X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

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

 
Reprints & Licensing
Mentioned in a Law.com story?

License our industry-leading legal content to extend your thought leadership and build your brand.

More From ALM

With this subscription you will receive unlimited access to high quality, online, on-demand premium content from well-respected faculty in the legal industry. This is perfect for attorneys licensed in multiple jurisdictions or for attorneys that have fulfilled their CLE requirement but need to access resourceful information for their practice areas.
View Now
Our Team Account subscription service is for legal teams of four or more attorneys. Each attorney is granted unlimited access to high quality, on-demand premium content from well-respected faculty in the legal industry along with administrative access to easily manage CLE for the entire team.
View Now
Gain access to some of the most knowledgeable and experienced attorneys with our 2 bundle options! Our Compliance bundles are curated by CLE Counselors and include current legal topics and challenges within the industry. Our second option allows you to build your bundle and strategically select the content that pertains to your needs. Both options are priced the same.
View Now
May 01, 2025
Atlanta, GA

The Daily Report is honoring those attorneys and judges who have made a remarkable difference in the legal profession.


Learn More
February 24, 2025 - February 26, 2025
Las Vegas, NV

This conference aims to help insurers and litigators better manage complex claims and litigation.


Learn More
March 24, 2025
New York, NY

Recognizing innovation in the legal technology sector for working on precedent-setting, game-changing projects and initiatives.


Learn More

The Court of Appeal, First Appellate District in San Francisco is accepting applications for a full-time regular Judicial Secretary I, Judic...


Apply Now ›

The County is looking for a skilled and seasoned County Attorney to oversee the Law Department in delivering top-tier legal services, repres...


Apply Now ›

Position Summary: The Corporate General Counsel will manage and coordinate all legal and compliance matters affecting the company. The Gen...


Apply Now ›