The End of Direct Action in Georgia (Sort of…in 2 years)

Douglas MacKimm – Senior Associate Attorney
Groth, Makarenko, Kaiser & Eidex
July 31, 2024

This month marked the beginning of a significant change in Georgia commercial motor carrier litigation which may serve to streamline the course of trucking cases going forward. On May 6, 2024 Governor Brian Kemp signed into law Senate Bill 246 which amended the basis on which a plaintiff can assert a direct action against the insurer of a motor carrier under O.C.G.A. §40-1-112 and §40-2-140.

Prior to this change, the law in Georgia allowed a plaintiff to name the primary insurer of a motor carrier directly as a defendant in a tort action when the cause of action occurred in the state. The impact of this new law, which took effect on July 1, 2024, is that a plaintiff may only assert a direct action against the insurer for a motor carrier in two specific scenarios. First, when one or more of the motor carriers involved are insolvent or bankrupt, and secondly, if after reasonable diligence personal service cannot be effected against the truck driver and/or motor carrier. Although this change took effect on July 1 ^st, this will not apply retroactively to accidents which occurred prior to this date. One notable portion of the new law is that a plaintiff may “as a matter of right, without motion or order of the Court, by filing an amended complaint” join the insurance company under the above scenarios. It would seem likely that plaintiffs will continue to name motor carrier’s insurers in these actions and it will be dependent on the defense to combat this with a showing of solvency of the involved motor carriers, and/or a lack of reasonable diligence in attempts at service of truck drivers and motor carriers.

Senator Blake Tillery, the chief sponsor of Bill 246, said that the change in the direct action statute would hopefully “help regulate, stabilize and reduce rates” and Georgia Lieutenant Governor Burt Jones said that “[t]he passage of this legislation was desperately needed in order to get Georgia’s business community the relief it needs.” Besides the implications of potential insurance rate decreases for motor carriers, the expectation is that this change will also have a meaningful impact for motor carriers in tort actions. The ability to name insurance carriers directly has historically served as a tool for plaintiffs to increase the value of lawsuits involving commercial vehicles. Previously there did not have to be an independent cause of action against the insurer to directly name them as defendants in these cases. As such, the presence of these insurance companies as party defendants on a verdict form increased a plaintiff’s potential for an inflated verdict. As Lieutenant Governor Jones said referring the passage of Bill 246, “[w]e are making legitimate strides to level the playing field when a case reaches the courtroom.” While the impact of the amendment to the direct action statute will have to seen over time, this should allow for defendant motor carriers to be evaluated individually by juries without the omnipresence of insurance companies which give the appearance of “deep pocket” defendants in these cases.

Although this change took effect on July 1 ^st, this will not apply retroactively to accidents which occurred prior to this date. This means that the full impact of the new law will likely not be felt for 2 more years.