805 F.2d 1484
Penny M. TATUM, f/k/a Penny M. Thompson, Plaintiff-Appellant,v.DAIRYLAND INSURANCE COMPANY, Defendant-Appellee.
No. 85-8958.
United States Court of Appeals,Eleventh Circuit.
Dec. 16, 1986.

L. Zack Dozier, Macon, Ga., for plaintiff-appellant.
Richard B. Eason, Jr., Atlanta, Ga., for defendant-appellee.
Appeal from the United States District Court for the Middle District of Georgia.
Before KRAVITCH, CLARK and EDMONDSON, Circuit Judges.
KRAVITCH, Circuit Judge:


1
Appellant Tatum appeals from the district court's grant of summary judgment on her claim of right under Georgia law to optional no-fault personal injury protection (PIP) on her automobile insurance policy with appellee Dairyland Insurance Company.  The sole issue on appeal is whether appellee's offer of optional PIP was in substantial compliance with the requirements of O.C.G.A. Sec. 33-34-5(b).  We hold that appellee's application form was not in substantial compliance with Georgia statutory requirements and that appellant has the right to claim the optional benefits.


2
The undisputed facts in this case indicate that appellant executed the application at issue in April 1979.  The application (Appendix I) included a section labeled "Optional No-Fault Coverage Benefits," which appellant signed just below printed language that stated "I have read and understood the offer to purchase additional coverages as set forth above, and hereby reject all additional coverages that have not been marked Accept " (emphasis in original).


3
Appellant was injured during the policy period in two automobile accidents in September and October 1980.  After the September accident, Dairyland paid Tatum a total of $2,590.24 for lost wages and medical expenses.  Following the October accident, Dairyland paid Tatum $5,000 in benefits for lost wages and medical expenses and then notified her that no further benefits would be paid because $5,000 was the policy limit.  Tatum's claims for additional benefits arising out of her October accident and her tender of an additional premium for $50,000 in retroactive PIP coverage were rejected.


4
In June 1982, appellant filed suit in Georgia state court seeking retroactive PIP coverage for unpaid medical bills and lost income.  Appellant also sought attorney fees, statutory penalties and punitive damages.  Dairyland removed the case to the United States District Court on the basis of diversity of citizenship.  Dairyland continued to decline to extend any additional PIP coverage to Tatum.


5
In March 1983, after the decision in Flewellen v. Atlanta Casualty Co., 250 Ga. 709, 300 S.E.2d 673 (1983), Dairyland offered to extend optional benefits upon proof of loss.  Appellant declined the offer because she objected to the quoted premium amount for the additional coverage.  In April 1983, Dairyland sent appellant a check for $3,098.73 with a letter indicating that the payment was for optional benefits after taking credit for prior payments and the quoted premium.  Appellant returned this check because, in her view, the amount was improperly calculated.  After a series of correspondence as to why the amount was or was not proper, appellant accepted a check for the same amount along with a letter from appellee stating that negotiation of the check would be without prejudice to appellant's claims for additional benefits.


6
Both sides moved for summary judgment and the district court, relying upon St. Paul Fire & Marine Insurance Co. v. Nixon, 252 Ga. 469, 314 S.E.2d 215 (1984), granted summary judgment for defendant Dairyland.  Tatum appealed.


7
Georgia law requires that motor vehicle insurers offer a minimum of $50,000 in optional PIP coverage.  O.C.G.A. Sec. 33-34-5(a).  Although the statute allows applicants to reduce the coverage to no less than $5,000, appellant has the right under Georgia law to $50,000 PIP coverage unless in Dairyland's insurance application "optional coverages were expressly offered to, and knowingly rejected in writing" by the insured.   Jones v. State Farm Mutual Automobile Insurance Co., 156 Ga.App. 230, 274 S.E.2d 623 (1980), cert. dismissed, 248 Ga. 46, 280 S.E.2d 837 (1981);  Flewellen v. Atlanta Casualty Co., 250 Ga. 709, 300 S.E.2d 673 (1983);  Tolison v. Georgia Farm Bureau Mutual Insurance Co., 253 Ga. 97, 317 S.E.2d 185 (1984).  Failure to reject the optional coverages in the manner provided in the statute forms a contract for $50,000 PIP coverage from the inception of the contract.   Flewellen, 250 Ga. at 714, 300 S.E.2d at 678.  The offer and knowing rejection in writing must appear on the face of the application itself;  oral communications have no relevance to the insured's right to recover optional PIP benefits.   See Voyager Casualty Insurance Co. v. Colwell, 166 Ga.App. 17, 303 S.E.2d 152, modified, 251 Ga. 744, 309 S.E.2d 617 (1983).


8
Dairyland contends that summary judgment was properly granted in its favor because Dairyland's application satisfied statutory requirements as articulated in St. Paul Fire & Marine Insurance Co. v. Nixon, 252 Ga. 469, 314 S.E.2d 215 (1984) (see Appendix II).1   In Nixon, the Georgia Supreme Court held that an application form satisfies the statutory requirements where:  (1) the form is in substantial compliance with the statutory requirement;  and (2) the form satisfies the intent of the Georgia legislature to ensure that insurers offer optional coverages to applicants and that an applicant's waiver of his privilege to obtain optional coverages be made knowingly and in writing.   Id. at 470, 314 S.E.2d at 217.    Nixon made it clear that Flewellen did not hold that separate signatures for acceptance or rejection of each of the optional coverages are mandatory.  Instead, Flewellen only indicated that the statutory requirements are satisfied by separate signatures.


9
Dairyland concedes that its application form did not completely comply with section 33-34-5(b).2   In its applicable form,3 section 33-34-5(b) states:  "Each application for a policy of motor vehicle liability insurance sold in this state must contain separate spaces for the insured to indicate his acceptance or rejection of each of the optional coverages...." (emphasis added).  Dairyland's application form had separate spaces for the applicant to indicate acceptance of any of the optional coverages but no separate spaces to indicate rejection of any of the optional coverages.  Rejection of the optional coverages on the Dairyland application was done simply by signing below the preprinted language regarding rejection.4


10
We cannot accept Dairyland's position that, even in the absence of separate spaces for rejection of optional coverages,5 the application form substantially complied with statutory requirements.  Separate spaces for rejection are expressly required by the statute for good reason.  The legislative intent of ensuring that an applicant's waiver of his privilege to obtain optional coverages be made knowingly and in writing is violated where nothing more than a single signature is made at the bottom of the optional coverage section.  Although multiple signatures are not required, separate spaces to indicate rejection make it significantly more likely that an applicant will be aware of what is being offered and rejected.


11
Post-Nixon Georgia cases considering the question of whether particular application forms substantially comply with section 33-34-5(b) support our conclusion.  The cases have identified several factors that are influential in determining whether the particular application form substantially complies with the statutory requirements and purposes.  These factors include:  (1) whether the offer of additional coverages is contained on a separate page, Tolison v. Georgia Farm Bureau Mutual Insurance Co., 253 Ga. 97, 100, 317 S.E.2d 185, 188 (1984) (see Appendix III);6  (2) whether the fact that optional coverages are being offered is prominently displayed by a clear heading, Associated Indemnity Corp. v. Sermons, 175 Ga.App. 513, 515, 333 S.E.2d 902, 905 (1985) (see Appendix IV);7  (3) whether optional coverages are presented in clear and easily readable sentences rather than by abbreviations without explanations, Tolison, 253 Ga. at 100, 317 S.E.2d at 188, Douglas v. Jefferson-Pilot Fire & Casualty Co., 175 Ga.App. 457, 458, 333 S.E.2d 634, 636 (see Appendix V),8 and (4) whether the marks in the rejection boxes are handwritten rather than typewritten, Sermons, 175 Ga.App. at 515, 333 S.E.2d at 905.


12
The offer of optional no-fault coverage benefits in this case had several of the deficiencies identified in these cases.  The offer of optional coverages is not on a separate page.  The offer is contained in a small box about three-fourths down the second page of the application.  The printed offer and the preprinted rejection language is in very small print.  No explanatory language is provided to clarify the short phrases used to describe the options.


13
Dairyland's contention that the application form in this case complied with the statutory requirements as substantially as did the form in Nixon is without merit.  The form in Nixon had a separate space for the insured to check, indicating "I do not want to purchase Optional Personal Injury Protection Coverage."    In addition, the form was on a separate page and the offered optional coverages were prominently displayed and described with complete sentences.


14
Our recent decision in State Automobile Insurance Co. v. Horne, 794 F.2d 621 (11th Cir.1986), is in accord.  In Horne, we found that the application form's offer of optional coverages was in substantial compliance with Georgia statutory requirements because the form reasonably evidenced the insured's awareness of and rejection of his rights.  We found the form in Horne to be similar to that in Nixon in that the form "is on a separate page, displays the optional coverages required to be offered, provides separate clauses and spaces for rejection of each of the options, and has a signature line at the bottom, which is in addition to the signature space for the general portion of the insurance application."    Id. at 623 (emphasis added).


15
No decision of this court or the Georgia courts has held that an application form can still substantially comply with the statutory requirements despite the absence of separate spaces for rejection of optional coverages.  Because we find this statutory requirement to be fundamental to fulfilling the legislative purpose of obtaining a knowing written waiver and because the offer in this case contained other deficiencies in its presentation of the options, we hold that the application at issue did not substantially comply with the statutory requirements.  Accordingly, we REVERSE the judgment of the district court and REMAND the case with instructions to enter summary judgment for appellant on the issue of liability and to proceed to trial on the damages issues.

APPENDIX I

16
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE


17
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

APPENDIX II

18
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

APPENDIX III

19
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE


20
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

APPENDIX IV

21
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

EXHIBIT A

22
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE

APPENDIX V

23
NOTE: OPINION CONTAINS TABLE OR OTHER DATA THAT IS NOT VIEWABLE


24
EDMONDSON, Circuit Judge, dissenting.


25
I respectfully dissent.


26
The application form before the court reasonably evidences the insured's awareness of and rejection of her right to optional no-fault coverages.  Therefore, I think the form substantially complies with the requirements of O.C.G.A. sec. 33-34-5(b).


27
Strict adherence to the terms of O.C.G.A. sec. 33-34-5(b) is not required.1   Georgia's state supreme court has held that the requirements of O.C.G.A. sec. 33-34-5(b) are satisfied by "substantial compliance" therewith.  Substantial compliance is inherently a flexible standard.  Needless to say, Georgia's high court could have adopted a more particularized standard;  but it chose not to do so.  Consequently, federal courts called upon to apply Georgia law must be on guard against developing their own overly particularized test for Georgia.  To the extent that the majority sees separate spaces to be checked for rejection of optional coverages as essential, I fear they have actually developed a standard that is more particularized than Georgia's highest court has stated is proper.


28
St. Paul Fire & Marine Ins. Co. v. Nixon, 252 Ga. 469, 314 S.E.2d 215 (1984), and the other cases cited by the majority exemplify substantial compliance;  they do not define the limits of substantial compliance. As noted in Nixon and later cases, the "substantial compliance" test was first stated in a special concurrence by Chief Justice Hill in Nalley v. Select Ins. Co., 251 Ga. 722, 723, 313 S.E.2d 465, 465-66 (1983).   See Tolison v. Georgia Farm Bureau Mut. Ins. Co., 253 Ga. 97, 99, 317 S.E.2d 185, 187 (1984);  Nixon at 470, 314 S.E.2d at 217.  In Nalley, the application form that Chief Justice Hill concluded materially complied with statutory requirements had no separate spaces to be checked for rejection of optional coverages.


29
Our court has previously said that an application form is in substantial compliance with the demands of O.C.G.A. sec. 33-34-5(b) "if it reasonably evidences the insured's awareness of and rejection of his right to optional no-fault coverages."   See State Auto Mutual Ins. Co. v. Horne, 794 F.2d 621, 623 (11th Cir.1986).  The meaning of our words seems materially similar to that of O.C.G.A. sec. 33-34-5(c), which provides that all named insureds in policies existing on March 1, 1975, "be given an opportunity to accept or reject, in writing, the optional coverages required to be offered under this Code section."2   In discussing that language of subsection (c), the Supreme Court of Georgia stated unequivocally, "The fact that we have stated that a block to be checked for each option is adequate does not mean that such blocks are required."   United Servs.  Auto. Ass'n v. Ansley, 254 Ga. 647, 649, 333 S.E.2d 579, 581 (1985) (form revealed knowing waiver of PIP benefits).    Ansley shows that Georgia's highest court recognizes that an insured can, in fact, knowingly reject the right to optional no-fault coverages even if there are no separate spaces to accept or reject each optional coverage.3   Consequently, the absence of separate blocks or spaces on forms seems less important to Georgia's supreme court than the majority in this case believes.


30
In its original size, the blank form in this case (Appendix I) is not hard to read due to print size or to layout.  I agree that it is not as straightforward as the application in Nixon.  See Douglas v. Jefferson-Pilot Fire & Casualty Co., 175 Ga.App. 457, 459, 333 S.E.2d 634, 638 (1985).  Still, Nixon's form is no procrustean bed for substantial compliance.  Furthermore, I view the present form as very much better than the application form in Tolison v. Georgia Farm Bureau Mut. Ins. Co., 253 Ga. 97, 317 S.E.2d 185.  In Tolison the form's layout was far more jumbled, and the box concerned with PIP coverage was much less prominent than in the case here.   See Associated Indem. Corp. v. Sermons, 175 Ga.App. 513, 517, 333 S.E.2d 902, 909 (1985).  Of course, the form in Tolison was found not to be in substantial compliance;  it seems significant, however, that two justices found even the form in Tolison to be in substantial compliance with O.C.G.A. sec. 33-34-5(b).   See Tolison, 253 Ga. at 102, 317 S.E.2d at 189 (Marshall and Weltner, JJ., dissenting).


31
If read with reasonable care, an insured confronted with the pertinent form in this case would appreciate that she could have more coverage if she chose to do so.  Likewise, a reasonable insured signing the form as it was marked here would know, or should know, that she was rejecting greater coverages.  Thus, the form reasonably evidences the insured's awareness of and rejection in writing of her right to optional no-fault coverage;  and the form is in substantial compliance.   See generally State Auto Mut. Ins. Co. v. Horne, 794 F.2d 621 (11th Cir.1986).


32
Of course, our duty is to decide this case as we think the Supreme Court of Georgia would decide it.  To do so, we ought to apply their announced standard and not apply one of our own making.  I realize that what the Supreme Court of Georgia would really decide in this case is, given the status of Georgia's case law, unknowable.  Accordingly, I admit doubt as to the correctness of my conclusion;  but I would affirm the judgment of the district court.



1
 The Nixon form appears at 175 Ga.App. 460, 333 S.E.2d 638


2
 We respectfully disagree with the dissent's attempt to apply the standards of O.C.G.A. Sec. 33-34-5(c) to this case.  The dissent admits that O.C.G.A. Sec. 33-34-5(b) is applicable to all insurance policies issued after March 1, 1975, and that O.C.G.A. Sec. 33-34-5(c) applies only to policies already in existence on March 1, 1975.  It is undisputed that appellant's policy was executed in April 1979
Nothing in our decision in State Auto.  Mut. Ins. Co. v. Horne, 794 F.2d 621 (11th Cir.1986), indicates that the standard of review under these two statutory sections is the same.    Horne involved a question of substantial compliance with O.C.G.A. Sec. 33-34-5(b).  We found the form in Horne was in substantial compliance because:  the form was on a separate page;  spaces for rejection of each of the options was provided;  and there was a signature space at the bottom which was in addition to the signature space for the general portion of the application.   Id. at 623.  Although the Horne court did indicate that, in the circumstances of that case, the form reasonably evinced the insured's awareness of and rejection of his right to optional coverages, we cannot agree that this is an indication that O.C.G.A. Sec. 33-34-5(b) and O.C.G.A. Sec. 33-34-5(c) are to be governed by the same standards.  The fact that this general statement of the goal of O.C.G.A. Sec. 33-34-5(b) bears some resemblance to the language in O.C.G.A. Sec. 33-34-5(c), does not mean that the scrutiny required by the two subsections is identical.
In fact, Georgia law is contrary to the dissent's view of the statutory standards.  First, there are important differences in the language of O.C.G.A. Sec. 33-34-5(b) and (c).  O.C.G.A. Sec. 33-34-5(b) states unequivocally that "[e]ach application for a policy of motor vehicle liability insurance sold in this state must contain separate spaces for the insured to indicate his acceptance or rejection of each of the optional coverages."    O.C.G.A. Sec. 33-34-5(c) contains no similar language regarding separate spaces.  Section 33-34-5(c) requires only that "all named insureds in existing motor vehicle liability policies who have not previously responded to an offer to accept or reject the optional coverages required to be offered by this chapter shall be given an opportunity to accept or reject, in writing, the optional coverages required to be offered...."  Second, Georgia courts have rejected the argument that post-1975 policy applications that do not meet the requirements of Sec. 33-34-5(b) can be deemed legally adequate by virtue of compliance with Sec. 33-34-5(c).   See Enfinger v. Int'l Indem. Co., 253 Ga. 185, 317 S.E.2d 816 ("OCGA 33-34-5(c) applies to policies in existence on March 1, 1975.  OCGA Sec. 33-34-5(b) applies to applications for policies beginning March 1, 1975.  Each category of policies is governed by the respective requirements of the statute. "), cert. denied, 469 U.S. 1018, 105 S.Ct. 433, 83 L.Ed.2d 360 (1984);  Rosser v. Int'l Indem. Co., 173 Ga.App. 342, 326 S.E.2d 543 (1985) ("appellee's compliance with [pre-1982] OCGA Sec. 33-34-5(c) does not operate as a curative mechanism for the legally insufficient application form, since the policy at issue came into existence after March 1, 1975").  We therefore decline to depart from Georgia law indicating that the more relaxed standard of O.C.G.A. Sec. 33-34-5(c) does not apply to post-1975 policies.  As the dissent points out, it is our duty to apply the standards announced by the Georgia courts, and not apply one of our own making.
The dissent's reliance upon United Services Auto.  Ass'n v. Ansley, 254 Ga. 647, 333 S.E.2d 579 (1985), is misplaced because it rests upon the erroneous legal premise discussed above.  The fact that the pre-1975 application forms in Ansley were found to satisfy the less stringent standard of O.C.G.A. Sec. 33-34-5(c) is of little relevance to our decision in this case.  Moreover, the form in Ansley did contain a separate space for the insured to check to indicate rejection of optional coverages.  If the insured did not check this box and simply signed the application, the policy would be issued with $45,000 personal injury protection.  The application in Ansley was thus different from that involved in this case because, in Ansley, a waiver of optional coverages could be accomplished only by the affirmative act of checking the rejection box, and not simply by signing the application form.


3
 O.C.G.A. Sec. 33-34-5(b) was amended, effective November 1, 1982


4
 The preprinted rejection language stated:  "I have read and understand the offer to purchase additional coverages as set forth above, and hereby reject all additional coverages that have not been marked Accept."


5
 Given that the application form in this case lacked any separate spaces for the insured to indicate rejection of optional coverages, we do not address the question of whether a similar form might substantially comply with the statutory requirements if the form had a single separate space for the insured to indicate rejection of all optional coverages


6
 The Tolison form appears at 175 Ga.App. 520, 333 S.E.2d 909


7
 The Sermons form appears as Appendix I to the court's opinion


8
 The Douglas form appears as Appendix I to the court's opinion


1
 While it is plain that O.C.G.A. sec. 33-34-5(b) requires "separate spaces ... for each of the optional coverages," it is not clear that it requires a separate space to be checked for acceptance and a separate space to be checked for rejection of each coverage.  The application in this case provides a separate space for each optional coverage;  Georgia's state supreme court has never required more.  The form here, therefore, may not only substantially comply, but also literally comply with the statute in respect to the spaces that are required


2
 Subsection (b) of the statute applies to all insurance policies issued after the effective date of the statute, March 1, 1975.  Subsection (c) applies to policies already in existence on that date.   Wiard v. Phoenix Ins. Co., 251 Ga. 698, 310 S.E.2d 221 (1983);  cf. Nalley v. Select Ins. Co., 251 Ga. 722, 313 S.E.2d 465 (1983)


3
 In footnote 2 of the court's opinion, my colleagues attempt to rebut my dissent by citing Enfinger v. International Indem. Co., 253 Ga. 185, 317 S.E.2d 816, cert. denied, 469 U.S. 1018, 105 S.Ct. 433, 83 L.Ed.2d 360 (1984) and Rosser v. International Indem. Co., 173 Ga.App. 342, 326 S.E.2d 543 (1985).  Those cases only hold that after March 1, 1975, applications for insurance that comply not at all with O.C.G.A. sec. 33-34-35(b) cannot be salvaged by later sending to the insured a totally separate form upon which the insured can reject or accept optional insurance coverages, even though such a practice might be adequate under O.C.G.A. sec. 33-34-35(c).  These cases have nothing to do with deciding the question of whether a particular application form substantially complies with O.C.G.A. sec. 33-34-35(b)
In its opinion, the court questions the significance of United Servs.  Auto. Ass'n. v. Ansley, 254 Ga. 647, 333 S.E.2d 578 (1985).  If the test for "substantial compliance" under 33-34-34(b) is whether the application evidences awareness of and rejection of optional coverages, Ansley seems important for it shows that such awareness and rejection can be evidenced, in fact, without the necessity of separate spaces to be checked for rejection of optional coverages.


