This case involves a dispute over the payment of insurance proceeds due under a policy issued by Balboa Life and Casualty, LLC and Meritplan Insurance Company the insurer covering a residence damaged by fire. The policy issued to the residence owner contained a loss payable provision giving an interest in the insurance proceeds to Home Builders Finance, Inc. d/b/a Owner Loan Services the mortgagee which held the owner’s mortgage debt and a security deed over the residence requiring that the owner have insurance with the loss payable provision. The mortgagee sued the insurer claiming it breached a contractual obligation to pay the mortgagee all the insurance proceeds due under the policy. The suit also sought to enforce an alleged partial settlement agreement with respect to payment of the insurance proceeds and sought bad faith penalties pursuant to OCGA § 33-4-6 and litigation expenses pursuant to OCGA § 13-6-11. The insurer appeals from the trial court’s grant of the mortgagee’s motions for summary judgment and for enforcement of the settlement agreement, and from the denial of the insurer’s motion for summary judgment. For the following reasons, we affirm in part and reverse in part. On August 4, 2006, the insured residence was partially destroyed by fire. It is undisputed that in January 2007 the insurer agreed to pay the full amount due under the policy —$103,000 in proceeds the insurer agreed was necessary to repair the damaged residence —by issuing two checks totaling $103,000 both made payable to the owner and the mortgagee. Although the checks were issued by the insurer directly to the owner with instructions to obtain the mortgagee’s endorsement, the owner forged the endorsement and absconded with the $103,000 without making any repairs on the insured residence. After the owner defaulted on his mortgage obligation, the mortgagee exercised power of sale provisions in the security deed and conducted a non-judicial foreclosure sale on November 6, 2007. At the foreclosure sale, the mortgagee successfully bid $150,000 and took title to the residence. The amount owed on the mortgage as of the date of foreclosure was $285,081.43. The mortgagee did not obtain confirmation of the foreclosure sale. The mortgagee discovered during the foreclosure process that the owner had forged its endorsement on the insurance proceeds checks and absconded with the proceeds. Through the efforts of the mortgagee, the bank which issued payment to the owner on the forged endorsements eventually refunded the $103,000 to the insurer. After engaging in correspondence with the insurer about payment of the refunded insurance proceeds, the mortgagee filed suit against the insurer on June 20, 2008, seeking payment of the entire $103,000 of insurance proceeds plus bad faith penalties and attorney fees.
1. The insurer contends that the trial court erred by granting summary judgment in favor of the mortgagee for all of the insurance proceeds in the amount of $103,000.
