Alfa Mut. Fire Ins. Co. v. Payton

• Decision Date: 10 October 1997
• Parties: ALFA MUTUAL FIRE INSURANCE COMPANY v. Tracie F. PAYTON. Tracie F. Payton v. Alfa Mutual Fire Insurance Company.
• Court: Alabama Court of Civil Appeals

742 So.2d 1228

ALFA MUTUAL FIRE INSURANCE COMPANY v. Tracie F. PAYTON.

Tracie F. Payton v. Alfa Mutual Fire Insurance Company.

2960518.

Court of Civil Appeals of Alabama.

October 10, 1997.

Rehearing Denied November 21, 1997.

Philip S. Gidiere, Jr., and Steven K. Herndon of Gidiere & Hinton, Montgomery, for appellant/cross appellee Alfa Mut. Fire Ins. Co.

Tyrone C. Means, Cynthia W. Clinton, Milton J. Westry, and Paul C. Williams of Thomas, Means & Gillis, P.C., Montgomery, for appellee/cross appellant Tracie F. Payton.

WRIGHT, Retired Appellate Judge.

Tracie F. Payton filed a complaint in the Lowndes County Circuit Court against Alfa Mutual Fire Insurance Company and Joe Wright, d/b/a Joe Wright Heating and Air Conditioning. Against Alfa, Payton asserted claims of fraudulent suppression; fraudulent misrepresentation; willful, reckless, or malicious misrepresentation; and deceit in the sale of a fire insurance policy. Payton asserted a claim of negligence against Joe Wright. Payton sought compensatory and punitive damages. Before trial, Payton entered into a pro tanto settlement with Joe Wright.

The case was tried before a jury in August 1996. The trial court denied Alfa's motion for a directed verdict and submitted Payton's fraud claims to the jury. The jury returned a verdict in favor of Payton and against Alfa, awarding Payton $80,000 in compensatory damages and $80,000 in punitive damages. The trial court entered a judgment accordingly. Alfa filed a motion for a judgment notwithstanding the verdict (JNOV) or, in the alternative, for a new trial or, in the alternative, for remittitur. Following oral proceedings, the trial court entered an order, granting Alfa's motion for a new trial. The trial court stated, in pertinent part:

"The court has carefully considered all of the testimony and other evidence presented at the hearing on this motion, [has] thoroughly reviewed the well-argued positions of the parties and the trial transcript, and [has] considered the law submitted by all of the parties, including Alfa's brief in support of this motion, and the court determines that it erred in denying Alfa's motion for a directed verdict on [Payton's] claim for punitive damages at the close of [Payton's] case in chief, based on the evidence in this case. However, because the court is granting a new trial in this matter, this issue is irrelevant.

"... It is the definite and considered opinion of this court that [Alfa] did not receive a fair trial and that the verdict failed to do justice between the parties. The court has carefully considered all the testimony and other evidence at the hearing on [Alfa's] motion, [has] thoroughly reviewed the well-argued positions of the parties, and [has] considered the law submitted by all of the parties, and the court finds that [Alfa's] motion for a new trial is due to be granted. The court finds that the lack of response by juror [G.L.D., Jr.], on voir dire resulted in probable prejudice to [Alfa]. The court takes note that Hayneville is a community of approximately 800 to 1,000 people. [Payton] and her family own and operate two businesses within this community; [Payton] and [G.L.D., Jr.,] are of the same race and approximately the same age; [G.L.D. Jr.,] has lived in Hayneville for some period of time; [G.L.D. Jr.,] was the foreman of the jury that returned this verdict; and he admitted at post-trial that he knew [Payton] on sight and was able to put her name with her face at trial. [G.L.D. Jr.,] did not respond to the court's question on voir dire, `If you know Tracie Payton, please raise your hand....' The court finds that [Alfa] suffered probable prejudice because this juror did not answer the question as to knowing [Payton] truthfully."

Alfa appeals, raising two issues: (1) whether the trial court erred in denying its JNOV motion and (2) whether the trial court erred in failing to grant Alfa's motion for a remittitur. Payton cross-appeals, raising one issue: whether the trial court erred in granting Alfa's motion for a new trial. This case is before this court pursuant to § 12-2-7(6), Ala.Code 1975.

Appeal

A motion for a JNOV, like a motion for a directed verdict, is a procedural mechanism whereby one party challenges the sufficiency of the other party's evidence. First Financial Ins. Co. v. Tillery, 626 So.2d 1252 (Ala.1993). A motion for a JNOV permits the trial court to revisit its earlier decision denying the motion for a directed verdict. Tillery. The ultimate question as to either motion is whether the nonmoving party has presented sufficient evidence to allow submission of the case to the jury for a factual determination. Tillery.

A motion for a JNOV, which challenges the sufficiency of the evidence, is appraised by the substantial evidence rule. Franks v. Alfa Mut. Ins. Co., 669 So.2d 971 (Ala.Civ.App.1995). In order to withstand a motion for a JNOV, the non-movant must present substantial evidence to support each element of his/her cause of action or defense. Tillery. Substantial evidence is "evidence of such weight and quality that fair-minded persons in the exercise 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). In reviewing a motion for a JNOV, this court must review the evidence in a light most favorable to the nonmoving party and must consider those reasonable evidentiary inferences a jury could have drawn. Franks.

The record reveals that in May 1992 Payton applied for a loan with the Farmers Home Administration (FHA) in Hayneville, Alabama, for the construction of a new home. In June 1992, prior to closing the loan, Melissa Williams, an FHA employee, informed Payton that FHA required a loan recipient to have fire insurance, with extended coverage sufficient to cover the loan amount. Williams testified that she told Payton to purchase a homeowners insurance policy to cover the contents of the house.

Prior to June 1992, Payton had never purchased insurance. Williams referred Payton to Gordon Ward, an Alfa agent and the insurance agent for Payton's mother. Payton spoke with Ward at the Alfa office in Hayneville. Payton testified that she could not remember the name of the insurance that Williams said she needed and that she told Ward that she wanted to purchase an insurance policy "that covers everything." She also stated that Ward completed an application and that she signed the application without reading it. The top of the application stated, "Application for Fire Insurance in the Alfa Mutual Fire Insurance Corporation." Payton further testified that because she trusted Ward, she did not read the application, and she stated that if she had read the application, she would not have understood that fire insurance would not cover anything inside the house, liability for guests, or water damage. Payton paid the premium and left the office.

On cross-examination, Payton admitted that Ward went through some papers with her, but she also testified that she did not understand what Ward was talking about. She also admitted that she probably had received a "Standard Fire Insurance" policy, but that she would not have reviewed it.

Ward testified that he is a licensed insurance agent, that Alfa trained him, and that Alfa sponsors his license. He stated that he sells life, automobile, house, health, and property insurance and that it is his responsibility to explain the insurance policies to his customers. Ward testified that he questions his customers to see how knowledgeable they are about insurance, that he then goes through Alfa's policies to determine which policy fits that customer's needs, and that he explains the policy he has chosen to the customer.

Ward testified that Alfa has several different house and home insurance policies. He testified that Alfa has three versions of a "Standard Fire Policy," that the SF-1 policy has the least amount of coverage that Alfa sells, and that he does not customarily sell an SF-3 policy because it is so similar to a homeowners policy that the customer might as well buy a homeowners policy. Ward also testified that a "Standard Fire Policy" covers only the building, but that contents coverage can be added to the policy.

Ward testified that Payton came to him to buy insurance coverage for her house, that he sold her an SF-1 policy, and that Payton's SF-1 policy did not have contents coverage. He then stated that Payton's insurance policy was really a "Builders Risk" policy and that contents coverage is not available under such a policy.

Ward stated that Payton wanted insurance to cover the amount of her FHA loan and that he made Payton aware of the coverages, that he told Payton that she could add contents coverage to her policy or change to a homeowners policy. He further stated that since Payton did not inquire about additional coverages or costs, he did not quote her the costs of broader coverage policies. He also admitted that he knew Payton had never purchased insurance before June 1992.

In March 1993 Ward inspected and photographed Payton's house to verify the completion of construction of the house. Ward testified that he walked through Payton's house, that he saw the furniture in the house, and that he commented on how nice the house looked. He also stated that he told Payton that he could add contents coverage to her policy or that she could purchase a homeowners insurance policy. Ward testified that Payton responded that she could not afford homeowners insurance. Payton denied that Ward told her that she could add contents coverage to her policy or that she could purchase homeowners insurance. In June 1994 the air conditioner in Payton's house began leaking, damaging a closet, her children's clothes, and the carpeting in her living room. Payton called and reported the damage to an Alfa agent in the Hayneville office, who eventually sent Tim Harris, an adjuster, to Payton's...