Clark v. Alabama Farm Bureau Mut. Cas. Ins. Co.
| Citation | 465 So.2d 1135 |
| Parties | Alfred CLARK and Jo Ann Clark v. ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY. Civ. 4417. |
| Decision Date | 31 October 1984 |
| Court | Alabama Court of Civil Appeals |
Cary L. Dozier, Troy, for appellants.
David E. Allred of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, for appellee.
Alfred and Jo Ann Clark appeal from Pike County Circuit Court, where summary judgment in favor of Alabama Farm Bureau Mutual Casualty Insurance Company (Farm Bureau) was entered against them in a declaratory judgment action filed by Farm Bureau.
The Clarks applied to Farm Bureau for a farm-owner policy on a jointly owned piece of property which had on it a frame dwelling.
When the application for insurance was taken, both appellants and a Farm Bureau agent were seated at the kitchen table in the Clarks' home. At the top of the application were four underwriting questions. Each question had a place for a positive or negative response, and a full explanation of any "yes" answers was requested.
Question number 1 asked whether anyone in the household had ever had any insurance cancelled or rejected, or had a company decline to insure or renew a policy. Question number 2 asked whether anyone in the household had ever filed for bankruptcy, had something repossessed, or had a foreclosure. Question number 3 asked whether anyone in the household had ever been sued or had sued anyone, and question number 4 asked whether anyone in the household had ever been arrested. According to the Clarks, the agent asked them the underwriting questions during the application, and either Alfred or Jo Ann, or both of them, responded with an answer. (Although the Clarks later insisted that the questions either weren't asked or were not asked of Alfred, they could not testify under oath during a sworn statement that the underwriting questions were not asked.)
The Clarks gave a negative response to each of the four questions. Jo Ann initialed a box that was immediately to the right of the questions. The application was also signed by Jo Ann. The information given on the lines reserved for "applicant" was that of Alfred Clark. This included his social security number, date of birth, employer and marital status. Jo Ann's social security number and date of birth were listed on the lines reserved for "spouse."
After considering the application, Farm Bureau issued a policy to the Clarks. A few months later, the Clarks' home was totally destroyed by fire while the Clarks were attending a movie. Their insurance policy was not destroyed in the fire, however, as it was in the Clarks' automobile during the fire. There were also some red markings or underlinings on the policy regarding the policy language concerning fire losses, replacement cost and additional living expense.
During its investigation of the fire loss suffered by the Clarks, Farm Bureau asked that each of the Clarks give a sworn statement regarding the fire loss and the circumstances surrounding their application for the insurance policy.
In his sworn statement, Alfred Clark testified that he had moved from Canada to the West Palm Beach/Miami, Florida area in 1974. He testified that he worked there as a marine mechanic, and that he had been unemployed for approximately four months before moving to Brundidge, Alabama. After moving to Brundidge, he worked as a mechanic for the Wiley Sanders Trucking Company before being terminated from that job. At the time of the fire, Alfred had been unemployed approximately six weeks.
Clark further said in his statement that neither he nor his wife had ever been arrested or convicted for any offense. He revealed in that statement that he had experienced a foreclosure while in Florida, and that his wife knew about it. He also revealed that an Allstate policy belonging to the Clarks had been cancelled prior to their application for the policy from Farm Bureau, and said that Jo Ann Clark was aware of that fact also.
Clark said that he originally thought he applied for the policy, but if he did not, his wife signed the application in his presence.
In further investigating the Clarks' fire loss, Farm Bureau learned that both Clarks had been arrested in Palm Beach, Florida, in 1972. Jo Ann Clark had been charged with prostitution and violation of the Florida Obscenity Law. Alfred Clark had been charged with "living off the earnings of a prostitute" and violation of the Florida Obscenity Law. Alfred was convicted on both counts. Neither of the Clarks revealed these arrests or Alfred's conviction at the time of application for the Alabama Farm Bureau policy.
After discovering the above information, Farm Bureau notified the Clarks that coverage was denied under the policy due to the material misrepresentations made by the Clarks in the application for insurance. It refunded their premiums, and filed a declaratory judgment action in January 1984 in Montgomery County Circuit Court, seeking to have Farm Bureau's rights and liabilities under the policy adjudicated. Farm Bureau requested a refund of some $4,500 paid to the Clarks under the living expenses provision of their policy before it realized that misrepresentation had occurred. Two days later the Clarks filed a complaint against Farm Bureau in Pike County Circuit Court, asking for recovery of the face amount of the policy and alleging fraud and bad-faith refusal to pay under the policy.
The Clarks responded to Farm Bureau's complaint by stating that they had not intentionally concealed any material facts, and requested a transfer of the case to Pike County. The transfer was granted.
The Clarks filed an amended answer asking that Jo Ann Clark be dismissed as a party defendant and requesting that their action against Farm Bureau be incorporated into the declaratory judgment action as a counterclaim. The trial court denied the Clarks' request to dismiss the declaratory judgment action and denied the request to dismiss Jo Ann Clark as a party defendant. Farm Bureau filed a motion for summary judgment in the declaratory judgment action.
Attached to the motion was an affidavit by Bill Oswalt, who is vice president for underwriting for Farm Bureau and who has been an underwriter for twenty-four years. Oswalt stated in his affidavit that he was in charge of underwriting at Farm Bureau, and, as such, was intimately familiar with the underwriting rules and guidelines used by Farm Bureau in deciding whether or not to issue an insurance policy.
Oswalt stated that based on the negative responses given by the Clarks to the four underwriting questions at the top of the application, Farm Bureau, according to its underwriting guidelines and procedures, had no reason to make further investigation into the backgrounds of the Clarks, and based upon the representations made, decided to issue the policy.
Oswalt stated that if positive responses had been given to any of the above questions, Farm Bureau would have made further inquiry, and then a decision would have been made whether or not to issue the policy.
Oswalt emphatically stated in his affidavit that had Farm Bureau known at the time of application for insurance that Alfred and Jo Ann Clark had been arrested and/or convicted for prostitution, living off the earnings of a prostitute, and violations of the Florida Obscenity Law, the policy would never have been issued at all.
In response to Farm Bureau's motion for summary judgment, the Clarks submitted affidavits which stated that they did not intentionally give false information in their application for insurance. Alfred Clark also stated that he was not asked the underwriting questions, not asked to look over the application, and that he did not appoint Jo Ann as his agent in answering the questions. Jo Ann stated that the answers were given in good faith and also stated that Alfred was not asked the underwriting questions.
The trial judge, after examining the sworn statements, pleadings, and affidavits, granted Farm Bureau's motion for summary judgment. The trial court listed as grounds the facts that...
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