This case arises out of three residential real estate closings conducted by attorney Constance Thomas. Thomas represented the purchase money lender at each closing. In connection with each closing, the lender purchased a title insurance policy from Atlantic Title Insurance Company Atlantic. After the closings, each lender made claims on their respective policies because Thomas had not paid off pre-existing liens encumbering the properties. Instead of paying the claims, Atlantic brought this suit against Thomas and the lenders. The lenders filed counterclaims against Atlantic seeking statutory damages and attorney fees under OCGA § 33-4-6 based on Atlantic’s bad faith refusal to indemnify the lenders for their losses. The trial court awarded summary judgment to the lenders on their claims for damages but reserved attorney fee issues for jury trial. Atlantic appeals. We affirm. OCGA § 33-4-6 a provides: In the event of a loss which is covered by a policy of insurance and the refusal of the insurer to pay the same within 60 days after a demand has been made by the holder of the policy and a finding has been made that such refusal was in bad faith, the insurer shall be liable to pay such holder, in addition to the loss, not more than 50 percent of the liability of the insurer for the loss or $5,000.00, whichever is greater, and all reasonable attorney’s fees for the prosecution of the action against the insurer. In addition, “the action for bad faith shall not be abated by payment after the 60 day period. . . .”1 And “the amount of any reasonable attorney’s fees shall be determined by the trial jury. . . .”2
“To support a cause of action under OCGA § 33-4-6, the insured bears the burden of proving that the refusal to pay the claim was made in bad faith.”3 “Bad faith is shown by evidence that under the terms of the policy upon which the demand is made and under the facts surrounding the response to that demand, the insurer had no good cause for resisting and delaying payment.”4 “Good faith is determined by the reasonableness of nonpayment of a claim. Because the damages are in the nature of a penalty, the statute is strictly construed and the right to such recovery must be clearly shown.”5 Although the question of good or bad faith is ordinarily for the jury, the insurer is entitled to judgment as a matter of law if it has reasonable grounds to contest the claim or the question of liability is close.6