The availability of UM coverage in varying circumstances is keeping Georgia’s appellate courts busy. As claimants look for all available means of recovery, their insurers and the courts are struggling to keep up with a landscape that changes on a near-weekly basis. Although it has long been the law in Georgia that courts will not strain to find ambiguities where none exist, a recent ruling by the Court of Appeals suggests that it may be willing to at least stretch.
Typically, before an insured can recover UM benefits, he or she must first exhaust the applicable underlying liability limits. However, in Wade v. Allstate Fire & Cas. Co., 751 S.E.2d 153 (Ga. Ct. App. 2013), an insured reached a partial settlement to receive the full limit of one allegedly negligent motorist’s liability insurance limits in connection with a multi-vehicle accident and then sought to recover benefits under his UM policy, though he had not exhausted the liability limits of the two other allegedly negligent motorists.
Bernard Wade, who was insured under an Allstate liability policy with added-on UM coverage in the amount of $25,000.00 per person, was injured in a multi-vehicle accident and filed suit against the other drivers involved in the accident—Fred Bergh, Dale Froman, and James Bruce—alleging that their negligence caused his injuries. Wade also served his insurer, Allstate, with a copy of his suit.
Wade subsequently settled with Bruce (and his mother who had also been named as a defendant under the family purpose doctrine), through the payment of the full limits of their liability insurance policy in exchange for a limited liability release. Wade then settled his claims against Bergh and Froman, as well as Froman’s employer, for a total sum of $30,000, which was an amount less than the full amount of their respective liability policy coverages. Wade executed a general release with respect to Bergh, Froman, and Froman’s employer and dismissed these defendants with prejudice.
Allstate consented to the dismissal of Bergh, Froman, and Froman’s employer, but it expressly noted that it did not waive any defenses regarding Wade’s claim for UM benefits. Allstate moved for summary judgment, contending that under the UM provision in Wade’s policy, it was not obligated to pay on Wade’s claim for UM benefits since he had not exhausted the limits of the insurance liability protection available to all named-defendants. The trial court granted Allstate’s motion, finding that the UM provision clearly and unambiguouslyOn appeal, however, Wade argued that summary judgment was improper because there had not been a determination as to the extent of his damages and there had been no apportionment of fault as required by law. Wade contended that he had exhausted the policy limits with respect to one of the defendants but that Allstate’s UM coverage obligation could not be determined until liability of all defendants had been apportioned. The Court of Appeals agreed. provided that Allstate was not obligated to pay benefits because Wade did not exhaust the limits of insurance for all defendants.
The Court held that the term “applicable” in the exhaustion provision was ambiguous. The Court explained the because there were multiple tortfeasors, who could not be held jointly and severally liable, then their respective liability carriers were only responsible for the amount of the damages apportioned to each tortfeasor. “[I]t stands to reason that an individual tortfeasor’s liability insurance is not ‘applicable’ to pay for any other tortfeasor’s damages.” Although Wade settled with the Bruces pursuant to a limited liability release and the remaining defendants pursuant to a full release, there had been no determination as to the percentage of fault attributable to each. The Court of Appeals ruled that Wade would be entitled to UM benefits “if there is an uninsured or underinsured motorist who is legally responsible for his damages.” More precisely, if there were any losses attributable to the Bruces in excess of their policy limits, then Wade would be entitled to UM coverage. Accordingly, the court ruled that Allstate was not entitled to judgment as a matter of law and remanded the case for a factual determination of Wade’s damages and for an apportionment of fault among the defendants.
This holding suggests that UM carriers may face protracted litigation in cases involving multiple tortfeasors, especially if the plaintiff settles with one or more of the defendants before trial for less than the liability limits. If that happens, then the UM carrier may be forced to try the case in order to determine whether the degree of fault attributable to the settling party (or parties) exceeded their respective policy limits, thus triggering UM coverage.
 The exhaustion provision stated, in pertinent part:
[Allstate is] not obligated to make any payment for bodily injury or property damage under this coverage which arises out of an accident involving the use of an underinsured motor vehicle until after the limits of liability for all liability protection in effect and applicable at the time of the accident have been exhausted by payment of judgments or settlement.