Title: State Farm Mut. Auto. Ins. Co. v. Alexander

State: alabama

Issuer: Alabama Supreme Court

Document:

950 So. 2d 267 (2006)
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY and Reggie Whitaker
v.
Roderick ALEXANDER.
No. 1041809.

Supreme Court of Alabama.
July 21, 2006.
Micheal S. Jackson and Michael B. Beers of Beers, Anderson, Jackson, Patty & Van Heest, P.C., Montgomery, for appellants.
Nat Bryan and Thomas M. Powell of Marsh, Rickard & Bryan, P.C., Birmingham, for appellee.
STUART, Justice.
Roderick Alexander sued State Farm Mutual Automobile Insurance Company and Reggie Whitaker, alleging fraud. At the close of the evidence, State Farm and Whitaker moved for a judgment as a matter of law; the trial court denied the motion. The jury returned a verdict in favor of Alexander in the amount of $200,000. State Farm and Whitaker then again moved for a judgment as a matter of law or, in the alternative, for a new trial. The trial court denied the motion; State Farm and Whitaker appeal. We reverse and remand.
On October 18, 2000, Crystal Sellers and Roderick Alexander were involved in a two-vehicle automobile accident. Sellers, *268 who was 16 years old at the time of the accident, was driving a 1997 Mazda Protégé automobile owned by her parents and insured by State Farm. Sellers was covered under the State Farm insurance policy, which was issued to her parents. Sellers testified that she presented the State Farm insurance card to one of the officers at the scene. The accident report indicates that Sellers was a minor and that the automobile she was driving was insured by State Farm.
The testimony established that State Farm investigated the accident and interviewed Alexander. State Farm determined that it could not establish whether Sellers or Alexander was liable for the accident, and it notified Alexander that because it could not determine liability, State Farm would cover the damage to Sellers's vehicle and Alexander would need to pursue coverage for damage to his vehicle and person from his insurance carrier. State Farm declared Sellers's automobile a total loss, paid Sellers's parents the fair market value of the automobile, and closed its file on the accident in May 2001.
During the summer of 2001, Alexander retained Michael Gedgoudas, an attorney, to pursue potential recovery for the damage he had sustained in the accident. According to Alexander, Gedgoudas informed him that based on his investigation Sellers did not have any insurance coverage; therefore, he was going to pursue an uninsured-motorist claim with Alexander's insurance carrier, Alfa Mutual Insurance Company. Alexander stated that he relied on Gedgoudas to communicate with the insurance companies and to pursue the best legal theories for recovery.
The record establishes that Gedgoudas represented to Alfa that Sellers had no insurance coverage at the time of the accident and, therefore, that Alexander was pursuing an uninsured-motorist claim on his policy with Alfa. Alfa paid Alexander the full amount of his uninsured-motorist coverage  $20,000.
Alexander testified that after Gedgoudas informed him that he had received his policy limits from Alfa, he and Gedgoudas discussed, because Alexander lived with his grandparents, a possible uninsured-motorist claim on his grandparents' automobile insurance policy with Farmer's Insurance Company. After an attempt to negotiate a settlement with Farmer's Insurance, Gedgoudas sued Farmer's Insurance, seeking uninsured-motorist benefits for Alexander under his grandparents' policy.[1]
At a pretrial hearing, Farmer's Insurance, relying on the accident report, told the trial court that Sellers may have been insured by State Farm at the time of the accident. The trial court ordered Alexander and Farmer's Insurance to investigate whether Sellers in fact was an uninsured motorist at the time of the accident. Gedgoudas contacted Maceo Hall, a State Farm claims team manager, who informed Gedgoudas that he could find no evidence indicating that State Farm insured Sellers or the vehicle she was driving at the time of the accident. Hall sent Gedgoudas a letter, stating: "We researched our records and found no evidence that we insured Ms. Sellers or the 1997 Mazda during the time of the accident. Further we found no evidence that we insure either at present time."
Farmer's Insurance's investigation, however, discovered that Sellers was covered by a State Farm policy at the time of the *269 accident. Mike Sharp, also a State Farm claims team manager, sent Farmer's Insurance a certificate of insurance, which indicated that State Farm, through a policy issued to Sellers's parents, insured Sellers and the automobile she was driving on the date of the accident.
Gedgoudas then amended the complaint against Farmer's Insurance to add as defendants State Farm and Reggie Whitaker, the State Farm agent Gedgoudas's secretary/paralegal had allegedly contacted about whether Sellers had been covered under a State Farm insurance policy at the time of the accident. The complaint alleged that the conduct of State Farm and Whitaker
Farmer's Insurance was dismissed by stipulation. Alexander's case against State Farm and Whitaker proceeded to trial; because Gedgoudas would be a witness at trial, Alexander was represented in the litigation by Nat Bryan.
At the trial, Gedgoudas testified that in 2001, when Alexander retained him, he was a sole practitioner and that Tina Rodgers was employed as his secretary/paralegal. Gedgoudas explained his standard operating procedures for pursuing a personal-injury case and in particular his investigation of Alexander's case. The following testimony was elicited:
Rodgers also testified about office procedures and the investigation of Alexander's case. She explained that while she worked for Gedgoudas she frequently used "Post-it" notes to communicate with Gedgoudas or to remind herself about a case. When questioned about the note dated July 27, 2001, Rodgers stated that the note indicated that she "called State Farm about Crystal Sellers. That [she] spoke to somebody. There was no policy on the vehicle. And the person [she] spoke to would have been Reggie Whitaker at that [telephone] number" on the note. Rodgers testified that she did not specifically remember the conversation with Whitaker, but that the note refreshed her recollection that she had made a telephone call to him and had recorded the contents of the conversation by a handwritten note.
Rodgers also identified the other "Post-it" note found in Alexander's file. According to Rodgers, both she and Gedgoudas had written on that note. She testified that the note indicated that Gedgoudas wanted her to send a representation letter to State Farm, referencing Crystal Sellers. She further explained that she had written "Nettie," "Reggie," and a telephone number, and then a facsimile transmission telephone number on the note. She testified that her actions and notes indicated that she had talked with Nettie Barnes,[5] that she learned that Reggie Whitaker[6] was the State Farm contact, and that she could fax the letter to him at that number. Rodgers testified that on September 10, 2001, she sent a fax dated September 7, 2001, to State Farm indicating that Gedgoudas wanted to know to whom to send his letter of representation. She testified that she included in the fax a copy of the accident report relating to Alexander and Sellers's accident, which included Sellers's name, driver's license number, date of birth, address, Social Security number, and the location of the accident for State Farm to determine if it had insured Sellers *274 on the date of the accident. Rodgers further testified that she confirmed that the fax was received. She stated that she did not remember having a conversation with either Barnes or Whitaker or anybody from State Farm after she sent the fax. She stated that she did not fax a letter of representation to State Farm.
Rodgers testified that approximately six hours later, at Gedgoudas's instruction, she sent a fax to Mike Lovelady at Alfa. The fax to Alfa included a letter of representation, indicating that Gedgoudas was representing Alexander and that Alexander was making an uninsured-motorist claim on his policy with Alfa. Rodgers testified that she would not have sent the letter to Alfa without first having learned that Sellers was not covered by a State Farm policy on the date of the accident. The following testimony was elicited:
At the close of Alexander's evidence and again after the jury rendered its verdict, State Farm and Whitaker moved for a judgment as a matter of law on the fraud claim, arguing, among other things, that Alexander had failed to present substantial evidence of the elements of misrepresentation. The trial court denied the motions. State Farm and Whitaker appeal.
"875 So. 2d  at 1152 (citations omitted)."
City of Crossville v. Haynes, 925 So. 2d 944, 950 (Ala.2005). Additionally, "[a] judgment as a matter of law is proper `"`only where there is a complete absence of proof on a material issue or where there are no controverted questions of fact on which reasonable people could differ' and the moving party is entitled to [a] judgment as a matter of law."' Floyd v. Broughton, 664 So. 2d 897 (Ala.1995)." Locklear Dodge City, Inc. v. Kimbrell, 703 So. 2d 303, 304 (Ala.1997).
State Farm and Whitaker contend that the trial court erred in denying their motions for a judgment as a matter of law because, they say, Alexander did not present substantial evidence of a misrepresentation by State Farm so as to support his claim of fraud. Specifically, State Farm and Whitaker argue that Alexander did not present substantial evidence indicating that State Farm informed Rodgers that at the time of the accident with Alexander Sellers was not covered by a State Farm insurance policy.
In order to withstand a motion for a JML on his fraudulent-misrepresentation claim, Alexander was required to present substantial evidence indicating (1) that State Farm, through Whitaker, misrepresented to him that Sellers was not covered by a State Farm policy at the time of the accident, (2) that State Farm, through Whitaker, made the misrepresentation willfully to deceive, recklessly without knowledge, or mistakenly, and (3) that he suffered damage as a proximate consequence of his reliance on State Farm's misrepresentation. Ex parte Alfa Mut. Fire Ins. Co., 742 So. 2d 1237 (Ala.1999).
It is undisputed that, at the time of the accident involving Alexander and Sellers, Sellers and the automobile she was driving were insured by State Farm under a policy issued in her parents' name. The evidence at trial relating to whether State Farm, through Whitaker, made a misrepresentation regarding whether Sellers was covered by a State Farm policy at the time of the accident was presented through the testimony of Rodgers and Gedgoudas. Rodgers testified as to her role in the investigation in Alexander's case and explained the meaning of the note dated July 27, 2001, and her actions in sending faxes to State Farm and Alfa on September 10, 2001. Rodgers's testimony regarding her communication with State Farm based on her note dated July 27, 2001, does not establish that State Farm informed her that there was not in effect an insurance policy on Sellers and her automobile on the date of the accident. The note dated July 27, 2001, at most establishes that Rodgers asked whether Sellers was covered by an insurance *276 policy. A statement by State Farm in response indicating that there was no coverage on July 27, 2001, would be true, because the insured automobile had been totaled, State Farm had closed its file on the accident, and no policy had ever been issued in Crystal Sellers's name as opposed to her parents. Rodgers specifically stated that she had no memory of what discussions she actually had had with State Farm on July 27, 2001, and her testimony based on her notes simply does not establish that State Farm represented to her during that conversation that on the date of the accident, October 18, 2000, Sellers was not covered by a State Farm insurance policy. Additionally, Rodgers's testimony about the fax she sent State Farm on September 10, 2001, does not establish that Rodgers inquired about coverage and that State Farm made a misrepresentation to her in response to her inquiry. Rodgers's testimony about Gedgoudas's note and the fax indicate that the purpose in contacting State Farm that day was not to confirm coverage on the date of the accident, but to advise State Farm that Gedgoudas was representing Alexander and to determine to which claims representative Gedgoudas should send his letter of representation. Neither the fax cover sheet nor Rodgers's testimony about the fax indicates that she inquired as to coverage on that day. Furthermore, Rodgers does not recall a conversation with a State Farm representative after she sent the fax, nor does she recall further conversation with Gedgoudas about State Farm. Nothing in Rodgers's testimony amounts to substantial evidence indicating that State Farm made a misrepresentation to her about its coverage of Sellers or the automobile Sellers was driving on the date of the accident.
Gedgoudas's testimony likewise does not present substantial evidence of a misrepresentation by State Farm. Gedgoudas admitted at trial that he never personally had any conversations with anyone at State Farm during the July-September 2001 time frame and that he had relied on Rodgers to provide information about Sellers's coverage. Gedgoudas stated that he did not recall any conversations with Rodgers about State Farm and coverage on Sellers on July 27, 2001. Although he did recall conversations with Rodgers on September 10, 2001, his testimony consists of an assumption that a misrepresentation was made based on the fact that the fax was sent to Alfa. Nothing in his testimony establishes that Rodgers asked State Farm whether Sellers was covered by a policy on the date of the accident.
The evidence presented by Alexander of misrepresentation does not satisfy the substantial-evidence test. "[S]ubstantial 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." West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989). Substantial evidence of a misrepresentation by State Farm is not presented through the testimony concerning the July 27, 2001, note. Both Gedgoudas and Rodgers acknowledge in their testimony that if they had understood that after Rodgers's July 27, 2001, inquiry that State Farm had provided Sellers no coverage for the accident, there would have been no reason on September 10, 2001, to attempt to learn to whom at State Farm a letter of representation should be directed. Substantial evidence of a misrepresentation by State Farm on September 10, 2001, likewise is not presented, because no evidence, other than speculation and conjecture, established that an inquiry was made as to Sellers's coverage on the date of the accident. Thus, Alexander's fraud claim is essentially based on the assumption that someone from State Farm, after Rodgers *277 sent the fax inquiring to whom to send the letter of representation, had a conversation with Rodgers to say there was not coverage. This assumption rests upon the fact that six hours after Rodgers sent the fax to State Farm, she faxed a letter of representation to Alfa, Alexander's automobile-insurance carrier. Only circumstantial evidence from which various assumptions may be drawn supports Alexander's claim of misrepresentation. Such circumstantial evidence is not substantial evidence indicating that State Farm misrepresented that it did not have an automobile insurance policy covering Sellers and the automobile she was driving on the date of her accident with Alexander.
Because we conclude that Alexander has failed to present substantial evidence of a misrepresentation by State Farm to establish his claim of fraud, a judgment as a matter of law is warranted on this ground, and we pretermit discussion of the other issues presented by the parties.
Alexander failed to present substantial evidence of a misrepresentation by State Farm to support his claim of fraud; therefore, we must conclude that the trial court erred in denying State Farm and Whitaker's motion for a judgment as a matter of law and that the trial court improperly submitted Alexander's fraud claim against State Farm and Whitaker to the jury. We reverse the judgment, and we remand this cause for the trial court to enter a judgment as a matter of law in favor of State Farm and Whitaker.
REVERSED AND REMANDED.
NABERS, C.J., and SEE, LYONS, HARWOOD, WOODALL, SMITH, BOLIN, and PARKER, JJ., concur.
[1]  Gedgoudas also named Sellers as a defendant; she was subsequently dismissed by stipulation.
[2]  The note dated July 27, 2001, was written on a small self-adhesive note in Rodgers's handwriting and contained the following list: "State Farm," "Crystal Sellers," "no policy in," "no vehicle," "Reg [Whitaker]," a telephone number, and "7/27/01." This note was admitted as plaintiff's exhibit 1.
[3]  A "Post-it" note is a small sheet of paper collected into a notepad manufactured by the 3M Company. Each note is backed with a strip of repositionable adhesive and can be temporarily attached to documents, etc.
[4]  This note contained writing by both Gedgoudas and Rodgers. The information written by Gedgoudas asked Rodgers to send a representation letter to State Farm referring to Crystal Sellers. The information written by Rodgers indicated the name of the person with whom she spoke at State Farm, Nettie Barnes, Barnes's telephone number, the name of the agent  Reggie Whitaker  and Whitaker's facsimile transmission telephone number.
[5]  Nettie Barnes testified that she was Reggie Whitaker's office manager. She confirmed that both of the telephone numbers recorded on the note belonged to Whitaker's insurance agency. Barnes remembered receiving the fax from Gedgoudas.
[6]  Whitaker testified that he is a State Farm agent and that the Sellers family was a client of his. He stated that at the time Gedgoudas allegedly sent his fax he had worked at that office for about two years. Whitaker admitted that his file indicated that he had faxed the original papers sent by the "lawyer" to the claims agent.