Shufford v. Integon Indem. Corp., CIV.A. 99-T-441-N.

• Decision Date: 04 November 1999
• Docket Number: No. CIV.A. 99-T-441-N.,CIV.A. 99-T-441-N.
• Citation: 73 F.Supp.2d 1293
• Parties: Christopher D. SHUFFORD, Plaintiff, v. INTEGON INDEMNITY CORPORATION; et al., Defendants.
• Court: U.S. District Court — Middle District of Alabama

73 F.Supp.2d 1293

Christopher D. SHUFFORD, Plaintiff, v. INTEGON INDEMNITY CORPORATION; et al., Defendants.

No. CIV.A. 99-T-441-N.

United States District Court, M.D. Alabama, Northern Division.

November 4, 1999.

COPYRIGHT MATERIAL OMITTED

James R. Morgan, Morgan & Shands, Birmingham, AL, Mark D. McKnight, Birmingham, AL, for plaintiff.

Robert M. Girardeau, Walter J. Price, III, Huie, Fernambucq & Stewart, Birmingham, AL, for Integon Indem. Corp., Bankers and Shippers Ins. Co., defendants.

Richard W. Smith, Steven L. McPheeters, Rives & Peterson, Birmingham. AL, for Warren Agency, Daniel E. Sosnowski, defendants.

ORDER

MYRON H. THOMPSON, District Judge.

Plaintiff Christopher D. Shufford has brought this lawsuit claiming that his car insurer and an agent thereof violated state laws of contract and tort in their handling of an insurance claim Shufford had submitted to recover for the destruction of his car by fire. Shufford has named as defendants Integon Indemnity Corporation, Integon Insurance Company, Bankers and Shippers Insurance Company, the Warren Agency, and Daniel E. Sosnowski. Because Integon Indemnity Corporation, Integon Insurance Company, and Bankers and Shipper Insurance Company are corporations with common ownership and control, the court will refer to them collectively as "Integon." And because the Warren Agency is a corporation in which Sosnowski is the principal shareholder, and because Shufford does not assert any claims against the Warren Agency independent of those alleged against Sosnowski, the court will refer to the Warren Agency and Sosnowski collectively as "Sosnowski."

The jurisdiction of this court has been properly invoked pursuant to 28 U.S.C.A. § 1332. Shufford initially raised the following six causes of action against all defendants: breach of contract; bad faith refusal to investigate and to pay a claim; fraud; professional negligence and negligent and wanton adjustment of claims; intentional infliction of emotional distress; and invasion of privacy and false light. Shufford subsequently dropped the breach-of-contract and bad-faith-refusal-to-pay claims as against Sosnowski.

This case is currently before the court on motions filed by Integon and Sosnowski for summary judgment. For the reasons that follow, the court concludes that these motions should be granted in part and denied in part.

I. SUMMARY JUDGMENT STANDARD

Rule 56(c) of the Federal Rules of Civil Procedure provides that summary judgment is appropriate where "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law." Once the party seeking summary judgment has informed the court of the basis for its motion, the burden shifts to the non-moving party to demonstrate why summary judgment would be inappropriate. See Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); see also Fitzpatrick v. City of Atlanta, 2 F.3d 1112, 1115-17 (11th Cir.1993) (discussing how the responsibilities on the movant and the nonmovant vary depending on whether the legal issues, as to which the facts in question pertain, are ones on which the movant or nonmovant bears the burden of proof at trial). In making its determination, the court must view all evidence and any factual inferences in the light most favorable to the nonmoving party. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986).

II. BACKGROUND

This lawsuit arises out of an insurance claim that Shufford filed with Integon, the insurer for Shufford's 1992 Mitsubishi Eclipse. Shufford filed the claim on November 9, 1995, after he discovered that his car, which he had left by the side of the road when it broke down the night before, had been completely destroyed by fire.

Under its normal procedures, Integon insurance adjustors use a checklist of "fraud indicators," each of which is assigned a certain number of points, to determine whether to initiate an investigation of a policy-holder's loss. Although Shufford's claim involved only one of the "fraud indicators," the adjustor who processed his report checked off three others to create the appearance of a necessity for investigation, and Integon thus began to investigate Shufford's claim. This investigation included an inspection and appraisal of Shufford's car, as well as demands that Shufford file a good deal of paperwork and submit to an examination under oath. All of these aspects of the investigation were provided for in Shufford's insurance policy.

Though Shufford cooperated with Integon's demands, Integon employed a series of delaying tactics that greatly protracted the processing of Shufford's claim. For example, Integon imposed very onerous demands on Shufford for paperwork to support his claim, requiring him to file and re-file forms due to minor mistakes and omissions. Integon sent Shufford a form letter indicating that Shufford's first proof-of-loss form, submitted in February 1996, was incomplete and not notarized, and that he would have to resubmit the paperwork. Integon also rejected Shufford's second attempt at filing a proof of loss, submitted in March 1996, allegedly for lack of notarization.

In June 1996, an Integon representative sent Shufford yet another copy of the forms he was required to fill out, and enclosed a letter stating that, as of that date, no documents had been received by Integon. The letter further stated that Integon considered itself prejudiced by Shufford's "failure to cooperate" with its investigation of his claim, and that it would terminate the investigation and close the claim file if Shufford did not submit the enclosed documents fully and correctly completed. Once again, Shufford filled out the forms and submitted them to Integon.

In addition to the repeated requests for paperwork, Integon required Shufford to meet with Daniel Sosnowski, who presented himself to Shufford as an agent of Integon participating in the investigation of Shufford's loss. During a March 7, 1996, meeting with Shufford, Sosnowski made several false statements and threats regarding Shufford's claim, as well as several unauthorized predictions about the likely outcome of his claim. For example, Sosnowski encouraged Shufford to withdraw his claim, saying that Integon would undoubtedly deny it. He told Shufford that he would have to "take his claim to court" in order to be compensated, and he suggested that if Shufford did pursue litigation, Integon would intensify its investigation and implicate Shufford in the burning of his car. Sosnowski also told Shufford that, should the matter be litigated, Integon could produce witnesses who would testify against Shufford. In particular, Sosnowski said that Integon's experts, who were highly experienced and whose testimony would be trusted, would testify that Shufford had poured gasoline all over his car. Finally, Sosnowski stated that further pursuit of the claim would lead Integon to turn the matter over for possible criminal investigation of Shufford. Shufford interpreted Sosnowski's statements as an effort to frighten and intimidate him, and to pressure him into withdrawing his claim.

Despite Integon's scare tactics, Shufford did retain legal counsel to assist him in pursuing his claim. On February 14, 1997, fifteen months after he filed his claim, Shufford, through counsel, agreed to accept a settlement from Integon for $ 10,000, minus Shufford's $ 250 deductible. This amount was, however, less than the Integon appraiser's valuation of the retail value of the car, which, unbeknownst to Shufford, was $ 11,300. It was also less than the average quote that the appraiser had received on the car from local car dealerships, which was $ 10,900. The lienholder on Shufford's car agreed to release the title and security interest lien, which at that time was valued at $ 14,498.16, in exchange for the $ 9,750 settlement check. However, a deficit of $ 4,000 still appears on Shufford's credit report, which since the settlement has caused Shufford to be denied credit.

III. BREACH OF CONTRACT

Shufford first claims that Integon breached its contract under the insurance policy by failing to pay the full amount of his claim under the insurance policy, and by failing to pay his claim in a timely fashion, despite his cooperation with all of Integon's demands. Integon argues that summary judgment should be granted on this claim, asserting two affirmative defenses that Integon believes should resolve the issue in its favor as a matter of law. First, Integon contends that the parties reached an accord and Shufford received satisfaction of his claim, thereby voiding Shufford's claims for breach of contract. Secondly, Integon asserts that Shufford's breach-of-contract claim is precluded by Shufford's failure to fulfill the conditions precedent to Integon's liability on the contract. The court rejects both of these arguments, and therefore will deny summary judgment on the contract claim.

A. Accord and Satisfaction

Integon maintains that, by accepting the settlement offer, Shufford received accord and satisfaction of his claim, and thereby discharged any liability Integon may have had under the contract. Accord and satisfaction occurs when parties agree to substitute some performance different from that originally contemplated in the terms of the contract, and is thus a means through which parties discharge their duties under a contract. See 6 Arthur Linden Corbin, Corbin on Contracts § 1276, at 115 (1962). Under Alabama law, the elements required to achieve an accord and satisfaction are "(1) proper subject matter, (2) competent parties, (3) assent or meeting of the minds, and (4) consideration." Austin v. Cox, 492 So.2d 1021, 1022 (Ala.1986); see also Ray v. Alabama Central Credit Union, 472 So.2d 1012, 1014 (Ala.1985). Shufford contests only the third of these elements; he contends that the parties could not as a matter...