Howton v. State Farm Mut. Auto. Ins. Co.

Decision Date13 March 1987
PartiesCharles HOWTON, et al. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY. 85-605.
CourtAlabama Supreme Court

Bill Thomason, Bessemer, for appellants.

Thomas A. Woodall of Rives & Peterson, Birmingham, for appellee.

PER CURIAM.

Charles Howton, Marlin E. Jordan, and Janet Jordan appeal from a summary judgment granted in favor of State Farm Mutual Automobile Insurance Company, and made final pursuant to Rule 54(b), A.R.Civ.P. We reverse and remand.

Howton and the Jordans sought damages from Patricia Ann Romanski for property damage and personal injuries allegedly sustained in a motor vehicle accident on December 8, 1984. The complaint also contained a claim against State Farm, the liability carrier for Romanski, because of its refusal to pay for the repair of plaintiffs' automobile pursuant to an alleged settlement agreement.

Plaintiffs' claim against State Farm is set forth in counts 4 and 6 of the complaint, substantially as follows:

"4. Plaintiffs allege that ... the defendant State Farm Mutual Automobile Insurance Company contacted them and agreed to pay the repair bills for the repairs to the plaintiffs' vehicle and agreed with the plaintiffs for the repair of plaintiffs' vehicle, at the expense of the defendant State Farm Mutual Automobile Insurance Company and without prejudice to the plaintiffs' right to claim damages for personal injury. Plaintiffs, in reliance upon their agreement with the defendant State Farm Mutual Automobile Insurance Company, contracted for repairs to their automobile.... Plaintiffs allege that the defendant State Farm Mutual Automobile Insurance Company breached said agreement for that it failed, after receiving demand from plaintiffs for the payment of said repairs, to pay said sums to them and tendered a partial payment for the repairs of said automobile, which partial payment is in the form of a draft issued by the defendant State Farm Mutual Automobile Insurance Company, which draft includes a general release....

"....

"6. Plaintiffs allege that their claim for damages against the defendants, separately and severally, are brought under the following theories of liability Their claim against the defendant State Farm Mutual Automobile Insurance Company is for breach of contract and outrage...."

The trial court's order granting State Farm's motion for summary judgment on a stipulation of facts and citing in its order the case of Strother v. Alabama Farm Bureau Mutual Casualty Co., 474 So.2d 85 (Ala.1985), reads, in part, as follows:

"The plaintiffs and the defendant State Farm Mutual Automobile Insurance Company stipulate that the facts, when viewed most favorably to the plaintiffs, are as follows: A 1977 Chevrolet Nova automobile, that was owned by one or more of the plaintiffs, was involved in a collision with another automobile; the other automobile was being operated by the defendant Patricia A. Romanski. The defendant Patricia A. Romanski is insured by State Farm Mutual Automobile Insurance Company. Following the collision, State Farm Mutual Automobile Insurance Company agreed with the plaintiffs for the plaintiffs to have their vehicle repaired by Long-Lewis Ford and the defendant State Farm Mutual Automobile Insurance Company agreed, prior to the time of the repairs, to pay for the costs of the repairs. In reliance [on] the agreement, the plaintiffs delivered their automobile to Long-Lewis Ford and Long-Lewis Ford repaired it. Following the repairs, State Farm Mutual Automobile Insurance Company refused to pay the bill unless the plaintiffs endorsed a check that contained a general release. Demand was made on State Farm to pay for the property damage, with a reservation of plaintiffs' rights to claim damages for personal injury, and the demand was refused. The court finds that all of the elements necessary to present a jury question of a breach of contract existed; that is, there is evidence to support the plaintiffs' contentions that they entered into an agreement with the defendant State Farm Mutual Automobile Insurance Company and that there was consideration to support the agreement. In addition, there is evidence that the plaintiffs changed their position in response to the agreement and that, in reliance on the agreement, they had the car repaired. Therefore, there was a breach of the agreement and injury to the plaintiffs. Likewise, the court finds that there is no evidence before the court that would entitle the defendant State Farm Mutual Automobile Insurance Company to a directed verdict on the plaintiffs' outrage claim and a Motion for Summary Judgment on said claim should be overruled, except for the absence of a duty between the parties, as is hereinafter addressed in this order.

"Alabama Supreme Court in Strother, et al. v. Alabama Farm Bureau Mutual Casualty Company, 474 So.2d 85 (Ala.1985), held in a similar situation, that there are no circumstances whereby the insurance carrier negotiating with a third party on behalf of its insured can become directly liable, because of acts committed during the course of the negotiations with the person making a claim against its insured, to the claimant. Based thereon, this court finds that under the stipulated facts in this case Strother, supra, requires the entry of a summary judgment in favor of the defendant State Farm Mutual Automobile Insurance Company."

The trial court's order, finding from the stipulated facts all the elements of an actionable breach of contract, coupled with absence of a factual defense to the claim based on the tort of outrage, is an obvious expression of its frustration in denying plaintiffs' relief. Yet, it felt duty-bound to grant the insurer's motion for summary judgment because of Strother. The trial court analyzed Strother to hold "that there are no circumstances whereby the insurance carrier negotiating with a third party on behalf of its insured can become directly liable, because of acts committed during the course of the negotiations with the person making a claim against its insured, to the claimant." While this language may dramatize Strother 's holding in its worst light, we cannot disagree with this analysis. Further, we understand the trial court's utter frustration in being forced to reject elementary principles of contract and tort law, and then to deny plaintiffs' relief. Accordingly, we hasten to overrule Strother and thereby vindicate the soundness of the trial court's reasoning.

As authority for its holding, Strother cites four cases: Stewart v. State Farm Ins. Co., 454 So.2d 513 (Ala.1984);...

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