                             FOURTH DIVISION
                              DILLARD, P. J.,
                          RICKMAN and BROWN, JJ.

                   NOTICE: Motions for reconsideration must be
                   physically received in our clerk’s office within ten
                   days of the date of decision to be deemed timely filed.
                              https://www.gaappeals.us/rules

                   DEADLINES ARE NO LONGER TOLLED IN THIS
                   COURT. ALL FILINGS MUST BE SUBMITTED WITHIN
                   THE TIMES SET BY OUR COURT RULES.


                                                                   August 14, 2020



In the Court of Appeals of Georgia
 A20A1513. PENN-AMERICA INSURANCE CO. v. MORGAN
     FLEET SERVICES INC.

      DILLARD, Presiding Judge.

      Penn-America Insurance Co. appeals from the trial court’s denial of its motion

for summary judgment and grant of Morgan Fleet Services Inc.’s motion for summary

judgment. Penn-America argues on appeal that the trial court erred by (1) failing to

declare an insurance policy it issued to MFS void due to an admitted

misrepresentation, and (2) concluding that it was estopped from seeking to void the

policy or waived the right to do so. For the reasons set forth infra, we affirm.

      Viewed de novo in the light most favorable to Penn-America (i.e., the non-

moving party),1 the record shows that on August 24, 2017, Armer Early—a bus driver

      1
       See, e.g., Fayette Cnty. Bd. of Tax Assess. v. Walmart Stores, Inc., 354 Ga.
App. 584, 584 (841 SE2d 104) (2020) (“In reviewing the grant or denial of a motion
for the Gwinnett County Board of Education—filed suit against MFS after she was

severely injured while going through the emergency exit of a bus that burst into

flames. Specifically, Early alleged that MFS was “a party to a contractual agreement

to service, maintain, and inspect buses” for the school system and, inter alia, failed

to adequately perform its duties, resulting in her injuries.

      In 2014, MFS applied for insurance coverage with Penn-America. The

application asked for a description of “all business operations conducted by [the]

applicant,” and MFS responded that it “[i]nstalls seat covers in buses[.]” The form

also contained the following certification:

      I hereby certify the information contained in this application is true and
      I agree that a misrepresentation of any facts by me will constitute reason
      for the Company to void or cancel any policy issued on the basis of this
      application and I will hold the Company harmless for the action taken.
      I also agree that if a policy is issued pursuant to this application, the
      application shall become part of the policy and any renewal or rewrite
      thereof.




for summary judgment, we conduct a de novo review of the law and the evidence, and
we view the evidence in the light most favorable to the nonmovant. On de novo
review, we owe no deference to the trial court’s conclusions of law. Instead, we are
free to apply anew the legal principles to the facts.”).

                                           2
         Thereafter, Penn-America issued a policy to MFS. The policy declarations

described MFS’s business as a “warehouse,” and provided “commercial general

liability coverage” for an annual premium of $364 and “commercial property

coverage” for an annual premium of $650. For the general liability coverage, the

policy provided that Penn-America had “no duty to defend the insured against any

‘suit’ seeking damages for ‘bodily injury’ or ‘property damage’ to which this

insurance does not apply.” It further provided that, by accepting the policy, MFS was

agreeing that, inter alia, the statements in the policy declarations were “accurate and

complete,” “based upon representations you made to us,” and Penn-America “issued

this policy in reliance upon your representations.” The $364 annual premium for

general liability coverage was based on the understanding of MFS’s operations as

reflected in the application—i.e., owning a warehouse used to install seat covers in

buses.

         It is undisputed that MFS performed inspections of school buses for Gwinnett

County Public Schools between October 2003 and June 31, 2018,2 and inspected the




         2
        MFS further admitted that, during this same time period, it also entered into
contracts and performed bus inspections for other entities.

                                           3
bus at issue in Early’s action against MFS.3 But according to Penn-America, it would

not have issued the specific policy it provided to MFS if it had been informed that

MFS was performing services such as bus inspections, which could give rise to auto-

related liability.

       On October 6, 2017, after reviewing Early’s complaint against MFS, Penn-

America contacted its underwriter, noting that the risk for MFS had “always been

rated as a private warehouse” and was based on a business description of installing

seat covers on buses. Penn-America ultimately asked the underwriter if there were

any other policies for MFS or if the exposure of bus inspections was noted anywhere

in the file. On October 9, 2017, the underwriter responded that they had no “notes or

indication that [MFS’s] operations include inspection” of buses and the “original

intention of this policy was simply based on storage of seat covers.” The underwriter

also had no other policies for MFS “for any kind of inspection operations.” Penn-

America responded the same day that it would forward this information to its claims

department.



       3
        These inspections were thorough and included, inter alia, the buses’
emergency equipment, transmission, shifter, engine controls, lights, brakes,
suspension, tires, and other components.

                                         4
      Subsequently, on October 10, 2017, Penn-America wrote to outside counsel,

while carbon copying two MFS employees, advising that the policy it issued to MFS

was “only to cover a warehouse storing bus seat covers,” asking if outside counsel

had inquired of MFS “who their other carrier is for [the fleet services] aspect of the

business,” and informing outside counsel that “coverage counsel [was] looking at

[the] matter.” Then, on October 16, 2017, Penn-America notified outside counsel that

it would be “providing a defense of this matter under a Reservation of Rights,” and

that a “letter will be forwarded shortly.” The email further indicated that Penn-

America wished for outside counsel to defend MFS in Early’s lawsuit. Again, two

MFS employees were carbon copied on this email.

      The letter referenced in Penn-America’s October 16, 2017 email was eventually

sent to MFS in March 2018, and provided, inter alia, that,

      [f]or the reasons more fully addressed below, and as previously
      discussed with you, Penn-America will conduct an investigation and
      provide a defense to [MFS] in the [Early] Litigation, subject to a full
      reservation of rights, and subject to Penn-America’s right to withdraw
      from the defense of the case if subsequent information indicates that
      such action is warranted.




                                          5
Penn-America also expressly reserved “the right to assert additional defenses to any

claims for coverage in the future as may be necessary or appropriate.” The letter went

on to explain that MFS’s policy with Penn-America covered the time period outlined

in Early’s complaint, but MFS’s application for the policy identified the business as

one that installed seat covers, which “was the risk that Penn-American [sic] intended

to insure through the policy.” Ultimately, the letter informed MFS that “[i]f the

allegations of [Early’s] complaint are true, and [MFS] was not only installing seat

covers on buses, but was also inspecting and maintaining the buses for the Board [of

Education], the application contains a material misrepresentation of the nature of

[MFS’s] business.” As a result, based on that misrepresentation, Penn-America would

have “the right to rescind, void, or cancel the Policy, and Penn-America expressly

reserves its right to do so.”

      Thereafter, Penn-America filed suit on October 17, 2018, seeking a declaration

that the policy it issued to MFS was void and it had no duty to defend MFS in Early’s

suit. Penn-America filed for summary judgment in its favor on the basis of MFS’s

admitted discrepancies between the services it actually performed and the description

of its services on the application for coverage. MFS then filed a cross-motion for

summary judgment, contending that Penn-America was estopped from asserting the

                                          6
defense of noncoverage because it assumed and conducted an initial defense of

Early’s suit without effectively notifying MFS that it was doing so under a reservation

of rights. The trial court ultimately granted summary judgment in MFS’s favor and

denied Penn-America’s request for summary judgment. This appeal by Penn-America

follows.

      Setting aside the question of whether MFS’s insurance policy was void based

on its admitted misrepresentations, Penn-America waived its right to void the policy

when it undertook the defense of MFS without first reserving its rights. Indeed, if an

insurer fails to properly reserve its rights, the insurer may be estopped from later

denying coverage.4 It is well established that

      risks not covered by the terms of an insurance policy, or risks excluded
      therefrom, while normally not subject to the doctrine of waiver and
      estoppel, may be subject to the doctrine [when] the insurer, without
      reserving its rights, assumes the defense of an action or continues such
      defense with knowledge, actual or constructive, of noncoverage.5

      4
        Am. Safety Idem. Co. v. Sto Corp., 342 Ga. App. 263, 267 (2) (802 SE2d 448)
(2017); see Gibson v. Preferred Risk Mut. Ins. Co., 216 Ga. App. 871, 874 (456 SE2d
248) (1995) (“It is true that an insurer may be estopped to deny coverage once it has
undertaken to defend a claim and performs that undertaking negligently.”).
      5
       Am. Safety Indem., 342 Ga. App. at 267 (2) (punctuation omitted); accord
Prescott’s Altama Datsun, Inc. v. Monarch Ins. Co. of Ohio, 253 Ga. 317, 318 (319
SE2d 445) (1984).

                                          7
But the insurer can avoid estoppel by “giving timely notice of its reservation of rights

which fairly informs the insured of the insurer’s position.”6

      To determine whether an insurer’s notice to the insured is sufficient, the

reservation of rights must, at a minimum, “fairly inform the insured that,

notwithstanding the insurer’s defense of the action, it disclaims liability and does not

waive the defenses available to it against the insured.”7 Additionally, the reservation

of rights should also inform the insured of “the specific basis for the insurer’s

reservations about coverage.”8 And importantly, to be effective, a reservation of rights

must be “unambiguous; if it is ambiguous, the purported reservation of rights must




      6
        Am. Safety Indem., 342 Ga. App. at 267 (2) (punctuation omitted); accord
State Farm Fire & Cas. Co. v. Walnut Ave. Partners, LLC, 296 Ga. App. 648, 653 (4)
(675 SE2d 534) (2009); O’Brien Family Trust v. Glen Falls Ins. Co., 218 Ga. App.
379, 380 (1) (461 SE2d 311) (1995).
      7
       World Harvest Church, Inc. v. GuideOne Mut. Ins. Co., 287 Ga. 149, 152 (1)
(695 SE2d 6) (2010) (citation & punctuation omitted); accord S. Trust Ins. Co. v.
Mtn. Express Oil Co., 351 Ga. App. 117, 122 (828 SE2d 455) (2019); Am. Safety
Indem., 342 Ga. App. at 267 (2).
      8
       World Harvest Church, 287 Ga. at 152 (1) (citation & punctuation omitted);
accord ACCC Ins. Co. of Ga. v. Walker, 351 Ga. App. 722, 723 (2) (832 SE2d 878)
(2019) (physical precedent only); Am. Safety Indem., 342 Ga. App. at 267 (2).

                                           8
be construed strictly against the insurer and [forgivingly] in favor of the insured.”9

Finally, the notice cannot be only a “statement of future intent,”10 and, once again,

must be timely.11

      Here, in the October 10, 2017 email to outside counsel, Penn-America

indicated that it was aware of and investigating the potential for non-coverage of the




      9
       World Harvest Church, 287 Ga. at 152-3 (1) (punctuation omitted); accord
ACCC Ins. Co. of Ga., 351 Ga. App. at 723 (2) (physical precedent only); Am. Safety
Indem., 342 Ga. App. at 267 (2).
      10
         World Harvest Church, 287 Ga. at 152 (1) (punctuation omitted); accord
accord ACCC Ins. Co. of Ga., 351 Ga. App. at 723 (2) (physical precedent only); see
Proudfoot v. Cotton States Mut. Ins. Co., 230 Ga. 169, 171 (3) (196 SE2d 131) (1973)
(“[A] statement of future intent . . . could not be held to be a present ‘reservation of
rights’ notice to the insured.”).
      11
         See Boatright v. Old Dominion Ins. Co., 304 Ga. App. 119, 123 (2) (a) (695
SE2d 408) (2010) (“The insurer can avoid estoppel by giving timely notice of its
reservation of rights which fairly informs the insured of the insurer’s position.”
(emphasis supplied)); State Farm Fire & Cas. Co., 296 Ga. App. at 648, 653 (4)
(same); O’Brien Family Trust, 218 Ga. App. at 380 (1) (same); see also State Farm
Mut. Auto. Ins. Co. v. Anderson, 104 Ga. App. 815, 818 (123 SE2d 191) (1961) (“The
general rule of estoppel is limited by the principle that a liability insurer may avoid
the operation of the rule by giving the insured timely notice that, notwithstanding its
defense of the action against him[,] it has not waived the defenses available to it
against the insured. Such notice, to be effective, must fairly inform the insured of the
insurer’s position, and must be timely, although delay in giving notice will be
excused where it is traceable to the insurer’s lack of actual or constructive knowledge
of the available defense.” (punctuation omitted)).

                                           9
claim at issue in Early’s action against MFS.12 So, as of that date, Penn-America knew

that the claims by Early against MFS did not comport with the representations MFS

made about the nature of its business on the policy application. Nevertheless, on

October 16, 2017, Penn-America sent notification that it would “provid[e] a defense

of this matter under a Reservation of Rights” and a “letter will be forwarded shortly.”

The email further indicated that Penn-America wished for outside counsel to defend

MFS in Early’s lawsuit.13 But this October email was only a statement of future intent

      12
           We reject Penn-America’s assertion that it lacked even constructive
knowledge of non-coverage when it was put on notice by the allegations in Early’s
complaint that MFS inspected school buses. See Hepner v. S. R.R. Co., 182 Ga. App.
346, 347 (356 SE2d 30) (1987) (“Constructive notice is information or knowledge of
a fact imputed by law because the fact could have been discovered by proper
diligence and the situation was such as to cast upon a person the duty to inquire into
it.”); see also Golden v. Nat’l Life & Acc. Ins. Co., 189 Ga. 79, 80 (2) (5 SE2d 198)
(1939) (defining “constructive knowledge” as “knowledge which might have been
acquired by diligence but was not acquired”).
      13
          We do not address Penn-America’s argument that MFS failed to present
evidence of the defense Penn-America provided in the underlying action because
Penn-America failed to make that specific argument before the trial court. See,
e.g., Flesch v. Flesch, 301 Ga. 779, 781 (1) (b) (804 SE2d 67) (2017) (explaining that
the court will not consider a legal argument advanced for the first time on appeal);
Harper v. Harper, 267 Ga. App. 553, 557 (2) (600 SE2d 659) (2004) (noting that an
appellate court will not consider an argument raised for the first time on appeal);
Chiaka v. Rawles, 240 Ga. App. 792, 796 (4) (525 SE2d 162) (1999) (“This court will
not consider arguments neither raised nor ruled on in the trial court and that are
asserted for the first time on appeal.”). In any event, the evidence shows that Penn-
America actually retained counsel to defend MFS. See Scruggs v. Int’l Indem. Co.,

                                          10
to “forward shortly” an actual reservation of rights.14 And the actual unambiguous

reservation of rights was not forwarded “shortly,” but rather was sent nearly six

months later, in March 2018, after Penn-America had already engaged the services

of outside counsel to represent MFS in Early’s suit. As a result, Penn-America waived

the defense of noncoverage of Early’s claims against MFS by its failure to provide

a timely reservation of rights.15


233 Ga. App. 772, 773 (1) (505 SE2d 267) (1998) (holding that insurer “undertook
their defense” when it notified the insured “that it had retained another attorney to
represent [the insured]”). Cf. Adams v. Atlanta Cas. Co., 235 Ga. App. 288, 290 (3)
(509 SE2d 66) (1998) (explaining that insurer had not assumed or conducted the
initial defense when it did not “retain counsel, file pleadings, or conduct a defense”).
      14
          See World Harvest Church, 287 Ga. at 152 (1) (“[N]otice cannot be only a
statement of future intent[.]” (punctuation omitted)); Proudfoot, 230 Ga. at 171 (3)
(“[A] statement of future intent . . . could not be held to be a present ‘reservation of
rights’ notice to the insured.”); see also ACCC Ins. Co. of Ga., 351 Ga. App. at 723
(2) (“[T]he notice cannot be only a statement of future intent but, at a minimum, must
fairly inform the insured that, notwithstanding the insurer’s defense of the action, it
disclaims liability and does not waive the defenses available to it against the insured.”
(punctuation omitted)) (physical precedent only).
      15
          See Am. Safety Idem., 342 Ga. App. at 267 (2) (“An insurer must act
reasonably promptly in reserving its rights.”); Builders Ins. v. Tenenbaum, 327 Ga.
App. 204, 209-10 (1) (757 SE2d 669) (2014) (“[D]efenses to coverage can be waived
where the insurer, without reserving its rights, assumes the defense of an action or
continues such defense with knowledge, actual or constructive, of noncoverage.”);
see also Hoover v. Maxum Indem. Co., 291 Ga. 402, 405-06 (2-3) (730 SE2d) (2012)
(“The disclaimer language in [insurer’s] denial letter purporting to reserve its rights
to assert certain defenses later was not a reservation of rights in the sense that term

                                           11
      For all these reasons, we affirm the trial court’s grant of summary judgment in

favor of MFS and its denial of Penn-America’s motion for summary judgment.

      Judgment affirmed. Rickman and Brown, JJ., concur.




is used in the insurance industry. . . . The boilerplate language in the denial letter
purporting to reserve the right to assert a myriad of other defenses at a later date did
not clearly [provide] notice of [the insurer’s] position.”). For these same reasons, we
likewise reject Penn-America’s assertion that MFS “accepted” the “offered defense”
under the March 2018 reservation of rights. Cf. Jacore Sys., Inc. v. Central Mut. Ins.
Co., 194 Ga. App. 512, 513-14 (1) (a) (390 SE2d 876) (1990) (noting, in case in
which insurer sent an immediate and effective reservation of rights, that “[b]y not
objecting to the reservation of rights letter and by permitting [the insurer] to go
forward with its defense of the suit, [the insured] [was] deemed to have consented to
the letter’s terms”); Anderson, 104 Ga. App. at 819 (“In none of the cases cited by the
plaintiff and none examined by this court is it held that when an insurer defends an
action after giving the insured timely and sufficient notice that it is not waiving its
right to deny liability and the insured does not reject the insurer’s defense under this
condition, the insurer is nevertheless estopped to deny liability for a judgment against
the insured.” (emphasis supplied)).

                                          12
