First Financial Ins. Co. v. TilleryFirst Financial Ins. Co. v. Tillery
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- Before:
- Maddox
Tillery alleged that First Financial had breached its insurance contract with him by refusing to pay his claims after his mobile home was destroyed by fire, аnd he claimed that First Financial‘s refusal was in bad faith. The jury awarded Tillery $64,750 in compensatory damages on the breach of contract claim and $75,000 in punitive damages on the bad faith claim.
The central issue raised in this appeal is whether the trial court erred in denying First Financial‘s motions for summary judgment and for judgment notwithstanding the verdict. Because we find substantial evidence on which the trial court could rest its deсision to submit the issues to the jury, we affirm.
Facts
In July 1990, Tillery contacted Roger Downs, at Roger Downs Insurance Agency, about insuring his mobile home. Downs visited Tillery to complete an application for coverage. Aftеr the application was completed, Downs forwarded it to Strickland General Agency, Inc., First Financial‘s general agent, for processing and First Financial issued a policy on the mobile home. On Aрril 29, 1991, Tillery‘s mobile home was destroyed by fire and Tillery reported the loss to Downs. During its investigation of the loss, Strickland and First Financial found that Tillery‘s application for insurance contained omissions and misreprеsentations about prior losses and, in accordance with a statement on the application, First Financial voided the policy and refunded Tillery‘s premiums. Tillery sued Downs, the Downs Agency, the Strickland General Agency, and First Financial.
I. Jury Verdicts
First, we note that a strong presumption of correctness attaches to a jury verdict in Alabama, if the verdict passes the “sufficiency test” presented by motions for directed verdict and JNOV. Christiansen v. Hall, 567 So.2d 1338, 1341 (Ala. 1990); Alpine Bay Resorts, Inc. v. Wyatt, 539 So.2d 160 (Ala. 1988). This presumption of correctness is further strengthened by the trial court‘s denial of a motion for new trial. Christiansen, 567 So.2d at 1341. Denying these motions is within the sound discretion of the trial court. See, Jawadv. Granade, 497 So.2d 471, 477 (Ala. 1986).
This Court will not reverse a judgment based on a jury verdict on a sufficiency of the evidence basis unless the evidence, when viewed in a light most favorable to the appellee, shows that the verdict was “plainly and palpably wrong and unjust.” Christiansen, 567 So.2d at 1341. In its sound discretion, the trial court found genuine issues of material fact and allowed certain issues to go before the jury. The trial court denied First Financial‘s motions for directed verdict, JNOV, and new trial. Based on our review of the record, we cannot say that the verdict was plainly and palpably wrong or unjust.
II. Summary Judgment Motion
First Financial argues that the trial court erred in denying its motion for summary judgment. For a summary judgment to be proper, there must be no genuine issue of material fact and the movant must be entitled to a judgment as a matter of law.
The movant must make a prima facie showing that there are no genuine issues of materiаl fact and that he is entitled to a judgment as a matter of law. Fincher, 583 So.2d at 257. If this showing is made, the burden then shifts to the nonmovant to rebut the movant‘s prima facie showing by “substantial evidence” to create a genuine issue of mаterial fact. Section
First Financial cites Clark v. Alabama Farm Bureau MutualCasualty Insurance Co., 465 So.2d 1135, 1140 (Ala.Civ.App. 1984), for the proposition that misrepresentations by an insured need not be “intentional for an insurance company to void a policy, if the facts concealed were material and they increased the loss.” First Financial argues that еven if Downs made the misrepresentations regarding Tillery‘s former losses, and not Tillery himself, the misrepresentations were material to First Financial‘s acceptance of the risk and should permit First Financial to void Tillery‘s coverage. However, Tillery
In Hyde v. Humana Insurance Co., 598 So.2d 876, 880-81 (Ala. 1992), this Court stated that because it was impossible to answer the question from the language of an insurancе policy “transplant rider,” the question of “exactly what ‘written criteria and procedures’ would be used to deny or to provide coverage for a transplant” was one for a jury. In Hyde, “[i]n moving for a summary judgment, Humana had the burden of making a prima facie showing that there was no genuine issue of material fact and that it was entitled to a judgment as a matter of law” (citations omitted). First Financial likewise failed tо meet the burden, and the trial court correctly submitted these issues to the jury.
First Financial argues that had it known the truth regarding Tillery‘s prior losses, it would not have issued a policy of insurance to cover Tillery‘s mobile home. However, insurers are not allowed to avoid coverage in every case of a misstatement by an insured, and the insurer cannot be allowed automatically to avoid coverage simply because its own employee testified that the company would not have undertaken the risk had it known the truth as to the particular fact. State Farm GeneralInsurance Co. v. Oliver, 658 F. Supp. 1546 (N.D.Ala. 1987), aff‘d., 854 F.2d 416 (11th Cir. 1988).
Finally, Tillery argues that it was Downs who made misrepresentations on the application and that Downs was an agent of First Financial. In order for an insurer to avoid coverage under §
III. Motions for Directed Verdict and Judgment Notwithstanding the Verdict
A motion for a directed verdict is a procedural device by which one party tests the sufficiency of the other party‘s evidence. See,
For actions filed after June 11, 1987, the standard of review applicable to motions for directed verdict and JNOV is the “substantial evidence rule.” See, §
This calls for “a purely objective determination of whether the party having the burden of proof has produced [sufficient] evidence [of a factual dispute] requiring resolution by the jury.” Ex parte Oliver, 532 So.2d 627, 628 (Ala. 1988); and see, John R. Cowley Bros., Inc. v. Brown, 569 So.2d at 375. Additionally, in reviewing a motion for directed verdict or for JNOV, this Court must view all the evidence in a light most favorable to the nonmovant and must entertain such reasonable evidentiary inferences as the jury has been free to draw. Williams v.Allstate Ins. Co., 591 So.2d 38 (Ala. 1991).
We conclude, after thoroughly reviewing the record, that Tillery presented more than sufficient evidence to create factual disputes requiring resolution by the jury.
IV. Waiver
First Financial argues that Tillery‘s misrepresentations as to priоr losses entitles it to void the policy. The general rule is that “[a]n insurance company does not normally have a duty to inquire further to verify that an applicant has told it the truth.” Old Southern Life Insurance Co. v. Spann, 472 So.2d 987, 989 (Ala. 1985). Indeed, “[a]n insurer has the right to expect applicants for insurance policies to tell the truth.” Id. Alabama has written this policy into law, §
However, “the law of Alabama is clear that an insurance policy cannot be voided if the insurer either knew the true facts or had sufficient indication that would put a prudent person on notice so as to induce inquiry which, if done with reasonable thoroughness, would have revealed the truth.” Oliver, 658 F. Supp. at 1552. Tillery argues that even if misrepresentations or omissions were made so that coverage would be voided if the facts concealed were material and increased the risk, First Financial was put on notice so that further inquiry was required in regard to Tillery‘s application. Tillery cоntends that First Financial‘s failure to investigate amounted to a waiver. In Bankers Life CasualtyCo. v. Long, 345 So.2d 1321 (Ala. 1977), we examined whether an insurance application can create a duty on the part of the insurer to inquire further into an aрplicant‘s medical history, so that the failure to do so precludes the insurer from voiding the policy on the ground of misrepresentation. In Long, we answered the question in the affirmative.
There was evidence that First Financial had previously paid one of Tillery‘s losses and that this loss was one of those not disclosed on Tillery‘s application. This evidence, if believed by the trier of fact, was sufficient to show that First Financial should have been on notiсe that further inquiry was necessary. In short, the jury could have found that, with a minimum of inquiry, First Financial could have checked its records and found that Tillery‘s application misrepresented the actual facts. Seе, American Casualty Co. v. Wright, 554 So.2d 1015 (Ala. 1989).
For the foregoing reasons, the judgment of the circuit court is affirmed.
AFFIRMED.
HORNSBY, C.J., and SHORES, HOUSTON and KENNEDY, JJ. concur.