Willingham v. United Ins. Co. of America
| Decision Date | 30 July 1993 |
| Citation | 628 So.2d 328 |
| Parties | Roger WILLINGHAM and Vera Willingham v. UNITED INSURANCE COMPANY OF AMERICA, et al. 1911937. |
| Court | Alabama Supreme Court |
S. Shay Samples and James P. Rea of Hogan, Smith, Alspaugh, Samples & Pratt, P.C., Birmingham, for appellants.
David K. Howard and Benjamin H. Albritton of Almon, McAlister, Ashe, Baccus & Tanner, Tuscumbia, for appellees.
Vera and Roger Willingham appeal from a summary judgment in favor of the defendants, United Insurance Company of America and its agents Wayne Hester and Mark Ross. The Willinghams sued United, Hester, and Ross, alleging fraud, breach of contract, negligence, conversion, and unjust enrichment. In their brief, however, the Willinghams make arguments only with regard to the fraud and conversion claims. Accordingly, the summary judgment with regard to the other claims is affirmed. Rule 28, A.R.App.P.
A summary judgment is proper when the motion and the materials submitted in support thereof, and those presented in opposition thereto, "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c)(3), A.R.Civ.P. To defeat a properly supported motion for summary judgment, the nonmoving party must present substantial evidence supporting its claims and creating a genuine issue of fact. Ala.Code 1975, § 12-21-12. To satisfy the "substantial evidence test," the nonmoving party is required to present "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). "[O]n review of a summary judgment, we must view all the evidence in a light most favorable to the nonmovant and we must entertain all reasonable inferences from the evidence in favor of the nonmovant." Lee v. City of Gadsden, 592 So.2d 1036, 1038 (Ala.1992).
The relevant evidence, considered in a light most favorable to the Willinghams, shows: The Willinghams were the foster parents of four children: T.S., T.C., A.S., and J.S. In 1987 Mark Ross, an agent of United, contacted the Willinghams and offered to sell them a $5,000 life insurance policy on the life of T.S. Ross filled out the application, and Mrs. Willingham signed on behalf of herself and her husband. While Ross was aware that the Willinghams were T.S.'s foster parents, he indicated on the application that they were T.S.'s mother and father.
In 1988 Hester, another United agent, contacted the Willinghams and offered to sell them life insurance policies on the lives of T.C., A.S., and J.S. Hester filled out the applications, and Mrs. Willingham signed them. Hester later added the label "mother" next to Mrs. Willingham's signature.
The United agents assured the Willinghams that the policies would cover foster children. Accordingly, the Willinghams paid premiums on the policies from the time they made the applications until they later came to believe that the policies were invalid.
In September 1989 an agent of Life of Georgia Insurance Company contacted the Willinghams and offered to sell them insurance policies on the lives of the four children. When the agent learned that the Willinghams were the children's foster parents, he informed them that Life of Georgia would not write life insurance on foster children. Mrs. Willingham also contacted other insurance companies, and they informed her that they would not write life insurance policies on foster children.
Having become suspicious regarding the validity of the life insurance policies, Mr. Willingham contacted James Langcuster, a district manager for United. When asked whether United would write life insurance policies on foster children, Langcuster said that it would not. In response to the Willinghams' demand for a refund of their premium payments, Langcuster stated that he would first have to consult with United's attorney.
The Willinghams testified that Langcuster later contacted them and informed them that the policies would be placed under a "Loving Care Program." Langcuster testified that he submitted the question to United's legal department. He was informed that United would honor the policies on the Willinghams' foster children. Langcuster denied any discussion of a "Loving Care Program," but he stated that he informed the Willinghams that the policies would be honored. It is undisputed that none of the children has died and that no claims have been made on the policies insuring their lives. However, believing that the policies were invalid, the Willinghams stopped making premium payments on them.
While Hester knew that life insurance policies had to be supported by an insurable interest, he did not know that United would not write policies on foster children. However, he never inquired as to whether a foster parent and foster child relationship was sufficient to support an insurable interest. An internal memorandum directed United's underwriters not to write insurance policies on foster children. This memorandum was circulated only to underwriters and not to sales agents. Hester and Ross testified that they did not know that United had decided not to write such policies.
The Willinghams argue that the trial court erred in entering the summary judgment in favor of United. They allege that United and its agents fraudulently represented to them that the life insurance contracts insuring the lives of the foster children were valid and enforceable. They argue that they presented substantial evidence to defeat United's properly supported motion for summary judgment on their fraud claim.
In order to prove their fraud claim, the Willinghams would have been required to show that United made a false representation concerning an existing material fact, that they relied on that representation, and that they suffered damage as a proximate result of such reliance. Harmon v. Motors Insurance Corp., 493 So.2d 1370, 1373 (Ala.1986). United, however, argues that the Willinghams would also have been required to prove the additional elements of promissory fraud. Specifically, United argues that the Willinghams would have had to prove that United, at the time the alleged misrepresentation was made, did not intend to perform the act promised, and that United, at the time, had the intent to deceive. General Motors Acceptance Corp. v. Covington, 586 So.2d 178 (Ala.1991). We conclude that this is not a case of promissory fraud. The alleged misrepresentation had to do with the validity of the life insurance policies at the time they were sold and not whether United intended to perform the promises embodied in the policies.
The evidence shows that United's agents represented to the Willinghams that the life insurance policies would cover foster children. Mrs. Willingham testified that she specifically asked one of the agents whether United could write valid life insurance policies on the lives of foster children. The agent told her that the policies were valid and that they would cover the children and that benefits would be paid by the company in the event a claim was made.
United does not deny that its agents made these statements to the Willinghams. Rather United argues that when the policies were issued, they were valid in all respects. United further argues that even if the policies were not supported by an insurable interest there still was no fraud because United agreed to honor the policies.
The first issue with which we are presented is whether the relationship between the Willinghams and their foster children was sufficient to create in the Willinghams an insurable interest in the lives of their foster children. If the relationship was not sufficient to create an insurable interest, then we must determine whether there were specific circumstances of this relationship that could give rise to an insurable interest. The relationships or circumstances that can give rise to an insurable interest are set out in Ala.Code 1975, § 27-14-3(a):
"(a) Insurable interest with reference to personal insurance is an interest based upon a reasonable expectation of pecuniary advantage through the continued life ... of another person and consequent loss by reason of his death ... or a substantial interest engendered by love and affection in the case of individuals closely related by blood or by law."
Although this Court has not directly addressed the issue of whether the relationship between foster parents and a foster child is, in and of itself, sufficient to give rise to an insurable interest, we now conclude that the language of § 27-14-3(a) does not allow for such a construction. The second part of the statutory definition of an insurable interest is "a substantial interest engendered by love and affection in the case of individuals closely related by blood or by law." § 27-14-3(a). (Emphasis supplied.) While the Willinghams had been entrusted by the state with the care of these four foster children, the Willinghams were not related to the children either by blood or by law. Therefore, the second circumstance set out in the quoted portion of § 27-14-3(a) cannot be the basis for finding an insurable interest.
We further conclude that United presented no evidence of circumstances that would invoke the first of the two statutory bases. That is, there is no evidence of circumstances that would give rise in the Willinghams to a reasonable expectation of pecuniary advantage through the continued life of the foster children and a consequent loss by reason of their death. There is no evidence that the Willinghams had any expectation that all of the foster children would even continue to live with them. 1 Moreover, there is no evidence that the Willinghams should have reasonably expected a pecuniary loss by reason of the death of one of...
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