Court of Appeals Confirms that Plaintiff Cannot Bring Declaratory Action Against Defendant’s Insurer to Confirm Amount of Coverage Available – by Timothy Mitchell

The Georgia Court of Appeals recently reversed a trial court’s denial of a purported insurer’s motion to dismiss a declaratory action brought by a plaintiff in an ongoing underlying case against the insurer’s purported insured. The Court of Appeals noted that “[a]s a general rule, a plaintiff does not hav[e] standing to bring a direct action against a defendant’s insurance company unless the plaintiff has obtained a judgment against the defendant that remains unsatisfied.” U-Haul Co. of Arizona v. Rutland, No. A18A2037, 2019 WL 848891, at *4 (Ga. Ct. App. Feb. 22, 2019).  The Court of Appeals went on to hold that, because the plaintiff had “no direct relationship with the [insurer], . . . until she obtains a judgment in the underlying tort suit, she has only a hypothetical and generalized economic interest. In other words, [the plaintiff]’s future conduct is not in jeopardy; only the extent of her potential recovery is uncertain. Id. at *5.

This ruling shows that, absent action by the insurer or the insured in bring a declaratory action, a plaintiff has to recover a verdict again an insured before he or she will be able to unilaterally resolve any outstanding coverage issues. This limits the negotiating position of the plaintiff on the underlying claims in light of the uncertainty of his or her ability to collect should a judgment be obtained, strengthening the bargaining power of the insurer in these instances.

If you have any questions about the rights of insurers in connection with declaratory judgment actions, please contact Timothy Mitchell at (678) 684-2133 or