Fowler Pest Control and Insulation, Inc. v. Hartford Ins. Co. of Alabama

• Decision Date: 24 July 1987
• Citation: 512 So.2d 88
• Parties: FOWLER PEST CONTROL AND INSULATION, INC. v. HARTFORD INSURANCE COMPANY OF ALABAMA, etc. 85-1122.
• Court: Alabama Supreme Court

Page 88

512 So.2d 88

FOWLER PEST CONTROL AND INSULATION, INC. v. HARTFORD INSURANCE COMPANY OF ALABAMA, etc.

85-1122.

Supreme Court of Alabama.

July 24, 1987.

Dieter Schrader, Huntsville, for appellant.

L. Tennent Lee III of Cleary, Lee, Morris, Smith, Evans & Rowe, Huntsville, for appellee.

PER CURIAM.

Fowler Pest Control and Insulation, Inc. ("Fowler"), appeals from a summary judgment in favor of defendant Hartford Insurance Company of Alabama ("Hartford"). At all times pertinent to this appeal, Fowler was insured under a comprehensive general liability policy issued by Hartford. Fowler's complaint, as amended, sets out claims against Hartford for "bad faith," breach of contract, fraud, and deceit arising from Hartford's withdrawal from the defense of Fowler in a suit filed against Fowler by Maurice G. Reynolds, Jr., and his wife, Rebecca Ann Reynolds.

The underlying action against Fowler by the Reynoldses was before this Court in Reynolds v. Fowler Pest Control & Insulation, Inc., 479 So.2d 1185 (Ala.1985). There the cause of action was stated as follows:

"AMENDED COMPLAINT FOR FRAUD"

"1. On, to wit, the 30th day of December, 1981, the Defendant, or its agent, servant or employee acting within the line and scope of his authority, represented in writing at a loan closing that the property in question was free of termite damage, when in fact there was significant termite damage to the dwelling house. The representations were made on Veterans Administration Loan Closing Forms that required disclosure of all observed damage. A copy of the report is attached hereto and incorporated herein by reference.

"2. At the time Defendants represented to Plaintiffs that no termite damage was observed, or failed to report any observed damage, there was in fact serious damage present which a reasonable termite inspection would have revealed.

"3. The representations made by the Defendant were false and Defendant knew or should have known that they were false, and they were made with the intent that Plaintiffs rely upon the representations.

"4. Plaintiffs believed the representations and in reliance upon the representations purchased the property to their detriment."

Based on this claim as alleged by the Reynoldses, Hartford determined that no coverage was provided under the terms of the policy issued to Fowler and withdrew from defending Fowler in the action.

The insurance policy issued to Fowler provided, among other things, the following:

"The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of

"Coverage A--Bodily Injury or

"Coverage B--Property Damage

"to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent...."

The policy defines "occurrence" as "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured."

Fowler contends that the trial court erred in concluding that there was no obligation by Hartford to defend Fowler because there was no coverage under the policy. Fowler argues that facts known to Hartford, which were outside the complaint, should be considered in determining whether the policy provided coverage for Fowler.

The rules regarding an insurer's duty to defend are set out in United States Fidelity & Guaranty Co. v. Armstrong, 479 So.2d 1164, 1167 (Ala.1985), as follows:

"Whether an insurance company owes a duty to provide an insured with a defense to...