Burt v. Commercial Union Ins. Co.

• Decision Date: 25 April 1986
• Citation: 489 So.2d 547
• Parties: Steve BURT and Jeffrey Soleman, d/b/a Cash & Carry Auto Parts v. COMMERCIAL UNION INSURANCE COMPANY. 84-819.
• Court: Alabama Supreme Court

Page 547

489 So.2d 547

Steve BURT and Jeffrey Soleman, d/b/a Cash & Carry Auto Parts v. COMMERCIAL UNION INSURANCE COMPANY.

84-819.

Supreme Court of Alabama.

April 25, 1986.

Thomas J. Knight, Anniston, for appellants.

John S. Thrower, Jr. and C.B. Paterson, Montgomery, and James M. Campbell, Anniston, for appellee.

HOUSTON, Justice.

Steve Burt and Jeffrey Soleman, d/b/a Cash & Carry Auto Parts, appeal from a summary judgment granted in favor of Commercial Union Insurance Company in their action to recover damages for breach of contract, misrepresentation, negligent handling of an insurance claim, and bad faith failure to pay the claim. We affirm in part, reverse in part, and remand.

Burt and Soleman had obtained a comprehensive insurance policy on their business through William Broadfoot, an independent agent. Broadfoot had placed this coverage with American Mutual Insurance Company. When the time came to renew the policy, Burt and Soleman contacted Broadfoot. They wanted to renew their existing policy, which included coverage for loss of money by theft.

Broadfoot informed Burt and Soleman that he no longer operated as an independent agent. He had sold his business to Lanier, Huffman & Robinson, an insurance agency headquartered in Atlanta, Georgia, and was working out of his office as an employee of Lanier, Huffman & Robinson. Broadfoot told Burt and Soleman that they could obtain through Lanier, Huffman & Robinson the same coverage that they had with American Mutual Insurance Company.

In his deposition, Burt testified as follows:

"Q So, you had an old [insurance] policy with Broadfoot; and what did you ask Broadfoot to do for you?

"A I wanted it renewed. He said at that time that he had been bought out; but he would send it to Lanier, Huffman and Robinson and ask for exactly the same coverage.

"Q Tell me what happened.

"A He sent it, they [Lanier, Huffman & Robinson] called us back and they said if we would lower the liability on something we could raise it on something else and get a better rate. We said okay. We said, 'We do have the same coverage?' 'Yes, you do.' ..."

Harris Rutsky, marketing and underwriting manager for Lanier, Huffman & Robinson at that time, testified by affidavit, as follows: That he was contacted by Broadfoot regarding the coverage requested by Burt and Soleman; that he sent applications to Broadfoot for insurance coverage with Commercial Union Insurance Company, for whom Lanier, Huffman & Robinson "had authority to underwrite, bind coverage and issue policies of insurance"; that Broadfoot completed the application for a "merchant package" and submitted it to Lanier, Huffman & Robinson; and that the application contained spaces where an applicant could select coverage for loss of money by theft, but Broadfoot left these spaces blank.

Lanier, Huffman & Robinson then issued a policy to Burt and Soleman. It is a matter of dispute whether the amount paid by Burt and Soleman is indicative that coverage for loss of money by theft was contemplated by the parties. It is undisputed, however, that the policy itself had no provision for such coverage.

During the term of the policy, Burt and Soleman's Cash & Carry Auto Parts store in Montgomery was burglarized; certain merchandise was taken, and $2,832.01 in money and checks was stolen. Burt and Soleman submitted a claim for the losses to Commercial Union. Commercial Union paid the claim for merchandise, but refused to pay that portion of the claim relating to loss of money, on the ground that the policy did not provide coverage for that portion of the loss. Consequently, Burt and Soleman brought this action against Commercial Union.

The trial court set out its reasons for granting summary judgment in favor of Commercial Union, as follows "Summary Judgment

"The Court has considered the argument made, the pleadings in the file, the depositions of Jeffrey Soleman and Steven Burt, the affidavits of Jeffrey L. Maas, Harris Rutskey [sic] and Steven D. Burt. In considering this case the Court concludes that any misconduct was clearly the misconduct of William Broadfoot, the local insurance agent involved in securing the insurance contracts in issue, and that said misconduct on the part of William Broadfoot cannot be legally visited upon the Defendant, Commercial Union Insurance.

"The Court finds that there is no genuine issue of material fact in this case in regard to the Plaintiffs' claim against the Defendant, Commercial Union Insurance...." (Emphasis added.)

Burt and Soleman contend that Broadfoot's misconduct should be regarded as the misconduct of Commercial Union. They argue that Broadfoot was a subagent of the general agent for Commercial Union, and, as such, had authority to make representations on behalf of Commercial Union. We believe that there is at least a scintilla of evidence presented to support these arguments.

Harris Rutsky stated in his...