Henry v. Kansas City Life Ins.Co.

• Decision Date: 01 October 1999
• Citation: 770 So.2d 76
• Parties: (Ala. 2000) Ex parte Altonie Henry (Re: Altonie Henry v. Kansas City Life Insurance Company et al.) 1980407
• Court: Alabama Supreme Court

770 So.2d 76 (Ala. 2000)

Ex parte Altonie Henry

(Re: Altonie Henry v. Kansas City Life Insurance Company et al.)

1980407

SUPREME COURT OF ALABAMA OCTOBER TERM, 1999-2000

05/05/2000

PETITION FOR WRIT OF MANDAMUS

(Mobile Circuit Court, CV-97-3531)

BROWN, Justice.

Altonie Henry sued Kansas City Life Insurance Company ("KC Life") and one of its agents; her action is pending in the Mobile Circuit Court. She petitions for a writ of mandamus directing that court to vacate its order of October 7, 1998, wherein it set out certain conditions for Henry to comply with before proceeding with a portion of the discovery process. Additionally, Henry asks us to direct the circuit court to vacate its orders of April 24, 1998, October 26, 1998, and November 9, 1998, quashing several nonparty subpoenas issued to various insurance companies for whom John T. Walley, a defendant in Henry's pending action, had acted as an agent.

On November 14, 1994, Henry purchased a "whole life" insurance policy, in the face amount of $25,000, from KC Life, through its agent Walley. Henry paid the first month's premium of $52.98, in cash, to Walley. Thereafter, KC Life billed Henry directly for each monthly premium. Henry arranged with Walley to pay the premium to him in cash each month when he came by her house. Henry paid her monthly premium to Walley each month until October 1995, a total of 12 payments. However, only 5 of the 12 payments were credited to her policy. Henry claimed that KC Life or Walley had converted the remaining 7 premium payments.

Before he was employed with KC Life, Walley had been employed for 23 years as an agent with American General Life Insurance Company ("American General"). American General had terminated Walley's employment in 1994 for stealing a policyholder's premiums by forging the policyholder's signature to a premium-refund check. Within a month of his termination, Walley became an agent for KC Life. Henry contends that Walley was not truthful when he completed the application to become a licensed agent for KC Life. KC Life submitted Walley's license application to the Alabama Department of Insurance, along with an endorsement stating that Walley was "an individual of good business standing and character" and that KC Life was "satisfied that the applicant [was] trustworthy and qualified to act as [its] agent."

Henry sued KC Life and Walley, alleging misrepresentation, deceit, and fraudulent suppression, and seeking damages to include compensation for mental anguish. As to KC Life separately, Henry alleged that it had been negligent or wanton in hiring, training, supervising, and retaining Walley as its agent. Specifically, Henry claimed that information concerning Walley's misconduct and his subsequent termination from American General had been available to KC Life at the time it hired him. Moreover, Henry claimed, KC Life knew when it hired him that Walley had been terminated by American General for conversion but nevertheless represented to the Alabama Department of Insurance that he was "honest and trustworthy."¹

Along with the complaint, Henry filed certain interrogatories and requests for production. Interrogatory no. 13 and request for production no. 14 read as follows:

"13. State the name, address and telephone number of each and every person or other legal entity who purchased a life insurance policy from defendant, Walley, which was issued by defendant, Kansas City Life from 1992 until the present." "14. Produce all applications relative to any Kansas City Life insurance policies sold by defendant, Walley, from 1992 until the present."

KC Life filed numerous objections, including objections to these two items. Henry filed a motion to compel answers and production. On October 7, 1998, the trial court granted Henry's motion to compel as to interrogatory no. 13 and request for production no. 14, but limited those discovery requests so as to relate only to those policies purchased in Alabama. Additionally, the court permitted KC Life to redact the policyholders' responses to health-related questions contained in those policies. Henry does not object to these restrictions. The court's order placed one final limitation on Henry's discovery:

"The court further ORDERS that counsel for the plaintiff shall submit to the Court a proposed letter for the Court's review and approval prior to any contact with any person made known to the plaintiff through the discovery items mentioned above. Said letter should make the recipient take the affirmative step of contacting the plaintiff's attorney if they so wish."

Henry objected to this limitation on her right of discovery.

Henry also had several nonparty subpoenas issued to various insurance companies for which Walley had acted as an agent. On April 24, 1998, the trial court entered an order quashing those nonparty subpoenas. Later, Henry filed notices of intent to seek the issuance of additional nonparty subpoenas to other insurance companies by which Walley had been employed. On October 26, 1996, and on November 9, 1998, the trial court quashed the additional nonparty subpoenas. On December 2, 1998, Henry filed this petition for the writ of mandamus.

I.

Rule 26, Ala.R.Civ.P., governs the discovery of information in civil actions. When a dispute arises over discovery matters, the resolution of the dispute is left to the sound discretion of the trial court. "Discovery matters are within the trial court's sound discretion, and its ruling on those matters will not be reversed absent a showing of abuse of discretion and substantial harm to the appellant." Wolff v. Colonial Bank, 612 So. 2d 1146, 1146 (Ala. 1992) (citations omitted); see also Ex parte Hicks, 727 So. 2d 23, 33 (Ala. 1998) (Maddox, J., dissenting).

Petitioning for the writ of mandamus is the proper method for determining whether a trial judge has abused his discretion in limiting discovery. Ex parte Allstate Ins. Co., 401 So. 2d 749, 751 (Ala. 1981). The writ of mandamus is a drastic and extraordinary remedy, to be issued only when there is (1) a clear legal right in the petitioner to the order sought; (2) an imperative duty upon the respondent to perform, accompanied by a refusal to do so; (3) the lack of another adequate remedy; and (4) properly invoked jurisdiction of the court. Ex parte Horton, 711 So. 2d 979, 983 (Ala. 1998) (citing Ex parte United Serv. Stations, Inc., 628 So. 2d 501 (Ala. 1993)); Ex parte Alfab, Inc., 586 So. 2d 889, 891 (Ala. 1991) (citing Martin v. Loeb & Co., 349 So. 2d 9 (Ala. 1977)). Moreover, this Court will not issue a writ of mandamus compelling a trial judge to alter a discovery order unless this Court "determines, based on all the facts that were before the trial court, that the trial court clearly abused its discretion." Ex parte Horton, 711 So. 2d at 983. Moreover, "`[t]he right sought to be enforced by mandamus must be clear and certain with no reasonable basis for controversy about the right to relief,' and `[t]he writ will not issue where the right in question is doubtful.'" Ex parte Bozeman, 420 So. 2d 89, 91 (Ala. 1982) (quoting Ex parte Dorsey Trailers, Inc., 397 So. 2d 98, 102 (Ala. 1981)).

An insurance company's policyholder lists are confidential proprietary information to which a litigant has no right except through court-ordered discovery. Ex parte Stephens, 676 So. 2d 1307, 1316 (Ala. 1996) (Houston, J., dissenting); Ex parte Mobile Fixture & Equip. Co., 630 So. 2d 358 (Ala. 1993); Ex parte McTier, 414 So. 2d 460 (Ala. 1982).

"The first step in determining whether the court has abused its discretion is to determine the particularized need for discovery, in light of the nature of the claim." Ex parte Rowland, 669 So. 2d 125, 127 (Ala. 1995). A plaintiff in a fraud action "is accorded a broader range of discovery in order to meet the heavy burden imposed on one alleging fraud." Ex parte Clarke, 582 So. 2d 1064, 1067 (Ala. 1991). Here, just as in Rowland, the complaint alleged that the plaintiff had been defrauded by an insurer and its agent. Because she is alleging fraud, Henry is entitled to broader discovery than would normally be allowed. "When the discovery request of a plaintiff alleging fraud is closely tailored to the nature of the fraud alleged, the discovery should be allowed in full, as long as the party opposing discovery does not show that the requested discovery is oppressive or overly burdensome." Ex parte Horton, 711 So. 2d at 983.

Henry's discovery requests sought the name of every person who had purchased a life insurance policy through Walley and issued by KC Life, since 1992, together with a copy of the application for the policy. These requests were overly broad and were not closely tailored to the nature of the fraud alleged in the complaint.² The trial court ordered that KC Life provide Henry with a list of the names of individuals in Alabama who had purchased such policies. Given that Walley and Henry were both residents of Mobile County, that Walley's alleged misconduct occurred in Mobile County, and that Henry filed her action in the Mobile Circuit Court, it would seem logical that most of Walley's sales for KC Life would have occurred within Alabama. Indeed, for the trial court not to restrict the discovery of other policyholders and their applications to Alabama would have made compliance with the requests unduly burdensome on KC Life. See Ex parte Finkbohner, 682 So. 2d 409, 413 (Ala. 1996). Thus, we conclude that the trial court properly limited Henry's discovery to the names of persons in Alabama who had purchased KC Life policies from Walley, together with copies of their redacted applications.

Although the trial court ordered KC Life to provide Henry with the names and applications of every person in Alabama who had purchased a life insurance policy from KC Life, through Walley, since 1992, it placed certain conditions on how Henry could contact these persons. The judge ordered that Henry submit a...