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

• Decision Date: 03 June 2005
• Docket Number: No. 1030974.,1030974.
• Citation: 915 So.2d 557
• Parties: Anna PONTIUS, individually and as personal representative of the estate of Andrew L. Pontius, Jr. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
• Court: Alabama Supreme Court

915 So.2d 557

Anna PONTIUS, individually and as personal representative of the estate of Andrew L. Pontius, Jr. v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.

No. 1030974.

Supreme Court of Alabama.

June 3, 2005.

COPYRIGHT MATERIAL OMITTED

Rhonda Marie, Hoover, for appellant.

Bert S. Nettles, C. Dennis Hughes, and Khristi J. Doss of Haskell Slaughter Young & Rediker, LLC, Birmingham, for appellee.

BOLIN, Justice.¹

Anna Pontius, individually and as personal representative of the estate of Andrew L. Pontius, Jr., appeals from the dismissal of her bad-faith and breach-of-contract claims against State Farm Mutual Automobile Insurance Company ("State Farm").

On October 18, 2002, Anna and her husband, Andrew L. Pontius, Jr., were involved in an automobile accident; Celia Martin, a minor, was the driver of the other vehicle. On October 28, 2002, the Pontiuses sued Martin and her parents, Paul and Denise Martin (hereinafter referred to collectively as "the Martins"). The Martins answered, denying all liability and asserting contributory negligence as an affirmative defense. The Pontiuses' automobile was insured with State Farm, and they subsequently made a claim for underinsured-motorist ("UIM") benefits under their insurance policy. State Farm did not pay the benefits.

On February 13, 2003, State Farm moved to intervene in the pending action between the Pontiuses and the Martins, acknowledging that its insurance policies with the Pontiuses provided for UIM coverage and stating that the disposition of the action might, as a practical matter, impair or impede State Farm's ability to protect its interest. On March 7, 2003, the trial court granted State Farm's motion to intervene.

On May 23, 2003, the Pontiuses amended their complaint to add State Farm as a defendant and asserted claims seeking UIM benefits and alleging breach of contract and bad-faith refusal to pay an insurance claim. On June 22, 2003, State Farm filed an answer to the amended complaint, denying the material allegations. In its answer, State Farm affirmatively pleaded the defense of failure to state a claim. That same day, State Farm filed a motion for a dismissal of the breach-of-contract and bad-faith-failure-to-pay claims against it pursuant to Rule 12(b)(6), Ala. R. Civ. P., or for a judgment on the pleadings on those claims pursuant to Rule 12(c), Ala. R. Civ. P. On July 2, 2003, Andrew died as a result of the injuries he sustained in the automobile accident.²

On August 6, 2003, the trial court held a hearing on State Farm's motion for a dismissal or a judgment on the pleadings. On August 12, 2003, the trial court denied State Farm's motion. State Farm then filed a motion entitled a "Motion to Reconsider Order Entered August 12, 2003," supported by a supplemental brief.

Following another hearing, the trial court entered an order on October 13, 2003, granting State Farm's motion for a dismissal and for a judgment on the pleadings, under both Rule 12(b)(6), Ala. R. Civ. P., and Rule 12(c), Ala. R. Civ. P., with regard to Pontius's breach-of-contract and bad-faith-failure-to-pay claims. Subsequently, Pontius and State Farm resolved the UIM claim, and on January 20, 2004, the trial court dismissed the UIM claim with prejudice. Pontius also resolved the pending claims against the Martins. On February 11, 2004, the trial court entered an order dismissing the case. On March 23, 2004, Pontius appealed the trial court's order dismissing the breach-of-contract and bad-faith-failure-to-pay claims against State Farm.

In seeking the dismissal in the trial court, State Farm argued that there can be no action against it based on an alleged breach of contract or the tort of bad-faith failure to pay an insurance claim until Pontius demonstrated that she was legally entitled to recover damages from the underinsured motorist, Celia Martin. In its motion to dismiss, State Farm asserted that Pontius's allegations in the amended complaint adding State Farm as a defendant that the injuries and damage were caused by an underinsured motorist "demonstrates on the face of the amended complaint that plaintiff['s] breach of contract and bad faith claims are not ripe for adjudication." State Farm stated in its motion to dismiss, in pertinent part:

"3. Before it can be determined whether [Pontius has] stated a claim of breach of contract or bad faith against State Farm for the alleged non-payment of UIM benefits, it must first be determined that [Pontius `is] legally entitled to recover' as that language is used both in the State Farm contract and in the Alabama Uninsured Motorist Act. LeFevre v. Westberry, 590 So.2d 154, 157 (Ala.1991). To be `legally entitled to recover as damages' the insured must establish fault on the part of the uninsured motorist, which gives rise to damages, and must then prove the extent of those damages. Id. (Citing Quick v. State Farm Mut. Auto. Ins. Co., 429 So.2d 1033, 1035 (Ala.1983)).

"4. It is the insured's obligation to satisfy all contractual conditions precedent to coverage before bringing a claim for breach of the insurance contract. Nationwide Ins. Co. v. Nilsen, 745 So.2d 264, 267 (Ala.1998). Consequently, in the context of uninsured motorist coverage, the Supreme Court of Alabama has consistently held, `[T]here can be no breach of a an uninsured motorist contract, and therefore no bad faith, until the insured proves that he is legally entitled to recover.' LeFevre, 590 So.2d at 158 (quoting Quick, 429 So.2d at 1035). Thus, in LeFevre the Court instructed that a delay in payment of UIM benefits does not constitute bad faith if there is a bona fide dispute concerning either liability or damages. Id. at 161. Moreover, the Court in LeFevre held that `the insurer and the insured occupy adverse positions until the uninsured motorist's liability is fixed; therefore there can be no action based on the tort of bad faith based on conduct arising prior to that time, only for subsequent bad faith conduct.' Id. at 159 (emphasis added); see also Bowers v. State Farm Mut. Auto. Ins. Co., 460 So.2d 1288, 1290 (Ala.1984)(`[W]here a legitimate dispute exists as to liability, whether under primary coverage or uninsured motorist coverage, a tort action for bad faith refusal to pay a contractual claim will not lie.' (emphasis added)).

"5. [Pontius's] complaint and amended complaint raise claims that are legally self-defeating. Through the very same lawsuit in which [she is] attempting to establish the fault of the Martin defendants and the amount of [her] allegedly resulting damages, [Pontius] now [is] also alleging that State Farm committed a breach of the insurance contract and the tort of bad faith with regard to [her] UIM coverage. As noted above, throughout their pre-suit contentions and their pleadings in this action the Martin defendants have disputed and continue to dispute that they are legally at fault for the accident or any damages arising from the accident. Thus, State Farm cannot legitimately be charged with a breach of contract of insurance (Court Five) or of a bad faith refusal to pay UIM benefits (Count Six) until the plainly demonstrated, legitimate issues of fault and damages are resolved. See LeFevre, 590 So.2d at 159; Bowers, 460 So.2d at 1290; Quick, 429 So.2d at 1035."

The trial court stated in its order of dismissal that it was dismissing Pontius's breach-of-contract and bad-faith claims under both Rule 12(b)(6) and Rule 12(c), Ala. R. Civ. P. In Reed Elsevier, Inc. v. TheLaw.net Corp., 269 F.Supp.2d 942, 947 (S.D.Ohio 2003), the federal district court stated with regard to Rule 12(b)(6) and Rule 12(c), Fed.R.Civ.P.:³

"These rules serve similar ends, insofar as they are dispositive motions, but at their cores they have distinct purposes. Rule 12(b)(6) is concerned with the technical sufficiency of the allegations in the complaint; under any reasonable construction of the facts, as pled, is there a recognized legal basis for granting the plaintiff the relief he seeks? In the Rule 12(b)(6) context, the merits of the claim are not supposed to be considered. Rule 12(c), in contrast, is concerned with the merits: accepting the truth of the allegations and assuming arguendo that the plaintiff has stated a technically valid claim, is the defendant nevertheless entitled to a judgment on the merits? See, generally, 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure §§ 1367, 1368 & 1369 (2d ed.1990); see also Paskvan v. City of Cleveland Civil Serv. Comm'n, 946 F.2d 1233, 1235 (6th Cir.1991)(`The [Rule 12(c)] motion is granted when no material issue of fact exists and the party making the motion is entitled to judgment as a matter of law.'). As noted by Professors Wright and Miller: `The granting of a Rule 12(b) motion merely means that plaintiff has failed to satisfy one of the procedural prerequisites for asserting his claim for relief. A motion for a judgment on the pleadings, however, theoretically is directed towards a determination of the substantive merits of the controversy....' 5A Wright & Miller, § 1369, at 532-33.

"The difference between the two types of motions stems from when in the course of proceedings they can be raised. Motions brought under Rule 12(b)(6), indeed, under 12(b) generally, must be brought by a defendant `before pleading' (i.e., before filing its answer to the complaint). Motions brought under Rule 12(c) cannot be filed until `[a]fter the pleadings are closed' (i.e., after filing its answer). Still and all, the standard for reviewing Rule 12(c) motions is often identical to that used for reviewing Rule 12(b)(6) motions, given that Rule 12(c) can be invoked in a number of situations where a Rule 12(b) motion could have been, but was not, filed by the defendant. See Rule 12(h)(2) & (3); 5A Wright & Miller § 1368, at 514-17. Thus, often times, after a responsive pleading has been filed, a defendant will move to dismiss for failure to state a claim under Rule 12(c),...