Liberty Nat. Life Ins. Co. v. Sanders

• Decision Date: 17 November 2000
• Parties: LIBERTY NATIONAL LIFE INSURANCE COMPANY and Keith Mahone v. Betty SANDERS.
• Court: Alabama Supreme Court

792 So.2d 1069

LIBERTY NATIONAL LIFE INSURANCE COMPANY and Keith Mahone v. Betty SANDERS.

1972247.

Supreme Court of Alabama.

November 17, 2000.

Philip H. Butler and Martha Ann Miller of Robison & Belser, P.A., Montgomery, for appellants.

Frank H. Hawthorne, Jr., and C. Gibson Vance of Hawthorne, Hawthorne & Vance, L.L.C., Montgomery, for appellee.

JOHNSTONE, Justice.

Defendants Liberty National Life Insurance Company ("Liberty National") and its former agent Keith Mahone appeal from a $145,000 judgment entered by the Montgomery County Circuit Court in favor of plaintiff Betty Sanders. We affirm.

Sanders sued Liberty National and Mahone for fraud; deceit; fraudulent suppression; fraudulent misrepresentation; negligent hiring, training, and supervision; and bad faith refusal to investigate. Sanders dismissed her bad faith refusal to investigate claim. The trial court conducted a jury trial.

At the close of Sanders's evidence and at the close of all the evidence, Liberty National and Mahone moved for a judgment as a matter of law, which the trial court denied. The jury returned a verdict of $10,000 in compensatory damages and of $135,000 in punitive damages in favor of Sanders and against Liberty National and Mahone. The trial court entered a judgment on the verdict.

Liberty National and Mahone renewed their motion for a judgment as a matter of law, or in the alternative, for a new trial, or in the alternative, for a remittitur and reconsideration of the taxing of attorney's fees against them as a discovery sanction for tardily taking of the deposition of one Russell Hurst. The trial court denied the motion. Liberty National and Mahone appealed.

On appeal, Liberty National and Mahone raise 11 issues: (1) whether Sanders presented substantial evidence to support the $10,000 compensatory damage award; (2) whether Sanders presented clear and convincing evidence to support the $135,000 punitive damage award; (3) whether the trial court erred in charging the jury on spoliation of evidence; (4) whether the trial court erred in charging the jury on the elements of intentional fraud and in including intentional or willful fraud in its charges on punitive damages; (5) whether the trial court erred in refusing to give Liberty National and Mahone's requested jury instruction No. 19 on fraud; (6) whether the trial court erred in refusing to give Liberty National and Mahone's requested jury instruction No. 21 on "lost opportunity"; (7) whether the trial court improperly admitted prejudicial evidence on an irrelevant and immaterial issue; (8) whether Sanders's counsel made improper arguments prejudicial to Liberty National and Mahone; (9) whether the $10,000 compensatory damage award is excessive; (10) whether the $135,000 punitive damage award is excessive; and (11) whether the trial court erred in denying Liberty National and Mahone's motion to reconsider the taxing of the attorney fee as a discovery sanction.

"In reviewing a jury verdict, an appellate court must consider the evidence in the light most favorable to the prevailing party...." Delchamps, Inc. v. Bryant, 738 So.2d 824, 831 (Ala.1999). See also Cobb v. MacMillan Bloedel, Inc., 604 So.2d 344 (Ala.1992),

and Mason & Dixon Lines, Inc. v. Byrd, 601 So.2d 68 (Ala.1992). A presumption of correctness attaches to a jury verdict, "if the verdict passes the `sufficiency test' presented by motions for directed verdict and a JNOV." S & W Properties, Inc. v. American Motorists Ins. Co., 668 So.2d 529, 534 (Ala.1995). (Rule 50(a), Ala.R.Civ.P., now designates a motion for a directed verdict as a motion for a judgment as a matter of law, and Rule 50(b) now designates a motion for JNOV as a renewed motion for a judgment as a matter of law.) This presumption is strengthened by a trial court's denial of a motion for a new trial. Christiansen v. Hall, 567 So.2d 1338 (Ala.1990). "This Court will not, on a sufficiency of the evidence basis, reverse a judgment based on a jury verdict unless the evidence, when viewed in a light most favorable to the [verdict winner], shows that the verdict was `plainly and palpably wrong and unjust.'" S & W Properties,

668 So.2d at 534 (quoting Christiansen, 567 So.2d at 1341). "Whether to grant or deny a motion for new trial rests within the sound discretion of the trial court, and this Court will not reverse a ruling in that regard unless it finds that the trial court's ruling constituted an abuse of that discretion." Colbert County-Northwest Alabama Healthcare Authority v. Nix, 678 So.2d 719, 722 (Ala.1995). "Without a showing of such an abuse, the trial court's ruling must be affirmed." Id.

A. Compensatory Damages

Liberty National and Mahone argue that Sanders did not present any evidence of actual damage resulting from Mahone's alleged fraudulent misrepresentation and suppression. Because Sanders is the jury-verdict winner, we must view the evidence in the light most favorable to Sanders. S & W Properties, supra; Carter v. Henderson, 598 So.2d 1350 (Ala.1992); Williams v. Allstate Ins. Co., 591 So.2d 38 (Ala.1991). Thus, the issue before us is whether the evidence viewed in the light most favorable to Sanders supports the jury's award of $10,000 in compensatory damages.

Sanders first purchased an insurance policy from Liberty National in 1971. Over the ensuing years, Sanders purchased various policies from Liberty National. In 1986, after Sanders was laid off from her nursing position, Sanders allowed her Liberty National policies to lapse because she could not afford to pay the premiums. In 1993, Sanders decided that she needed life insurance to insure her own life and the life of her son David Ogle, a disabled adult. Ogle, an overweight cigarette-smoking schizophrenic, lived at a nearby hospital, but came home frequently. Needing life insurance and recalling her past experience with Liberty National, Sanders telephoned the local Liberty National office and asked to speak with a salesman about purchasing a life insurance policy.

In February 1993, Liberty National sent insurance agents Tim McLain and Keith Mahone to Sanders's mobile home to discuss her purchase of life insurance. At that time Sanders purchased a Liberty National life insurance policy insuring her own life. The policy had a face amount of $10,000 and had a monthly premium amount of $54.22. Additionally, Sanders asked Mahone about purchasing a homeowner's insurance policy. The next day, Mahone returned to Sanders's mobile home with the paperwork for a fire insurance policy insuring Sanders's mobile home. Approximately two or three weeks later, Sanders telephoned Mahone and asked him about purchasing a life insurance policy insuring the life of her son, Ogle.

On March 23, 1993, Mahone met with Sanders and Ogle at Sanders's mobile home. Sanders told Mahone that she wanted to purchase a $10,000 policy like the one she had purchased insuring her own life to insure Ogle's life. She told Mahone that she wanted the policy in case anything happened to Ogle. Sanders and Ogle informed Mahone that Ogle was a schizophrenic and a smoker. Mahone completed the application for the life insurance policy.

Sanders testified that Mahone told her the policy insuring Ogle would be the same as the one she purchased insuring her own life, that Mahone told her that she would receive $10,000 if anything happened to her son, and that Mahone told her that the policy would be effective when she paid the first premium. Sanders delivered the first month's premium to Mahone. Mahone tendered the application and premium to Liberty National, which rejected Sanders's application because Mahone quoted the wrong premium amount. Liberty National cancelled that policy and returned the premium to Sanders.

In April 1993, Sanders asked Mahone to complete another application for a life insurance policy to insure Ogle. Mahone did not explain why Liberty National cancelled the first policy on Ogle. Sanders again brought Ogle home to meet with Mahone, and again told Mahone that Ogle was a schizophrenic and a smoker. She told Mahone that she wanted the policy because she would not have the money to bury Ogle unless she had insurance. Mahone asked Ogle the questions on the application for life insurance. One of the questions was whether the applicant suffered from a "brain disease." Ogle responded, "Yes." On April 19, 1993, Mahone completed, and Ogle signed, the application for insurance on Ogle's life. The next day, April 20, 1993, Sanders paid the monthly premium of $192 to Mahone. Sanders testified that on April 20, 1993, Mahone

"assured [her that] the policy was effective when I gave him the money. Mr. Russell H. Hurst was present when I gave the money to Mr. Mahone and was aware of his accepting the money and declaring the policy was effective upon receipt of the money. Mr. Mahone did not give me a receipt for the money, but took it, with Mr. Hurst present assuring me the policy was effective immediately."

On April 23, 1993, Liberty National issued Sanders a policy insuring the life of Ogle, but Sanders never received the policy. On April 24, 1993, Ogle died of natural causes. Later that day, Sanders telephoned Mahone and left a message on his answering machine for Mahone to call her.

On the day of Ogle's funeral, Mahone went to Sanders's mobile home. Mahone had Sanders complete a "death claim," which requested a "lump sum" payment of the insurance proceeds. Sanders sent the "death claim" to Liberty National. Mahone told Sanders that she would receive a $10,000 check in the mail from Liberty National. Thereafter, Liberty National mailed Sanders a check in the amount of $193.30, comprising the one premium Sanders had paid plus 10% interest on that premium. Sanders did not accept the check and did obtain counsel, who sent a Mahone letter inquiring when Sanders could expect payment of the full $10,000. Mahone gave the letter to Liberty National. Liberty National sent Sanders's counsel a letter stating...