In Colonial, the insurer sent the insured a "qualified denial letter," but thereafter undertook the insured's defense under a reservation of rights before seeking a declaratory judgment. See also State Farm c. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332, 335 ( 208 S.E.2d 170) (1974). As Colonial recognized, "[h]ad [the insurer] simply rested on its denial of coverage, it could not have sought a declaratory judgment."
An insurer "may not refuse to pay [under its policy] and then use declaratory judgment procedure as a means of avoiding bad faith penalties." State Farm c. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332, 334 ( 208 S.E.2d 170) (1974), discussing Reliance Ins. Co. v. Brooks Lumber Co., 101 Ga. App. 620 ( 115 S.E.2d 271) (1960). The fact that the insurer did not expressly determine prior to the entry of judgment that no coverage was afforded to its insured does not alter this rule, as the failure to provide a defense to the damage action against the insured is equivalent to the denial of coverage.
Chambers of Georgia is the better view, but it may have been overruled by implication by Mabry. Mabry by implication casts doubt on numerous landmarks, e.g. State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332, 334 ( 208 S.E.2d 170) (1974) (declaratory judgment is "a signal for the future not a seal of approval . . . for the past"); Pennsylvania Threshermen Farmers Mut. Cas. Ins. Co. v. Gardner, 107 Ga. App. 472 ( 130 S.E.2d 507) (1963). See Rolleston II, supra.
Since the judgment of default has already been entered, the setting aside of the judgment denied, and defense of the insured already undertaken, then there exists no justiciable issue as to the duty to defend. Atlantic Wood Indus., Inc. v. Argonaut Ins. Co., 190 Ga. App. 814 ( 380 S.E.2d 504) (1989) (determine duty to defend); State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332, 334-335 ( 208 S.E.2d 170) (1974) (determination of duty to defend prior to judgment on tort action); Ditmyer v. American Liberty Ins. Co., 117 Ga. App. 512, 515-516(1) ( 160 S.E.2d 844) (1968) (determine obligation to defend). The General Assembly has vested in the superior court subject matter jurisdiction to decide actual cases of uncertainty as to future conduct under the Declaratory Judgment Act under limited circumstances.
Adams v. Atlanta Cas. Co., 225 Ga. App. 482, 484 (1) ( 484 S.E.2d 302) (1997).State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332, 335 ( 208 S.E.2d 170) (1974). Compare Empire Fire c. Co. v. Metro Courier Corp., 234 Ga. App. 670 ( 507 S.E.2d 525) (1998) (insurer faced no uncertainty as to its rights because it denied coverage, did not defend its insured, and judgment had already been entered in the damage action.)
Indeed, had it done so, there would have been no "actual controversy" necessary to authorize a petition for declaratory judgment. OCGA § 9-4-2; see generally State Farm Mut. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332 ( 208 S.E.2d 170) (1974). Rather, the entire purpose of Essex's petition for declaratory judgment was to resolve the uncertainty over the parties' rights and obligations under the insurance policy issued to GBCH, in accordance with OCGA § 9-4-1, and Essex's resort to that declaratory judgment procedure may not be regarded as a breach of the insurance contract.
Appellants argue, inter alia, that State Farm has not been exposed to uncertainty with regard to its duty to defend its insured. The record discloses there exists a pending action which could possibly expose State Farm to uncertainty with regard to its duty to defend its insured, particularly in view of State Farm's timely reservation of rights ( State Farm c. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332 ( 208 S.E.2d 170)), and also as to the scope of policy coverage (see Nationwide Mut. Ins. Co. v. Peek, 112 Ga. App. 260, 263 ( 145 S.E.2d 50); compare Shield Ins. Co. v. Hutchins, 149 Ga. App. 742 (2) ( 256 S.E.2d 108)). "An insurer can readily show that it is in a position of insecurity and uncertainty when faced with the dilemma of providing and paying for a defense of its insured in a tort action as required under the liability policy or of denying coverage and thus losing the opportunity to protect its interest in the tort case." (Emphasis supplied.)
"The question of coverage is still in issue, and the trial court properly denied the motion to dismiss the declaratory judgment complaint." State Farm c. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332, 335 ( 208 S.E.2d 170) (1974). Judgment reversed. Beasley and Andrews, JJ., concur.
Further, the record discloses that there is no pending action which could possibly expose USFG to uncertainty with regard to its duty to defend. (See State Farm Mut. c. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332, 334, 335 ( 208 S.E.2d 170). Compare Nationwide Mut. Ins. Co. v. Peek, 112 Ga. App. 260 ( 145 S.E.2d 50), where an insurance carrier was seeking to relieve itself of an obligation to defend a pending suit against an insured.) It is therefore apparent that USFG was merely seeking an advisory opinion from the trial court should past events result in an action at law or in equity.
In fact, Leader's withdrawal from defending Kemp in the underlying tort actions rendered moot the declaratory judgment action it had initiated to determine the parties' duties under the policy and invited the action which is the subject of this appeal. See State Farm Mut. Auto. Ins. Co. v. Allstate Ins. Co., 132 Ga. App. 332, 334-335 ( 208 S.E.2d 170). Consequently, the trial court did not err in denying Leader's motion for directed verdict.