Court of Appeals Reaffirms Ambiguities in Insurance Policy Construed Against Insurer

Following an accident where a Blue Ridge Auto Auction (“Blue Ridge”) employee lost control of a car and struck many people attending an auction, Blue Ridge filed an action against Acceptance Indemnity Insurance Company, Inc. (“Acceptance”) because it failed to defend Blue Ridge in certain personal injury actions and failed to pay the resulting claims. Blue Ridge Auto Auction v. Acceptance Indem. Ins. Co., Inc., 2017 WL 4784396 (Ga. Ct. App. 2017). The Court held that Blue Ridge was provided coverage under an exception to an exclusion in the policy and reversed the trial court’s grant of Acceptance's motion for summary judgment and denial of Blue Ridge's motion for summary judgment. Id.

The car involved in the accident was owned by Acceptance’s insured, Tommy Nobis Foundation, Inc. (“Nobis”), a charitable organization that operates a vehicle donation program. Blue Ridge claimed that coverage should be provided to it as a third-party. The parties agreed that the car involved in the accident was a “covered auto” for purposes of the policy. The policy provided that Acceptance, “will pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from ‘garage operations' involving the ownership, maintenance or use of covered ‘autos.'” There were two issues with the policy: (1) whether the term “garage operations” was ambiguous; and (2) whether the auto auction was part of Nobis’s “garage operations.”

The Court reviewed the policy while considering that “exceptions and exclusions to coverage must be narrowly and strictly construed against the insurer and forgivingly construed in favor of the insured to afford coverage,” Id.; (quoting Auto-Owners Ins. Co. v. Neisler, 334 Ga. App. at 287 (1), 779 S.E.2d 55 (2015)). The policy provided coverage for “garage operations” that included “all operations necessary or incidental to a garage business.” The Court found that the term “garage operations” was ambiguous; therefore, because it was foreseeable that the cars that were donated would be sold at auction, it was reasonable for Nobis to expect that its garage business, and thus its garage operations, included the sale by auction of its donated vehicles. Id. Construing the ambiguity against the insurer, the Court held that Blue Ridge was a covered insured under the policy. It may be that the refusal to cover a charitable organization enhanced the court’s concerns about the policy language.