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Posted by H. Lee Pruett

The Georgia Supreme Court ruled that a limited release for pursuit of uninsured motorist (“UM”) coverage is ambiguous when the plaintiffs — husband and wife — settle bodily injury claims and a loss of consortium claim for single person liability limits.

In Thompson v. Allstate Ins. Co., Case No. S08G1594 (Ga. S. Ct., Feb. 9, 2009), the Georgia Supreme Court ruled that summary judgment was not proper for the uninsured motorist carriers even though the two plaintiffs, husband and wife, apparently settled their bodily injury claims and the wife’s loss of consortium claim for the single person limits of the defendant’s liability policy. The plaintiffs claimed they were both injured in an automobile accident. The wife included a claim for loss of consortium. The plaintiffs served Allstate and Georgia Farm Bureau as their uninsured motorist carriers, and both companies answered in their own names.

Both UM carriers raised the defense that the plaintiffs had failed to comply with a condition precedent, that is, they had not exhausted the underlying liability coverage. The defendant’s liability coverage provided limits of $100,000 per person and $300,000 per accident. The plaintiffs — individually and as husband and wife — settled with the defendant for $100,000 and executed a limited release to allow them to pursue UM coverage. Arguing that neither plaintiff had exhausted the available liability coverage, the UM carriers filed motions for summary judgment. The plaintiffs responded by filing their attorney’s affidavit which stated that the entire settlement was for the husband’s claims only.

The trial court denied the motions for summary judgment as to the husband’s claims. The court ruled that questions of fact remained as to whether the $100,000 consideration was for solely for the claims of the husband. The Court of Appeals reversed. The court held that the limited release was unambiguous and that the wife received at least a portion of the consideration. The husband, therefore, had not exhausted the underlying liability limits and so could not pursue UM coverage. The Court of Appeals also held that the parol evidence rule prevented consideration of the plaintiffs’ attorney’s affidavit concerning the limited release and their intent in settling.

The Georgia Supreme Court reversed the Court of Appeals. The Court emphasized that under the UM statute, O.C.G.A. § 33-24-41.1, the claimant must exhaust the liability limits and sign a limited release. Although the husband in this case complied with the limited release requirement, it was unclear whether he had settled for less than the liability policy limits. The loss of consortium claim is entirely dependent on the husband’s bodily injury claim, and, therefore, both claims fall within the single person limit of liability.

The limited release was ambiguous because the wife could have accepted consideration for the benefit of her husband. In other words, she could accept consideration for her husband’s bodily injury claims and not her own. Thus, the question remained whether the husband had failed to exhaust the liability limits for his claims.

The Court further held that, even if the limited release was unambiguous, the attorney’s affidavit could be considered because the parol evidence rule applies only to the parties to the contract. Here, the UM carriers were strangers to the limited release. Parol evidence about the release, therefore, was admissible against them.