Defleron v. Gulf Agency, Inc.

• Decision Date: 29 October 1999
• Citation: 815 So.2d 548
• Parties: Gregory DEFLERON and Leslie Defleron v. GULF AGENCY, INC., et al.
• Court: Alabama Court of Civil Appeals

815 So.2d 548

Gregory DEFLERON and Leslie Defleron v. GULF AGENCY, INC., et al.

2980441.

Court of Civil Appeals of Alabama.

October 29, 1999.

Rehearing Applications Denied January 14, 2000.

Thomas R. McAlpine of Whitfield & McAlpine, P.C., Mobile, for appellants.

James W. Garrett, Jr., and William H. Webster of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for appellee Gulf Agency, Inc.

E.L. McCafferty III of Vickers, Riis, Murray & Curran, L.L.C., Mobile; and Paul L. Fields, Jr., of Lord, Bissell & Brook, Atlanta, Georgia, for appellee Certain Underwriters at Lloyd's of London.

ROBERTSON, Presiding Judge.

The plaintiffs Gregory Defleron and Leslie Defleron appeal from a summary judgment entered in favor of the defendants The Gulf Agency, Inc. ("Gulf"), and certain underwriters at Lloyd's of London subscribing to Insurance Policy/Certificate No. HOL 00983 (hereinafter those underwriters are referred to as "Lloyd's") on the Deflerons' claims arising out of the issuance of, and the subsequent attempted cancellation of, a policy of homeowner's insurance. We affirm in part, reverse in part, and remand.

Our standard of review of summary judgments is settled:

"A motion for summary judgment tests the sufficiency of the evidence. Such a motion is to be granted when the trial court determines that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. The moving party bears the burden of negating the existence of a genuine issue of material fact. Furthermore, when a motion for summary judgment is made and supported as provided in Rule 56, [Ala. R.Civ.P.,] the nonmovant may not rest upon mere allegations or denials of his pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Proof by substantial evidence is required."

Sizemore v. Owner-Operator Indep. Drivers Ass'n, Inc., 671 So.2d 674, 675 (Ala.Civ. App.1995) (citations omitted). Moreover, in determining whether a summary judgment was properly entered, the reviewing court must view the evidence in a light most favorable to the nonmovant. Long v. Jefferson County, 623 So.2d 1130, 1132 (Ala.1993). No presumption of correctness attaches to a summary judgment, and our review is de novo. Hipps v. Lauderdale County Bd. of Educ., 631 So.2d 1023, 1025 (Ala.Civ.App.1993) (citing Gossett v. Twin County Cable T.V., Inc., 594 So.2d 635 (Ala.1992)).

In the fall of 1995, Leslie Defleron contacted Jack Nichols, an employee of the Badger-Stonewall Insurance Agency ("Badger-Stonewall"), concerning the Deflerons' homeowner's insurance. The record reveals that in November 1994, Badger-Stonewall had obtained homeowner's insurance for the Deflerons through Southern Insurance Underwriters, Inc., and that that coverage had expired on November 1, 1995. On December 14, 1995, Nichols provided Leslie Defleron a price quotation for a policy of homeowner's insurance offered by Lloyd's through Gulf. However, that price quotation was for a type of policy, designated "HO8" by Gulf and Lloyd's, that was not to be issued with respect to homes more than 50 years old.

On December 15, 1995, Nichols completed, and Leslie Defleron signed, an application form (drafted by Gulf) for Lloyd's HO8 homeowner's insurance, listing "Greg L. Defleron" as the applicant; listing "260 Dexter Avenue, Mobile, Alabama" as the mailing and dwelling address; and identifying the mortgagee of the property as "Fleet Finance Inc." at "P.O. Box 6016, Springfield, Ohio." The application indicated that the property for which coverage was sought was constructed in "1906 & 1929" and that a $277 advance premium had been accepted by Badger-Stonewall. Gulf received the application on December 18, 1995, and initially issued a certificate of insurance for policy number HOL 00983, with a coverage term of December 15, 1995, to December 15, 1996. However, a Gulf supervisor detected that the Deflerons' home did not meet the underwriting guidelines for issuance of an HO8 homeowner's policy, and directed that the policy be canceled.

Gulf prepared a notice of cancellation, dated January 3, 1996, indicating that policy number HOL 00983 would be canceled as of 12:01 A.M. on January 15, 1996. The record contains a copy of this notice of cancellation, which bears a signed certification indicating that exact copies of the notice were mailed to the insured and the lienholder; the notice lists the address of "Greg L. Defleron" as "260 Dexter Avenue, Mobile" and Fleet Finance's address as "P.O. Box 6016, Springfield, OH." The record also contains a separate signed certification from a postal employee indicating that the cancellation notices addressed to "Greg L. Defleron" and Fleet Finance were delivered by Gulf to a post office on January 3, 1996. However, Leslie Defleron testified at her deposition that she did not receive this notice, and a Fleet Finance employee based in that company's Atlanta office testified at her deposition that there was no record in its files of its having received the cancellation notice. Gregory Defleron testified at his deposition that he could not recall having received a cancellation notice from Gulf, but also testified that he was sure that he would have communicated with Leslie Defleron, who handled insurance matters for the two of them, had he received such a notice.

At his deposition, Nichols testified that on January 18, 1996, he had sent the Deflerons a personal note apologizing for his inability to obtain insurance for them. However, he also testified that he did not keep a copy of this note, and no copy of the note appears in the record; in addition, the Deflerons denied having received any such note from Nichols.

On April 4, 1996, a burglar took several items from the Deflerons' home, and Leslie Defleron contacted Nichols by telephone to report the loss. Nichols telephoned Gregory Defleron later that day and informed him that there was no insurance to cover the loss.

The Deflerons sued Nichols, Badger-Stonewall, Gulf, and Lloyd's in the Mobile County Circuit Court. Their four-count complaint asserted, among other things, that Nichols had acted on behalf of Gulf and Lloyd's, as well as the Deflerons and Badger-Stonewall, when he allegedly represented to the Deflerons that their homeowner's insurance coverage could be placed with a "better" insurance carrier, and that the Deflerons had purchased the Lloyd's policy in reliance upon Nichols's alleged representations. In addition to this misrepresentation count, the Deflerons asserted two counts alleging that the defendants had negligently or wantonly "sold, procured, and administered" the Lloyd's homeowner's policy and one count alleging that the defendants had suppressed a material fact, i.e., that the Deflerons actually had no homeowner's coverage.

Gulf and Lloyd's filed summary-judgment motions as to all claims asserted against them. After the Deflerons had filed responses in opposition, the trial court heard argument on the motions and entered partial summary judgments in favor of Gulf and Lloyd's. These judgments were later certified as final, pursuant to Rule 54(b), Ala.R.Civ.P.

The Deflerons appealed to the Alabama Supreme Court. That court transferred the appeal to this court, pursuant to § 12-2-7(6), Ala.Code 1975. The trial court subsequently entered an order in compliance with Brown v. Whitaker Contracting Corp., 681 So.2d 226, 229 (Ala.Civ.App. 1996), and we now address the merits of the appeal.

I. Vicarious liability

In its six-page summary judgment, the trial court concluded that all of the Deflerons' claims were based upon the theory that Nichols acted as an agent for Gulf and Lloyd's, and that the Alabama Supreme Court's decision in Ballard v. Lee, 671 So.2d 1368 (Ala.1995), precluded the imposition of vicarious liability upon Gulf and Lloyd's. While the trial court opined that this ground was "dispositive of all of [the Deflerons'] claims," it proceeded to conclude that the Deflerons had failed to present substantial evidence that they did not receive a cancellation notice from Gulf and Lloyd's, citing Montz v. Mead & Charles, Inc., 557 So.2d 1 (Ala.1987), and Currie v. Great Central Insurance Co., 374 So.2d 1330 (Ala.1979).

In Ballard, the owner of a restaurant (Ballard) sought property insurance coverage for his restaurant from an insurance agency in Hamilton, Alabama. Ballard requested coverage amounting to $85,000 for the restaurant structure itself and $45,000 for the structure's contents. The insurance agency contacted a local surplus-lines insurance broker to assist it in securing coverage for Ballard, and that broker in turn contacted an overseas brokerage firm, which solicited coverage from a number of independent syndicates. When a particular syndicate ("the Syndicate") agreed to issue a policy after receiving certain documents, the overseas brokerage firm contacted the local broker, who informed the Hamilton insurance agency. An employee of that agency (Carter) told Ballard, "I have got your insurance and got you bound, if you want it.... It's $85,000 and $45,000." Carter also received the premium for the coverage from Ballard and assisted Ballard in obtaining a satisfactory inspection report regarding the restaurant. However, the policy that was eventually issued by the Syndicate and that was delivered by Carter to Ballard contained language limiting the Syndicate's liability to the "actual cash value" of the restaurant building and its contents.

After the restaurant was destroyed by fire, and the Syndicate had paid an amount approximately $57,000 less than the aggregate $130,000 policy limits, Ballard sued the Syndicate, alleging, among other things, that it was liable in fraud because Carter had misrepresented or suppressed material facts. The trial court entered a summary judgment in favor of the Syndicate, and Ballard appealed.

In concluding that the trial court properly entered a summary...