Smith v. National Sec. Ins. Co.
| Decision Date | 04 April 2003 |
| Citation | 860 So.2d 343 |
| Parties | Julia M. SMITH v. NATIONAL SECURITY INSURANCE COMPANY. |
| Court | Alabama Supreme Court |
Ronald Austin Canty of Beasley, Allen, Crow, Methvin, Portis & Miles, P.C., Montgomery, for appellant.
L. Merrill Shirley, Elba, for appellee.
Julia M. Smith appeals from the trial court's order dismissing her claims against National Security Insurance Company ("National Security"). We affirm.
On or about January 19, 1998, Don Murphy, a salesman for National Security, offered to sell Julia Smith a "hospital/accident" insurance policy for her minor son. Smith's son was eligible for Medicaid benefits. Smith asserted in her complaint that Murphy represented that "[the] policy would cover all of her minor son's medical bills incurred as a result of an accident, and despite being a recipient of Medicaid" and that Smith "needed the insurance policy for her son's protection." Smith notes that Murphy made these representations "even though, as a Medicaid recipient, her son would receive absolutely no benefit from this policy." Smith purchased the insurance policy and made premium payments until around August 2000, when she claims she heard there might be "something wrong" with her insurance policy.
On October 3, 2001, Smith sued National Security alleging: 1) fraudulent misrepresentation; 2) fraudulent suppression; 3) innocent/negligent/reckless misrepresentation; 4) negligent hiring and/or supervision of Murphy; 5) wanton hiring and/or supervision of Murphy; and 6) the tort of outrage. National Security filed a motion to dismiss, and on January 14, 2002, the trial court entered an order dismissing all counts other than those sounding in fraud. The order noted that Smith's complaint had not been filed within the two-year statutory limitations period for a fraud action but stated that a fraud claim "may survive if the alleged fraud was not discovered until the two year statute had run." Because Smith's complaint did not provide information as to when she discovered the alleged fraud, the trial court granted Smith 20 days to amend the complaint "to allege the time of discovery of any fraud." The order also allowed National Security to renew its motion to dismiss based on the statute-of-limitations defense, if, after Smith amended her complaint, the defense still had merit.
On March 12, 2002, Smith was allowed to file her amended complaint, which stated in part: "In or around August of the year 2000, [Smith] heard in her community that there may be something wrong with her insurance policy and shortly thereafter, [Smith] contacted an attorney." National Security filed a motion to strike and/or to dismiss Smith's amended complaint based in part on the grounds that Smith's action was filed "more than two (2) years after [Smith's] alleged civil [cause of] action should or could have been discovered and, in fact, more than three (3) years after receipt of her policy." On September 3, 2002, the trial court entered an order dismissing Smith's remaining claims as barred by the "appropriate" statute of limitations. Smith filed a "motion to reconsider," which the trial court denied. Smith appealed.
In Nance v. Matthews, 622 So.2d 297 (Ala.1993), this Court stated the standard of review applicable to a motion to dismiss:
Nance, 622 So.2d at 299 (citations omitted).
Smith argues that the statutory limitations period had not run on her fraud claims when she filed her complaint. She acknowledges the two-year statutory limitations period for fraud-based actions, § 6-2-3, Ala.Code 1975, but points out that the limitations period "does not begin to run until the plaintiff discovers or should have discovered the fraud." See Ala.Code 1975, § 6-2-3; Kelly v. Connecticut Mut. Life Ins. Co., 628 So.2d 454 (Ala.1993). Smith contends that when a plaintiff discovered or should have discovered the fraud for the purposes of the limitations period is a fact question to be decided by a jury. Liberty Nat'l Life Ins. Co. v. McAllister, 675 So.2d 1292, 1297 (Ala.1995).
Smith argues in her brief to this Court that she "has not alleged one fact that would have put her on notice before the statute of limitations had run" and that her complaint alleges that she discovered National Security's fraud within two years of filing her action. Smith recognizes that a complaint must contain the time and circumstances of discovery of the alleged fraud to toll the running of the limitations period and thereby entitle a plaintiff to relief from the bar of the limitations period. Angell v. Shannon, 455 So.2d 823 (Ala.1984); Rule 9(b), Ala. R. Civ. P. Smith contends that her amended complaint complies with the requirements of Rule 9(b) by providing the time and circumstances of her discovery of the alleged fraud. She points us to paragraphs 9 through 12, which state:
Smith's brief, pp. 8-9.
The amended complaint was filed in response to the trial court's order granting Smith 20 days to amend the complaint "to allege the time of discovery of any fraud." On its face, the amended complaint complies with the trial court's order. However that fact does not end our inquiry, because the trial court dismissed the amended complaint based on National Security's renewed motion to dismiss. In its renewed motion, National Security alleged that the complaint was untimely filed, "having been filed more than two (2) years after [Smith's] alleged civil [cause of] action should or could have been discovered and, in fact, more than three years after receipt of her policy." (Emphasis added.) It is thus undisputed that from the face of Smith's complaint her action is barred by the statute of limitations.
The standard applicable to efforts to save a complaint when the complaint on its face is barred by the statute of limitations was established in Miller v. Mobile County Board of Health, 409 So.2d 420 (Ala.1981). In Miller, this Court held:
The plaintiff in Miller attempted to escape the bar of the statute of limitations by pleading "`that Defendants committed fraud on Plaintiff by fraudulently concealing the defective and unreasonably dangerous condition of said product from Plaintiff after they knew said product was defective and dangerous.'" 409 So.2d at 422. Unlike Smith's complaint—where there is no reference to concealment—the complaint under consideration in Miller at least contained a reference to concealment. Nevertheless, this Court found the complaint in Miller to be deficient, stating:
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