Auto-Owners Ins. Co., Inc. v. Rodgers, AUTO-OWNERS

• Court: Alabama Supreme Court
• Writing for the Court: FAULKNER; JONES; TORBERT
• Citation: Auto-Owners Ins. Co., Inc. v. Rodgers, 360 So.2d 716 (Ala. 1978)
• Decision Date: 14 April 1978
• Docket Number: AUTO-OWNERS
• Parties: INSURANCE CO., INC., a corp. v. Donna Frye RODGERS et al. 77-122.

Page 716

360 So.2d 716

AUTO-OWNERS INSURANCE CO., INC., a corp. v. Donna Frye RODGERS et al.

77-122.

Supreme Court of Alabama.

April 14, 1978.

Rehearing Denied July 14, 1978.

Alan C. Livingston of Lee & McInish, Dothan, for appellant.

J. Earl Smith of Smith & Smith, Dothan, for appellees.

FAULKNER, Justice.

Auto-Owners appeals from an order, in a declaratory judgment action, finding that there was no substantial and material lack of cooperation on the part of its insured, to assist in the defense of a suit for damages. We affirm.

Ronnie Brannon operated an automobile garage in Geneva County, and as an adjunct, bought and sold used cars. He was insured by Auto-Owners under a garage liability policy, the subject of the declaratory action. While negotiating with a garage customer, John Doss McKinney, for the purchase of a certain automobile, Brannon loaned McKinney another owned by him. McKinney, operating the borrowed car, in a downpour of rain, lost control and skidded into an automobile driven by Jack Rodgers on June 17, 1975. Donna Frye Rodgers was a passenger in that automobile. The Rodgers filed damage suits against Brannon and McKinney on October 15.

Rodgers' insurer, State Farm Mutual Automobile Insurance Co., investigated the accident. When State Farm learned of the Brannon policy, its adjuster notified Auto-Owners. Auto-Owners adjuster telephoned McKinney who was, at that time, in a hospital recuperating from the injuries he received in the accident. (Even though McKinney was hospitalized for 5 weeks, no one representing Auto-Owners called upon him.) Auto-Owners, after McKinney was discharged, telephoned his home three times between 9:00 A.M. and 5:00 P.M. and each time was told by his grandmother that McKinney worked from early in the morning until after 8:00 P.M. At each call, the caller requested the grandmother to have McKinney call the Auto-Owners' office presumably during its office hours. He did not return any calls. Having no success with his telephone calls, Auto-Owners' adjuster went to the McKinney residence. Finding no one at home, he left his card in the door. Subsequently, the Branch Claims Manager in Pensacola, MacDonald, wrote to McKinney on three occasions, September 18, October 1, and October 27. The letters were sent by certified mail, return receipt requested, with McKinney accepting all but the last letter. On October 27, Auto-Owners wrote McKinney advising him that the company was disclaiming any coverage under the policy. McKinney refused to accept delivery of the letter. No effort was made by Auto-Owners to talk with McKinney after the suits were filed.

At the hearing on the declaratory judgment action McKinney testified, when asked the question if he would defend the suit, that he would tell what happened. At his deposition, on August 27, 1976, McKinney testified that he was now ready, willing, and able to cooperate in the defense of the action against him.

The trial court found that "the conduct of John Doss McKinney did not amount to a lack of cooperation in any substantial or material respect."

An insured's lack of cooperation must be substantial and material to cause a breach of the policy condition. George v. Employers' Liability Assurance Corporation, Ltd. of London, England, 219 Ala. 307, 122 So. 175 (1929). Was there a substantial and material lack of cooperation on the part of McKinney in this case? That is the principal issue here.

Auto-Owners' letter of September 18 to McKinney advised him that its adjuster had tried, but failed, to get his statement of the accident, and moreover, that the garage policy covering Brannon required his cooperation. An...