Justia Alabama Supreme Court Opinion Summaries

The Federal District Court for the Northern District of Alabama certified a question to the State Supreme Court. The Court was asked whether the failure of an insured to give notice of a proposed settlement to an insurance company causes the insured to forfeit underinsured motorist coverage (UIM), regardless of the insured’s actual knowledge of that coverage, and regardless of prejudice to the insurance company if the insured has a copy of the policy that contains the coverage. In 2007, Delbert and Lou Ann Downey were stopped at an intersection on their motorcycle when a vehicle driven by Wyndell Thompson failed to stop and hit them. At the time of the accident, multiple insurance policies were in force. The Downeys had underinsured motorist coverage. The Downeys, in consideration of $10,000 and while represented by counsel (but without having notified Travelers Property Casualty Insurance Company that they were doing so), executed a general release to discharge Mr. Thompson and his insurance company from all liability arising out of the accident. Subsequently, and with different counsel, the Downeys notified Travelers of the accident for the first time and that they were making a claim under their underinsured motorist policy. Travelers denied the claim and the Downeys sued. The Supreme Court found that the Downeys were at all relevant times in possession of the policy, and it clearly provided UIM coverage. However, the Downeys did not meet the threshold of showing any condition under which their lack of notice could be excused. "In other words, the Downeys have ‘forfeit[ed]’ UIM coverage." View "Downey v. Travelers Property Casualty Insurance Co." on Justia Law

Petitioner Brady Farr appealed a circuit court judgment in favor of Respondents The Gulf Agency, Orange Beach Insurance Agency and Lexington Insurance Company. Mr. Farr finished renovating his house in 2003. In 2004, he decided to sell his property to a developer who wished to turn the property into condominiums. In anticipation of the sale, Mr. Farr obtained a $1 million loan, secured by a mortgage. As part of the loan process, the mortgage company ordered an appraisal of the property. The property was appraised at $1.3 million and the improvements were valued at $313,000. In 2004, Mr. Farr contacted Orange Beach to insure the property against "total loss." Lexington, acting as Orange Beach's agent, submitted an insurance application for policy limits based on the appraisal to The Gulf Agency, who ultimately served as underwriter for the policy. In the fall of 2004, Mr. Farr was concerned that the policy limits were not sufficient to adequately cover a total loss of the property. In September, Mr. Farr's concerns were realized when Hurricane Ivan destroyed the property. He filed a claim with Orange Beach. In November, Mr. Farr sold his property for $1.18 million. The sales agreement was amended to reflect the total loss he suffered as a result of the hurricane. Lexington's adjuster visited the property to determine the cause of Mr. Farr's loss. The adjuster found the hurricane was the "proximate cause". Lexington subsequently paid Mr. Farr $50,000 for the damage. Alleging that the policy did not provide adequate coverage and that Lexington failed to pay the proper benefits under the policy, Mr. Farr sued the insurance companies for breach of contract, fraud, misrepresentation, negligence, conspiracy, and bad-faith failure to pay an insurance claim. The trial court granted the companies' motion for summary judgment, finding that some of Mr. Farr's claims were barred by a two-year statute of limitations. Upon review of the trial court record, the Supreme Court affirmed the lower court's judgment pertaining to Mr. Farr's tort claims. The Court found that those claims were indeed barred by a statute of limitations. The Court however found that the breach of contract and bad faith claims should not have been dismissed through summary judgment. The Court affirmed part and reversed part of the lower court's order and remanded the case for further proceedings. View "Farr v. Gulf Agency" on Justia Law

Nationwide Mutual Insurance Company (Nationwide) appealed a trial court’s order that denied its "renewed motion for a judgment as a matter of law" in its case against J-Mar Machine & Pump. J-Mar is a repair shop that held a commercial liability and property insurance policy with Nationwide. In 2004, in anticipation of its policy renewal, Nationwide sent an inspector to the shop. In his report, the inspector noted several safety hazards and a messy shop. The insurance policy was renewed in March but several months later Nationwide cancelled the policy. Nationwide cited the inspector’s report as reason for the cancellation. J-Mar management was not aware of the cancellation until late that year when shop property was stolen. When it tried to file a claim, Nationwide declined J-Mar’s claim. A jury trial was held on the disputed policy cancellation and coverage. At the close of J-Mar’s case, Nationwide moved the court for a "judgment as a matter of law" which was denied. Nationwide unsuccessfully motioned again at the close of all evidence. Upon review of the trial court record, the Supreme Court found that the evidence J-Mar presented at trial was insufficient to support the jury verdict in its favor. Accordingly, the Court reversed the trial court’s judgment denying Nationwide’s motion and rendered a judgment in Nationwide’s favor. View "Nationwide Mutual Ins. Co. v. J-Mar Machine & Pump, Inc." on Justia Law