McGinnis v. Continental Ins. Co.
| Decision Date | 03 September 1993 |
| Citation | 628 So.2d 470 |
| Parties | Greg McGINNIS and Judy McGinnis v. CONTINENTAL INSURANCE COMPANY, et al. 1920828. |
| Court | Alabama Supreme Court |
Lynn W. Jinks III and L. Bernard Smithart of Jinks, Smithart & Jackson, Union Springs, for appellants.
Dennis R. Bailey and N. Wayne Simms, Jr., of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for John Long, Continental Ins. Co., and Fidelity and Cas. Co. of New York.
Les Hayes III of Melton, Espy, Williams & Hayes, P.C., Montgomery, for Water Works and Sanitary Sewer Bd. of the City of Montgomery.
Greg McGinnis, Judy McGinnis, and their three minor children sued Continental Insurance Company; Fidelity Casualty Company of New York; the Starke Agency, Inc.; Continental Loss Adjusting Service and its agent, John Long; the Water Works Board of the City of Montgomery, Alabama; and the Sanitary Sewer Board of the City of Montgomery, claiming damages based on a blocked municipal sewer line. The McGinnises alleged that the City of Montgomery had negligently and wantonly failed to properly maintain, repair, inspect, and construct the sewer line and thereby had caused a continuous two-year leakage of raw sewage into their house and yard. The McGinnises also alleged breach of contract, bad faith, conspiracy, misrepresentation, and breach of fiduciary duty on the part of the insurance companies and Long, based on these defendants' refusal to pay for damage or harm to their property and their persons arising from the leakage of sewage. Delores Wells, the mother of Judy McGinnis and owner of the property, was allowed to intervene as a plaintiff. The trial court dismissed the Starke Agency from the action upon joint motion of the parties and entered a summary judgment in favor of the remaining defendants. The McGinnises appeal.
A summary judgment is proper only where there exists "no genuine issue as to any material fact" and the "moving party is entitled to a judgment as a matter of law." Rule 56(c)(3), A.R.Civ.P. Once the movant makes a prima facie showing that no genuine issue of material fact exists, the burden shifts to the nonmovant to produce substantial evidence creating such an issue. Ala.Code 1975, § 12-21-12; Murdoch v. Knollwood Park Hospital, 585 So.2d 873 (Ala.1991). "Substantial evidence" is "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); § 12-21-12(d). In determining whether there is a genuine issue of material fact to be determined by a jury, this Court must view all facts in a light most favorable to the nonmovant and draw all reasonable inferences favorable to that party. Murdoch.
The McGinnises in 1987 moved into a house owned by Delores Wells. In 1988, the McGinnises' washing machine began to overflow, and the floor underneath buckled from the constant moisture. Wells's insurance company sent workers to assess the problem and to repair the floor. Two weeks later, the washing machine began overflowing again. The McGinnises then began having problems with their bathroom plumbing; the problems escalated to the point that raw sewage flowed throughout their yard from a pipe that connected the house to the sewer line; the sewage flowed throughout the floors and walls of their house from their overflowing toilets. The McGinnises consulted several plumbing companies, who advised them that there was an obstruction in the municipal sewer line in the street in front of their house and that they should contact the municipal authorities.
The McGinnises contacted the Water Works Board numerous times, and the Board sent two workers to examine the street. The McGinnises say the workers merely lifted the manhole cover above the sewer line and pointed out that water was flowing properly through the line and then advised the McGinnises that there was no problem with the city line and that they should get a private plumber to fix the problem. Over the next two years, the McGinnises employed plumbers on 13 occasions to repair the problem; each time, the plumbers told the McGinnises that there was an obstruction either in the street or in the Sanitary Sewer Board's line. One of the companies even spray painted a large orange "X" on the spot where the obstruction seemed to be.
In response to the McGinnises' continuous complaints, the Water Works Board sent workers to inspect the line on 35 separate occasions; however, each time, the McGinnises say, the workers gave the line a cursory examination and informed the McGinnises that there was no problem with it. Meanwhile, the problems caused by the raw sewage intensified and the McGinnises began contacting the State Highway Department and the mayor of the city, as well as the Water Works Board, to plead for help.
In May 1990, the Water Works Board informed the McGinnises that it was going to dig up the sewer line to show "once and for all" that the line was problem-free. When it dug up the line, it discovered a large chunk of street asphalt lodged in the sewer pipe; that chunk of asphalt was blocking the line and causing the raw sewage to back up. The Water Works Board repaired the line and spread deodorized sand across the McGinnises' yard to minimize the odor that had been emanating from the ground for two years.
The Water Works Board informed the McGinnises that it would send an insurance adjuster to assess their claims. John Long, an adjuster for Continental Loss Adjusting Service, met with the McGinnises three days later. Judy McGinnis produced two or three estimates she had made of some of the damage to the house, including replacement of carpets, vinyl flooring, and plumbing and bathroom fixtures, which totaled about $4100. Long added $898.37 as compensation for expenses and offered the McGinnises $5000. Long gave the McGinnises a release form, which contained the words "RELEASE OF ALL CLAIMS" and "Read Carefully Before Signing," as well as a lengthy explanation written in formal, legal language.
The McGinnises at first refused to sign the release, because, they said, they were concerned that it would bar later recovery for losses that were ongoing or not yet discovered. According to the McGinnises, Long assured them that the $5000 was merely an installment on the amount the McGinnises could recover and that the language about "releasing all claims" was merely a "technicality" that would not bar them from filing for more compensation. He also told them that they could not have the $5000 installment unless they signed the form. They read and signed the form, then received a check for $5000 several weeks later. At the bottom of the check, beside a box labeled "nature of payment" were the words "ANY AND ALL CLAIMS AGAINST THE WATER WORKS BOARD OF MONTGOMERY." The McGinnises indorsed and cashed this check and immediately applied the proceeds to outstanding repair and medical bills. The McGinnises thereafter contacted Long to obtain compensation for these and other bills that had arisen; they were informed that the release they had signed barred any further recovery for their losses.
In its summary judgment for the defendants, the trial court held that the release form was valid and thus barred the McGinnises' claims against the defendants. The McGinnises point out, however, that if a release is obtained from one in a weakened condition, without advisers, for a sum grossly less than an amount that would be fair and just compensation, there is a question of fact as to whether the release was obtained through fraud and is thus void. Taylor v. Dorough, 547 So.2d 536 (Ala.1989).
In deposition, Greg McGinnis gave the following testimony concerning his signing of the release:
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