Alfa Life Ins. Corp. v. Colza

Decision Date09 May 2014
Docket Number1111415.
Citation159 So.3d 1240
PartiesALFA LIFE INSURANCE CORPORATION and Brandon Morris v. Kimberly COLZA.
CourtAlabama Supreme Court

William P. Gray Jr., and Douglas N. Robertson of Gray & Associates, L.L.C., Birmingham, for appellants.

Leah O. Taylor and Rhonda P. Chambers of Taylor & Taylor, Birmingham; and Jeremy P. Summers, Birmingham, for appellee.

Drayton Nabers, Jr., of Maynard, Cooper & Gale, P.C., Birmingham, for amicus curiae Business Council of Alabama, in support of the appellants.

Christina M. Bolin of Alford Bolin Dowdy, LLC, Mobile; Melody H. Eagan of Lightfoot, Franklin & White, LLC, Birmingham, president, Alabama Defense Lawyers Association; and Sharon D. Stuart of Christian & Small, LLP, Birmingham, chairperson, amicus curiae committee for amicus curiae Alabama Defense Lawyers Association in support of the appellant.

Matthew C. McDonald of Jones Walker, Mobile, for amicus curiae Alabama Civil Justice Reform Committee, in support of the appellant.

Opinion

STUART, Justice.1

Alfa Life Insurance Corporation (“Alfa”) and Brandon Morris, an agent for Alfa, appeal a judgment entered against them following a jury verdict for Kimberly Colza, the widow of Dante Colza. We reverse the judgment and render a judgment for Alfa and Morris.

I.

On September 2, 2010, Morris met with Dante to assist him in completing an application for a life-insurance policy in the amount of $150,000. Kimberly and Justin Morton, an employee of Dante's, were also present at the meeting. The application process for an Alfa life-insurance policy consists of three parts: the applicant's completion of an application agreement, the applicant's answering various health questions before a medical examiner, and the medical examiner's report. Morris testified that he asked Dante the questions in the application agreement and then typed the answers on the application form on his laptop computer. Although the evidence is disputed as to whether Morris asked Dante question 16(g)—whether Dante had had a moving traffic violation, a driver's license suspended, or an accident in the prior three years—it is undisputed that Morris entered a checkmark in the “No” box by that question. The evidence indicated that Dante applied for the Preferred Tobacco premium rate.2 Dante named Kimberly as the beneficiary under the policy. Disputed evidence was presented as to whether Dante himself signed the application agreement.

At the close of the meeting, Morris provided Dante and Kimberly with a hard-copy document entitled “Applicant's Copy of Notices—Authorization—Agreement—Receipt Signed Electronically” (hereinafter referred to as “the application agreement”). The relevant portion of the application agreement stated:

“I understand and agree with the Company that:
“1. Any policy issued as a result of this Application shall constitute a single and entire contract of insurance.... Only the President, a Vice President, the Secretary or Actuary of the Company may waive or vary a contract provision or any of the Company's rights or requirements and such waiver must be in writing. Only the Company's Underwriters have any authority to accept or approve the insurance applied [for] or to pass upon insurability.
“2. To the best of my knowledge and belief all of the statements and answers on the Application are true, complete, and correctly stated, and I understand the statements and answers are submitted to the Company as the basis for any policy issued, and if incorrect can be cause for cancellation or loss of coverage.
“3. Unless the policy becomes effective at an earlier date due to full and complete fulfillment of the conditions in the Conditional Receipt, any insurance issued by the Company will not become effective until this Application has been approved and accepted by the Underwriting Department of the Company, and the policy issued has been delivered to the owner of the policy personally and payment to the Company of the full first premium during the lifetime and continued insurability of the Proposed Insured has been made.
“4. I authorize the Company to amend this Application by a notation in the space set aside for ‘Home Office Endorsements' to correct apparent errors or omissions and to conform the Application to any policy that may be issued by the Company. Acceptance of the policy issued based on this Application will be acceptance of its terms and ratification by me of any changes specified in the section marked ‘Home Office Endorsements.’ Any change in plan or amount of insurance or added benefits must be agreed to in writing.”

The application agreement completed by Dante referenced another document entitled “Conditional Receipt,” which stated in relevant part:

“1. CONDITIONS TO COVERAGE: NO INSURANCE WILL BECOME EFFECTIVE BEFORE THE DELIVERY
AND ACCEPTANCE OF A POLICY OF INSURANCE UNLESS AND UNTIL EACH AND EVERY ONE OF THE FOLLOWING CONDITIONS IF [sic] FULFILLED EXACTLY:
(a) The amount of the premium deposit made with the application must be at least equal to the amount of the full first premium for the mode of payment selected in the application and for the plan and the amount of insurance applied for.
(b) All medical examinations, tests, x-rays and electrocardiograms required by the Underwriting Department of the Company must be completed and received at its Home Office in Montgomery, Alabama, within sixty (60) days from the date of completion of Part 1 of the application....
(c) The Company's Underwriting Department at its Home Office must be satisfied that on the Effective Date, as defined below, the Proposed Insured(s) ... was insurable at a risk acceptable to the Company under its rules, limits and standards for the amount applied for at the Company's standard published rates corresponding to the age of such person, without any modification either as to plan, amount, riders, supplemental agreements, and/or rate of premium.
(d) On the Effective Date, as defined below, the state of health and all factors affecting the insurability of the Proposed Insured ... must be as stated in the application.
“2. EFFECTIVE DATE: When every one of the conditions contained in paragraph 1 have been fulfilled exactly and completely, then insurance, as provided by the terms and conditions of the policy applied for and in use by the Company on the Effective Date, but for an amount not exceeding that specified in paragraph 3, will become effective as of the Effective Date. ‘Effective Date,’ means the latest of (a) the date of completion of the application PART 1; (b) the date of completion of all medical examinations, tests, x-rays, and electrocardiograms required by the Company; or (c) the Date of Issue, if any requested in the application.
“3. LIMITS OF COVERAGE: The total amount of life insurance, including accidental death benefits, which may become effective prior to delivery and acceptance of a policy of insurance shall not exceed $100,000.
“4. RETURN OF THE DEPOSIT: If any one or more of the conditions in paragraph 1 have not been fulfilled exactly and completely there shall be no liability on the part of the Company except to return the premium deposit in exchange for this receipt. If the application is not accepted and approved by the Company within sixty (60) days from the date of this receipt, then no policy will be issued.
“5. OFFER OF MODIFIED POLICY: If all of the conditions in paragraph 1 have not been fulfilled completely and exactly but the Company does accept and approve the application upon a modification as to plan, amount, premium rate and/or disallowance of any supplementary benefit applied for, the policy offered shall take effect as of the date which the Company offers to issue said policy, provided that the owner accepts delivery of the policy by paying the full first premium or balance thereof, and if required by the Company signs an Amendment of Application therefor, during the lifetime and continued insurability of the Proposed Insured ... according to the Company's standards, within sixty (60) days from the issue date of the policy.
“6. NO AGENT, GENERAL OR SPECIAL, OR ANY OTHER PERSON IS AUTHORIZED BY THE COMPANY TO WAIVE OR MODIFY IN ANY WAY ANY OF THE CONDITIONS OR PROVISIONS CONTAINED IN THIS CONDITIONAL RECEIPT.”

(Capitalization in original.) Conflicting evidence was presented at trial as to whether Morris provided Dante and Kimberly with a hard copy of the conditional receipt; however, Kimberly acknowledges that she received an identical conditional receipt when she applied for her own life-insurance policy approximately two weeks before Dante applied for his.

At the close of the meeting, Kimberly wrote a check payable to Alfa for $103.70, the monthly Preferred Tobacco premium rate. Kimberly testified at trial that Morris informed them that Dante would be covered as soon as they gave Morris the check. Morris submitted Dante's application to Alfa on September 3, 2010.

Dante was examined by the medical examiner on October 15, 2010.3 During the examination, Dante informed the medical examiner that his family had a history of heart disease and that he had had moving traffic violations within the past five years.4 On October 16, 2010, the day after he had his medical examination, Dante was killed in an accident. Two days later, Alfa received the medical examiner's report, which indicated that Dante's family had a history of heart disease, that Dante's cholesterol was above 255, and that Dante had had moving traffic violations in the past five years.5

In light of Dante's high cholesterol level and his family history of heart disease, the Alfa underwriters determined that Dante was not eligible for the Preferred Tobacco rate for which he had applied; rather, the proper classification for Dante would have been the Standard Tobacco rate, which had a higher premium. Additionally, in light of Dante's moving-vehicle violations, Dante was a greater risk to insure and a “rate-up” of $2.50 per $1,000 worth of coverage was required. The...

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