Brady FARR v. the GULF AGENCY Et Al.
74 So. 3d 393
| Ala. | 2011Background
- Farr owned a beachfront house in Orange Beach and renovated it at cost about $568,000, then sought a loan secured by a mortgage.
- An appraisal by Holyfield in March 2004 valued the house at $1,325,710 with improvements at $313,000; Farr believed this undervalued and did not obtain a second appraisal.
- Farr requested homeowners insurance in March 2004, obtaining a Lexington/Lexington-backed policy through Orange Beach and Gulf Agency for wind coverage of $300,000 and contents coverage of $20,000; flood coverage was placed separately under NFIP with Assurant Solutions.
- Policy excluded primary flood insurance and contained an other-insurance clause directing proportional payment.
- In September 2004, Hurricane Ivan destroyed the house; Farr filed a claim, and insurance paid $50,000 for wind damage and $250,000 for flood damage, with no payment for contents by Lexington.
- Farr sued in 2007 for fraud, misrepresentation, negligence, conspiracy, breach of contract, and bad faith; summary judgments were granted for the insurers, and the case proceeded to appeal.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Farr’s tort claims are barred by the two-year statute of limitations | Farr contends tolling delayed accrual due to later negotiations | Insurance companies argue accrual occurred when Farr signed the March 29, 2004 application | Yes; tort claims barred; accrual date March 29, 2004, and suit in 2007 was timely barred |
| Whether the circuit court properly struck Sanspree’s affidavit as an amendment to the complaint | Affidavit supported increased coverage allegations | Affidavit was an improper amendment | Yes; affidavit struck; no basis to support increased limits claim |
| Whether Lexington breached by not increasing policy limits and by paying only $50,000 for wind damage | Policy limits allegedly increased by oral agreement | No evidence of increased limits; policy fixed by appraisal | Affirmed for wind-damage; reversed regarding contents coverage under the policy |
| Whether Lexington’s partial payment, and the handling of contents coverage, supports a bad-faith claim | Bad-faith denial of contents coverage | No evidence of bad faith regarding contents payment | Bad-faith claim affirmed except as to contents payment, which was reversed due to breach of contents coverage |
Key Cases Cited
- Bussey v. John Deere Co., 531 So.2d 860 (Ala.1988) (summary-judgment burden shifting standard applies in Alabama)
- Ex parte General Motors Corp., 769 So.2d 903 (Ala.1999) (lays out summary-judgment burden shift and need for movant to show basis)
- University of South Alabama v. Progressive Insurance Co., 904 So.2d 1242 (Ala.2004) (Rule 28(a)(10) citation requirements; failure to cite authority may lead to ignoring argument)
- Totten v. Lighting & Supply, Inc., 507 So.2d 502 (Ala.1987) (leave to amend and delay considerations in Rule 15(a) analysis)
- Steele v. Rosenfeld, LLC, 936 So.2d 488 (Ala.2005) (cites limits on raising new arguments in reply brief)
- Liberty Nat'l Life Ins. Co. v. Ingram, 887 So.2d 222 (Ala.2004) (accrual of statute-of-limitations when insured receives policy and is put on notice)