Ball-Rodriquez et. al. v. Progressive Premier Insurance Company of Illinois

Facts

In the case of Ball-Rodriquez et. al. v. Progressive Premier Insurance Company of Illinois, Ball-Rodriquez was involved in a car accident with William Stephens on January 3, 2020.  He claimed that Stephens hit him, a pedestrian, with his vehicle.  In June of 2020, Ball-Rodriguez filed suit against Stephens; however, Stephens failed to respond to Ball-Rodriquez’s suit and the trial court entered a default judgment against Stephens.

Ball-Rodriquez then filed a second suit against Stephens and Progressive, Stephens’ alleged liability insurer.  Ball-Rodriquez claimed that he was a judgment creditor of Stephens. Progressive filed a motion for summary judgment in which Progressive argued that Stephens’ policy with Progressive was void due to lack of consideration. Progressive claimed there was a lack of consideration because Stephens never made his initial payment on the policy.

The evidence shows that on December 26, 2019, Stephens applied for automobile insurance with Progressive. Stephens agreed to an initial payment of $116.03 and provided his banking information for the payment.  The Progressive policy language stated that the initial payment was a condition for the insurance coverage. If the payment was not honored by the banking institution, then Progressive would not consider the payment and the policy could be voided. The policy language was also clear that any action by Progressive to “present the remittance for payment more than once shall not affect our right to void this policy.”

Unfortunately, Stephens’ bank did not honor his draft and Progressive did not receive Stephens’ initial payment.  Beginning on January 3, 2020, Progressive alerted Stephens that his initial payment had not been received.  Progressive again alerted Stephens to his non-payment on January 6, 2020, this time informing him that payment was needed by January 12, 2020. 

On January 7, 2020, Progressive sent Stephens a letter with the same information.  On January 14, 2020, Progressive sent Stephens a recession notice, informing Stephens that his policy starting on December 26, 2019, had been rescinded and that Stephens “did not have insurance coverage at any time under the policy.” At no point did Stephens ever make a payment towards the Progressive policy.

In the second suit seeking to collect on the judgment, the trial court agreed with Progressive that the policy was void from the beginning because the insured, Stephens, never made payment. This appeal followed.

Issues & Holdings

The issue in this case was whether the failure to make any premium payment constituted a lack of consideration that permitted Progressive to void the policy. The Court of Appeals agreed with Progressive that it did, and it affirmed the trial court’s grant of summary judgment to Progressive.

Reasoning

The Court of Appeals looked to Georgia case law on insurance contracts.  In Georgia, insurance is considered a contract matter and the parties are bound by the plain and unambiguous terms of the contract. Western Pacific Mut. Ins. Co. v. Davies, 267 Ga. App. 675, 676 (2004). Under Georgia law, consideration is considered an essential element of a contract. See O.C.G.A. § 13-3-1.  Further, relying on Estate of Ryan v. Shuman, a lack of consideration renders a contract null and void.  288 Ga. App. 868, 872 (2007).  

The Court of Appeals relied on the clear language from the Progressive policy that made the policy voidable if the initial payment was dishonored. Based on Stephens’ non-payment, Progressive had authority to void the policy. Further, the Court found that Stephens’ non-payment equated to there being no consideration between Stephens and Progressive. Under Georgia law, if there is no consideration, then all the elements needed to create a contract are not present.

The Appellants argued that Progressive waived its right to rescind the policy because Progressive had attempted to collect the overdue payment from Stephens. They also argued that because Stephens provided his personal data and made an implied promise to make the initial payment, this constituted consideration. 

The Court easily shot down those arguments. In regard to providing his personal data, the Court of Appeals found that while Stephens may have thought personal data counted as consideration, personal data was not intended or considered to be consideration by Progressive, and under O.C.G.A. § 13-2-2, contract construction is based on the intention of the parties (emphasis added).  

In terms of the implied promise to pay argument, the Court found that a dishonored check is not considered a promise to pay. 

Lastly, with regard to the argument that Progressive waived its right to recession because it sought payment, the Court of Appeals concluded that Progressive did not waive that right “because such as waiver must be clear and unmistakable.” Bell-Rodriquez v. Progressive Premier Ins. Co. of Illinois, 2023 WL 3069512, *2 (quoting Vratsinas Constr. Co. v. Triad Drywall, LLC, 321 Ga. App. 451, 454 (2013)). Further, the Georgia Supreme Court has found that insurance companies should not suffer for giving their insured a second chance to pay before voiding a policy. Progressive Preferred Ins. Co. v. Brown, 261 Ga. 837, 840 (1992). 

Conclusion

An insurance policy is a contract. When coverage issues arise, contract law is analyzed to determine whether coverage exists for a claim. The parties will be bound by the clear and non-ambiguous language of the contract. Further, if there is no consideration, then there is no contract.

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Citation: Ball-Rodriquez et. al. v. Progressive Premier Insurance Company of Illinois,
No. A23A0491, (Ga. Ct. App. Apr. 25, 2023)