Baldwin Mut. Ins. Co. v. Adair

• Decision Date: 30 September 2014
• Docket Number: 1100872.
• Parties: BALDWIN MUTUAL INSURANCE COMPANY v. Melissa ADAIR et al.
• Court: Alabama Supreme Court

181 So.3d 1033

BALDWIN MUTUAL INSURANCE COMPANY

v.Melissa ADAIR et al.

1100872.

Supreme Court of Alabama.

Sept. 30, 2014.

Rehearing Denied May 22, 2015.

W. Evans Brittain and W.D. Montgomery of Ball, Ball, Matthews & Novak, P.A., Montgomery, for appellant.

Charles C. Turner, Anniston, for appellees.

MURDOCK, Justice.¹

Baldwin Mutual Insurance Company ("BMIC") appeals from an order of the Calhoun Circuit Court modifying a previous order granting BMIC injunctive relief. We reverse and remand.

I. Facts and Procedural History

On December 2, 2010, BMIC filed an "Application for Temporary Restraining Order, Motion for a Preliminary Injunction and Complaint for Declaratory Judgment" ("the complaint") in the Baldwin Circuit Court against 122 individuals who were insured under various insurance policies issued by BMIC ("the insureds").² According to the complaint, the insureds, through their legal counsel, had sent a letter dated November 12, 2010, to BMIC. The November 2010 letter stated:

"On behalf of each of our clients listed on the attached, please know that we invoke the appraisal provision contained within the Baldwin Mutual policies issued to these insureds for each loss or claim suffered previously. We hereby identify Samantha Ronquille–Green as our appraiser, and insist that you identify your appraiser within the time specified in the policies [i.e., 20 days]. Obviously, we are only seeking appraisal of claims for which there is prior coverage."

The letter also requested that BMIC provide the insureds' counsel with a copy 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. The appraisal process entailed BMIC and the insured each choosing an appraiser to estimate the insured's loss, and the appraisers in turn choosing an umpire who would resolve differences in the loss estimates provided by the appraisers. BMIC alleged:

"11. Under each of the appraisal provisions ..., a condition precedent to the demand of an appraisal is that there be a disagreement as to the amount of the loss.

"12. The November 12, 2010 letter, by which the [insureds] demand appraisal, fails to satisfy this condition precedent, as the [insureds] fail to establish that there is a disagreement as to the amount of the loss.

"13. Specifically, the purported appraisal demand fails to set forth, among other things, the date of the loss, the cause of the loss, the location of the loss, any specifics concerning the nature of the loss, or why the [insureds] assert that there is a disagreement as to the amount of the loss.

"14. Upon information and belief, [BMIC] avers that all claims and losses have been adjusted and settled properly and without any disagreement or complaint by said ... policyholders.

"15. Under each of the appraisal provisions at issue, appraisal is proper only as to the ‘amount of loss.’

"16. Therefore appraisal is appropriate under said policies only where (1) no coverage issue exists, and (2) the policyholder and insurer agree on the scope of the damage.

"17. To the extent the November 12, 2010 letter, by which the [insureds] demand appraisal, demands an appraisal as to issues concerning coverage or the scope of the loss, the appraisal demand is improper.

"18. [The insureds], separately and severally, therefore, have no right to invoke the appraisal process.

"19. [BMIC] further avers that the attorneys that demanded appraisal by way of the November 12, 2010 letter presently have filed nine (9) separate lawsuits against [BMIC], three of which set forth class action allegations (McCain v. Baldwin Mutual et al, CV–10–901266, Montgomery County (‘McCain Class'), Moyers v. Baldwin Mutual et al, CV–10–900100, Escambia County (‘Moyers Class'), and Smith v. Baldwin Mutual et al, CV–07–900258, Calhoun County (‘Smith Class')).

"20. The Complaint as last amended in Smith defines the putative class as follows:

" ‘The class includes all of those past and present ... policyholders, who, after suffering an insured loss, were subjected to Defendant [John] Bobo's³ nefarious ways following his dispatch to adjust the loss by [BMIC].’

"21. Upon information and belief, most, if not all, of the [insureds] were identified by their current attorneys and contacted by way of the Smith litigation. Specifically, the attorneys that now represent the [insureds] sent over two thousand (2,000) letters to various policyholders of [BMIC], including, most, if not all, of the [insureds].

"22. While simultaneously prosecuting the Smith class, the attorneys for the [insureds] are also seeking individual appraisals for the same individuals that would fall within the Smith class.

"23. The Complaint as last amended in Mover[s] defines the putative class as follows:

" ‘The class includes past and present BMIC policyholders that suffered losses as a result of the occurrence of Hurricane Ivan for which they have not been duly compensated, upon whose land Defendants trespassed or who have otherwise been aggrieved by Defendants' conduct in the wake of Hurricane Ivan.

" ‘Members of the class or a class also include those BMIC policy holders who suffered losses as a result of Hurricane Ivan and who were subjected to the abnormally low pricing scheme perpetrated by Defendants, as herein described above, and whose claims were consequently underpaid.’

"24. Count IX of the Second Amended Complaint in Movers sets forth a demand for Appraisal.

"25. The Complaint as last amended filed in McCain defines the putative class as follows:

" ‘All holders of policies, issued by [BMIC], insuring properties within the State of Alabama who have suffered a loss within six (6) years of the filing of this complaint for which [BMIC] reduced the actual cash value of the same by reduction for the loss of value of undepreciable loss elements.’

"26. The same Gloria McCain that serves as the class representative in the McCain class is among the Respondents on whose behalf appraisal has been demanded.

"27. Because [the insureds] have failed to adequately identify the claims or losses for which they seek an appraisal, [BMIC] is unable to determine which of the [insureds] may fall within the class definitions set forth in the aforementioned class actions.

"28. [BMIC] avers that proceeding with the appraisal process prior to a determination whether there exists a real dispute or disagreement and whether each [of the insureds], separately and severally, is entitled to invoke the appraisal process, will result in immediate and irreparable injury loss damage to [BMIC]."

(Emphasis added.)

In its complaint, BMIC sought a temporary restraining order, "until such time as this court has the opportunity to rule on [BMIC's] Motion for a Preliminary Injunction." 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."

In regard to BMIC's motion for a preliminary injunction, the complaint requested that the court "conduct a hearing as to the issues set forth above and issue a preliminary injunction enjoining the [insureds] from proceeding with the appraisal process as requested herein during the pendency and until the final disposition of this cause. " (Emphasis added.)

As to the declaratory relief requested, BMIC's complaint alleged as follows:

"40. The insurance policies issued to the [insureds] by [BMIC] serve as the basis for the [insureds'] claims for appraisal. [BMIC] has not been able to determine that all [the insureds] have been insured with or suffered a covered loss while insured with [BMIC].

"41. Each policy issued by [BMIC] provides, as a condition to the appraisal process, that there be a failure to agree on the amount of the loss.

"42. The appraisal demanded by the [insureds] does not identify the claims or losses for which appraisal is sought, but on information and belief, [BMIC] avers that all claims and losses have been adjusted and settled without any disagreement or complaint by said ... policyholders.

"43. [The insureds] fall within [the] definition of one or more of the three class actions that the attorneys for the [insureds] have filed, and therefore, may not pursue individual appraisals.

"44. [BMIC] seeks a determination from this Court pursuant to Alabama Code [1975,] § 6–6–220 et seq., as to the following issues:

"(1) Whether the [insureds] may properly demand an appraisal, where, as is the case here, the [insureds] (1) have failed to identify the claims or losses for which appraisal is sought; (2) have failed to set forth any reason as to why the [insureds] contend there is a disagreement as to the amount of loss; and (3) have failed to establish that any alleged disagreement is over the amount of loss, as opposed to a disagreement over coverage under the policy or the scope of loss or some other matter not subject to appraisal.

"(2) Whether the [insureds] may seek an appraisal, given the pendency of the three class actions filed by their attorneys.

"(3) Determine that those [insureds] who have not suffered a loss insured by [BMIC] are not entitled to appraisal."⁴

On December 21, 2010, the Baldwin Circuit Court held a hearing on BMIC's request for a preliminary injunction. During the hearing, the court summarized its understanding of the matter as follows:

"[I]f the essence of your injunction request is, we don't want to proceed with an appraisal until we

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