McLaughlin v. Alabama Farm Bureau Mut. Cas. Ins. Co.

• Court: Supreme Court of Alabama
• Citation: 437 So.2d 86
• Parties: Gary H. McLAUGHLIN d/b/a McLaughlin's IGA Foodliner v. ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, a Corporation. 82-368.
• Decision Date: 22 July 1983

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437 So.2d 86 Gary H. McLAUGHLIN d/b/a McLaughlin's IGA Foodliner
v.
ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, a Corporation. 82-368. Supreme Court of Alabama. July 22, 1983.
Rehearing Denied Sept. 2, 1983.

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Billy C. Bedsole of Stockman & Bedsole, Mobile, for appellant.

Bert S. Nettles and J. Harley McDonald, Jr., of Nettles, Barker & Janecky, Mobile, for appellee.

TORBERT, Chief Justice.

Appellant, Gary McLaughlin appeals from a partial summary judgment in favor of Alabama Farm Bureau Mutual Casualty Insurance Co., Inc. (Farm Bureau). This dispute arose because of the denial of coverage by Farm Bureau under a fire insurance policy on McLaughlin's business. The first claim was for breach of contract by Farm Bureau; the trial court denied summary judgment on this claim. The trial court granted summary judgment as to the second claim for intentional misrepresentation and the third claim for bad faith refusal to pay. Pursuant to A.R.Civ.P. 54(b) the trial court directed entry of final judgment as to these two claims which are now before us on this appeal.

McLaughlin owned and operated McLaughlin's I.G.A. Foodliner in Theodore, Alabama. On October 8, 1980, Farm Bureau issued a fire insurance policy on McLaughlin's grocery store. On November 18, 1980, at some time after 6:45 p.m., a fire at the store caused approximately $120,000.00 in damages to the building and its contents. On January 13, 1981, after investigating the fire, Farm Bureau denied payment on the policy. One of the bases for the denial was that McLaughlin had provided false information in the application to Farm Bureau for coverage. The policy has a provision stating:

"This policy is void if any insured has intentionally concealed or misrepresented any material fact or circumstance relating to this insurance."

Farm Bureau took this position because McLaughlin had answered "No" to a question on the application asking whether McLaughlin had ever been sued or sued anyone, when, in fact, he had been involved in litigation. McLaughlin stated in his deposition that he specifically told Terry Barnes, the agent for Farm Bureau who filled out the application, that he had been sued by a lady who fell in the store. He also testified that Barnes indicated he would not even bother putting it down and that Barnes proceeded to check "no" on the application.

In his original complaint, McLaughlin set forth the following allegations of misrepresentation by Farm Bureau:

"The Plaintiff avers that he paid the premiums on said policy of fire insurance to the Defendant, ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, INC., based on the representations made by the defendant, ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, INC., to him, that it would pay all proceeds due under the insurance policy, No. SMP01273, when and if the Plaintiff did suffer loss of personal property and income due to a fire.

"The Plaintiff further avers that these representations made by the Defendant, ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, INC., were false and were fraudulently made and the said Defendant had no intention of paying the said fire insurance proceeds on the said policy since he specifically told them on his application that he had one prior lawsuit filed against his place of business but that the said agent failed to note this on the application and therefore have denied the Plaintiff's claim based on the fact that the application contains false information when on the contrary the Plaintiff did state to the said Defendant or its agent, the correct information but that the Defendant purposely listed the false information so that if any claim were made it could use this

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false statement as a basis for its denial of said claim."

The defendant, Farm Bureau, thereafter filed a motion for summary judgment. Before it was ruled upon by the court, the plaintiff amended his complaint "in its entirety" to read as follows:

"The Plaintiff avers that heretofore and on, to-wit, October 8, 1980, the Defendant, ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, INC., a corporation, issued a policy of fire insurance, Policy Number SMP01273, covering personal property and contents of refrigerators and freezers located in his grocery store.

"...

"The Plaintiff avers that he complied with the provisions of the above mentioned policies of fire insurance based on the representations made by the Defendants to him that they would pay all proceeds due under the insurance policies when and if the Plaintiff suffered a loss of personal property and income due to fire.

"The Plaintiff further avers that these representations made by the Defendants were false and were fraudulently made and the said Defendants had no intention of paying the fire insurance proceeds on the said policies and wilfully and wantonly failed to pay the Plaintiff's loss under the said policies and that the said Defendants issued the said policies with the present intention not to honor valid claims filed thereunder.

"The Plaintiff avers that the said fire, set out above, occurred while the said insurance policies were in full force and effect and that he made demand on the said Defendants to pay the proceeds under said policies, but that the said Defendants refused to pay said proceeds and they had no intention whatsoever of paying the proceeds when they issued the policies and have failed and refused to pay the said proceeds due under the policies up to the present time.

"WHEREFORE, Plaintiff demands judgment against the Defendants for the fraud and misrepresentations set out above in the amount of ONE MILLION AND NO/100 ($1,000,000.00) DOLLARS, for compensatory and punitive damages."

Thereafter, the trial court denied Farm Bureau's motion for summary judgment. Farm Bureau then filed a motion for reconsideration of the denial. The motion for reconsideration was subsequently granted, and upon reconsidering the trial court granted the motion for summary judgment. The order granting summary judgment was later amended so that the motion for summary judgment on the breach of contract claim was denied, but the summary judgment on fraud or misrepresentation and bad faith was granted.

At the outset we must determine whether appellant's amended pleading was sufficient under A.R.Civ.P. 9(b). Farm Bureau maintains that the amended complaint, which superseded the prior complaint "in its entirety," Zeigler v. Baker, 344 So.2d 761 (Ala.1977), failed to allege fraud with sufficient particularity. Farm Bureau states the complaint fails to set forth the time, place or circumstances of the fraud.

We need not reach this issue because we are of the opinion that if there was error, the defendant failed to preserve it for our review by calling the defect in the complaint to the attention of the trial court. The only...