indicate that there is no opposition to the motion." LR 7.1B, ND Ga. As of the date of this order, plaintiff has not responded to defendant's motion to strike [docket no. 54] which included a certificate of service. Accordingly, the court GRANTS AS UNOPPOSED defendant's motion to strike [docket no. 58]. Plaintiff's cross-motion for summary judgment [docket no. 54] is DISMISSED.

Motion for summary judgment

Standard

Courts should grant summary judgment when "there is no genuine issue as to any material fact ... and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party must "always bear the initial responsibility of informing the district court of the basis of its motion, and identifying those portions of 'the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 324, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). That burden is 'discharged by 'showing'--that is, pointing out to the district court--that there is an absence of evidence to support the nonmoving party's case.'' Id. at 325; see also U.S. v. Four Parcels of Real Property, 941 F.2d 1428, 1437 (11th Cir.1991).

Once the movant has met this burden, the opposing party must then present evidence establishing that there is a genuine issue of material fact. Celotex, 477 U.S. at 325. The nonmoving party must go beyond the pleadings and submit evidence such as affidavits, depositions and admissions that are sufficient to demonstrate that if allowed to proceed to trial, a jury might return a verdict in his favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). If he does so, there is a genuine issue of fact that requires a trial. In making a determination of whether there is a material issue of fact, the evidence of the non-movant is to be believed and all justifiable inferences are to be drawn in his favor. Id. at 255; Rollins v. TechSouth, Inc., 833 F.2d 1525, 1529 (11th Cir.1987). However, an issue is not genuine if it is unsupported by evidence or if it is created by evidence that is "merely colorable" or is "not significantly probative." Anderson, 477 U.S. at 249-50. Similarly, a fact is not material unless it is identified by the controlling substantive law as an essential element of the nonmoving party's case. Id. at 248. Thus, to create a genuine issue of material fact for trial, the party opposing the summary judgment must come forward with specific evidence of every element essential to his case with respect to which (1) he has the burden of proof, and (2) the summary judgment movant has made a plausible showing of the absence of evidence of the necessary element. Celotex, 477 U.S. at 323.

Facts

In light of the foregoing standard, the court finds the following pertinent facts for the purpose of resolving this motion for summary judgment only. On or about September 25, 2002, defendant issued to Jerry Yarbrough, d/b/a J & J Trucking and Excavation, a trucker's liability policy with the intended effective dates of September 25, 2002 through September 25, 2003. Mr. Yarbrough financed his insurance premiums for the Stratford policy through AI Credit Corporation ("AI"). Yarbrough and AI entered a premium-finance agreement in which Yarbrough gave AI a power of attorney to unilaterally cancel the Stratford policy in the event of default. Stratford and AI are separate entities, and there is no dispute that Stratford was not a party to the premium-finance agreement.

On March 4, 2003, AI mailed to Yarbrough its notice of intent to cancel the Stratford policy. On March 26, 2003, AI mailed notices of cancellation to Yarbrough, Yarbrough's insurance agent, and Stratford's underwriting and policy-issuing agent, indicating that it was canceling Yarbrough's policy the following day, effective March 27, 2003. Apparently, Stratford did not receive the notice of cancellation directly from AI but it did receive a notice of cancellation from its agent. After receiving a copy of AI's notice of cancellation, Stratford considered the policy cancelled by Yarborugh as of March 27, 2003. The underlying accident occurred on August 27, 2003.

At all times relevant to this suit, the Georgia Department of Motor Vehicle Safety (DMVS) would not accept for filing a Form E Certificate of Insurance where a carrier had not applied for or obtained a permit for authority with the DMVS. Had the DMVS received a Form E for a carrier who had not applied for or received a permit, the DMVS would have returned the filing to the insurer with a notation that this carrier was not registered. Furthermore, where a carrier had not applied for or obtained Authority from the DMVS to operate as a motor carrier, the DMVS would not accept or file a certificate of cancellation of insurance.

Yarbrough has never applied for or obtained a motor-carrier permit in Georgia. Consequently, had Stratford submitted a certificate of insurance for filing with the DMVS at any time between September 2002 and the present, the DMVS would have rejected the Certificate and returned it to Stratford. Likewise, a Form K notice of cancellation also would have been returned.

Discussion

Plaintiff contends that the "attempted cancellation" of the policy was legally ineffective because (1) the premium finance company failed to strictly comply with the requirements for legal cancellation of the policy under the Premium Finance Statute and (2) defendant failed to notify the State of the cancellation. Defendant moves for summary judgment on the ground that AI properly cancelled the policy before the date of the underlying accident and therefore the liability policy was not in effect at the time of the accident.

Premium Finance Statute

Under Georgia law, a premium finance company canceling an insurance contract pursuant to a power of attorney must adhere to the requirements of the premium finance statute which provides that

[n]ot less than ten days' written notice shall be delivered to the insured ... of the intent of the premium finance company to cancel the insurance contract unless the default is cured within such ten-day period. A copy of said notice shall also be sent to the insurance agent or insurance broker indicated on the premium finance agreement.

O.C.G.A. § 33-22-13(b).

After expiration of the ten-day period, the premium finance company may, in the name of the insured, cancel the insurance contract by mailing to the insurer a notice of cancellation. O.C.G.A. § 33-22-13(c)(1). The insurance contract then shall be canceled as if the notice of cancellation had been submitted by the insured. Id. The premium finance company also shall mail notice to the insured notifying him or her of the action taken. Id.

The receipt of the notice of cancellation by the insurer creates "a conclusive presumption" that the premium finance company has fully complied with all the requirements of the premium finance statute, that the insurer is entitled to rely on such presumption, and that the cancellation of the insurance contract or contracts is concurred in and authorized by the insured. O.C.G.A. § 33- 22-13(c)(2).

It is undisputed that Yarbrough financed his insurance premiums for the policy at issue through AI Credit Corporation. Yarbrough and AI entered a premium-finance agreement in which Yarbrough gave AI a power of attorney to unilaterally cancel the policy in the event Yarbrough failed to make his finance payments to AI.

Plaintiff argues that Yarbrough was not in default at the time he received a Notice of Intent to Cancel his policy and that the Premium Finance Statute setting forth the procedures for cancellation was not followed. The court previously has found that plaintiff failed to show as a matter of law that Yarbrough's account was current at the time of the notice of cancellation. However, even assuming that AI erred in sending the notice of cancellation, defendant can not be liable for coverage to the insured. The premium finance statute specifically provides that "[n]o liability of any nature whatsoever shall be imposed upon the insurer as a result of the failure by the insured to receive the notice of the action taken ... or as a result of the failure of the insurance premium finance company to comply with any of the requirements of this Code section." Id. Therefore, plaintiff fails to show that defendant's reliance on AI's notice of cancellation was legally ineffective.

Notice to the State

Plaintiff contends that because defendant failed to give notice of cancellation of the policy to the DMVS, the attempted cancellation was ineffective as to plaintiff and, therefore, defendant is liable for the Cobb County judgment. Defendant argues, however, that notice to the DMVS was not required and would have been impossible to achieve.

A motor carrier for hire must register with the State and obtain a permit of authority before being allowed to commercially operate in Georgia. O.C.G.A. § 46-7-3. Before authorization will be given, financial responsibility must be established. O.C.G.A. § § 46-7-7(a)(1) and 46-7-12; Transportation Rules of Georgia Public Service Commission, Rule 7-2.1. Before a permit will be issued, there must be on file with the State a certificate of insurance. O.C .G.A. § 46-7-12. "The insurer shall file such certificate" on Form E. Id. See Transportation Rules of Georgia Public Service Commission, Rules 7- 2.1, 7-2.6(c). "Certificates of insurance evidencing coverage shall be continuous and shall not be canceled or withdrawn until thirty (30) days' notice in writing by the insurance company" has been given using Form K. Transportation Rules of Georgia Public Service Commission, Rules 7-2.6(b) & (c).

Georgia's direct action statute establishes an independent cause of action against the carrier's insurer on behalf of a member of the public injured by the carrier's negligence. O.C.G.A. § 46-7-12. See e.g. Jackson v. Sluder, 256 Ga.App. 812, 81 (2002); Thomas v. Bobby Stevens Hauling Contractors, 165 Ga.App. 710, 302 S.E.2d 585 (1983). When a Form E certificate of insurance filed with the state provides that an insurance company has issued its insured an insurance policy and the policy lapses before the incident giving rise to liability on the part of the insured, and before proper notice of the cancellation is given to the State, the policy remains in effect as to the injured third party. Progressive Preferred Ins. Co. v. Ramirez, 277 Ga. 392, 588 S.E.2d 751 (2003) (answering certified question from the Eleventh Circuit Court of Appeals).

It is undisputed that Yarbrough did not register with the DMVS. While "[t]he failure to file any form required by the commission shall not diminish the rights of any person to pursue an action directly against a motor carrier's insurer," O.C.G.A. § 46-7-12(a), it is undisputed that if defendant had attempted to file a certificate of insurance on Yarbrough's behalf, the certificate would have been rejected and returned to defendant. Because no certificate of insurance was on file, defendant also could not have filed a Form K notice of cancellation.

While plaintiff cites testimony that the form would have been returned with a notation that the insured was unregistered, plaintiff fails to cite the court to any legal authority that, under such circumstances, defendant was required to attempt to file the certificate of insurance form. Likewise, plaintiff fails to cite the court to any authority that defendant was subsequently required to attempt to file a Form K notice of cancellation of the certificate of insurance where no registration or certificate of insurance previously had been filed. Cf. DeHart v. Liberty Mutual Ins. Co., 270 Ga. 381, 509 S.E.2d 913 (1998)(applying continuous coverage provision and finding coverage where insurer previously filed certificate of insurance but failed to give proper notice of cancellation prior to plaintiff's injury). Defendant already was aware that Yarbrough was not registered. This was the reason Stratford did not attempt to file the certificate of insurance. Although the internal procedures of the DMVS regarding the filing of forms seem contrary to the desires and intentions of the legislature in amending the direct action statute, the law can not require an impossible act. See e.g. Giles v. Ireland, 742 F.2d 1366, 1376 (11th Cir.1984).

Therefore, having considered the evidence and the arguments of the parties the court hereby GRANTS defendant's motion for summary judgment [docket no. 49].

Defendant's motion to compel

The court has granted defendant's motion for summary judgment. Therefore Defendant's motion to compel [docket no. 25] is DENIED AS MOOT. Defendant's motion to strike plaintiff's response in opposition to motion to compel [docket no. 37] also is DENIED AS MOOT.

Motion to withdraw

Audrey E. Mitchell moves to withdraw as counsel for plaintiff. No objection to the motion has been filed. Richard W. Hendrix will remain as plaintiff's counsel of record.

Having considered the motion, the court hereby GRANTS the motion to withdraw as counsel for plaintiff by Audrey E. Mitchell.

Summary

(1) defendant's motion for summary judgment [docket no. 49] is GRANTED;

(2) plaintiff's cross-motion for summary judgment [docket 54] is DISMISSED;

(3) defendant's motion to strike plaintiff's cross motion for summary judgment [docket no. 58] is GRANTED AS UNOPPOSED;

(4) defendant's motion to compel discovery and for sanctions [docket no. 25] is DENIED AS MOOT;

(5) Audrey E. Mitchell's motion to withdraw as attorney for plaintiff [docket no. 60] is GRANTED;

(6) defendant's motion to strike plaintiff's response in opposition to motion to compel [docket no. 37] is DENIED AS MOOT.

SO ORDERED.

Slip Copy, 2006 WL 870377 (N.D.Ga.)