Case Title: Allstate Ins. Co. v. Hilley

Citation: 595 So. 2d 873

Docket Number: 1901762

State: alabama

Court: Alabama Supreme Court

Date: 1992-03-20T00:00:00Z

Document:
595 So. 2d 873 (1992)
ALLSTATE INSURANCE COMPANY
v.
James Larry HILLEY and Robbie Hilley.
1901762.

Supreme Court of Alabama.
March 20, 1992.
*874 Sterling G. Culpepper, Jr. and William P. Cobb II of Balch & Bingham, Montgomery, and Curtis C. Wright of Dortch, Wright & Russell, Gadsden, for appellant.
Larry W. Morris and Kenneth F. Ingram, Jr. of Morris, Haynes & Ingram, Alexander City, and Donald R. Rhea of Rhea, Boyd & Rhea, Gadsden, for appellees.
HORNSBY, Chief Justice.
Allstate Insurance Company ("Allstate") appeals from a $2,000,000 judgment entered on a jury verdict in favor of James Larry Hilley and Robbie Hilley, based on the Hilleys' claim of fraudulent misrepresentation. In Hilley v. Allstate Ins. Co., 562 So. 2d 184 (Ala.1990), this Court affirmed the trial court's summary judgment in favor of Allstate on the Hilleys' claims of breach of contract, outrageous conduct, bad-faith refusal to pay, and violation of public policy. The trial court had denied Allstate's motion for a summary judgment as to the Hilleys' fraudulent misrepresentation claim. Allstate raises four issues on appeal: (1) whether the Hilleys' fraud claims are supported by the evidence and the law; (2) the propriety of the general verdict; (3) whether the trial court erred in admitting evidence relevant to issues previously decided by this Court upon the Hilleys' appeal; and (4) whether the award of damages was excessive or otherwise improper.
In our opinion addressing the Hilleys' appeal from the summary judgment in favor of Allstate, we stated the facts of this controversy as follows:
Hilley, 562 So. 2d  at 186-87 (emphasis added in first opinion).
The Hilleys' fraud claim is based on an Allstate agent's representation that, in the event of a fire, Allstate would rebuild the Hilleys' house, replace their house, or pay them the $38,000 that Allstate assessed as the market value of their house. Allstate, of course, elected none of these options after the Hilleys lost their house. The Hilleys' complaint alleged that "instead [Allstate] offered and paid only $11,000 on the personal property protection and further only paid $14,050 on the dwelling coverage, which according to the defendant was the actual cash value of the property plus clean up and debris removal." Allstate contends that the policy in effect at the time of the Hilleys' loss required the Hilleys to commence rebuilding the house within 180 days after the loss in order to be entitled to any amount over the actual cash value of their house.
Allstate contends that neither the evidence nor the law supports the Hilleys' fraud claims. Allstate primarily argues that the alleged fraud is in the nature of promissory fraud, and, therefore, that the trial court erred in instructing the jury as to the elements of legal fraud, but not promissory fraud.
Initially, we note that because this action was pending on June 11, 1987, the "scintilla rule" is applicable. "[T]he scintilla rule requires that issues in civil cases must go to the jury if the evidence, or a reasonable inference therefrom, furnishes a glimmer or trace in support of an issue." Alabama Farm Bureau Mut. Casualty Ins. Co. v. Haynes, 497 So. 2d 82, 85 (Ala.1986). Because we believe that this rule was satisfied in this case, we cannot say that the trial court erred in submitting the Hilleys' fraud claims to the jury.
In General Motors Acceptance Corp. v. Covington, 586 So. 2d 178 (Ala.1991), this Court enumerated the elements that must be satisfied in order to prove a claim of fraud: "(1) a false representation; (2) of a material existing fact; (3) that [the plaintiff] justifiably relied upon; and (4) that [the plaintiff] was damaged as a proximate result." Id. at 181. We further stated:
Id. Allstate contends that the Hilleys failed to prove the additional elements of promissory fraud. We do not believe the Hilleys were required to do so.
A promissory fraud claim is "one based upon a promise to act or not to act in the future." Padgett v. Hughes, 535 So. 2d 140, 142 (Ala.1988). The Hilleys' fraud claim arises from the Allstate agent's representation that, in the event their house was destroyed by fire, Allstate would either rebuild the house, replace the house, or pay the Hilleys the $38,000 that Allstate assessed as the market value of their house.[1] This statement is a representation of the insurance coverage that the Hilleys were purchasing. The statement was not a promise to act in the future. It was, rather, represented to the Hilleys as a present fact of Allstate's obligations under the insurance policy. Therefore, the trial court did not err in refusing to instruct the jury as to the additional elements of promissory fraud.
The only argument with regard to legal fraud that Allstate makes concerns the element of justifiable reliance. Allstate argues that the Hilleys failed to produce any evidence that they justifiably relied on the agent's representation that the market value of their house was $38,000. We disagree. In Hickox v. Stover, 551 So. 2d 259 (Ala.1989), we stated:
Id. at 263 (quoting Southern States Ford, Inc. v. Proctor, 541 So. 2d 1081, 1091-92 (Ala.1989) (Hornsby, C.J., concurring specially)). We do not believe that the Allstate agent's representation at issue was "one so patently and obviously false that [the Hilleys] must have closed [their] eyes to avoid the discovery of the truth," and we, therefore, hold that the jury could have reasonably found that the Hilleys justifiably relied on the agent's representation.
In effect, Allstate is asking how the Hilleys could have believed their house was worth as much as Allstate's own agent represented. The Hilleys were entitled to rely, and justifiably, on the assumption that the agent was using his knowledge of the real estate market in the Gadsden area in assessing the market value of the Hilleys' house. Moreover, there was evidence that the year before the Hilleys purchased the house, the property had been appraised at $21,000. Thereafter, but before the Allstate agent assessed the market value of the house, Mr. Hilley made $8,000 to $10,000 worth of improvements. Finally, Mr. Hilley testified that the agent told him that his house was one of the nicer houses in the neighborhood. We believe that these factors are of such a character that the Hilleys could have justifiably relied on the agent's representation as to the market value of their house.
Allstate claims that the jury's general verdict was improper because, it argues, one of the Hilleys' fraud claims was submitted to the jury without any supporting evidence. Specifically, Allstate focuses on the Hilleys' allegation that Allstate represented that it would fully cooperate with *877 the Hilleys in repairing the house and that the Hilleys would be kept comfortable. Allstate argues that it was entitled to a directed verdict on this claim because, Allstate says, it was not supported by any evidence. Therefore, Allstate asserts that the general verdict may not stand because an unsupported fraud claim was presented to the jury.
The only theory submitted to the jury was fraudulent misrepresentation. This was not a "multiple-theory case." See King Mines Resort, Inc. v. Malachi Mining & Minerals, Inc., 518 So. 2d 714, 716 (Ala.1987). In the present case, we cannot say that "it is impossible to know on which of the multiple theories the jury based its verdict." Id. at 716. Therefore, we agree with the Hilleys that because there was only one theory submitted to the jury, the jury properly returned a general verdict.
In Hilley v. Allstate Ins. Co., 562 So. 2d 184 (Ala.1990), this Court affirmed the trial court's summary judgment in favor of Allstate on the Hilleys' claims of breach of contract, outrageous conduct, bad-faith refusal to pay, and violation of public policy.[2] Allstate contends that the trial court erred in admitting evidence that it says was relevant only to the breach of contract and bad faith claims upon which this Court had previously affirmed the summary judgment. The claimed error concerns evidence of Allstate's cancellation of the Hilleys' policy after the Hilleys had failed to rebuild their house within six months, Allstate's failure to pay the Hilleys' additional living expenses, and Allstate's refusal to guarantee payment of the replacement cost balance to a contractor of the Hilleys' choice. Allstate argues that the submission of evidence relating to these events prejudiced the jury.
In Sessions Co. v. Turner, 493 So. 2d 1387 (Ala.1986), this Court stated:
Id. at 1391 (citations omitted). See also Gadsden Paper & Supply Co. v. Washburn, 554 So. 2d 983, 988 (Ala.1989) (although "evidence may be excluded by the trial judge if its prejudicial effect outweighs its probative value[,] ... it is equally true that in fraud cases the plaintiff is allowed wide latitude as to the proof he may submit into evidence"); Dorcal, Inc. v. Xerox Corp., 398 So. 2d 665, 671 (Ala.1981) ("questions of materiality, relevancy and remoteness [in a fraud case] rest largely within the discretion of the trial court" and "its ruling concerning relevancy must not be disturbed on appeal unless such discretion had been grossly abused").
We conclude that the evidence in question was relevant not only to the claims previously addressed by this Court upon the Hilleys' appeal, but also to the Hilleys' fraudulent misrepresentation claim. The fact that this Court had previously affirmed a summary judgment in favor of Allstate on the Hilleys' claims other than fraud did not preclude the trial court from recognizing that evidence relevant to the previously decided claims was also relevant to the Hilleys' fraud claim. The trial court did not abuse its discretion in ruling that evidence of various actions taken by Allstate *878 was relevant to the Hilleys' claim that Allstate fraudulently misrepresented the respective obligations of Allstate and the Hilleys under the insurance contract.
Allstate contends that the $2,000,000 damages award rendered against it is excessive and is the result of bias, passion, prejudice, or other improper motive. The trial court entered the following order after its hearing conducted pursuant to Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986):
We believe that the facts of this case strongly support the trial court's conclusions. The trial court did not err in declining to reduce the $2,000,000 damages award.[3]
*880 "[O]nly where the record establishes that the award is excessive or inadequate as a matter of law, or where it is established and reflected in the record that the verdict is based upon bias, passion, corruption, or other improper motive may a trial court order a new trial or remittitur." Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala.1986). The record does not support Allstate's assertion that the jury's verdict was the result of bias, passion, prejudice, or any other improper motive. "It has long been the rule in Alabama that jury verdicts carry with them a presumption of correctness, and that this presumption is strengthened when the trial court denies a motion for new trial." Alfa Mut. Ins. Co. v. Northington, 561 So. 2d 1041, 1048 (Ala. 1990). See also Charter Hosp. of Mobile, Inc. v. Weinberg, 558 So. 2d 909, 911 (Ala. 1990).
Based upon the foregoing reasons, the judgment is affirmed.
AFFIRMED.
MADDOX, SHORES and KENNEDY, JJ., concur.
HOUSTON, J., concurs specially.
HOUSTON, Justice (concurring specially).
If the representations by Allstate's agent were only promissory in nature, then the trial court erred in not directing a verdict for Allstate and in not entering the JNOV requested by Allstate, for there was not a scintilla of evidence that Allstate intended not to rebuild the Hilleys' house, replace the Hilleys' house, or pay the Hilleys $38,000 if their house was destroyed by fire at the time Allstate's agent told the Hilleys that is what Allstate would do.
However, I do not view the representations of Allstate's agent as futuristic. I view these as representations as to what the policy of insurance bound Allstate to do in the event the Hilleys sustained a loss. These representations were misrepresentations because they did not reflect what the language of the policy bound Allstate to do on July 24, 1985, when Allstate's agent made these representations. The replacement-cost provision in the Allstate policy had been held by this Court to be valid and binding before these representations were made. See Huggins v. Hanover Insurance Co., 423 So. 2d 147 (Ala.1982); see also, Hilley v. Allstate Ins. Co., 562 So. 2d 184, 189 (Ala.1990).
[1]  We note that although Allstate originally assessed the market value of the Hilleys' house at $35,000, upon learning that the house had two bathrooms rather than one Allstate increased its assessment to $38,000. Although the effect is insignificant, these figures have been used interchangeably throughout the record in this case.
[2]  Specifically, we held that "because the Hilleys failed to satisfy the policy's condition precedent [completion of repair or replacement], Allstate had no duty to advance the [replacement cost]." Hilley, 562 So. 2d  at 190. "Having affirmed Allstate's summary judgment as to the Hilleys' breach of contract claim with regard to replacement cost, we ... also affirm[ed] that summary judgment as to the Hilleys' bad faith claim with regard to replacement cost." Id. We also affirmed the summary judgment as to the breach of contract claim for additional living expenses because "the Hilleys had failed to satisfy the condition precedent of submitting receipts for additional living expenses." Id. at 192. Finally, "because we ... affirmed the summary judgment for Allstate as to the Hilleys' breach of contract claim with regard to additional living expenses, we ... affirm[ed] the summary judgment for Allstate as to the claim of bad faith refusal to pay with regard to additional living expenses." Id.
[3]  Although Ala.Code 1975, § 6-11-21, limits punitive damages to $250,000 in many circumstances, we note that this action was commenced before June 11, 1987, and, therefore, that this statutory limitation is inapplicable.