In Georgia, bad faith claims brought by a policyholder against the insurer are codified by statute specifying the requirements for a policyholder to recover a civil remedy for an insurer's bad faith refusal to pay a valid claim:
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 25 percent of the liability of the insurer for the loss and all reasonable attorney's fees for the prosecution of the action against the insurer.
O.C.G.A. § 33-4-6. Even though this statutory regime provides a specific route to recovery for attorney's fees and penalty damages in justified situations, plaintiff insureds continually plead for extra-contractual damages outside O.C.G.A. § 33-4-6, such as punitive damages (O.C.G.A. § 51-12-5.1) and damages under general penalty statutes such as O.C.G.A. § 13-6-11.
Fortunately for insurers, Georgia courts have long-held that if an insured wishes to complain of the insurer's conduct in its handling of their claim, the insured is limited to the penalties provided in O.C.G.A. § 33-4-6. See McCall v. Allstate Ins. Co., 251 Ga. 869, 310 S.E.2d 513 (1984); Anderson v. Georgia Farm Bureau Mut. Ins. Co., 255 Ga.App. 734, 566 S.E.2d 342 (2002). In United States Automobile Association v. Carroll, the insured sought coverage from her vehicle insurer, which the insurer denied. 226 Ga.App. 144, 145, 486 S.E.2d 613 (1997). The insured filed suit against her insurer, seeking actual damages (medical expenses), attorney's fees under O.C.G.A. § 33-4-6 and litigation expenses under O.C.G.A. § 13-6-11. Id. The lower court permitted a jury award damages for damages for litigation expenses in addition to an award of attorney's fees under O.C.G.A § 33-4-6. Id. On appeal, the court set aside the portion of the judgment awarding expenses of litigation, finding that "O.C.G.A. § 33-4-6 is the exclusive remedy for bad faith denial of benefits so that litigation expenses under O.C.G.A. § 13-6-11 are not recoverable." Id. at 148. The court further reasoned that "where the General Assembly specifically has provided a procedure and a penalty for non-compliance" under O.C.G.A. § 33-4-6, the "general penalty provisions under O.C.G.A. §§ 13-6-11; 33-4-6; and 51-12-5.1 cannot be recovered. . ." Id. Georgia courts have also held that tort actions cannot be maintained against an insurer where an insured also seeks damages pursuant to O.C.G.A. § 33-4-6. See Leonard v. Firemen's Ins. Co., 100 Ga.App. 434, 111 S.E.2d 773 (1959); see also Tate v. Aetna Cas. & Surety Co., 140 Ga.App. 123, 252 S.E.2d 775 (1979).
In 2019, Georgia federal courts have consistently upheld this "exclusive remedy" rule under O.C.G.A. § 33-4-6. The United States District Court for the Middle District of Georgia, interpreting Georgia law, recently addressed this issue when plaintiffs filed an amended complaint that sought to add claims for "stubborn litigiousness" under O.C.G.A. § 13-6-11 in addition to bad faith damages under O.C.G.A. §33-4-6. Maddox v. State Farm Fire and Cas. Co., 2019 WL 137596 *2 (M.D. Ga. Jan. 8, 2019). Because the plaintiffs did not comply with the procedural requirement of a bad faith demand 60 days prior to filing suit, the court struck plaintiffs' claim for damages under O.C.G.A. § 33-4-6. Additionally, the court struck plaintiffs' claim for damages under O.C.G.A. §13-6-11, finding "that the exclusive remedy for recovering litigation expenses in insurance cases is Ga. Code Ann. § 33-4-6. . . Because Plaintiffs specifically assert a remedy for stubborn litigiousness under Ga. Code Ann. §13-6-11, the Court finds that this claim would not survive a motion to dismiss and is therefore futile." Id.
In another 2019 decision, the United States District Court for the Northern District of Georgia awarded summary judgment in favor of the insurer, addressing policyholder's claim for punitive damages, stubborn litigiousness, unnecessary legal expenses and attorney's fees in addition to damages under O.C.G.A. § 33-4-6. Sutton v. State Farm Fire and Cas. Co., 2019 WL 2004133 (N.D.Ga. Feb. 26, 2019). The court first dismissed the plaintiff's claim for bad faith damages under O.C.G.A. §33-4-6, finding that based upon the information gathered during the insurer's arson investigation, the insurer had reasonable grounds for contesting coverage. The court then kicked out plaintiff's claim for punitive damages and claim for recovery for stubborn litigiousness and unnecessary legal expenses and attorneys' fees, finding that "it is undisputed that this case is a breach of contract action between Plaintiff and Defendant related to Defendant's refusal to pay insurance policy benefits. The exclusive remedy for bad faith breach of an insurance contract is set forth in O.C.G.A. §33-4-6." Id. at *5.
These recent cases continue to provide insurers with a means of putting an end to "kitchen sink" claims for extra-contractual damages on a motion for summary judgment or motion to dismiss.
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