Syx v. Midfield Volkswagen, Inc.

• Decision Date: 02 October 1987
• Parties: Lorn SYX v. MIDFIELD VOLKSWAGEN, INC., d/b/a Midfield Dodge, et al. 86-914.
• Court: Alabama Supreme Court

Page 94

518 So.2d 94

Lorn SYX v. MIDFIELD VOLKSWAGEN, INC., d/b/a Midfield Dodge, et al.

86-914.

Supreme Court of Alabama.

Oct. 2, 1987.

Rehearing Denied Dec. 4, 1987.

Stan Brobston of Brobston and Brobston, Bessemer, for appellant.

James B. Kierce, Jr., and V. Edward Freeman II of Stone, Patton, Kierce & Kincaid, Bessemer, for appellees Midfield Volkswagen, d/b/a Midfield Dodge, and Ted Cook.

John M. Fraley of McDaniel, Hall, Conerly & Lusk, Birmingham, for appellee Southeastern Fidelity Ins. Co.

HOUSTON, Justice.

The plaintiff, Lorn Syx, appeals from a summary judgment for the defendants, Southeastern Fidelity Insurance Company; Midfield Volkswagen, Inc., d/b/a Midfield Dodge (this defendant is hereinafter called "Midfield Dodge"); Ted Cook; ¹ and Autry Insurance Agency, Inc., in this action seeking damages for fraud. We affirm.

The plaintiff purchased a pick-up truck from Midfield Dodge on September 4, 1984. On February 24, 1985, the plaintiff was involved in an accident with another vehicle. Thereafter, he discovered that his automobile insurance policy did not include coverage for any of the damages and injuries sustained by the other vehicle and its occupant (i.e., it did not include liability coverage). This fraud action followed.

At the time he purchased the truck, the plaintiff applied to Autry Insurance Agency, Inc., for an automobile insurance policy issued by Southeastern Fidelity Insurance Company. A representative of Midfield Dodge prepared the documents of sale, including the application for insurance. Although he was given the opportunity, the plaintiff did not read the insurance application prior to signing it. The application clearly shows that only "comprehensive and collision" coverage was applied for. The plaintiff's insurance policy was delivered by mail on or about September 27, 1984, to the address he had provided. The plaintiff testified in his deposition that, with the exception of his bills, he does not read his mail. He admitted that as of the date of the deposition, he had probably accumulated a year's worth of unread mail. Although his policy was delivered to him approximately five and a half months prior to the accident, the plaintiff did not read it. He stated in his deposition that had he read his policy, he would have known that he did not have liability coverage. He stated further that he could have read his mail, including his insurance policy, if only he "had wanted to read it."

The plaintiff claims fraud because, he says, the representative of Midfield Dodge told him at the time he purchased the truck that he was applying for "full coverage," including liability coverage. The defendants moved for summary judgment on the ground that the plaintiff did not reasonably rely on any statement that might have been made by the Midfield Dodge representative. The thrust of the defendants' argument is that because the plaintiff failed to read the insurance application he signed, either at the time he purchased the truck, or later, and thereafter refused to read the policy that was mailed to the address he had provided, he cannot recover damages for fraud, under the rationale of Torres v. State Farm Fire & Casualty Co., 438 So.2d 757 (Ala.1983). We agree.

Reasonable reliance is an essential element of a fraud action. Torres. In Torres, the plaintiffs brought suit against State Farm Fire & Casualty Company for, inter alia, an alleged misrepresentation that flood insurance would be obtained. The trial court granted a summary judgment in favor of State Farm. This Court affirmed, stating, in pertinent part, as follows:

"For several years prior to the incident in question the plaintiffs, John and Eunice Torres, had purchased their homeowner's and automobile insurance through Clovis Goraum, a State Farm insurance agent. They testified that they relied on Mr. Goraum with regard to their insurance needs. On or about September 12, 1979, Mrs. Torres went to Mr. Goraum's office in connection with an insurance claim related to Hurricane Frederic. She testified in her deposition that 'the first words out of my mouth when I went in the door were, "The first thing I want to tell you is that we want flood coverage." ' According to Mrs. Torres, Elizabeth Hawkins, Mr. Goraum's employee, replied, 'I'll take care of it.' The Torreses admittedly received insurance policies each year from State Farm, but testified that they were unaware that the policies provided no coverage for flood [damage].

"No further conversations with regard to flood insurance took place between the Torreses and Mr. Goraum's office until the plaintiffs suffered flood damage on May 4, 1981. When Mrs. Torres reported the damage to Mr. Goraum, he told her that she did not have coverage.

"... Because it is the policy of courts not only to discourage fraud but also to discourage negligence and inattention to one's own interests, the right of reliance comes with a concomitant duty on the part of the plaintiffs to exercise some measure of precaution to safeguard their interests. In order to recover for misrepresentation, the plaintiffs' reliance must, therefore, have been reasonable under the circumstances. If the circumstances are such that a reasonably prudent person who exercised ordinary care would have discovered the true facts, the plaintiffs should not recover. Bedwell Lumber Co. v. T & T Corporation, 386 So.2d 413, 415 (Ala.1980).

'If the purchaser blindly trusts, where he should not, and closes his eyes where ordinary diligence requires him to see, he is willingly deceived, and the maxim applies, "volunti non fit injuria." '

Munroe v. Pritchett, 16 Ala. 785, 789 (1849).

"For purposes of a summary judgment, the facts must, of course, be viewed in a light most favorable to the non-movants. Even so, we are not constrained to overrule the trial court. The conversation in question took place in the wake of a major disaster. The employee who told Mrs. Torres that she would 'take care of it' no doubt was inundated with work at that particular time generated by claims like the Torreses' related to the hurricane. The plaintiffs relied on the statement for over a year and a half, despite the fact that they never received any premium notice for flood coverage and despite the fact that they received a homeowner's policy each year which did not provide for such coverage. We opine that, under the circumstances, the plaintiffs failed to exercise ordinary diligence in relying for so long on Ms. Hawkins's statement, when they received nothing from State Farm indicating that flood coverage had gone into effect. The failure to procure flood insurance which would have covered the loss was attributable to the plaintiffs' carelessness and neglect rather than to the misrepresentation."

Torres is not materially distinguishable from the present case. In Torres, the plaintiffs relied for approximately a year and a half on an alleged representation that flood coverage had been obtained. In the present case, the plaintiff relied for approximately five and a half months on an alleged representation that liability coverage had been obtained. In both Torres and the present case, the plaintiffs received nothing indicating that the desired coverage had been obtained. The plaintiffs did not read their policy in Torres; the plaintiff in the present case did not read the application he signed at the time he purchased the truck, nor did he read the policy that was subsequently mailed to the address he had provided. The plaintiff in the present case could have readily understood that he was not applying for liability coverage had he only read his application. He testified in his deposition that had he read the policy that was later mailed to him, he would have known that he did not have liability coverage. Although the representation in Torres was made subsequent to a hurricane, that does not materially distinguish that case from the present one. Nor is it material that the plaintiffs in Torres relied for approximately a year longer than the plaintiff in the present case. Five months was sufficient time for the plaintiff to have discovered that he did not have liability coverage. The plaintiff made a conscious decision not to read the application or his policy.

Summary judgment is proper when there is no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. Rule 56(c), Ala.R.Civ.P. All reasonable doubts concerning the existence of a genuine issue of fact must be resolved against the moving party. Fountain v. Phillips, 404 So.2d 614 (Ala.1981). On the authority of Torres we hold, as a matter of law, that because the plaintiff in the present case was put on notice that he did not have liability coverage, his reliance on any statement to the contrary that might have been made by the representative of Midfield Dodge was unreasonable. Therefore, summary judgment in favor of the defendants was proper.

The cases relied on by the plaintiffs, Century Plaza Co. v. Hibbett Sporting Goods, Inc., 382 So.2d 7 (Ala.1980), and Connell v. State Farm Mut. Auto. Ins. Co., 482 So.2d 1165 (Ala.1985), are distinguishable from the present case. Century Plaza involved a shopping center lease and a dispute between the parties over what agreement was reached regarding "common area maintenance." Century Plaza, through its agent, Engel Realty, presented to Ira Hibbett several proposed leases during a two-year period prior to the opening of the Century Plaza Mall in Birmingham in August 1975. Century aggressively solicited Hibbett to open a sporting goods store in its facility. Section 28 of those proposed leases provided that a charge of thirty cents per square foot would be levied on the tenant for common area maintenance. Hibbett refused to enter into an agreement with Century Plaza at that time.

On September 29, 1975, negotiations were resumed and Engel Realty proffered to Hibbett a proposed lease. Hibbett claimed that he...