That same day, ACCC filed a declaratory judgment action to determine whether it had a duty to defend the Medranos and whether the claims arising from the collision were covered by the policy.

ACCC moved for summary judgment, arguing that there was no coverage because of certain policy exclusions.

In response, Mr. Walker argued, among other things, that ACCC had waived its noncoverage defenses because it had assumed control of the Medranos' defense without first unambiguously informing them of its reservation of rights.

The trial court summarily denied ACCC's summary judgment motion, and ACCC appealed.

There, ACCC argued that the trial court had erred in denying its motion for summary judgment because policy exclusions excepted coverage for damages arising from the collision and ACCC had effectively reserved its rights to deny coverage.

The Appellate Court's Decision

The appellate court affirmed the trial court's denial of ACCC's motion for summary judgment.

In its decision, the appellate court explained that ACCC had assumed the defense of the Walker action on behalf of the Medranos and had filed an answer on their behalf on April 24, 2017.

The appellate court then examined whether ACCC had "timely and unambiguously" informed Ermes Medrano that it was reserving its right to deny coverage.

The appellate court was not persuaded by ACCC's argument that it had orally informed Ermes Medrano of its reservation of rights in a voice mail message left on his telephone on April 5, 2017 – 19 days before it entered a defense on the Medranos' behalf. The appellate court pointed out that the ACCC employee who left the voice mail testified only that she had "called and left a voice mail with Ermes Medrano, because Anthony Medrano is a minor, regarding ACCC defending the [underlying] lawsuit, . . . pursuant to [a] previous reservation of rights issued on the file" "due to coverage concerns."

According to the appellate court, that message "may or may not have been sufficient." The appellate court added that whether it effectively reserved ACCC's rights by unambiguously communicating its reservation to Ermes Medrano was a question for the fact finder.

The appellate court also rejected ACCC's assertion that it was not until November 17, 2017, when it took Anthony Medrano's deposition, that it learned of two of its potential defenses – namely, that Anthony Medrano allegedly was driving in violation of the terms of his driver's license and that Anthony Medrano allegedly was driving without his father's permission to use the car – and that, as a result, its November 20, 2017 reservation of rights that listed those two defenses was timely.

The appellate court pointed out that, more than a year earlier, on November 6, 2016, the Georgia Uniform Motor Vehicle Accident Report had listed the driver of the insured vehicle as Anthony Medrano and had indicated that Anthony Medrano had been charged with driving on an invalid license in violation of OCGA § 40-5-20 and driving on a restricted license in violation of OCGA § 40-5-30. The appellate court ruled that whether ACCC had constructive knowledge of its potential defenses – that Anthony Medrano allegedly was driving in violation of the terms of his driver's license and without his father's permission – before ACCC assumed the defense of the Medranos also were questions for the fact finder.

Accordingly, the appellate court concluded, ACCC had not demonstrated that there was no genuine issue of material fact on the waiver issue.

The case is ACCC Ins. Co. of Georgia v. McF-028 Walker, No. A19A0804 (Ga. Ct. App. Sep. 5, 2019).