Marietta Injury Lawyer Blog
In many successful personal injury cases, the defendant’s insurance company ends up paying most of the judgment. You might therefore think it would “save a step” just to sue the insurance company directly. In most cases, such “direct action” is not permitted under Georgia law. The legal theory behind this is that an insurance policy is a contract between the insurer and the insured, and the injured person is a third party who is not “privy” to this agreement.
However, Georgia law makes an exception to the prohibition on “direct action” when the insured party is a “motor carrier.” That is to say, if you are injured in an accident caused by a motor carrier, you may file directly sue both the carrier and its insurance company for damages.
Mitchell v. Dixie Transport, Inc.
A federal judge in Atlanta recently addressed a case, Mitchell v. Dixie Transport, Inc., in which this exception proved to be a contested issue. This particular case involves a personal injury lawsuit filed by a plaintiff injured in a 2014 motor vehicle accident. The plaintiff’s vehicle collided with a driving a tractor-trailer. The plaintiff’s lawsuit subsequently named as defendants not only the driver of the tractor-trailer, but also the owner of the vehicle and its insurance company.
After completing pre-trial discovery, the defense filed a motion to dismiss the insurance company as a defendant, arguing that Georgia’s exception did not apply here. U.S. District Judge Michael L. Brown noted it was “unclear why Defendants have only now moved” for such a dismissal, given this motion came three years into the litigation. Nevertheless, Judge Brown considered and dismissed the motion on its merits.
The defense’s first argument was that Georgia’s exceptions to the no-direct action rule only applied to “intrastate” carriers and not “interstate” carriers like the co-defendant in this case. Judge Brown categorically rejected this interpretation of the law, noting several prior federal courts expressly held direct action laws applied equally to interstate and intrastate carriers.
The defense next argued that federal law somehow “preempted” Georgia’s direction action law. Again, Judge Brown disagreed. Indeed, he noted the Supreme Court of Georgia recently considered and rejected this very argument.
Judge Brown also denied the defense’s argument to “bifurcate” or split the trial into two separate proceedings–one to determine the issue of the plaintiff’s liability and damages, and the second to decide any contractual liability on the part of the insurance company. The defense noted that in most personal injury cases, it was not permissible to even mention the defendant has insurance “absent an express or authorized reason to do so,” for fear of prejudicing the jury. But Judge Brown noted the Georgia direct action law created an “expressed and authorized reason” to depart from the normal rule. Given the law allows the plaintiff to file a single lawsuit against both the motor carrier and its insurance company, it would be a “waste of judicial resources” to then require separate trials.