Howard v. Mutual Sav. Life Ins. Co.
Decision Date | 04 September 1992 |
Parties | Rosa Mae HOWARD v. MUTUAL SAVINGS LIFE INSURANCE COMPANY. 1910698. |
Court | Alabama Supreme Court |
Charles H. Morris III, Selma, for appellant.
Robert W. Bradford, Jr. and T. Randall Lyons of Hill, Hill, Carter, Franco, Cole & Black, P.C., Montgomery, for appellee.
This appeal presents the issue of when a plaintiff is charged with knowledge of fraud by a defendant so as to begin the running of the statutory period of limitations. We hold that in this case the plaintiff's actual knowledge of fraud turns on whether she could justifiably rely on the defendant's representations that she had received all that was due under her insurance policies. We reverse the summary judgment entered by the trial court on the statute of limitations ground.
In December 1983, plaintiff Rosa Mae Howard's husband was diagnosed with cancer and was hospitalized three times before his death on January 27, 1984. At the time of her husband's death, Howard was paying premiums to the defendant, Mutual Savings Life Insurance Company ("Mutual Savings"), for several health insurance policies then in effect for her and her husband.
In August 1990, Howard sued Mutual Savings, alleging that it had fraudulently failed to pay to her all amounts that were due under various policies she maintained with the company. In deposition, she testified that she talked with Mutual Savings officers approximately a week after the death of her husband, because, she said, she "did not feel they had paid where the insurance man told us that they would." Howard further testified as follows:
At least twice more in her deposition, Howard repeated her statement that the manager at the Mutual Savings office told her that the company had paid all it was going to pay. She also stated that she did not inquire further as to the exact nature of her coverage and that she thereafter allowed the policies to lapse, because, she said, she felt that Mutual Savings had not paid what it had promised to.
Mutual Savings thereafter moved for a summary judgment, alleging that Howard's claim was barred by the statute of limitations. Mutual Savings argued that the testimony cited above established that Howard had had actual knowledge of her fraud claim a few weeks after her husband's death. A fraud action is subject to the two-year statute of limitations of Ala.Code 1975, § 6-2-38(l ), but the two-year period does not begin to run until the plaintiff has discovered, or should have discovered, the fraud. See § 6-2-3; Green v. Wedowee Hospital, 584 So.2d 1309 (Ala.1991).
Howard responded by saying that although she had been dissatisfied with the payment on the policies, she had had no actual knowledge of fraud until a lawyer made a careful examination after a chance discussion between her and the lawyer's wife. After a hearing on the motion, the trial court determined that Howard had had actual notice of the alleged fraud, as a matter of law, more than two years before she sued, and it entered a summary judgment in favor of Mutual Savings.
Rule 56, A.R.Civ.P., sets forth a two-tiered standard for entering summary judgment. The rule requires the trial court to determine (1) that there is no genuine issue of material fact and (2) that the moving party is entitled to a judgment as a matter of law. The burdens placed on the moving party by this rule have often been discussed by this Court:
" "
Berner v. Caldwell, 543 So.2d 686, 688 (Ala.1989) (quoting Schoen v. Gulledge, 481 So.2d 1094 (Ala.1985)).
The standard of review applicable to a summary judgment is the same as the standard for granting the motion, that is, we must determine whether there was a genuine issue of material fact and, if not, whether the movant was entitled to a judgment as a matter of law. Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Wilson v. Brown, 496 So.2d 756, 758 (Ala.1986); Harrell v. Reynolds Metals Co., 495 So.2d 1381 (Ala.1986). See also Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990).
Because this action was not pending on June 11, 1987, Ala.Code 1975, § 12-21-12, mandates that the nonmovant meet his burden by "substantial evidence." Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). Under the substantial evidence test the nonmovant must present "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). More simply stated, "[a]n issue is genuine if reasonable persons could disagree." Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 481 (1982).
In this case, we must consider whether, taking Howard's evidence in the most favorable light, she presented evidence on which reasonable persons could disagree as to when she had, or should have had, actual knowledge of the alleged fraud. The summary judgment rests on the trial court's conclusion that Howard's suspicions that Mutual Savings had not paid properly on her claim requires the finding that she knew of the alleged fraud as a matter of law. Howard's suspicions prompted her to inquire at a Mutual Savings office, where, she testified, she was told that the company had paid all it was going to pay.
Howard testified that she felt that Mutual Savings had not done what its agent had stated it would do. She stated further that she allowed the policy to lapse, without further investigation. These facts certainly could support an inference that Howard believed that she had been defrauded. These facts also support an inference that she simply believed her insurance with Mutual Savings was inadequate and that she chose to find more satisfactory insurance. That is, Howard could have accepted the statement of a Mutual Savings agent as an indication that the insurer had paid all that the policy required it to pay. The record also indicates that Howard's insurance with Mutual Savings was through four complex and interrelated policies. Reasonable people could certainly disagree on whether an examination of these policies would allow a layman to discern the likelihood of fraud under these facts.
The issue of when a fraud is discovered, for the purpose of the running of the limitations period, has been specifically addressed, in the summary judgment context, in Hicks v. Globe Life & Accident Ins. Co., 584 So.2d 458 (Ala.1991):
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