Justia Alabama Supreme Court Opinion Summaries

Sentinel Insurance Company, Limited appealed a declaratory judgment entered in favor of Alabama Municipal Insurance Corporation ("AMIC") in this dispute between Sentinel and AMIC over which insurance company was responsible for providing primary insurance coverage in an underlying automobile-accident case. After reviewing the AMIC policy and the Sentinel policy, the Supreme Court concluded that the language in each was unambiguous as to which provided primary coverage: the AMIC policy provided primary coverage, and the Sentinel policy provided excess coverage. The Court held that the trial court erred in concluding that the Sentinel policy provided primary coverage. Therefore, the trial court's judgment was reversed, and the case was remanded for further proceedings. View "Sentinel Insurance Company, Ltd. v. Alabama Municipal Insurance Corp." on Justia Law

This case was, "[i]n short, ... an insurance bad faith failure to defend/indemnify/settle case arising out of several underlying lawsuits, which in turn arose out of the [respondents'] operation and financing of a dairy farm in between 2007 and 2010." Specifically, the respondents were involved in two earlier actions, the first as plaintiffs and the second as defendants. Both actions concerned the respondents' operation of a dairy farm and milking facility located in Dallas County. At all relevant times in the first action, both Laird Cole and Henry Cole were insured by Alfa Mutual Insurance Company. At all relevant times in the second action, Laird Cole was insured by Alfa. While these two actions were ongoing, Jerry Newby was the president and chief executive officer of Alfa. On July 25, 2013, Laird Cole and Foundation Farms sued Alfa in the circuit court, alleging "claims of fraud, breach of contract, bad faith, breach of the enhanced duty of good faith, negligence, and wantonness arising out of [Alfa's] handling [of the] underlying lawsuits." The respondents filed an amended complaint adding Henry Cole as an additional plaintiff and "clear[ing] up some of the allegations." On April 30, 2014, Alfa moved for summary judgment, alleging that there was no dispute as to any material fact and that Alfa was entitled to judgment as a matter of law. Respondents then served Alfa with a subpoena ordering Newby to appear at a video deposition. Newby and Alfa petitioned the Supreme Court for a writ of mandamus to direct the circuit court to vacate its November 19, 2014, order denying the petitioners' motion to quash the subpoena directed to Newby for deposition testimony that was requested by respondents. After review of the matter, the Supreme Court concluded that petitioners failed to demonstrate that they had a clear legal right to the relief sought and denied their petition. View "Ex parte Jerry Newby and Alfa Mutual Insurance Company." on Justia Law

In 2011, Wanchetta Reese, individually and as owner and beneficiary of the life-insurance policy issued on the life of her husband Lee Reese, filed a complaint in the Etowah Circuit Court against the defendants, Alfa Life Insurance Corporation, Josh Griffith and Judy Russell, two licensed Alfa insurance agents. Reese advised Defendants that she sought to obtain life insurance on her husband so that she would have funds available to bury him in the event of his death. Mr. Reese suffered from several chronic conditions, including kidney disease and diabetes. Reese contended that after being advised of Lee Reese's medical condition, Griffith stated to Reese that he needed to ask Russell for advice in completing the insurance application. In the presence of Reese, Griffith advised Russell Lee Reese's medical issues, and Russell advised Griffith, in the presence of Reese, to not put that information in the application. Lee Reese passed away unexpectedly on May 23, 2010. Mrs. Reese turned to defendants to make a claim for benefits, and Alfa denied it in a letter dated August 16, 2010. In her complaint, Mrs. Reese raised several claims including breach of contract, bad faith, fraud and the tort of outrage. Defendants moved to dismiss, and the trial court granted the motion with respect to the outrage claim, and denied as to Reese's other claims. The Supreme Court, after review, reversed the trial court's denial of defendants' motion as to the remaining claims: the undisputed evidence showed: (1) that Reese improperly relied on the agents' oral representations regarding the validity of the application without making any attempt to read the life-insurance policy application; (2) that Reese made no attempt to inquire into or to investigate any inconsistencies between the agents' oral representations and the language of the application; and (3) that no exception to the duty to read applied here. View "Alfa Life Insurance Corp. v. Reese" on Justia Law

Gladys Tellis, Sherry Bronson, Gwendolyn Moody, Nadine Ivy, and Uneeda Trammell (collectively, "the policyholders") initiated separate actions against American Bankers Insurance Company of Florida, asserting generally that American Bankers had sold them homeowner's insurance policies providing a level of coverage they could never receive, even in the event of a total loss involving the covered property. American Bankers moved the trial court hearing each action to compel arbitration pursuant to arbitration provisions it alleged were part of the subject policies; however, the trial courts denied those motions, and American Bankers appealed. The Supreme Court consolidated the five appeals for the purpose of writing one opinion, and reversed those orders denying the motions to compel arbitration. The Court based its decision on its holdings that the policyholders manifested their assent to the arbitration provision in their policies by continuing to renew the policies, that the sale of the policies affected interstate commerce, and that the arbitration provision in the policies was not unconscionable. View "American Bankers Ins. Co. of Florida v. Tellis" on Justia Law

Alfa Mutual General Insurance Company ("Alfa") petitioned for a writ of mandamus to direct the Mobile Circuit Court to grant its motion seeking to realign the parties to the underlying litigation so that Alfa may "opt out" of participation in the trial. In October 2012, respondent Mark Trotter was injured when a "road sweeper" he was operating was struck by a vehicle being operated by Daniel Elijah Davis, an uninsured motorist. In October 2014, Trotter sued Alfa seeking to recover uninsured/underinsured motorist ("UIM") benefits pursuant to a policy of insurance issued by Alfa to Trotter, which was in place at the time of the 2012 accident. Trotter did not include Davis as a codefendant in his action against Alfa. Alfa subsequently filed a third-party complaint adding Davis as a third-party defendant. Specifically, Alfa's third-party complaint alleged that, to the extent it was determined to be liable to Trotter for UIM benefits, then Alfa was subrogated to and entitled to recover the amount of that liability from Davis. Thereafter, Alfa filed a "Motion to Realign Parties" in which it asked to "opt out" of the litigation. Without explaining the findings on which its decision was based, the trial court denied Alfa's motion. The Alabama Supreme Court concluded after a review of the record, that Alfa has demonstrated a clear legal right to have its motion to realign the parties granted and to allow it to opt out of the underlying litigation. No authority is cited requiring that, in order to make the permitted election, Alfa must first release the right of subrogation to which it was also clearly entitled. View "Ex parte Alfa Mutual General Insurance Company." on Justia Law

Baldwin Mutual Insurance Company appealed a circuit court order certifying the action filed against it by Gloria McCain as a class action. McCain owned a house in Montgomery on which she held a homeowner's insurance policy issued by Baldwin Mutual. That policy provided that any covered property losses would be settled "at actual cash value at the time of loss but not exceeding the amount necessary to repair or replace the damaged property." In July 2005, McCain's house was damaged as the result of a windstorm. She filed a claim with Baldwin Mutual, and Baldwin Mutual thereafter retained an independent adjuster to examine McCain's damaged property and to prepare an estimate to repair the damage. Baldwin Mutual paid McCain's claim in accordance with the estimate prepared by the adjuster. Pursuant to a work-authorization form signed by McCain, Baldwin Mutual paid the funds directly to McCain's contractor. In June 2006, McCain filed another claim after her house suffered damage as a result of a lightning strike. After the same adjuster prepared an estimate, Baldwin Mutual paid the new claim in accordance with the adjuster's estimate. The genesis of the claims underlying this suit was that Baldwin Mutual had wrongfully been reducing the amount paid on claims made on actual-cash-value polices inasmuch as its practice was to deduct some amount for depreciation not only of the damaged materials and the labor costs of initially installing those damaged materials (based on their condition prior to the covered damage and their expected life span), but also of the labor costs associated with the removal of the damaged materials. It was improper and impossible to depreciate those labor costs, McCain argued, because they had not previously been incurred at some defined time in the past; rather, they were being incurred at the time of the current repair. Noting that hundreds or thousands of Baldwin Mutual policyholders were likely negatively affected by Baldwin Mutual's practices in this regard, McCain sought class action certification of her claims. The Alabama Supreme Court reversed the class certification, finding that the trial court here exceeded its discretion with a definition proposed by McCain without giving Baldwin Mutual the opportunity to oppose the certification of the proposed class at a hearing conducted for that purpose pursuant to statute. The case was remanded for further proceedings. View "Baldwin Mutual Ins. Co. v. McCain" on Justia Law

Travelers Home and Marine Insurance Company ("Travelers") appealed the grant of summary judgment in favor of Dianne and Martin Gray in the Grays' action arising from injuries Dianne suffered as the result of a motor-vehicle accident. In 2010, Lawana Coker and Dianne were involved in a motor-vehicle accident in Elmore County; Coker was without motor-vehicle insurance at the time of the accident. Two years later, the Grays filed in the trial court a three-count complaint naming as defendants Coker and Travelers and a fictitiously named defendant. Travelers answered the complaint, denying the material allegations therein and asserting certain affirmative defenses. Coker, however, failed to answer the complaint. In 2013, the Grays moved the trial court to enter a default judgment in their favor and against Coker, requesting that the trial court assess damages in the amount of $500,000 for Dianne and $50,000 for Martin. The Grays' motion requested no relief as to Travelers. Shortly thereafter, the Grays filed a new summary-judgment motion in which, for the first time, they sought relief against Travelers. The Grays did not base their summary judgment motion against Travelers on the ground that there was no genuine issue of fact as to whether tortious conduct by Coker caused them to suffer injury. Instead, they based their summary-judgment motion against Travelers solely on the fact that they previously had obtained a default judgment against Coker. In this regard, the Grays argued that they were entitled to a judgment as a matter of law against Travelers because, they said, "Travelers as a party defendant had notice and adequate opportunity to intervene and present any defenses and arguments necessary to protect its position with respect to the entry of or the amount of damages in the Default Judgment. By failing to do so, Defendant Travelers legally is bound by the judgment." After review, the Supreme Court reversed: because Travelers as the Grays' UM carrier, was not bound by the default judgment entered against Coker, Travelers was not required to submit evidence in opposition to a motion for a summary judgment that relied solely on that default judgment. Consequently, the trial court erred in entering a summary judgment in favor of the Grays and against Travelers. View "Travelers Home & Marine Ins. Co. v. Gray" on Justia Law

Alabama Mutual Insurance Corporation ("AMIC") appealed the trial court's order certifying a class in the action filed by the City of Vernon and a class of similarly situated entities that had purchased uninsured motorist/underinsured-motorist coverage ("UM/UIM coverage") from AMIC. Vernon was the original class representative; however, after AMIC filed its notice of appeal of the class-certification order, Vernon settled its claims against AMIC and withdrew as the class representative. Because there was no longer a representative to "fairly and adequately protect the interests of the class," the Supreme Court remanded the case back to the trial court for a new class representative to be substituted for Vernon. The City of Fairfield substituted for Vernon as the class representative. After review of the parties' arguments on appeal, the Supreme Court did not reach the merits of the underlying dispute: the Court concluded that the trial court lacked subject-matter jurisdiction over this dispute. Initial jurisdiction over this dispute was with the Alabama Department of Insurance and its commissioner. Therefore, the Supreme Court vacated the trial court's class-certification order, and remanded for dismissal. View "Alabama Mutual Insurance Corporation v. City of Fairfield" on Justia Law

In 2010, Baldwin Mutual Insurance Company (BMIC) filed an "Application for Temporary Restraining Order, Motion for a Preliminary Injunction and Complaint for Declaratory Judgment" against 122 individuals who were insured under various insurance policies issued by BMIC. According to the complaint, the insureds, through their legal counsel, had sent a letter requesting BMIC provide copies of the policy file for each of the insureds, and the letter accused BMIC of "bad faith" as to its treatment of the insureds. According to BMIC's complaint, the various insurance policies at issue provided that BMIC or an insured could invoke an appraisal process if BMIC and the insured could not reach an agreement as to the amount of compensation due the insured for a loss covered under the insured's policy. BMIC asked that the restraining order "enjoin[] the [insureds] from engaging in the appraisal process and stay[] the time in which [BMIC] has to identify an appraiser or otherwise participate in said process." Also, BMIC asserted that "it will be caused immediate and irreparable injury, loss or damage should it be required to engage in the appraisal process demanded prior to determining whether [the insureds] separately and severally are entitled to invoke the appraisal process." BMIC appealed the Circuit Court's order modifying a previous order granting BMIC injunctive relief. Based on its review of the record, the Supreme Court concluded the circuit court erred by ordering BMIC to engage in the appraisal process before the insureds satisfied their respective post-loss obligations and before BMIC had sufficient information on which it could decide whether it disagreed with the respective claims of the insureds. Accordingly, the Court reversed the circuit court and remanded this matter for further proceedings. View "Baldwin Mutual Insurance Company v. Adair et al. " on Justia Law

Electric Insurance Company petitioned the Supreme Court for a writ of mandamus to direct the Circuit Court to allow Electric, an uninsured-motorist insurer, to "opt out" of the trial of the underlying case. The issue presented by this petition was whether Electric asserted its right to opt out within a reasonable time. Upon review, the Supreme Court concluded that it did; thus, it granted the petition and issued the writ. View "Bolt v. Electric Insurance Company" on Justia Law