Spriggs v. Compass BankSpriggs v. Compass Bank
- Reporters:
- ,
- Before:
- Yates, Thompson, Crawley
Willetha Renee Spriggs sued Compass Bank and Alfa Insurance Company, alleging negligence, a breach of сontract, and fraud. Compass Bank and Alfa moved for summary judgments. The trial court granted the motions and entered judgments in favor of Compass Bank and Alfa. Spriggs appealed. The case was transferred to this court, pursuant to
A motion for summary judgment is to be granted if there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Hinkle v. Burgreen Contracting Co., 678 So.2d 797 (Ala.Civ.App.1996). If the moving party makes a prima facie showing that no genuine issue of material fact exists and that it is entitled to a judgment as a matter of law, the burden shifts to the nonmovant to present substantial evidence creating a genuine issue of material fact. “[S]ubstantial evidence is evidence of such weight and quality that fair-minded persons in the exеrcise of impartial judgment can reasonably infer the existence of the fact sought to be proved.” West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).
Viewed in a light most favorable to Spriggs, see Hinkle, supra, the evidence in the record suggests the following facts: In February 1994, Spriggs bought a home, borrowing funds from Compass Bank. Before the lоan closing, Compass Bank instructed Spriggs that the mortgage would require her to obtain insurance on the
Spriggs moved into her new home on March 3, 1994; the house was destroyed by fire on April 30, 1994. On May 2, 1994, Spriggs went to the Alfa office to make a claim. Sрriggs was informed that her application had been rejected and that there was no policy on her home. Alfa claimed that on February 24, 1994, it had written a letter to Spriggs and Compass Bank canceling the policy effectivе March 7, 1994. Both Spriggs and Compass Bank claimed never to have received the February 24, 1994 letter providing notice of the cancellation.
I. Alfa‘s Summary Judgment
Spriggs argues that the court erred in entering the summary judgment in favor of Alfa because, she sаys, a genuine issue of material fact existed as to whether she received the notice of cancellation from Alfa.
Alfa contends that it complied with the statute and that it met its burden of proof as to the proper mailing of the notice of cancellation.
Kim Lolley, a senior mail clerk at Alfa, testified by dеposition and in affidavit about Alfa‘s standard operating procedure in handling letters of rejection and cancellation. She stated that all such letters are prepared with an original and one copy, and that they are placed in a designated basket. The typed letters are then removed from the basket by either the supervisor of mail operations or a senior mail clerk and the original and the copy are examined to verify thаt both have the same address and date. The original is then placed in an envelope addressed to the address found on the applicant‘s declaration page. The letter is then placed through a postal maсhine, which seals the envelope and places postage on it, and the letter is then placed in a tray supplied by the United States Postal Service. The letter is then placed on the loading dock and is picked up by the United States Postal Service. The copy of the letter is initialed to verify that the proper procedure was followed, and the copy is placed in a “drawer type assembly.” When the drawer becomes full, the coрies are taken to the basement and filed by date; the copies are retained for seven years. The copy of the cancellation letter to Spriggs was stamped with Lolley‘s name and was date-stamped “February 24, 1994“—it wаs offered as an exhibit to Lolley‘s affidavit.
John Young, the other Alfa senior mail clerk, mailed the cancellation letter to Compass Bank. He testified to the procedure he used in mailing the letter. The procedure was the same procedure used by Lolley.
Spriggs denied receiving the cancellation letter. Her assertion, standing alone, would not be sufficient to defeat Alfa‘s motion for a summary judgment. Hilliar, supra. However, Compass Bank says that it too did not receive the notice of cancellation. This additional evidence presents a question of fact as to whether the notice of cancellation was properly mailed.
II. Compass Bank‘s Summary Judgment
Spriggs asserts that the court erred in entering a summary judgment in favor of Compass Bank, because, she says, a question of fact remained as to whether Compass Bank had breached its internal policy, which called for it to notify Spriggs of the cancellation of her insurance policy.
The mortgage agreement between Spriggs and Compass Bank provided that Spriggs would maintain insurance coverage on the mortgaged property. The mortgage agreement contained no requirement that the Bank notify Spriggs that the insurance she was required to obtain had been canceled. Compass Bank, however, maintained an internal policy of sending demand letters to its borrowers once it had received notice that the borrower‘s insurance had been canceled. The demand letter provides:
“The insurance policy on the above mentioned real estate loan has been canceled, and we have not received a new policy.
“Your contract with Compass Bank requires you to maintain insurance on the property securing the loan, that Compass Bank be namеd as lienholder on the policy, and that you provide the bank with evidence of your insurance coverage.”
Spriggs relies on the “undertake a duty” doctrine to support her argument. She insists that Compass Bank voluntarily “undertook a duty” to inform its insureds of insurance cancellations, and that it breached by not notifying her of the cancellation.
We conclude that Compass Bank was entitled to a judgment as a matter of law on numerous grounds. The most notable one, however, is that the internal procedure maintained by Compass Bank was promulgated for its benefit and not for Spriggs‘s benefit.
Alabama recognizes the “undertake a duty” doctrine. That doctrine provides that one who volunteers to аct, though under no duty to do so, is thereafter charged with the duty of acting with due care and is liable for negligence in connection therewith. Dailey v. City of Birmingham, 378 So.2d 728 (Ala.1979). However, no duty arises if the voluntary act of the lender inures to the benefit of the lender and not to the benefit of the borrower. Pugh v. Butler Telephone Co., 512 So.2d 1317 (Ala.1987); Rudolph v. First Southern Federal Sav. & Loan Ass‘n, 414 So.2d 64 (Ala.1982); Ranger Ins. Co. v. Hartford Steam Boiler Inspection & Ins. Co., 410 So.2d 40 (Ala.1982).
Compass Bank sends demand letters to its borrowers demanding that they comply with their contractual duty to maintain insurance to protect the Bank‘s interest in the property; therefore, it is clear thаt Compass Bank has not, by its policy of sending demand letters, assumed a duty that runs to Spriggs. The internal policy is merely a policy adopted to protect Compass Bank‘s contractual rights.
Spriggs also asserts that the court erred in entering the summary judgment in favor of Compass Bank without allowing her time for additional discovery pursuant to
The summary judgment for Compass Bank is affirmed.
AFFIRMED IN PART; REVERSED IN PART; AND REMANDED FOR FURTHER PROCEEDINGS.
MONROE, J., concurs.
ROBERTSON, P.J., and CRAWLEY, J., concur in the result.
THOMPSON, J., concurs in part and dissents in part.
I disagree with the statement by Judge Yates (as well as the statement by Judge Thompson, dissenting) that Spriggs‘s claim that she failed to receive the cancellation notice, standing alone, would have been insufficient to defeat Alfa‘s motion for summary judgment. Under Hilliar v. State Farm Mut. Auto. Ins. Co., 451 So.2d 287 (Ala.1984), that evidence, by itself, would have been sufficient to create a genuine issue of material fact.
THOMPSON, Judge, concurring in part and dissenting in part.
Alfa submitted clear and convincing evidence of compliance with the requirements set forth in
The record contains additional evidence demonstrating that Ms. Spriggs, before the date of the loss, had been made aware that her homeowner‘s insurance coverage had been canceled. Alfa had contacted the closing attorney‘s office in early March, 1994 and notified the closing attorney‘s secretary that the closing application had been rejected. Alfa returned the original check at that time and the closing attorney immediately forwarded a replacement check to Compass Bank. Carolyn Clay, the closing attorney‘s secretary, contacted Ms. Spriggs by telephone on April 1, 1997, and told her that her application for insurance coverage had been rejected. Alfa never cashed Ms. Sprigg‘s check for the amount of the premium. The closing attorney forwarded a replacement check to the bank.
Before the closing, and in an effort to accommodate Ms. Spriggs, Alfa provided Spriggs with immediate homeowner‘s coverage to enable her to satisfy her loanclosing requirements. Because time did not permit for processing of Ms. Spriggs‘s application, the company deferred its completе evaluation of Ms. Spriggs‘s application; that evaluation was necessary for Alfa to determine whether she met Alfa‘s risk evaluation guidelines. Surely Alfa should be able to cancel this coverage in the same prompt and certain manner in which it was originally extended.
I conclude that Alfa established by clear and convincing evidence that the notice of cancellation was mailed to Ms. Spriggs at the address shown on the proof of insurance form. For the foregoing reasons, I dissent as to the reversal of the summary judgment in favor Alfa. As to the remainder of the main opinion, I concur.