Baker v. State Farm General Ins. Co.

• Decision Date: 07 June 1991
• Citation: 585 So.2d 804
• Parties: Bobby Jack BAKER and Mildred Baker v. STATE FARM GENERAL INSURANCE COMPANY, an Illinois Corporation, et al. 89-1163.
• Court: Alabama Supreme Court

Page 804

585 So.2d 804

Bobby Jack BAKER and Mildred Baker v. STATE FARM GENERAL INSURANCE COMPANY, an Illinois Corporation, et al.

89-1163.

Supreme Court of Alabama.

June 7, 1991.

Rehearing Denied Aug. 9, 1991.

John P. Oliver II of Oliver & Sims, Dadeville, and W. Banks Herndon of Herndon & Dean, Opelika, for appellants.

Stanley A. Martin of Samford, Denson, Horsley, Pettey, Martin & Barrett, Opelika, for appellees State Farm Gen. Ins. Co. and State Farm Fire and Cas. Co.

W. Scears Barnes, Jr. of Barnes & Radney, Alexander City, for appellee Perry C. Davis.

KENNEDY, Justice.

Bobby Jack Baker and Mildred Baker filed an action against State Farm General Insurance Company ("State Farm General"), State Farm Fire and Casualty Company ("State Farm Fire"), and Perry C. Davis. The trial court dismissed two of their claims and entered summary judgment for the defendants on each of the Bakers' five remaining claims.

Bobby Jack and Mildred Baker are married and live in Tallassee. Perry C. Davis is an insurance agent who represents both State Farm Fire and State Farm General; beginning in the mid-1970's, he sold the Bakers insurance for their house.

On February 23, 1987, the Bakers executed and closed a real estate mortgage to CBS Mortgage Company ("CBS") to refinance the existing debt on their house. The Bakers' mortgage agreement with CBS provides for an escrow fund into which the Bakers are to make monthly payments to CBS to pay for homeowner's insurance; CBS is to pay for homeowner's insurance from the escrow funds. Bruce MacPherson, an attorney, represented the Bakers at the closing, and at the closing $473 was paid on the Bakers' behalf for a 12-month policy of homeowner's insurance with State Farm Fire (the "$473 policy"). At the time of the closing, the Bakers already had a State Farm Fire homeowner's insurance policy that had gone into effect on January 18, 1987.

April Tillery was employed as a secretary for Davis from March 1986 to September 1987. On April 4, 1987, she filled out and signed Bobby Jack Baker's signature to a "Rewrite Application" to change the effective date of the policy from January 18, 1987, to February 23, 1987; the change reflected CBS's requirement that the effective date of the insurance policy be the same as the date of the mortgage. The rewrite application was submitted to State Farm Fire to provide the same coverage at the same premium cost. Mr. Baker testified in deposition that he understood at the closing that CBS required that the insurance policy have the same effective date as the date of the mortgage. It is disputed who told Tillery to make the change: the Bakers say they never told Tillery to make it, and the defendants contend that MacPherson or his secretary told Tillery to make the change.

On April 17, 1987, Mary Helen Hall, an underwriter for State Farm Fire and State Farm General, reviewed the rewrite application. She determined that the insurance involved in the rewrite application was an acceptable risk, preliminarily approved the application, and forwarded the application for additional processing. Because of actuarial reasons, State Farm Fire will not insure a house for less than 80 percent of its replacement cost; State Farm General provides insurance for houses that are insured at less than 80 percent of their replacement cost. Although Hall had preliminarily approved the rewrite application, the State Farm Fire computer rejected, or, as the parties say, "errored out" that application, because the requested amount of insurance, which was the same in the rewrite application as in the policy that had gone into effect on January 18, 1987, was less than 80 percent of the replacement cost. On May 5, 1987, Hall had a policy issued with State Farm General, and she wrote a memo to Davis informing him of that change. The State Farm Fire policy was canceled. The State Farm General policy cost $747 (the $747 policy) for the identical coverage that Mr. Baker had obtained from State Farm Fire for $473.

Tillery contacted Mr. Baker when she received Hall's memo. She explained to him that because his house was not insured for 80% of its replacement cost State Farm Fire would not provide insurance for his house. Tillery told Baker, in effect, that he had two options--either increase the coverage with State Farm Fire to 80% of the replacement value of his house or keep the same amount of coverage, which would be provided by State Farm General at the increased cost of $747.

In early May, Mr. Baker received a bill from State Farm General for $320.64, which, for complicated reasons, was the balance due on the difference between the $473 policy and the $747 policy. Mr. Baker telephoned Davis's office two or three days after he received that bill. He told someone in Davis's office that he had already paid for a full year's premium and that he had no intention whatever of paying any additional premium for the current year's coverage.

State Farm General also sent a premium notice for $320.64 to CBS, and CBS eventually paid State Farm General the $320.64 from the Bakers' escrow account. The insurance companies, Davis, and the Bakers continued arguing over the correct amount of the premium. Ultimately, in March 1988, Bill Lovell, an underwriting operations supervisor for State Farm Fire, decided to reinstate the original State Farm Fire policy, effective February 23, 1987, at a cost of $426.36. State Farm General refunded the excess premium.

In September 1988, the Bakers filed their original complaint, which they amended twice. By agreement of all the parties, Counts four, five, and nine of the amended complaints were dismissed. The trial court dismissed both Count seven, which alleged outrage, and Count eight, which alleged invasion of privacy. The trial court entered summary judgment for all the defendants on the remaining counts. The Bakers appeal the dismissal of counts seven and eight and the summary judgment for the defendants on the other counts.

In Count seven, the Bakers claim damages for outrage by alleging that State Farm General and Davis fraudulently signed Baker's signature to the rewrite application and by arguing that that action in and of itself is utterly intolerable in a civilized society. In American Road Service Co. v. Inmon, 394 So.2d 361 (Ala.1981), we recognized the tort of outrage and described the proof required for that tort:

"[W]e now recognize that one who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress and for bodily harm resulting from the distress. The emotional distress thereunder must be so severe that no reasonable person could be expected to endure it. Any recovery must be reasonable and justified under the circumstances, liability ensuing only when the conduct is extreme.... By extreme we refer to conduct so outrageous in character and so extreme in degree as to go beyond all possible bounds of decency, and to be regarded as atrocious and utterly intolerable in a civilized society."

394 So.2d at 365.

A motion to dismiss should be granted only when it appears on the face of the complaint that the plaintiff can prove no set of facts entitling him to relief. Alorna Coat Corp. v. Behr, 408 So.2d 496 (Ala.1981). The complaint fails to show that Baker could prove his claim for outrage, and the judgment as to Count seven is due to be affirmed. The complaint also fails to show that Baker could prove his claims in Count eight, which alleges that all the defendants invaded Baker's right to privacy by appropriating his name for a commercial use. The trial court's judgment as to count eight is likewise due to be affirmed.

The defendants contend that the remaining counts, on which the trial court entered a summary judgment for all the defendants, because they are tort actions alleging the wrongful termination of an insurance policy, are barred as a matter of law by the holding in Watkins v. Life Insurance Co. of Georgia, 456 So.2d 259 (Ala.1984). Even if Watkins held as the defendants argue, except for count 10, which we discuss presently, the Bakers do not base their claims on a wrongful termination of the $473 policy; Watkins, accordingly, is distinguishable.

In Count one, pursuant to Ala.Code 1975, § 6-5-101, the Bakers claim damages for misrepresentation by State Farm General in its sending the bill to CBS for $320.64; only State Farm General is named as a defendant in this Count.

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