Title: Thomas v. Principal Financial Group

State: alabama

Issuer: Alabama Supreme Court

Document:

566 So. 2d 735 (1990)
Barbara Caroline THOMAS
v.
PRINCIPAL FINANCIAL GROUP, a/k/a or d/b/a Principal Mutual Life Insurance Company, a corporation.
PRINCIPAL MUTUAL LIFE INSURANCE COMPANY
v.
Barbara Caroline THOMAS.
88-834, 88-925.

Supreme Court of Alabama.
August 3, 1990.
*736 John T. Crowder, Jr. and Andrew T. Citrin of Cunningham, Bounds, Yance, Crowder and Brown and Mary Beth Mantiply, Mobile, for appellant/cross-appellee.
Forrest S. Latta and Lynn Etheridge Hare of Barker & Janecky, Birmingham, for appellee/cross-appellant.
HOUSTON, Justice.
Barbara Caroline Thomas sued Principal Financial Group, d/b/a Principal Mutual Life Insurance Company ("Principal Mutual"), seeking damages for breach of contract and bad faith refusal to pay insurance benefits. At trial, Ms. Thomas's motion for a directed verdict on the contract claim and Principal Mutual's motion for a directed verdict on both claims were denied and the case was submitted to a jury, which awarded Ms. Thomas $1,000 on her breach of contract claim and $750,000 on her bad faith claim. The trial court entered a judgment on that verdict. Principal Mutual moved for a judgment notwithstanding the verdict on both claims or, in the alternative, a new trial. The trial court entered for Principal Mutual a judgment notwithstanding the verdict on the bad faith claim, but left intact the judgment for Ms. Thomas on the contract claim. Ms. Thomas appealed from the judgment for Principal Mutual on the bad faith claim, and Principal Mutual cross-appealed from the judgment for Ms. Thomas on the contract claim. We affirm the judgment for Ms. Thomas on the contract claim; we reverse the judgment for Principal Mutual on the bad faith claim and remand the case with directions.
The University of South Alabama Medical Center ("the University") contracted with Principal Mutual for group life insurance for its employees and their dependent children. The policy reads, in pertinent part, as follows:
Ms. Thomas, an employee of the University, had a daughter, Melinda Warren, who in July 1984 had enrolled in a 1200-hour work-study course in cosmetology at the Mobile Academy of Hair Design ("Mobile Academy"), when she was 21 years old. The course was not taught on a quarter or semester basis, but, instead, on a continuous basis until a degree was earned. After paying full tuition and after attending classes for a period of time, Ms. Warren became disabled and could not attend school after August 1985 due to ovarian cancer; she died of ovarian cancer in March 1987, at the age of 24. At the time of her death, Ms. Warren was unmarried and was dependent upon her mother for her principal support and maintenance. With the help of Janice Rehm, a representative of the University's personnel department, Ms. Thomas filed a claim with Principal Mutual for the $1,000 life insurance benefit that was payable for the death of a "dependent." JoAnn Robbins, a claims examiner with Principal Mutual, contacted *737 Ms. Rehm and inquired as to whether Ms. Warren was "attending school on a fulltime basis" at the time of her death. Ms. Rehm contacted Ms. Thomas and Betty Jo Tanner, the owner of the Mobile Academy. Ms. Rehm relayed the information that she received from Ms. Thomas and Ms. Tanner to Ms. Robbins, who made the following notation in the claim file:
In accordance with company procedure, Ms. Robbins prepared an evaluation sheet on Ms. Thomas's claim and sent it to her supervisor, Pam Davis, recommending that the claim be denied:
Ms. Davis approved that recommendation and made the following notation on the evaluation sheet:
The evaluation sheet was then forwarded by Ms. Davis to her supervisor, Mike Wallace, for a final determination as to whether the claim would be paid. Wallace decided to deny the claim and he wrote "agree" on the evaluation sheet. Thereafter, Ms. Robbins wrote a letter to Ted Ferguson, the personnel director at the University, stating in part:
Ms. Thomas and her attorney wrote letters to Ms. Robbins, requesting that Principal Mutual reconsider its denial of her claim. Upon receipt of these letters, Ms. Robbins conducted a second review of the claim and prepared a second evaluation sheet, upon which she noted:
This evaluation sheet was then sent to Ms. Davis, who wrote "agree" on it. The claim was then reviewed jointly by Nancy Ford, another claims examiner, and Merle Kaplan, the senior claims consultant. Kaplan made the following notation on the evaluation sheet:
Thereafter, Ms. Davis wrote a letter to Ms. Thomas's attorney stating that Principal Mutual's initial decision to deny the claim would stand. Upon receipt of this letter, Ms. Thomas filed suit.
Principal Mutual contends that the trial court erred in denying its motions for a directed verdict and judgment notwithstanding the verdict on the contract claim because, it argues, there was no fact question for resolution by the jury. Principal Mutual maintains that the policy clearly provided that the $1,000 benefit was payable to Ms. Thomas only if her daughter was a "dependent" at the time of her death; that to be a "dependent," Ms. Warren had to be "attending school on a fulltime basis"; that the undisputed evidence showed that she had not been enrolled in, nor attending, school for approximately 18 months immediately preceding her death; and, therefore, that Ms. Thomas could not recover under the policy.
Ms. Thomas argues, on the other hand, that the words "attending school on a fulltime basis" are ambiguous; that the undisputed evidence showed that Ms. Warren was enrolled in the Mobile Academy at the time of her death and was "attending school on a full-time basis" within the meaning of the policy, even though she had not attended classes for approximately 18 months immediately preceding her death; and, therefore, that the trial court did not err in denying Principal Mutual's motions for a directed verdict and judgment notwithstanding the verdict. The thrust of Ms. Thomas's argument is that she, not Principal Mutual, was actually entitled to a directed verdict on the contract claim. This argument is based upon her claim that Ms. Warren did not lose her status as a "dependent" under the policy because of the fact that the illness that eventually led to her death rendered her physically incapable of attending school prior to her death. Ms. Thomas argues strenuously that the evidence showed that under the circumstances of this case Principal Mutual contemplated that payment would be made. For the following reasons, we hold that a fact question was presented as to whether Ms. Warren was a "dependent" within the meaning of the policy at the time of her death.
This action was not pending on June 11, 1987; therefore, the applicable standard of review is the "substantial evidence rule." Ala.Code 1975, § 12-21-12. Thus, Principal Mutual would have been entitled to a judgment as a matter of law if, viewing the evidence in a light most favorable to Ms. Thomas, Ms. Thomas failed to present substantial evidence that Ms. Warren was a "dependent" within the meaning of the policy at the time of her death. Watters v. Lawrence County, 551 So. 2d 1011 (Ala. 1989). "Substantial evidence" has been defined by the Legislature as "evidence of such quality and weight that reasonable and fair-minded persons in the exercise of impartial judgment might reach different conclusions as to the existence of the fact sought to be proven." § 12-21-12. In West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989), this Court, construing § 12-21-12, stated that "substantial evidence" is "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."
The trial court correctly concluded as a matter of law that, under certain clear language of the policy, Ms. Warren's status as a "dependent" was to be determined as of the date of her death. Alpine Constr. Co. v. Water Works Bd. of the City of Birmingham, 377 So. 2d 954, 956 (Ala.1979) ("[t]here is scarcely a rule more firmly established than that the court, not the jury, will interpret the meaning of a contract, whether oral or written, unless the court determines the contract to be ambiguous and one of the parties makes an offer of proof as to surrounding facts and circumstances which would clarify the contract's meaning, in which case it is within the province of the jury to ascertain those facts and draw such inferences from them as are necessary to the interpretation of the contract, upon proper instructions by the court"). The trial court concluded, however, that the words "attending school on a full-time basis" were ambiguous under the circumstances, and it instructed the jury to determine whether Ms. Warren was a "dependent" within the meaning of the policy at the time of her death.
*739 The words "attending school on a fulltime basis" are not patently ambiguous; that is, on their face they are clear and intelligible and suggest but a single meaning. "Attending" is the present participle of "attend." "Attend" is defined in The American Heritage Dictionary of the English Language (1969) as "to be present at: attend class." "Full-time," used in the policy as an adjective, is defined in The Random House Dictionary of the English Language (1971) as "working or operating the customary number of hours in each day, week, or month." Thus, the words "attending school on a full-time basis," at least on their face, envision presence in school for the normal or standard period of time required. If this were the end of our inquiry, we would be compelled to hold the trial court in error for denying Principal Mutual's motions for a directed verdict and judgment notwithstanding the verdict, because the undisputed evidence showed that Ms. Warren was not attending school at the Mobile Academy at the time of her death and had not been doing so for approximately 18 months prior thereto. However, if all of the evidence is considered and viewed in a light most favorable to Ms. Thomas, as it must be in this case, it is apparent that the policy language does suffer from a latent ambiguity. An ambiguity is latent when the language employed is clear and intelligible and suggests but a single meaning but some extrinsic fact or extraneous evidence creates a necessity for interpretation or a choice among two or more possible meanings. Black's Law Dictionary (5th ed. 1979) (defining "ambiguity"); Medical Clinic Bd. of the City of Birmingham-Crestwood v. Smelley, 408 So. 2d 1203 (Ala.1981).
The record in the present case reveals that the policy in question was a life insurance policy that was payable upon the death of a "dependent," whether death was the result of an accident or of an illness; that each claim submitted to Principal Mutual was reviewed on a case-by-case basis; that policy language was not always interpreted literally; that a manual used by Principal Mutual's claims examiners stated: "All policy provisions shall be interpreted in accordance with the common understanding of their language. The spirit or intent of the provision as distinguished from a narrow interpretation of the language shall be given effect"; that Edward Kahalley, Jr., an insurance consultant and administrator with over 20 years of experience in interpreting group insurance policies, and with knowledge of the practices and customs of the insurance industry, gave undisputed testimony as an expert that Ms. Warren would have been considered a "dependent" within the meaning of the policy by all other insurers within the industry because she was rendered physically incapable of attending school by a debilitating illness that eventually caused her death;[1] that there was a conflict in the *740 evidence as to whether Ms. Warren was enrolled in the Mobile Academy at the time of her death; and that at least two of Principal Mutual's claims examiners, Ms. Robbins and Mr. Wallace, seemed confused as to exactly what the policy language meant. Although Ms. Davis and Mr. Kaplan appear to have steadfastly maintained that the policy language did not contemplate that a person in Ms. Warren's position would be considered a "dependent" within the meaning of the policy, as previously shown, there was substantial evidence that it did contemplate that. We hold, therefore, that the trial court did not err in allowing the jury to determine whether Ms. Warren was "attending school on a full-time basis" and, thus, whether she was a "dependent" at the time of her death. Alpine Constr. Co. v. Water Works Bd. of the City of Birmingham, supra.
Ms. Thomas contends that the trial court erred in entering a judgment for Principal Mutual notwithstanding the verdict on her bad faith claim. She argues that a fact question was presented as to whether Principal Mutual was guilty of bad faith in denying her claim. Principal Mutual, on the other hand, argues that there was no fact question to be resolved by the jury and, therefore, that the trial court did not err in entering a judgment for it as a matter of law.
This Court first recognized an actionable tort for an insurer's intentional refusal to pay a claim in Chavers v. National Security Fire & Cas. Co., 405 So. 2d 1 (Ala.1981). The Chavers Court held that there was an implied-in-law duty of good faith and fair dealing in contractual relationships between insurers and their insureds. Bad faith was defined as "the intentional failure by the insurer to perform this duty implied in law." 405 So. 2d  at 5. The Court went on to hold:
405 So. 2d  at 7. Accordingly, a two-tiered test was established by which to determine whether an insurer had acted in bad faith in refusing to pay a claim. In recognizing the new tort, the Court in Chavers explained that the policy considerations underlying the disallowance of a negligence standard of conduct in actions by insureds against their insurers did not proscribe a cause of action arising out of intentional misconduct by insurers:
405 So. 2d  at 6.
The Chavers test was refined and clarified in Gulf Atlantic Life Ins. Co. v. Barnes, 405 So. 2d 916, 924 (Ala.1981):
Gulf Atlantic's instructions evidence this Court's initial concern that the existence vel non of bad faith must not be determined in a vacuum, but under the circumstances existing at the time the insurer denied the claim.
The elements of a bad faith claim were summarized in National Security Fire & Cas. Co. v. Bowen, 417 So. 2d 179, 183 (Ala. 1982), as follows:
Following the decisions in Chavers, Barnes, and Bowen, this Court established what is now known as the "directed verdict on the contract claim standard" in bad faith cases. See Burkett v. Burkett, 542 So. 2d 1215, 1218 (Ala.1989). Writing for the Court in National Savings Life Ins. Co. v. Dutton, 419 So. 2d 1357, 1362 (Ala.1982), Justice Shores stated:
The Dutton Court's characterization of a plaintiff's burden of proof as a "heavy" one was no doubt prompted by the Court's previous recognition in Chavers of the necessity for allowing insurers a broad range of freedom to thoroughly evaluate claims and to decline payment in nonmeritorious cases. However, keenly aware of the fact *743 that there were countervailing policy considerations that weighed in favor of an insured's right to have his claim properly evaluated and promptly paid by the insurer, the Dutton Court, in articulating the standard to be applied in "normal" or "ordinary" bad faith cases, allowed for a different standard to be applied in certain unusual or extraordinary cases. Justice Jones, concurring specially in Dutton, elaborated on the majority's opinion:
Later, Justice Jones, in his opinion concurring specially in Safeco Insurance Co. of America v. Sims, 435 So. 2d 1219, 1224 (Ala. 1983), wrote:
Indeed, this Court was later confronted with cases in which the "directed verdict on the contract claim standard" was deemed inapplicable and the insurers were not permitted to avoid bad faith liability by putting on evidence sufficient to defeat the plaintiffs' motions for a directed verdict on the contract claims. In Continental Assurance Co. v. Kountz, 461 So. 2d 802 (Ala. 1984), this Court stated that even if the plaintiff had not been entitled to a directed verdict on the contract claim, the bad faith claim would have been properly submitted to the jury. The Court in Kountz determined from the evidence presented at trial that the insurer intentionally failed to investigate the claim sufficiently to determine the existence of a valid reason for denying payment (i.e., the insurer failed to determine that the reason for the removal of the plaintiff's teeth was an injury, as claimed, not the pre-existing chronic periodontal disease). See, also, Aetna Life Ins. Co. v. Lavoie, 505 So. 2d 1050 (Ala.1987). In both Kountz and Aetna, the Court, quoting Gulf Atlantic Life Ins. Co. v. Barnes, supra, recognized that an intentional failure on the part of an insurer to determine whether there was a lawful basis for denying a claim could be established with proof that the insurer either intentionally or recklessly failed to properly investigate the claim or to subject the results of the investigation to a cognitive evaluation and review. In Aetna, the Court stated: "Considering the fact that the decision to deny [the claim] was made without the benefit of `critical' sections of the medical file, the jury could find that the claim was not `properly investigated,' and that there was a `reckless indifference to facts or to proof.'" 505 So. 2d  at 1053. See, also, Blue Cross & Blue Shield of Alabama v. Granger, 461 So. 2d 1320 (Ala.1984), and Carter v. Old American Ins. Co., 544 So. 2d 917 (Ala. 1989).
In Jones v. Alabama Farm Bureau Mutual Casualty Co., 507 So. 2d 396 (Ala. 1987), the plaintiffs had a homeowner's policy that insured against damage caused directly by perils such as lightning, but not against damage caused indirectly, such as from a tree falling on the power line. During a storm the plaintiffs experienced problems with their electrical service, and several items of personal property were damaged. The plaintiffs and Alabama Farm Bureau Mutual Casualty Company ("Farm Bureau") disputed whether the damage was caused directly by a lightning strike or by a power surge when a tree limb fell on the power line. A Farm Bureau adjuster claimed that the plaintiff told him that the damage resulted when a tree limb fell on the power line. The adjuster's decision was based solely on what the plaintiff allegedly had told him. Farm Bureau argued that the factual dispute as to what the plaintiff had told the adjuster in the conversation precluded a directed verdict in favor of the plaintiff in the breach of contract action, and, therefore, under Dutton entitled Farm Bureau to a summary judgment on the bad faith claim. However, we held:
507 So. 2d  at 400-01.
In United American Ins. Co. v. Brumley, 542 So. 2d 1231 (Ala. 1989), the insurer failed to pay the insured's claim under a "Medicare supplement" policy that read as follows:
The insured, who was 64 years old, was not covered by Medicare at the time he submitted his claim. This Court held that the bad faith claim had been properly submitted to the jury, stating, in pertinent part, as follows:
542 So. 2d  at 1235-36.
As we stated earlier in this opinion, neither Ms. Thomas nor Principal Mutual was entitled to a judgment as a matter of law on the breach of contract claim. A fact question existed as to whether Ms. Warren was a "dependent" under the policy at the time of her death (i.e., a fact question existed as to whether she was "attending school on a full-time basis"). Ordinarily, if the evidence produced by either side creates a fact question with regard to the contract claim, the bad faith claim must fail. Ms. Thomas argues, however, that even if the trial court did not err in submitting the contract claim to the jury, this case does not fall within the category of a normal bad faith case. Rather, she argues, this is an extraordinary case where the "directed verdict on the contract claim standard" could not be applied. Principal Mutual takes the contrary positionthat there is nothing extraordinary about this case.
After carefully reviewing the record, we conclude that this case is not the "normal" or "ordinary" case to which the "directed verdict on the contract claim" standard is applicable. The evidence presented at trial persuades us that this case falls within the category of an extraordinary case, in which it would not be appropriate to allow the insurer to obtain a judgment as a matter of law on the bad faith claim by putting on evidence sufficient to defeat the plaintiff's motion for a directed verdict on the contract claim.
The record reveals that at the time she made her initial recommendation to deny Ms. Thomas's claim, Ms. Robbins was *746 aware that the only reason Ms. Warren had stopped attending the Mobile Academy was "because she was sick." Ms. Robbins's notation in the claim file indicates that she knew that Ms. Warren had undergone extensive chemotherapy treatments, had been in the hospital on numerous occasions, and had been completely bedridden for approximately six months immediately preceding her death. Ms. Robbins testified at trial that she based her recommendation on the information that had been given to her by Ms. Rehm. Ms. Robbins further testified that it was her understanding that Ms. Warren was neither enrolled in nor attending school at the time of her death and had not been for approximately 18 months prior thereto. Ms. Robbins also testified at trial that, in her opinion, Ms. Warren was not "attending school on a full-time basis," and, thus, that she was not a "dependent" at the time of her death. However, portions of Ms. Robbins's deposition testimony were admitted at trial. The following is an excerpt from that testimony:
The jury could have inferred from this testimony that Ms. Robbins was confused as to whether Ms. Thomas was entitled to recover under the policy. Based upon the information that she placed in the claim file, the jury also could have found that had Ms. Robbins carefully reviewed the claim, she would have realized that Ms. Warren had to withdraw from school after September 1985 because she was physically incapable of attending classes. Viewing the evidence in a light most favorable to Ms. Thomas, as we are required to do, we think that the jury could have reasonably found from all of the evidence (i.e., the information in the claim file, the rule prohibiting a narrow and unreasonable interpretation of policy language that was contained in the claims manual, and the custom or practice within the insurance industry of paying such claims) that, at the time she made her initial recommendation to deny the claim, Ms. Robbins simply failed to subject the results of her investigation *748 (i.e., the information accumulated in the claim file) to a cognitive evaluation and review.
Mr. Wallace testified at trial that he carefully reviewed Ms. Thomas's claim and that he denied it because the claim file indicated that Ms. Warren was not enrolled in and did not attend the Mobile Academy after September 1985. However, portions of his deposition testimony were also admitted into evidence at trial. The record shows the following:
Although he testified at trial that, in his opinion, Ms. Warren was not "attending school on a full-time basis" and, thus, that she was not a "dependent" at the time of her death, the jury could have reasonably inferred from his testimony that Mr. Wallace was also confused as to exactly what circumstances would warrant payment. In fact, viewing his testimony as a whole, we conclude that a fact question was presented as to whether Mr. Wallace carefully reviewed Ms. Thomas's claim, or, instead, simply "rubber stamped" the recommendations of Ms. Robbins and Ms. Davis. The credibility of both Ms. Robbins and Mr. Wallace was certainly a matter for the jury.
As previously noted, Ms. Davis and Mr. Kaplan appear to have steadfastly maintained that Ms. Warren lost her status as a "dependent" under the policy after September 1985, notwithstanding the fact that she was rendered physically incapable of attending classes by a terminal illness. We note that Ms. Ford did not testify. We also note that Mr. Wallace apparently did not participate in the second review of Ms. Thomas's claim.
The existence vel non of bad faith must not be determined in a vacuum, but under the particular circumstances of each case existing at the time the insurer denied the claim. The evidence in this case was such that the jury could have reasonably found: that Principal Mutual contracted with the University to provide life insurance for its employees and their "dependents"; that the policy was payable upon the death of a "dependent," whether death was the result of an accident or an illness; that each claim submitted to Principal Mutual was reviewed on a case-by-case basis; that policy language was not always interpreted literally; that a manual promulgated by Principal Mutual and used by its claims examiners prohibited a narrow and unreasonable interpretation of the language of the policy; that according to the custom and practice within the insurance industry, Ms. Warren should have been considered to be a "dependent" within the meaning of the policy because she was rendered physically incapable of attending school by a debilitating illness that eventually caused her death; that at least two of the examiners who reviewed Ms. Thomas's claim, Ms. Robbins and Mr. Wallace, exhibited confusion as to exactly what circumstances would warrant payment within the context of this case; that all of the examiners involved in the review of the claim, including Ms. Davis and Mr. Kaplan, apparently disregarded the claims manual and placed a narrow and restrictive interpretation on the policy language that was contrary to the interpretation generally placed on such language within the industry; and finally, and perhaps most importantly, that throughout the claims review process, Principal Mutual's examiners either intentionally or recklessly failed to subject the results of the investigation to a cognitive evaluation and review.
In the letter denying the claim, Ms. Robbins misstated the facts: "[Ms.] Warren was last on the role [sic] at school through September 1985. She then became disabled and died on March 10, 1987." (Emphasis supplied.) Principal Mutual's claim file showed: "Only reason she wasn't in school beyond 9/85 was because she was sick." It appears to us that Principal Mutual refused to believe what all of the evidence that it had before it showedthat Ms. Warren could not attend school from September 1985 until her death because *750 she was dying of cancer. Ms. Warren's physician testified that he did not believe that Ms. Warren could physically attend school after June 1985. However, she did attend through August 1985. There was nothing to substantiate Principal Mutual's assertion that Ms. Warren became disabled after she had ceased attending school. To the contrary, all of the evidence showed that Ms. Warren stopped attending school because she was physically unable to attend.
All of this illustrates why this case falls within the category of unusual or extraordinary cases. If the "directed verdict on the contract claim standard" were applied, Principal Mutual would be allowed to obtain a judgment as a matter of law on the bad faith claim, even though a factual question was presented as to whether its claims examiners either intentionally or recklessly failed to subject the results of the investigation to a cognitive evaluation and review and, thereby intentionally failed to determine prior to denying the claim whether there was, in fact, a lawful basis for denial. This Court's decisions in Aetna Life Ins. Co. v. Lavoie, supra, and Continental Assurance Co. v. Kountz, supra, would not allow such a result. Furthermore, the very existence vel non of Principal Mutual's alleged lawful basis for denying Ms. Thomas's claimthat Ms. Warren was not a "dependent" within the meaning of the policyis itself a question of fact only because of the testimony of employees of Principal Mutual (i.e., the examiners who reviewed the claim) as to the intent of the policy. Under these circumstances, the "directed verdict on the contract claim standard" did not bar the jury's consideration of the bad faith claim. See United American Ins. Co. v. Brumley, supra, and Jones v. Alabama Farm Bureau Mutual Casualty Co., supra. For the foregoing reasons, we hold that the trial court erred in entering a judgment notwithstanding the verdict for Principal Mutual on the bad faith claim.
We note that because the trial court entered a judgment as a matter of law for Principal Mutual on the bad faith claim, it was unnecessary for it to consider whether the $750,000 damages award was excessive, an issue that was raised by Principal Mutual in its post-judgment motion. Any future consideration of this issue should be in accordance with Hammond v. City of Gadsden, 493 So. 2d 1374 (Ala. 1986), and Green Oil Co. v. Hornsby, 539 So. 2d 218 (Ala.1989).
88-834 REVERSED AND REMANDED WITH DIRECTIONS.
88-925 AFFIRMED.
HORNSBY, C.J., and JONES and ADAMS,[*] JJ., concur.
ALMON, STEAGALL and KENNEDY, JJ., concur in the result.
MADDOX, J., concurs in part and dissents in part.
MADDOX, Justice (concurring in part; dissenting in part).
Mr. Justice Almon, in a dissenting opinion in Chavers v. National Sec. Fire & Cas. Co., 405 So. 2d 1 (Ala.1981), said the following about the new tort of bad faith refusal to pay an insurance claim established in that case:
405 So. 2d  at 15.
Today's opinion by the Court confirms the fears expressed by Mr. Justice Almon in the Chavers case, and once again authorizes the recovery of punitive damages against an insurer for failing to pay a claim that was seriously disputed, the validity of which has only finally been determined today in this appeal. To authorize the recovery of punitive damages in such a factual setting, in my opinion, is a misapplication of the law of contracts, and effectively allows for the recovery of punitive damages against an insurer without affording the insurer due process of law. The majority's conclusion that this case "falls within the category of an unusual or extraordinary case" tends to confirm what Mr. Justice Almon pointed out in his dissent in Chaversthat there are no "parameters" or boundaries for the tort. I believe that the opinion expands the tort of bad faith and does not correctly state the law of contracts, the reasonable expectancies of the parties under such contracts, and the damages that can be awarded in cases of a breach. Consequently, I am compelled to dissent once again, as I have done over the years since the tort of bad faith was recognized.[2] I hesitate to continue to express a dissenting view, but I am convinced that, under the facts of this case, the trial judge was correct in granting the insurer's motion for judgment notwithstanding the verdict, and I am especially troubled by the holding, which allows the recovery of punitive damages for an insurer's failure to pay a claim that has only today been judicially determined to be a valid claim.
My view of the law in this area has been expressed in several dissenting and special concurring opinions. In Aetna Life Ins. Co. v. Lavoie, 505 So. 2d 1050 (Ala. 1987), I spelled out in some detail in a special concurrence my views on the tort of bad faith refusal to pay an insurance claim, and I attempted to state my view of the law of insurance contracts and the failure to pay claims and how the matter could best be handled in view of the public policy considerations involved. I also stated in that special concurrence the reasons for the dissents I had previously filed in bad faith cases. I do not restate those views here, but refer the reader to that special concurrence. I still believe the views I expressed there to be legally correct.[3]
Even though my view of the law of insurance contracts has not received much following, and even though the legislature has not seen fit to enter the field of regulating the new tort except to pass legislation setting a cap on the recovery of punitive damages, I continue to believe that the legislature is the proper body to resolve the public policy questions surrounding these controversies and that the tort of bad faith failure to pay is an inappropriate method for resolving the public policy issues.
Accepting the fact that this Court has established the tort of bad faith failure to pay an insurance claim, I cannot accept the conclusion of the majority that this case "falls within the category of an unusual or extraordinary case." In my opinion, this case is no different from the ordinary case in which there is a dispute about insurance coverage. Because of that fact, I am convinced that the plaintiff should not be permitted to recover punitive damages in any amount, and certainly not in the sum of $750,000. I was almost convinced that the trial court was incorrect in denying the insurer's motion for judgment notwithstanding the verdict on the contract claim, on the ground that the evidence showed that the dependent was not enrolled in school on the date of her death, but there was evidence that the contract language was ambiguous and that reasonable persons could disagree on the question of coverage. *752 Does that mean that punitive damages should be allowed? I think not.
The issue of coverage was disputed from the beginning and was only finally resolved by this Court today; therefore, the trial judge did not err in granting the insurer's motion for judgment notwithstanding the verdict. Consequently, I must respectfully disagree with the Court's holding that a jury question was presented on the bad faith claim. Also, to allow the recovery of $750,000 in punitive damages, under the facts of this case, has serious "due process" implications, especially in view of the fact that there are no set parameters for determining when such damages are recoverable and what will be the "unusual or extraordinary" case. See my dissent in Pacific Mutual Life Ins. Co. v. Haslip, 553 So. 2d 537, 544 (Ala.1989).
Based on the foregoing reasons, I concur in the judgment in Case No. 88-925, but I dissent in Case No. 88-834.
[1]  Mr. Kahalley testified, in pertinent part, as follows:

"Q. Let me give you a hypothetical to be extra clear: Assume that this young lady is between the ages of 19 and 25. Assume that she is living at home with her mother. Assume that she is dependent upon her mother for her principal support and maintenance. Assume that on March 19th, 1985, she re-enrolled in the Mobile Academy of Hair Design. In May of 1985Oh, at that time she paid her full entry fee for a full 1200 hours. She paid the full $600.00 registration fee and tuition fee for 1200 hours. This was not a school on a quarter or semester basis.... She had her surgery in 1985, May 1985. That Dr. Clarkson has testified that as of June 1985 when she started getting chemotherapy that he would not expect her to be able to attend class any more. Assume that her last dayeven though Dr. Clarkson said in June she was disabled her last day in class was in August of 1985. That in September 1985 she could no longer be physically present in class. And Ms. Tanneralthough she will testify that Melinda was fully paid up, she could come back whenever she couldhad to send her permit back and took her off of her rolls because there was no reason [inaudible] every day and ... she died March 1987. Under the terms of this policy would she be covered for dependent life insurance?
"A. Yes.
"Q. Are you familiar with the practices and customs of the insurance industry?
"A. Yes.
"Q. Is that an opinion that reasonable people in the insurance industry could differ with?
". . . .
"A. Those people who have had any experience with adjudication of claims, that is with actually dealing with the policy language, I
[Footnote one continued on page 740].
don't think they would differ on that opinion, no.
"Q. Let me show you something else that came out of the defendant's own claim file and ask you to read that into the record?
"A. Where it says message. I am not sure I can read that.
"Q. Read just this bottom line for one thing.
"A. `The only reason she wasn't in school beyond 9/85 was because she was sick.'
"Q. Would that further support your opinion that this life insurance policy should have been paid?
"A. Sure.
"Q. And this is a document signed by JoAnn Robbins saying that she knew; is that correct?
"A. I assume so, yes.
"Q. What does it say on 4/24/87? Can you read that into the record?
"A. `Last on roll at school through September `85, last year and ten months in and out of hospital, approximately 30 times. Also went on chemo, out patient' something
"Q. Treatment.
"A. Is that `treatment'? `Last six months before death she was completely bedridden.'
"Q. Would that further support your opinion?
"A. Oh, most definitely."
[*]  Justice Adams did not sit at oral argument, but has listened to the audio tape of the arguments.
[2]  See my dissenting opinions in Gulf Atlantic Life Ins. Co. v. Barnes, 405 So. 2d 916, 924 (Ala. 1981), and Continental Assurance Co. v. Kountz, 461 So. 2d 802 (Ala. 1984).
[3]  I joined in the disposition of that particular case because of the peculiar facts that surrounded it, as my special concurrence shows.