Jones v. Alfa Mut. Ins. Co.
| Decision Date | 13 June 2008 |
| Docket Number | 1060179. |
| Citation | 1 So.3d 23 |
| Parties | Harold JONES and Pam Jones v. ALFA MUTUAL INSURANCE COMPANY. |
| Court | Alabama Supreme Court |
David M. Cowan of Mann, Cowan & Potter, P.C., Birmingham, for appellants.
L. Merrill Shirley and Griffin M. Shirley, Elba, for appellee.
Harold Jones and Pam Jones, plaintiffs in a bad-faith and breach-of-contract action in the Coffee Circuit Court, appeal from a partial summary judgment entered in favor of Alfa Mutual Insurance Company on the Joneses' bad-faith claims. We affirm in part, reverse in part, and remand.
On October 4, 1995, Hurricane Opal made landfall along the Florida Gulf Coast. Much of south Alabama, including Coffee County, sustained damage as a result of the storm, which retained hurricane status as it arrived inland. The Joneses, who reside on their cattle farm in Coffee County, awoke on October 5, 1995, to find that their house, garage, and barn had suffered damage from the wind associated with Hurricane Opal. Specifically, the Joneses contend that there were cracks in their interior drywall, the seams in the drywall ceiling of their house were visible, cracks appeared in the mortar of the exterior brick veneer of their house, and there were loose bricks in the veneer. The Joneses also contend that a tree near their house was partially uprooted by the wind and that the tree fell onto and damaged the roof of their house. They further contend that at least one of the metal trusses in an addition to their barn was bent during the hurricane. The Joneses had a farm owner's policy with Alfa at the time, and they submitted a claim to Alfa on October 6, 1995, for the damage to their property they say was caused by Hurricane Opal. At an unspecified date, two Alfa adjusters came to the Joneses' residence to inspect the damage to the house. According to Harold Jones, the two adjusters noted the damage to the roof of his house. Harold Jones then showed the two adjusters damage to the drywall ceiling and the walls in his house. The adjusters told Jones that that damage was outside the realm of their expertise and that someone else would inspect that damage.
According to Pam Jones, Alfa agent Wendell Sanders came to the Joneses' house soon after Hurricane Opal, looked at the house, and told the Joneses that they could proceed with replacing their roof. Sanders, however, testified that he did not make any such representation to the Joneses nor would he have had the authority to do so.
Alfa adjuster Gary Bradshaw also inspected the Joneses' house. Bradshaw inspected the roof, walked around the exterior of the house, and noted cracks in the exterior brick veneer and interior drywall that Harold Jones contended were caused by Hurricane Opal. Bradshaw was uncertain about Harold Jones's contention that the cracking of the brick veneer and drywall was the result of Hurricane Opal, and Bradshaw consulted his supervisor Hilton Godwin, an Alfa district claims manager, and the two determined that an engineer's opinion was warranted. Alfa then hired structural engineer Ralph E. Jones to inspect the Joneses' house and to render an opinion as to the causation of the cracks in the drywall and the brick veneer.
Ralph Jones inspected the Joneses' house on November 13, 1995. Harold Jones and Bradshaw were both present during the inspection, and Harold Jones showed Ralph Jones various cracks in the exterior and interior of the house. Ralph Jones also inspected the crawl space under the house. During his inspection Ralph Jones never went into the attic or onto the roof. While he was inspecting the interior of the house, Ralph Jones saw a crack in the fireplace surround. Ralph Jones stated that he asked Harold Jones about the crack and that Harold Jones told him that the crack had been present for an extended time.
According to Harold Jones, after Ralph Jones completed his inspection, Ralph Jones told Harold Jones that if the Joneses' house was located in Montgomery County he would say the damage was most likely caused by soil settlement but that the soil in Coffee County did not tend to cause settlement problems in structures. Harold alleges that Ralph Jones continued by saying that it was his belief that wind had become trapped in the carport of the house during Hurricane Opal and that the trapped wind had lifted the roof and had shifted the top of the house. Harold Jones recalls that Pam Jones and possibly Bradshaw were present when Ralph Jones made this statement. Ralph Jones, however, testified by deposition that he did not recall making such a statement.
On December 4, 1995, Ralph Jones submitted a two-page written report on the Joneses' house to Hilton Godwin. In his report, Ralph Jones wrote:
"It is my opinion that the brick cracks, caulk separations, [S]heetrock cracks, and related damage along the north and east sides of the carport are due to settlement of the foundation in the vicinity of the northeast corner of the carport, and that this settlement and damage was not caused by wind forces or otherwise related to Hurricane Opal."
According to Bradshaw, he had a telephone conversation with Harold Jones the day after Bradshaw received Ralph Jones's report. Bradshaw contends that he told Harold Jones that Ralph Jones's report had arrived and that the cracks in the drywall and exterior brick veneer were not covered by the insurance policy and that Alfa would pay benefits only for the damage to the roof. Harold Jones, however, denies that Bradshaw ever told him that the claim would not be paid.
On December 29, 1995, Bradshaw wrote a letter to the Joneses' attorney, Bruce McLean.1 In this letter, Bradshaw stated:
According to the Joneses, there were no cracks in their exterior brick veneer and interior drywall before Hurricane Opal. They contend that Alfa knew that these cracks did not exist before Hurricane Opal. During the summer of 1995, Sanders came to the Joneses' house to inspect the house for a "rewrite" of their farm owner's policy. During his inspection, Sanders walked around the house and took photographs of the house. In his deposition, Sanders testified that he did not see any damage to the Joneses' property during his inspection of the house.
Bradshaw called McLean about the Joneses' claim on August 5, 1996. Alfa's records state "[McLean] wasn't sure if [Harold Jones] wanted to pursue this or not; [McLean] would check with [Harold Jones] to see." On August 8, 1996, Sanders had a telephone conversation with Joy Richardson of Alfa's underwriting department in which he stated that Bradshaw had spoken with the Joneses' attorney and that the Joneses were dissatisfied with Alfa's handling of their claim.
Also on August 8, 1996, Bradshaw sent a memorandum to Richardson asking that the Joneses' farm owner's policy be canceled "based upon [the] engineer's report after the hurricane that this house is suffering from settlement and structural damage, none of which was related to the storm but all attributed to the foundation." Richardson responded to Bradshaw on August 13, 1996, stating the Joneses' policy was to renew on September 9, 1996, that she did not receive Bradshaw's memorandum until August 12, 1996, that insufficient time existed to give 30 days' notice of nonrenewal before the renewal date, and thus that the policy would be renewed, but it would be renewed for only 6 months. On August 13, 1996, Richardson also wrote a memorandum to Sanders directing him not to rewrite the Joneses' policy because it was being renewed "as is" and that underwriting would make a final decision before the next renewal.
On October 17, 1996, Bradshaw adjusted a claim at the Joneses' residence resulting from peanuts that had boiled over while cooking. While Bradshaw was adjusting that claim, Harold Jones reminded Bradshaw that Alfa had not yet paid for numerous problems the Joneses alleged were caused by Hurricane Opal. According to Harold Jones, Bradshaw stated, "I'm out here to take care of the peanut boil situation and that's it." Harold Jones also testified that Bradshaw informed him that Alfa had not ruled on the Joneses' hurricane claim, that Alfa had not informed him how to handle the claim, and that as of that date there had been no settlement of the claim.
On or around January 14, 1997, Richardson sent a memorandum to Sanders instructing him to raise the Joneses' deductible at the next renewal. In response to the memorandum, Sanders called Richardson and inquired if Alfa could legally raise the deductible while a claim was pending. Richardson told Sanders that she would inquire as to whether Alfa could legally raise the deductible. On January 19, 1997, Alfa's underwriting department signed off on the August 13, 1996, recommendation not to renew the Joneses' farm owner's policy. On January 20, 1997, Alfa closed the Joneses' Hurricane Opal claim file and issued a $350 check to the Joneses for damage their barn sustained during the hurricane.
According to Sanders, he was unaware until ...
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