Title: Hartford Underwriters Insurance Company v. Dave Henry Reed

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel 06/25/10 
Notice: T h i s 
o p i n i o n i s s u b j e c t t o f o r m a l 
r e v i s i o n b e f o r e 
p u b l i c a t i o n i n 
t h e 
advance 
s h e e t s o f 
Southern Reporter. 
R e a d e r s a r e r e q u e s t e d t o 
n o t i f y t h e Reporter of 
Decisions, 
Alabama 
A p p e l l a t e 
C o u r t s , 
300 D e x t e r Avenue, Montgomery, Alabama 36104-3741 
((334) 
2 2 9 - 0 6 4 9 ) , o f 
any t y p o g r a p h i c a l o r o t h e r e r r o r s , i n 
o r d e r t h a t c o r r e c t i o n s may be made 
b e f o r e t h e 
o p i n i o n i s p r i n t e d i n 
Southern Reporter. 
SUPREME COURT OF ALABAMA 
OCTOBER TERM, 2009-2010 
1071605 
H a r t f o r d U n d e r w r i t e r s Insurance Company 
v. 
Dave Henry Reed 
Appeal from M o b i l e C i r c u i t 
Court 
(CV-07-900307) 
PER CURIAM. 
H a r t f o r d 
U n d e r w r i t e r s 
I n s u r a n c e 
Company 
( " H a r t f o r d " ) 
a p p e a l s 
f r o m t h e t r i a l 
c o u r t ' s j u d g m e n t a g a i n s t 
i t , 
a n d i t s 
s u b s e q u e n t 
d e n i a l o f H a r t f o r d ' s 
m o t i o n f o r a j u d g m e n t as a 
m a t t e r o f l a w ("JML"). We r e v e r s e a n d remand. 
1071605 
F a c t s 
and 
P r o c e d u r a l 
H i s t o r y 
T & W C o n s t r u c t i o n , 
LLC, 
o b t a i n e d 
w o r k e r s ' 
c o m p e n s a t i o n 
i n s u r a n c e 
t h r o u g h t h e J a c k G r e e n I n s u r a n c e A g e n c y 
("the 
G r e e n 
A g e n c y " ) . 
The G r e e n A g e n c y p r o c u r e d 
t h e w o r k e r s ' c o m p e n s a t i o n 
i n s u r a n c e 
f o r T & W t h r o u g h t h e a s s i g n e d - r i s k p o o l managed 
by 
t h e N a t i o n a l C o u n s e l on C o m p e n s a t i o n I n s u r a n c e ("NCCI"). 
NCCI 
a s s i g n e d 
T 
& 
W's 
r i s k 
t o 
H a r t f o r d . 
T r a v e l e r s 
I n s u r a n c e 
Company ( " T r a v e l e r s " ) , t h r o u g h a c o n t r a c t u a l a r r a n g e m e n t 
w i t h 
H a r t f o r d , 
managed 
t h e 
u n d e r w r i t i n g 
o f 
and 
c l a i m s 
u n d e r 
H a r t f o r d ' s 
a s s i g n e d - r i s k 
p o l i c i e s 
and 
a c t e d 
as 
H a r t f o r d ' s 
a g e n t 
i n c o n n e c t i o n 
w i t h Dave H e n r y Reed's 
c l a i m u n d e r 
t h e 
H a r t f o r d 
p o l i c y . 
H a r t f o r d 
r e q u i r e d 
T 
& 
W 
t o 
pay 
an 
e s t i m a t e d 
a n n u a l 
p r e m i u m 
up 
f r o n t 
f o r 
i t s w o r k e r s ' 
c o m p e n s a t i o n 
i n s u r a n c e 
p o l i c y 
("the 
H a r t f o r d p o l i c y " ) . 
H a r t f o r d r e s e r v e d 
t h e 
r i g h t 
t o 
c o n d u c t 
an 
a u d i t 
when 
t h e 
H a r t f o r d 
p o l i c y 
e n d e d 
t o 
d e t e r m i n e 
t h e 
amount 
o f 
t h e 
f i n a l 
p r e m i u m . 
T 
& W 
p a i d 
a 
p o r t i o n 
o f 
t h e 
e s t i m a t e d 
a n n u a l 
p r e m i u m 
f o r 
t h e 
H a r t f o r d 
p o l i c y ; t h e 
r e m a i n d e r was 
f i n a n c e d 
t h r o u g h A m e r i c a n 
L i b e r t y 
F i n a n c i a l 
S e r v i c e s , 
I n c . 
( " A m e r i c a n 
L i b e r t y " ) . 
A 
r e p r e s e n t a t i v e o f t h e G r e e n A g e n c y s i g n e d t h e p r e m i u m - f i n a n c e 
2 
1071605 
a g r e e m e n t 
on b e h a l f o f T & W. 
T i m o t h y P o a t e s , a p r i n c i p a l o f 
T & W, 
t e s t i f i e d t h a t he was n o t aware o f t h e p r e m i u m - f i n a n c e 
a g r e e m e n t and t h a t he d i d n o t know i f T & W h a d a u t h o r i z e d t h e 
G r e e n A g e n c y 
t o e n t e r 
i n t o s u c h an a g r e e m e n t 
on i t s b e h a l f . 
T & W p a i d t h e G r e e n A g e n c y t h e m o n t h l y i n s t a l l m e n t s 
r e q u i r e d 
by t h e p r e m i u m - f i n a n c e a g r e e m e n t , and t h e G r e e n A g e n c y 
w o u l d , 
i n t u r n , p a y A m e r i c a n L i b e r t y on T & W's 
b e h a l f . 
I n t h e e v e n t 
T & W f a i l e d t o t i m e l y p a y i t s m o n t h l y i n s t a l l m e n t s 
r e q u i r e d 
u n d e r 
t h e 
p r e m i u m - f i n a n c e 
a g r e e m e n t , 
t h e 
p r e m i u m - f i n a n c e 
a g r e e m e n t 
p r o v i d e d 
A m e r i c a n 
L i b e r t y t h e a u t h o r i t y t o 
c a n c e l 
t h e 
H a r t f o r d p o l i c y . 
H a r t f o r d 
i s s u e d t h e H a r t f o r d p o l i c y e f f e c t i v e f r o m J u l y 
23, 2004, t o J u l y 23, 2005. 
The H a r t f o r d p o l i c y i n s u r e d T & 
W 
f o r w o r k e r s ' 
c o m p e n s a t i o n 
l i a b i l i t y 
r e s u l t i n g f r o m 
an 
e m p l o y e e ' s 
" b o d i l y 
i n j u r y 
by 
a c c i d e n t , " 
p r o v i d e d 
t h a t 
t h e 
b o d i l y i n j u r y by a c c i d e n t o c c u r r e d d u r i n g t h e " p o l i c y p e r i o d . " 
The H a r t f o r d p o l i c y a l s o c o n t a i n e d t h e f o l l o w i n g c a n c e l l a t i o n 
p r o v i s i o n : 
"D. 
C a n c e l a t i o n 
[ s i c ] . 
"2. We may 
c a n c e l 
t h i s p o l i c y . We must m a i l o r 
d e l i v e r 
t o 
you 
n o t 
l e s s 
t h a n 
t e n 
d a y s 
a d v a n c e 
3 
1071605 
w r i t t e n n o t i c e s t a t i n g when t h e c a n c e l a t i o n [ s i c ] 
i s 
t o t a k e e f f e c t . M a i l i n g t h a t 
n o t i c e t o you a t y o u r 
m a i l i n g a d d r e s s shown i n I t e m 1 o f t h e 
I n f o r m a t i o n 
Page w i l l be s u f f i c i e n t t o p r o v e 
n o t i c e . 
"3. The p o l i c y p e r i o d 
w i l l 
end on t h e day and 
h o u r s t a t e d i n t h e c a n c e l a t i o n [ s i c ] n o t i c e . " 
T & W's 
" m a i l i n g a d d r e s s shown i n I t e m 1 o f t h e 
I n f o r m a t i o n 
Page" o f t h e H a r t f o r d p o l i c y was "3828 I s a b e l l a L a n e , 
M o b i l e , 
AL 33618." 
P o a t e s c o n f i r m e d 
t h a t 
t h i s 
a d d r e s s was T & 
W's 
c o r r e c t 
a d d r e s s . 
I n December 2004, T & W d e f a u l t e d on i t s p r e m i u m p a y m e n t . 
On December 21, 2004, A m e r i c a n L i b e r t y m a i l e d t o T & W a t t h e 
a d d r e s s above a n o t i c e o f i n t e n t t o c a n c e l t h e H a r t f o r d p o l i c y 
on J a n u a r y 5, 2005, d e p e n d a n t upon T & W's 
payment o f t h e 
p a s t - d u e m o n t h l y i n s t a l l m e n t . A m e r i c a n L i b e r t y m a i l e d 
a n o t h e r 
n o t i c e o f i n t e n t t o c a n c e l 
t h e H a r t f o r d 
p o l i c y t o T & W on 
December 
27, 
2004. 
P o a t e s 
t e s t i f i e d 
t h a t 
he 
c o u l d 
n o t 
remember i f T & W h a d r e c e i v e d 
e i t h e r n o t i c e . 
On J a n u a r y 5, 
2005, A m e r i c a n L i b e r t y , n o t h a v i n g r e c e i v e d payment f r o m T & 
W, m a i l e d T & W and f a x e d H a r t f o r d a n o t i c e o f c a n c e l l a t i o n o f 
t h e 
H a r t f o r d 
p o l i c y . 
The n o t i c e o f c a n c e l l a t i o n s t a t e d , i n 
p e r t i n e n t 
p a r t : 
"**NOTICE 
OF 
CANCELLATION 
-- 
NONPAYMENT 
OF 
PREMIUM FINANCED POLICY** 
4 
1071605 
" T h i s 
p o l i c y 
has 
b e e n 
f i n a n c e d 
by 
[ A m e r i c a n 
L i b e r t y ] . 
[ A m e r i c a n L i b e r t y ] 
has 
e x e r c i s e d 
i t s r i g h t 
t o 
c a n c e l 
t h i s 
p o l i c y 
as 
p r o v i d e d 
i n i t s a g r e e m e n t 
w i t h 
[T 
& W], 
due 
t o 
[T 
& W's] 
d e l i n q u e n t payment 
s t a t u s . 
f l 
"PLEASE NOTE: [ H a r t f o r d ] 
i s u n d e r no 
o b l i g a t i o n 
t o 
r e i n s t a t e 
t h i s 
p o l i c y 
i n 
t h e 
e v e n t 
[ A m e r i c a n 
L i b e r t y ] 
s h o u l d r e s c i n d t h e i r c a n c e l l a t i o n 
r e q u e s t . " 
P o a t e s 
t e s t i f i e d 
t h a t 
he 
d i d n o t 
r e c a l l 
r e c e i v i n g 
t h e 
n o t i c e 
o f 
t h e 
c a n c e l l a t i o n 
o f 
t h e 
H a r t f o r d 
p o l i c y 
f r o m 
A m e r i c a n 
L i b e r t y . 
Upon r e c e i p t 
o f A m e r i c a n L i b e r t y ' s 
c a n c e l l a t i o n 
r e q u e s t , 
T r a v e l e r s , 
on b e h a l f 
o f 
H a r t f o r d , 
m a i l e d T & W and 
t h e 
G r e e n 
A g e n c y 
a 
n o t i c e 
d a t e d 
J a n u a r y 
6, 
2 0 0 5 , 
n o t i f y i n g 
them 
o f 
H a r t f o r d ' s 
i n t e n t 
t o 
c a n c e l 
t h e 
H a r t f o r d 
p o l i c y 
e f f e c t i v e 
J a n u a r y 21, 
2005. 
Sue 
F l u r r y , 
a 
s u p e r v i s o r 
o f 
a g r o u p 
o f 
a c c o u n t - m a n a g e r 
u n d e r w r i t e r s 
f o r 
T r a v e l e r s , 
t e s t i f i e d 
c o n c e r n i n g 
T r a v e l e r s ' 
a u t o m a t e d 
method 
f o r 
p r o d u c i n g 
and 
m a i l i n g 
c a n c e l l a t i o n 
n o t i c e s . 
F l u r r y 
t e s t i f i e d 
t h a t 
c a n c e l l a t i o n 
n o t i c e s 
a r e 
c o m p u t e r 
g e n e r a t e d , 
f o l d e d , 
and 
s t u f f e d 
i n t o 
a 
window 
e n v e l o p e , w h i c h 
has 
t h e 
a p p r o p r i a t e p o s t a g e 
a f f i x e d 
t o i t . 
5 
1071605 
F l u r r y 
t e s t i f i e d 
t h a t 
t h e c a n c e l l a t i o n p r o c e s s i n c l u d e s 
t h e 
c r e a t i o n 
o f 
an 
" a f f i d a v i t 
o f 
m a i l i n g , " 
w h i c h 
l i s t s 
t h e 
r e c i p i e n t s o f t h e c a n c e l l a t i o n n o t i c e s , i n c l u d e s a d a t e s t a m p , 
and 
c o n t a i n s 
t h e 
f o l l o w i n g 
c e r t i f i c a t i o n 
by 
a 
T r a v e l e r s 
e m p l o y e e : 
" [ E ] a c h 
c a n c e l l a t i o n 
e n t r y 
on 
t h i s 
page 
o f 
t h e 
m a s t e r 
c o m p u t e r 
l i s t 
o f 
c a n c e l l a t i o n s 
has 
a 
c o r r e s p o n d i n g e n v e l o p e c o n t a i n i n g an o r i g i n a l 
n o t i c e 
o f c a n c e l l a t i o n s h o w i n g t h e name and a d d r e s s o f t h e 
p o l i c y h o l d e r o r p a y e r i n t h e window o f t h e e n v e l o p e 
and 
t h a t s u c h e n v e l o p e was 
s u b m i t t e d t o t h e 
U n i t e d 
S t a t e s 
P o s t a l 
S e r v i c e . " 
The 
a f f i d a v i t 
o f 
m a i l i n g 
f o r t h e 
c a n c e l l a t i o n 
n o t i c e 
was 
s i g n e d . 
F l u r r y 
a l s o 
t e s t i f i e d 
t h a t 
a 
T r a v e l e r s 
e m p l o y e e 
" t a k e s 
[ t h e ] a f f i d a v i t o f m a i l i n g and 
... t h e e n v e l o p e s 
t h a t 
were p r o d u c e d i n o r d e r 
t o v e r i f y 
t h a t t h e a d d r e s s e e shows i n 
t h e window, t h a t t h e a d d r e s s 
[on t h e c a n c e l l a t i o n n o t i c e ] i s 
t h e same [as t h e a d d r e s s on t h e a f f i d a v i t o f m a i l i n g ] , 
[and] 
t h a t 
t h e 
a p p r o p r i a t e 
p o s t a g e 
has 
b e e n 
a f f i x e d 
t o 
t h e 
e n v e l o p e . " 
The 
a f f i d a v i t 
o f 
m a i l i n g 
shows 
t h a t 
T 
& 
W's 
c a n c e l l a t i o n n o t i c e was 
s e n t t o t h e a d d r e s s s p e c i f i e d i n t h e 
H a r t f o r d p o l i c y . 
F u r t h e r , 
F l u r r y t e s t i f i e d t h a t t h e e n v e l o p e 
i n w h i c h t h e c a n c e l l a t i o n n o t i c e was 
m a i l e d 
i n c l u d e d a r e t u r n 
a d d r e s s and t h a t t h e n o t i c e was n o t r e t u r n e d as 
u n d e l i v e r a b l e . 
6 
1071605 
T r a v e l e r s 
a l s o 
m a i l e d 
t h e 
G r e e n 
A g e n c y 
a 
c o p y 
o f 
t h e 
c a n c e l l a t i o n n o t i c e , w h i c h t h e G r e e n A g e n c y 
r e c e i v e d . 
On 
J a n u a r y 
18 , 
2005, 
T 
& 
W made 
a 
l a t e 
payment 
t o 
A m e r i c a n L i b e r t y . 
Upon r e c e i p t o f t h e 
l a t e p a y m e n t , A m e r i c a n 
L i b e r t y 
f a x e d 
H a r t f o r d 
a r e q u e s t 
t o 
r e i n s t a t e t h e 
H a r t f o r d 
p o l i c y . 
H a r t f o r d d i d n o t 
r e i n s t a t e t h e H a r t f o r d p o l i c y , b u t , 
as s t a t e d i n i t s n o t i c e o f c a n c e l l a t i o n , c a n c e l e d 
t h e 
H a r t f o r d 
p o l i c y on J a n u a r y 21, 
2005. 
On 
F e b r u a r y 17, 
2005, T r a v e l e r s , 
on b e h a l f 
o f 
H a r t f o r d , 
m a i l e d t h e G r e e n A g e n c y a document t i t l e d " C a n c e l l a t i o n Change 
S l i p 
-- 
C o m m e r c i a l . " 
T h i s 
document showed 
t h e 
" e f f . d a t e 
c a n c . " o f t h e 
H a r t f o r d p o l i c y as " 0 1 / 2 1 / 0 5 , " and 
t h e 
" R e a s o n 
f o r 
C a n c e l l a t i o n " as " F i n a n c e Company R e q u e s t -- Non 
Payment." 
I n 
A p r i l 
2005, H a r t f o r d 
a u d i t e d 
T & W t o d e t e r m i n e 
t h e 
f i n a l 
p r e m i u m 
f o r 
t h e 
c a n c e l e d 
H a r t f o r d 
p o l i c y . 
H a r t f o r d 
h i r e d an a u d i t i n g f i r m t o c o n d u c t t h e a u d i t , w h i c h met 
w i t h 
T 
& W's 
p r i n c i p a l s , 
P o a t e s 
and 
R o b e r t W i l l i a m s , 
t o r e v i e w 
T & 
W's 
r e c o r d s . 
D u r i n g 
t h e 
a u d i t , 
P o a t e s 
s i g n e d 
a 
document 
t i t l e d 
" V e r i f i c a t i o n 
o f 
V i s i t , " 
w h i c h 
i n d i c a t e d 
t h a t 
t h e 
" p o l i c y 
p e r i o d " 
o f 
t h e 
H a r t f o r d 
p o l i c y 
was 
"7/23/04 
t o 
1/21/05." 
P o a t e s t e s t i f i e d a t 
t r i a l t h a t he was 
u n s u r e o f 
t h e 
7 
1071605 
p u r p o s e o f t h e a u d i t b u t t h a t he t h o u g h t i t 
was " t o renew t h e 
[ H a r t f o r d ] 
p o l i c y . " 
P o a t e s 
a l s o 
t e s t i f i e d 
t h a t he was n o t 
t o l d t h a t t h e a u d i t was a c a n c e l l a t i o n a u d i t and t h a t he d i d 
n o t know t h a t t h e H a r t f o r d p o l i c y h a d b e e n 
c a n c e l e d . 
The a u d i t showed t h a t T & W owed H a r t f o r d an a d d i t i o n a l 
amount f o r t h e p r e m i u m . 
T r a v e l e r s , on b e h a l f 
o f 
H a r t f o r d , 
m a i l e d 
T & W and t h e G r e e n 
A g e n c y a "Premium 
A d j u s t m e n t 
N o t i c e " 
s h o w i n g 
t h e 
t o t a l 
e a r n e d 
p r e m i u m . 
The 
p r e m i u m -
a d j u s t m e n t n o t i c e c o n t a i n e d 
a r e f e r e n c e t o t h e " C a n c e l l a t i o n 
A u d i t 07/23/04 t o 0 1 / 2 1 / 0 5 . " 
On May 18, 2005, Dave H e n r y R e e d , an e m p l o y e e o f T & W, 
was i n j u r e d w i t h i n t h e l i n e and s c o p e o f h i s employment 
w i t h 
T & W. 
Reed f i l e d a c l a i m f o r w o r k e r ' s c o m p e n s a t i o n 
b e n e f i t s 
u n d e r t h e H a r t f o r d p o l i c y . 
Reed's c l a i m was d e n i e d 
b e c a u s e 
t h e 
H a r t f o r d 
p o l i c y h a d b e e n c a n c e l e d b e f o r e Reed's 
i n j u r y 
o c c u r r e d . 
As a r e s u l t o f t h e d e n i a l o f Reed's c l a i m , Reed s u e d T & 
W f o r w o r k e r ' s 
c o m p e n s a t i o n 
b e n e f i t s . 
I n t h a t 
a c t i o n , t h e 
t r i a l c o u r t a w a r d e d Reed $364,526.40 i n w o r k e r ' s 
c o m p e n s a t i o n 
b e n e f i t s . 
I n a d d i t i o n t o t h e w o r k e r ' s c o m p e n s a t i o n b e n e f i t s , 
Reed a l s o r e q u e s t e d t h a t t h e t r i a l 
c o u r t i m p o s e a g a i n s t T & W 
8 
1071605 
t h e 
s t a t u t o r y p e n a l t y u n d e r § 2 5 - 5 - 8 ( e ) , A l a . Code 1975, w h i c h 
p r o v i d e s , i n p e r t i n e n t 
p a r t : 
" [ A ] n 
e m p l o y e r 
r e q u i r e d 
t o s e c u r e t h e payment 
o f 
c o m p e n s a t i o n u n d e r 
t h i s 
s e c t i o n who 
f a i l s t o s e c u r e 
t h e 
c o m p e n s a t i o n 
s h a l l be 
l i a b l e 
f o r two t i m e s t h e 
amount o f c o m p e n s a t i o n 
w h i c h w o u l d have o t h e r w i s e 
b e e n p a y a b l e f o r i n j u r y o r d e a t h t o an 
e m p l o y e e . " 
The 
t r i a l c o u r t i m p o s e d t h e s t a t u t o r y p e n a l t y a g a i n s t T & W i n 
t h e 
amount o f $364,526.40 f o r T & W's 
f a i l u r e 
t o s e c u r e t h e 
p a y m e n t 
o f 
c o m p e n s a t i o n . 
Reed's 
t o t a l 
a w a r d 
was 
t h u s 
$ 7 2 9 , 0 5 2 . 8 0 . 
T & W c o n s e n t e d t o t h e j u d g m e n t . 
I n 
e x c h a n g e 
f o r an a s s i g n m e n t o f T & W's 
r i g h t s t o any p o t e n t i a l i n s u r a n c e 
c o v e r a g e , Reed a g r e e d n o t t o c o l l e c t t h e j u d g m e n t 
f r o m T & W. 
On 
M a r c h 
19, 
2007, 
Reed, 
as 
t h e 
a s s i g n e e o f T 
& 
W's 
r i g h t s , 
f i l e d 
t h e p r e s e n t 
a c t i o n 
a g a i n s t 
H a r t f o r d 
s e e k i n g 
c o v e r a g e u n d e r t h e H a r t f o r d 
p o l i c y . 
Reed a l l e g e d b r e a c h o f 
c o n t r a c t , b a d - f a i t h r e f u s a l t o p a y a c l a i m , and f r a u d . 
I n t h e 
same a c t i o n , Reed a l s o s u e d A m e r i c a n L i b e r t y , 
a l l e g i n g b r e a c h 
o f c o n t r a c t , n e g l i g e n c e , and w a n t o n n e s s ; and t h e G r e e n 
A g e n c y , 
a l l e g i n g 
b r e a c h 
o f 
c o n t r a c t , 
n e g l i g e n c e , 
w a n t o n n e s s , 
and 
b r e a c h o f f i d u c i a r y d u t y . 
On M a r c h 14, 2008, H a r t f o r d 
f i l e d 
a m o t i o n f o r a summary j u d g m e n t . 
The 
t r i a l 
c o u r t e n t e r e d a 
summary j u d g m e n t 
f o r H a r t f o r d on Reed's b a d - f a i t h and 
f r a u d 
9 
1071605 
c l a i m s , 
b u t 
d e n i e d 
H a r t f o r d ' s 
summary-judgment 
m o t i o n 
on 
Reed's b r e a c h - o f - c o n t r a c t 
c l a i m . 
The a c t i o n p r o c e e d e d t o 
t r i a l 
b e f o r e 
a j u r y . 
H a r t f o r d 
moved f o r a JML on Reed's 
b r e a c h - o f - c o n t r a c t 
c l a i m a t t h e 
c l o s e o f Reed's c a s e . 
H a r t f o r d ' s m o t i o n f o r a JML was 
d e n i e d , 
and t h e t r i a l 
c o u r t a l s o s t r u c k H a r t f o r d ' s 
j u d i c i a l - e s t o p p e l 
d e f e n s e . 
A m e r i c a n 
L i b e r t y and t h e G r e e n A g e n c y a l s o 
f i l e d 
m o t i o n s f o r a JML 
c o n c e r n i n g 
a l l 
c l a i m s 
a g a i n s t them. 
The 
t r i a l 
c o u r t 
g r a n t e d 
A m e r i c a n 
L i b e r t y ' s m o t i o n f o r a JML 
on 
Reed's 
w a n t o n n e s s 
c l a i m 
a g a i n s t 
i t , 
and 
t h e 
t r i a l 
c o u r t 
g r a n t e d 
t h e 
G r e e n 
A g e n c y ' s 
m o t i o n 
f o r a 
JML 
on 
Reed's 
w a n t o n n e s s and b r e a c h - o f - f i d u c i a r y - d u t y c l a i m s a g a i n s t i t . 
H a r t f o r d 
a g a i n 
moved 
f o r a JML 
on Reed's 
b r e a c h - o f -
c o n t r a c t 
c l a i m a g a i n s t i t a t t h e c l o s e o f a l l t h e 
e v i d e n c e . 
The 
t r i a l 
c o u r t d e n i e d 
H a r t f o r d ' s m o t i o n . 
A m e r i c a n L i b e r t y 
and t h e G r e e n A g e n c y a l s o 
f i l e d 
m o t i o n s f o r a JML on Reed's 
r e m a i n i n g 
c l a i m s 
a g a i n s t 
them 
a t 
t h e 
c l o s e 
o f 
a l l t h e 
e v i d e n c e , 
w h i c h t h e t r i a l 
c o u r t g r a n t e d . 
Reed and H a r t f o r d 
a g r e e d t o s u b m i t t h e i s s u e o f damages t o t h e t r i a l 
c o u r t i n 
t h e e v e n t t h e j u r y f o u n d f o r R e e d . 
The 
t r i a l 
c o u r t s u b m i t t e d t h e c a s e t o t h e j u r y on Reed's 
10 
1071605 
b r e a c h - o f - c o n t r a c t 
c l a i m a g a i n s t H a r t f o r d . 
The j u r y 
r e t u r n e d 
a 
v e r d i c t 
i n f a v o r 
o f Reed, 
and 
t h e 
t r i a l 
c o u r t 
e n t e r e d 
j u d g m e n t 
a g a i n s t 
H a r t f o r d 
f o r $ 7 2 9 , 0 5 2 . 8 0 . 
I n i t s o r d e r 
e n t e r i n g j u d g m e n t i n f a v o r o f Reed, t h e t r i a l 
c o u r t 
s t a t e d : 
"The j u r y a f t e r d e l i b e r a t i o n and v e r d i c t 
h a v i n g 
f o u n d 
i n 
f a v o r 
o f t h e 
p l a i n t i f f , 
Dave 
Reed 
and 
a g a i n s t 
t h e 
d e f e n d a n t 
H a r t f o r d 
U n d e r w r i t e r s 
I n s u r a n c e Company, t h e C o u r t h e r e b y r e n d e r s j u d g m e n t 
i n 
f a v o r 
o f 
p l a i n t i f f 
Dave 
Reed 
and 
a g a i n s t 
d e f e n d a n t 
H a r t f o r d 
U n d e r w r i t e r s 
I n s u r a n c e Company. 
B a s e d upon t h e e v i d e n c e i n t h i s c a s e and t h e j u r y ' s 
v e r d i c t , 
t h e C o u r t 
f i n d s 
t h e r e f o r e 
t h a t 
H a r t f o r d 
U n d e r w r i t e r s 
I n s u r a n c e Company's p o l i c y o f w o r k e r s ' 
c o m p e n s a t i o n i n s u r a n c e 
was i n e f f e c t a t t h e t i m e o f 
Dave Reed's i n j u r y on May 18, 2005. See I n s t i t u t e o f  
L o n d o n 
C o m p a n i e s 
v. 
V a l l e y E q u i p m e n t , 660 
So. 
2d 
1000 
( A l a . 
C i v . App. 
1 9 9 5 ) . 
" P r i o r 
t o t h e s u b m i s s i o n o f 
t h i s 
c a s e t o t h e 
j u r y , 
t h e 
p a r t i e s 
a g r e e d 
t o s u b m i t 
t h e 
i s s u e 
o f 
damages t o t h e C o u r t f o r r e s o l u t i o n i n t h e e v e n t o f 
a v e r d i c t f o r t h e p l a i n t i f f . 
H a r t f o r d c o n t e n d s 
t h a t 
i f i t i s l i a b l e a t a l l , i t s 
damages s h o u l d 
o n l y be 
t h e amount o f t h e p e r m a n e n t and t o t a l 
i n j u r y 
a w a r d 
i n 
Dave Reed's 
w o r k e r s ' 
c o m p e n s a t i o n 
c a s e , i . e . , 
$ 3 2 8 , 9 2 6 . 4 0 [
1 ] . 
P l a i n t i f f Reed, f o r h i s p a r t 
a r g u e s 
t h a t as t h e a s s i g n e e 
o f H a r t f o r d ' s 
i n s u r e d , 
T & W 
C o n s t r u c t i o n L.L.C., he i s e n t i t l e d t o r e c e i v e 
t o t a l 
c o m p e n s a t i o n b e n e f i t s p l u s t h e p e n a l t y 
a s s e s s e d 
by 
t h e 
C i r c u i t C o u r t f o r T & W's 
f a i l u r e t o s e c u r e t h e 
payment 
o f c o m p e n s a t i o n u n d e r § 2 5 - 5 - 8 ( e ) , Code o f 
1The 
$328,926.40 
amount 
d o e s 
n o t 
i n c l u d e 
" [ a ] c c r u e d 
b e n e f i t s 
o f 89 weeks 
[ a t ] comp. 
r a t e o f $400 week," 
w h i c h 
t o t a l 
$ 3 5 , 6 0 0 . 
I t i n c l u d e s 
o n l y 
t h e 
" [ p r e s e n t 
v a l u e ] 
o f 
r e m a i n i n g 
2434.64 
weeks 
(822.316) 
x 
$400.00/week." 
The 
a d d i t i o n 
o f 
t h e 
$35,600 
w o u l d 
b r i n g 
t h e 
t o t a l 
a w a r d 
t o 
$ 3 6 4 , 5 2 6 . 4 0 . 
11 
1071605 
A l a b a m a , 
1975. 
" A f t e r c o n s i d e r i n g 
t h e 
b r i e f s 
and 
a r g u m e n t s 
o f 
t h e 
p a r t i e s , 
t h e 
C o u r t 
f i n d s 
t h a t 
a 
f u n d a m e n t a l 
p r i n c i p l e 
o f 
c o n t r a c t 
l a w 
i s t h a t 'damages f o r 
t h e 
b r e a c h o f c o n t r a c t i s t h a t sum w h i c h w o u l d p l a c e 
t h e 
i n j u r e d 
p a r t y 
i n t h e same c o n d i t i o n he 
w o u l d have 
o c c u p i e d 
i f t h e c o n t r a c t had 
n o t b e e n b r e a c h e d . ' 
See 
B r e n d l e 
F i r e E q u i p m e n t I n c . v. E l e c t r o n i c 
E n g i n e e r s ,  
I n c . , 454 
So. 
2d 1032 
( A l a . C i v . App. 
1 9 8 4 ) . B u t 
f o r 
t h e 
b r e a c h 
o f 
c o n t r a c t 
by 
H a r t f o r d , 
T 
& W 
I n c . , 
w o u l d 
n o t 
have 
s u f f e r e d 
t h e 
a d d i t i o n a l 
p e n a l t y 
i m p o s e d 
by 
t h e 
C i r c u i t 
C o u r t . 
A c c o r d i n g l y , 
t h i s 
C o u r t 
r e n d e r s 
j u d g m e n t 
i n 
f a v o r 
o f Dave Reed 
and 
a g a i n s t 
d e f e n d a n t 
H a r t f o r d 
U n d e r w r i t e r s 
I n s u r a n c e 
Company i n t h e amount o f $ 7 2 9 , 0 5 2 . 8 0 . A d d i t i o n a l l y , 
t h e C o u r t f i n d s t h a t H a r t f o r d i s l i a b l e f o r p a s t 
and 
f u t u r e 
m e d i c a l 
b e n e f i t s , 
as 
w e l l 
as 
v o c a t i o n a l 
b e n e f i t s u n d e r t h e A l a b a m a W o r k e r ' s C o m p e n s a t i o n 
Law 
f o r 
i n j u r e s s u s t a i n e d 
by Dave Reed on 
o r a b o u t 
May 
18, 
2 0 0 5 . " 
H a r t f o r d 
t h e n 
f i l e d 
a r e n e w e d m o t i o n 
f o r 
a 
JML 
o r , 
i n 
t h e 
a l t e r n a t i v e , 
f o r a new 
t r i a l , 
w h i c h t h e 
t r i a l 
c o u r t 
d e n i e d . 
H a r t f o r d 
a p p e a l e d . 
S t a n d a r d o f R e v i e w 
I n A m e r i c a n N a t i o n a l 
F i r e 
I n s u r a n c e 
Co. 
v. Hughes, 
624 
So. 
2d 
1362 
( A l a . 1 9 9 3 ) , 
t h i s C o u r t s t a t e d t h e 
s t a n d a r d 
t h a t 
a p p l i e s 
t o 
a p p e l l a t e 
r e v i e w 
o f 
a 
t r i a l 
c o u r t ' s 
r u l i n g 
on 
a 
m o t i o n f o r a 
JML: 
"The 
s t a n d a r d 
o f r e v i e w 
a p p l i c a b l e t o a 
r u l i n g 
on 
a 
m o t i o n 
f o r 
JNOV 
[now 
r e f e r r e d 
t o 
as 
a 
p o s t v e r d i c t 
JML] 
i s i d e n t i c a l 
t o t h e 
s t a n d a r d 
u s e d 
by 
t h e 
t r i a l 
c o u r t 
i n g r a n t i n g 
o r d e n y i n g a m o t i o n 
12 
1071605 
f o r 
d i r e c t e d v e r d i c t 
[now 
r e f e r r e d 
t o 
as 
a 
J M L ] . 
Thus, i n r e v i e w i n g 
t h e 
t r i a l 
c o u r t ' s 
r u l i n g 
on 
t h e 
m o t i o n , 
we 
r e v i e w 
t h e 
e v i d e n c e 
i n 
a 
l i g h t 
most 
f a v o r a b l e t o t h e n o n m o v a n t , and we d e t e r m i n e w h e t h e r 
t h e 
p a r t y 
w i t h 
t h e 
b u r d e n 
o f 
p r o o f 
has 
p r o d u c e d 
s u f f i c i e n t 
e v i d e n c e 
t o 
r e q u i r e 
a 
j u r y 
d e t e r m i n a t i o n . " 
624 
So. 
2d a t 1366 
( c i t a t i o n s 
o m i t t e d ) . 
The 
r u l e r e g a r d i n g 
c a n c e l l a t i o n o f 
an 
i n s u r a n c e 
p o l i c y 
r e q u i r e s 
t h a t 
" t h e 
i n s u r e r 
s e t t i n g 
up 
c a n c e l l a t i o n 
as 
a 
d e f e n s e 
on 
a p o l i c y has 
t h e b u r d e n 
o f p r o v i n g 
by 
c l e a r 
and 
c o n v i n c i n g 
e v i d e n c e 
t h a t 
t h e 
n o t i c e 
o f 
c a n c e l l a t i o n 
was 
p r o p e r l y m a i l e d 
t o t h e 
i n s u r e d . " 
C u r r i e v. G r e a t C e n t . 
I n s . 
Co., 
374 
So. 
2d 
1330, 
1331 
( A l a . 
1979) 
( c i t i n g 
H a r r e l l 
v. 
A l a b a m a Farm B u r e a u Mut. 
Cas. 
I n s . Co., 
287 
A l a . 259, 
251 
So. 
2d 
220 
( 1 9 7 1 ) ) . 
D i s c u s s i o n 
H a r t f o r d a r g u e s , among o t h e r t h i n g s , t h a t t h e 
t r i a l 
c o u r t 
e r r e d i n d e n y i n g i t s m o t i o n f o r a JML b a s e d on i t s c o n t e n t i o n 
t h a t 
t h e 
u n d i s p u t e d 
e v i d e n c e shows t h a t 
t h e 
H a r t f o r d 
p o l i c y 
was 
c a n c e l e d 
b e f o r e 
Reed 
was 
i n j u r e d . 
Reed 
r e l i e s 
on 
I n s t i t u t e o f L o n d o n Co. 
v. V a l l e y E q u i p m e n t , I n c . , 
660 
So. 
2d 
1000 
( A l a . C i v . App. 
1 9 9 5 ) , and 
a r g u e s t h a t § 2 7 - 4 0 - 1 1 , A l a . 
Code 
1975, 
" c o n t a i n s 
s p e c i f i c 
r e q u i r e m e n t s 
r e g a r d i n g 
13 
1071605 
c a n c e l l a t i o n by o r a t t h e r e q u e s t o f a p r e m i u m f i n a n c e 
company 
l i k e 
[ A m e r i c a n L i b e r t y ] . 
... 
U n d e r t h e p r o p e r 
i n t e r p r e t a t i o n 
o f 
[§ 
2 7 - 4 0 - 1 1 ] , 
t h e 
b u r d e n 
i s 
on 
t h e 
i n s u r e r 
a l l e g i n g 
c a n c e l l a t i o n 
as 
a 
d e f e n s e 
t o 
p r o v e 
t h e 
f i n a n c e 
company 
s t r i c t l y 
c o m p l i e d w i t h 
a l l t h e 
r e q u i r e m e n t s 
o f 
[§ 
27-40-11] 
b e f o r e e f f e c t i n g a c a n c e l l a t i o n . " 
(Reed's b r i e f , a t 39-40.) 
R e e d ' s a r g u m e n t 
i s b a s e d 
on 
t h e 
a s s u m p t i o n 
t h a t 
i f t h e 
o n l y 
r e a s o n t h e 
i n s u r e r 
i s c a n c e l i n g 
t h e 
p o l i c y 
i s t h e 
r e q u e s t 
o f 
a p r e m i u m - f i n a n c e company, 
t h e 
p o l i c y must 
be 
c a n c e l e d 
i n 
a c c o r d a n c e w i t h 
§ 2 7 - 4 0 - 1 1 . 
H a r t f o r d 
a r g u e s t h a t , 
r e g a r d l e s s 
o f A m e r i c a n L i b e r t y ' s 
r e q u e s t t o c a n c e l t h e 
H a r t f o r d 
p o l i c y , 
H a r t f o r d 
e f f e c t i v e l y 
c a n c e l e d 
t h e 
H a r t f o r d 
p o l i c y 
i n 
a c c o r d a n c e w i t h 
t h e t e r m s o f t h e 
p o l i c y . 
T h e r e f o r e , 
H a r t f o r d 
a r g u e s , 
A m e r i c a n 
L i b e r t y ' s 
c o m p l i a n c e 
w i t h 
§ 
27-40-11 
i s 
i n c o n s e q u e n t i a l ; 
we 
a g r e e . 
The 
l a w 
c o n c e r n i n g an 
i n s u r e r ' s 
r i g h t t o c a n c e l a p o l i c y 
i s 
w e l l 
s e t t l e d : 
" [ T ] h e 
r i g h t 
v e l 
non 
o f 
c a n c e l l a t i o n 
i s 
a 
m a t t e r 
o f 
c o n t r a c t 
The 
q u e s t i o n 
o f 
t h e 
m o t i v e 
o f 
t h e 
p a r t i e s 
o r company i n t h a t b e h a l f i s i m m a t e r i a l when t h e r e i s 
a c a n c e l l a t i o n u n d e r t h e t e r m s o f t h e 
c o n t r a c t . " 
P a c i f i c 
Mut. 
 
L i f e 
I n s . 
Co. 
o f C a l i f o r n i a v. S t r a n g e , 226 
A l a . 
98, 
100, 
145 
14 
1071605 
So. 425, 426 ( 1 9 3 2 ) . 
F u r t h e r , 
" [ i ] t 
i s w e l l 
s e t t l e d i n A l a b a m a 
t h a t 
' i n 
an 
a c t i o n on an i n s u r a n c e 
p o l i c y when t h e i n s u r e r 
s e t s 
up 
c a n c e l l a t i o n as a d e f e n s e , t h e i n s u r e r h a s t h e 
b u r d e n 
o f 
p r o v i n g 
t h e 
p o l i c y 
was 
c a n c e l e d . ' 
M i d - S t a t e Homes, I n c . 
v. C h e r o k e e I n s . 
Co., 51 A l a . 
App. 
247, 248, 284 So. 2d 274, 275 ( 1 9 7 3 ) . However, 
i t 
i s 
' e q u a l l y 
t r u e 
t h a t 
i n t h e a b s e n c e 
o f a 
r e s t r i c t i v e 
s t a t u t o r y p r o v i s i o n , t h e p a r t i e s t o an 
i n s u r a n c e 
c o n t r a c t may s p e c i f y t h e method by w h i c h 
i t 
may be 
c a n c e l e d 
and t h e p a r t i e s 
a r e 
t h e r e b y 
b o u n d . P u t a n o t h e r way, an i n s u r a n c e 
p o l i c y may be 
c a n c e l e d 
a c c o r d i n g 
t o i t s 
t e r m s . ' 51 A l a . 
App. a t 
249, 
284 So. 2d a t 276. ( C i t a t i o n 
o m i t t e d ) . " 
A m e r i c a n 
I n t e r s t a t e I n s . 
Co. v . K e l l e y , 797 So. 2d 479, 482 
( A l a . 
C i v . 
App. 2 0 0 0 ) . 
See a l s o G r e e n v. S t a n d a r d F i r e I n s . 
 
Co. o f A l a b a m a , 398 So. 2d 671, 675 ( A l a . 1981) ( h o l d i n g 
t h a t 
" [ i ] t i s w e l l 
s e t t l e d i n A l a b a m a l a w t h a t t h e r i g h t o f t h e 
i n s u r e r t o c a n c e l an i n s u r a n c e 
p o l i c y i s s t r i c t l y 
c o n s t r u e d 
and 
t h e c o n d i t i o n 
i m p o s e d upon i t w i t h 
r e s p e c t 
t o 
g i v i n g 
n o t i c e o f c a n c e l l a t i o n must be s t r i c t l y 
p e r f o r m e d " ) . 
R e g a r d l e s s o f H a r t f o r d ' s m o t i v e s o r r e a s o n s f o r c a n c e l i n g 
t h e 
H a r t f o r d p o l i c y , t h e d i s p o s i t i v e i s s u e b e f o r e 
t h i s 
C o u r t 
i s 
w h e t h e r 
H a r t f o r d 
p r o d u c e d 
s u f f i c i e n t 
e v i d e n c e a t 
t r i a l 
i n d i c a t i n g t h a t t h e H a r t f o r d p o l i c y h a d b e e n c a n c e l e d and was 
n o t i n e f f e c t a t t h e t i m e o f Reed's i n j u r y . 
H a r t f o r d 
a r g u e s 
t h a t i t p r o d u c e d s u f f i c i e n t e v i d e n c e t h a t i t 
h a d c a n c e l e d t h e 
15 
1071605 
H a r t f o r d 
p o l i c y 
a c c o r d i n g 
t o i t s 
t e r m s . 
A c c o r d i n g 
t o t h e 
t e r m s o f t h e H a r t f o r d p o l i c y , H a r t f o r d c o u l d c a n c e l t h e p o l i c y 
by 
" m a i l [ i n g ] 
o r d e l i v e r [ i n g ] t o [T & W] n o t l e s s t h a n t e n 
d a y s a d v a n c e w r i t t e n n o t i c e s t a t i n g when t h e c a n c e l a t i o n [ s i c ] 
i s t o t a k e e f f e c t . " The H a r t f o r d p o l i c y does n o t c o n d i t i o n o r 
l i m i t 
H a r t f o r d ' s 
r i g h t t o c a n c e l t h e p o l i c y i n any way. 
H a r t f o r d 
a r g u e s 
t h a t 
i t p r e s e n t e d 
e v i d e n c e 
i n d i c a t i n g 
t h a t 
i t h a d m a i l e d 
t h e n o t i c e 
o f c a n c e l l a t i o n t o T & W's 
p r o p e r a d d r e s s and t h a t T & W f a i l e d t o r e b u t s a i d e v i d e n c e . 
H a r t f o r d 
r e l i e s on 
" t h e common-law p r i n c i p l e g e n e r a l l y 
r e f e r r e d t o as 
t h e 
' m a i l b o x r u l e ' o r t h e ' l e t t e r p r e s u m p t i o n . ' As 
a r t i c u l a t e d b y t h i s 
C o u r t i n C o r i n t h Bank & 
T r u s t  
Co. v . C o c h r a n , 219 A l a . 81, 83, 121 So. 66, 67 
( 1 9 2 9 ) , 
t h i s 
p r i n c i p l e s t a n d s f o r t h e p r o p o s i t i o n 
t h a t 
" ' [ a ] 
l e t t e r 
p r o p e r l y 
a d d r e s s e d , 
s t a m p e d , 
and 
m a i l e d 
i s p r e s u m e d 
t o 
h a v e 
b e e n 
r e c e i v e d 
i n due c o u r s e . 
E v i d e n c e 
d e n y i n g 
t h e 
r e c e i p t o f t h e l e t t e r does n o t r e n d e r 
t h e 
e v i d e n c e o f t h e m a i l i n g 
i n a d m i s s i b l e . 
N e i t h e r i s 
i t 
c o n c l u s i v e . W h e t h e r i t 
was so 
m a i l e d 
and 
r e c e i v e d 
becomes 
a 
j u r y 
q u e s t i o n . ' " 
S u l l i v a n v . E a s t e r n 
H e a l t h 
S y s . , I n c . , 953 So. 2d 355, 360 
( A l a . 
2 0 0 6 ) . 
Sue 
F l u r r y ' s 
t e s t i m o n y 
and t h e e x h i b i t s 
p r e s e n t e d b y 
16 
1071605 
H a r t f o r d 
a t 
t r i a l 
c o n s t i t u t e 
c l e a r 
and 
c o n v i n c i n g 
e v i d e n c e 
t h a t 
H a r t f o r d 
" p r o p e r l y 
a d d r e s s e d , s t a m p e d , 
and 
m a i l e d " 
t h e 
c a n c e l l a t i o n 
n o t i c e 
t o 
T 
& W. 
As 
a 
r e s u l t , 
a 
p r e s u m p t i o n 
a r i s e s 
t h a t 
T 
& 
W 
r e c e i v e d 
t h e 
c a n c e l l a t i o n 
n o t i c e . 
The 
p r e s u m p t i o n c o u l d h a v e b e e n r e b u t t e d by T & W's 
d e n i a l t h a t i t 
r e c e i v e d t h e c a n c e l l a t i o n n o t i c e . 
However, T & W d i d n o t d e n y 
r e c e i p t 
o f 
t h e 
c a n c e l l a t i o n n o t i c e . 
R a t h e r , P o a t e s , 
as 
T & 
W's 
r e p r e s e n t a t i v e , 
t e s t i f i e d 
as 
f o l l o w s : 
"Q 
[Reed's a t t o r n e y ] : I show you 
a document t h a t 
i s 
e x h i b i t 
23-A. 
A r e 
you 
f a m i l i a r 
w i t h 
t h i s 
d o c u m e n t , 
Mr. 
P o a t e s ? 
I t 
s a y s , 
' N o t i c e 
o f 
C a n c e l l a t i o n Nonpayment o f Premium F i n a n c e P o l i c y . ' 
"A 
[ P o a t e s ] : 
I know I h a v e s e e n 
i t s i n c e , 
you 
know, t h e 
l a w s u i t s 
and 
e v e r y t h i n g . 
"Q: 
A l l 
r i g h t . 
Do 
you 
r e c a l l 
r e c e i v i n g 
t h e 
n o t i c e 
o f 
c a n c e l l a t i o n f r o m 
t h e 
H a r t f o r d 
i n 
t h a t 
m a i l b e f o r e 
J a n u a r y 21, 
2005? 
"A: 
T h a t I can remember, no, s i r . 
"Q: 
I t s a y s t h e d a t e t h a t i t was 
m a i l e d , 
d a t e 
o f 
i s s u e i s J a n u a r y 6 t h o f 
'05. 
So t h a t w o u l d have b e e n 
o b v i o u s l y 
e a r l y i n t h e 
y e a r o f 
'05. 
A n y t h i n g 
a b o u t 
t h a t 
j a r y o u r r e c o l l e c t i o n ? 
"A: 
No, 
s i r . T h a t I can remember, no, 
s i r ; n o t 
t o s a y 
t h a t 
i t d i d n ' t come i n . 
"Q: 
R i g h t . And Mr. T h u r b e r [ H a r t f o r d ' s 
a t t o r n e y ] 
t o o k 
y o u r 
d e p o s i t i o n 
and 
a s k e d 
you 
a 
s e r i e s 
o f 
q u e s t i o n s 
a b o u t 
t h a t . 
How 
s t r o n g , 
how 
weak, 
j u s t 
t e l l us y o u r r e c o l l e c t i o n o f w h e t h e r o r n o t 
you 
d i d , 
17 
1071605 
as b e s t 
you 
c a n , 
w h e t h e r o r n o t 
you 
r e c e i v e d 
t h a t ? 
" [ H a r t f o r d ' s 
a t t o r n e y ] : 
J u d g e , 
I 
a s k e d 
and 
a n s w e r e d . He 
s a i d t h r e e 
t i m e s he 
d i d n o t 
remember. 
"THE 
COURT: O v e r r u l e d . 
You 
can 
c r o s s - e x a m i n e . 
"A 
[ P o a t e s ] : 
I d o n ' t remember. 
f l 
"Q 
[ H a r t f o r d ' s 
a t t o r n e y ] : 
T h i s 
i s 
a 
l e t t e r 
d a t e d , w h i c h we h a v e a l r e a d y s e e n b e f o r e , J a n u a r y 
6. 
T h a t 
i s 
t h e 
l e t t e r 
we 
h a v e 
t a l k e d 
a b o u t 
b e f o r e , 
c o r r e c t ? 
"A 
[ P o a t e s ] : Y e s , s i r . 
"Q: 
I t 
i s 
a d d r e s s e d 
t o 
T 
& 
W 
C o n s t r u c t i o n 
Company. You 
s a i d you do n o t remember r e c e i v i n g t h a t 
n o t i c e o f c a n c e l l a t i o n ? 
"A: 
C o r r e c t . 
I d o n ' t remember. 
"Q: 
Was 
t h a t 
T 
& W's 
m a i l i n g 
a d d r e s s 
a t 
t h a t 
t i m e , 3828 I s a b e l l a L a n e , M o b i l e , A l a b a m a 36618? 
"A: 
Y e s , s i r . 
"Q: 
So 
t h a t m a i l i n g a d d r e s s i s c o r r e c t ? 
"A: 
Y e s , s i r . 
f l 
"Q: 
[ H a r t f o r d ' s ] 
E x h i b i t 22. 
Do 
you 
r e c o g n i z e 
t h a t 
l e t t e r ? 
"A: 
I t i s a n o t i c e o f c a n c e l l a t i o n . 
f l 
18 
1071605 
"Q: 
D i d you 
r e c e i v e t h a t 
l e t t e r ? 
"A: 
Not 
t h a t 
I can 
r e c a l l . 
f l 
"Q 
[Reed's a t t o r n e y ] : You 
a r e 
n o t d e n y i n g 
t h a t 
you 
r e c e i v e d 
t h e s e 
l e t t e r s , 
p a r t i c u l a r l y 
t h i s 
l e t t e r , 
N o t i c e 
o f 
C a n c e l l a t i o n , 
t h e 
one 
t h a t 
was 
j u s t 
up 
t h e r e , 
my 
e x h i b i t 22? 
You 
a r e 
n o t 
d e n y i n g 
t h a t , 
a r e 
you? 
"A 
[ P o a t e s ] : 
I c a n ' t deny i t n o r 
c o n f i r m 
i t . " 
Reed f a i l s 
t o p o i n t t o a n y t h i n g 
i n t h e r e c o r d i n d i c a t i n g t h a t 
T 
& W 
d e n i e s 
h a v i n g 
r e c e i v e d 
t h e 
c a n c e l l a t i o n n o t i c e 
f r o m 
H a r t f o r d . 
H a r t f o r d met 
i t s b u r d e n by p r o v i d i n g c l e a r and 
c o n v i n c i n g 
e v i d e n c e t h a t i t c a n c e l e d 
t h e H a r t f o r d p o l i c y u n d e r t h e 
t e r m s 
o f 
t h e 
p o l i c y 
and 
t h a t 
t h a t 
c a n c e l l a t i o n 
was 
p r o p e r . 
T h e r e f o r e , 
t h e 
t r i a l 
c o u r t ' s 
j u d g m e n t 
d e n y i n g 
H a r t f o r d ' s 
m o t i o n 
f o r a JML 
on 
t h e 
b r e a c h - o f - c o n t r a c t 
c l a i m was 
e r r o r , 
and 
we 
r e v e r s e i t . 
Reed a r g u e s t h a t i n o r d e r 
f o r t h i s C o u r t t o r u l e i n f a v o r 
o f 
H a r t f o r d , 
i t i s n e c e s s a r y 
t o 
o v e r r u l e 
V a l l e y 
E q u i p m e n t . 
However, V a l l e y E q u i p m e n t i s d i s t i n g u i s h a b l e f r o m t h e 
p r e s e n t 
c a s e , and 
o u r d e c i s i o n t o d a y d o e s n o t e f f e c t i t s p r e c e d e n t i a l 
v a l u e . 
I n V a l l e y E q u i p m e n t , 
an 
i n s u r e d 
p r o c u r e d 
" p h y s i c a l 
19 
1071605 
damage i n s u r a n c e " t h r o u g h an i n s u r e r and f i n a n c e d t h e p r e m i u m 
t h r o u g h 
a p r e m i u m - f i n a n c e 
company. 
The 
i n s u r e d 
and t h e 
p r e m i u m - f i n a n c e 
company 
e n t e r e d 
i n t o 
a 
p r e m i u m - f i n a n c e 
a g r e e m e n t , w h i c h c o n t a i n e d a power o f a t t o r n e y , e n a b l i n g t h e 
p r e m i u m - f i n a n c e 
company t o c a n c e l t h e p o l i c y . 
The 
i n s u r e d 
d e f a u l t e d on i t s 
p a y m e n t s t o t h e p r e m i u m - f i n a n c e company, and 
t h e 
p r e m i u m - f i n a n c e company r e q u e s t e d t h a t t h e i n s u r e r 
c a n c e l 
t h e 
p o l i c y ; 
t h e 
i n s u r e r 
c o m p l i e d w i t h 
t h e 
p r e m i u m - f i n a n c e 
company's r e q u e s t . 
S u b s e q u e n t l y , t h e i n s u r e d 
f i l e d a c l a i m , 
w h i c h t h e i n s u r e r d e n i e d b a s e d upon t h e p r i o r c a n c e l l a t i o n o f 
t h e 
i n s u r a n c e p o l i c y . 
The i n s u r e d s u e d t o r e c o v e r u n d e r t h e 
p o l i c y . 
The 
t r i a l 
c o u r t 
f o u n d 
t h a t 
t h e 
p r e m i u m - f i n a n c e 
company 
f a i l e d 
t o c o m p l y 
w i t h 
§ 2 7 - 4 0 - 1 1 and g r a n t e d t h e 
i n s u r e d ' s summary-judgment m o t i o n . 
The i n s u r e r a p p e a l e d . 
B e f o r e 
t h e C o u r t o f 
C i v i l 
A p p e a l s , t h e i n s u r e r 
n e v e r 
r a i s e d 
t h e 
a r g u m e n t 
t h a t 
t h e 
i n s u r a n c e 
p o l i c y 
h a d 
b e e n 
p r o p e r l y c a n c e l e d u n d e r t h e t e r m s o f t h e p o l i c y . 
R a t h e r , t h e 
i n s u r e r a r g u e d t h a t t h e p o l i c y was p r o p e r l y c a n c e l e d u n d e r t h e 
p r o v i s i o n s o f § 2 7 - 4 0 - 1 1 . The C o u r t o f C i v i l A p p e a l s a f f i r m e d 
t h e 
t r i a l 
c o u r t ' s j u d g m e n t , h o l d i n g t h a t t h e p r e m i u m - f i n a n c e 
company's 
f a i l u r e t o a d h e r e t o t h e r e q u i r e m e n t s o f § 27-40-11 
20 
1071605 
r e n d e r e d 
i t s a t t e m p t 
t o 
c a n c e l 
t h e 
i n s u r a n c e 
p o l i c y 
i n e f f e c t i v e . 
T h i s 
c a s e 
i s d i s t i n g u i s h a b l e 
f r o m 
V a l l e y 
E q u i p m e n t 
b e c a u s e , 
u n l i k e t h e i n s u r e r i n V a l l e y E q u i p m e n t , 
H a r t f o r d 
a r g u e d b e f o r e 
t h e t r i a l 
c o u r t and b e f o r e 
t h i s C o u r t t h a t i t 
p r o p e r l y 
c a n c e l e d t h e H a r t f o r d p o l i c y i n a c c o r d a n c e w i t h t h e 
t e r m s o f t h e H a r t f o r d 
p o l i c y . 
T h e r e f o r e , 
t h e d i s p o s i t i v e 
i s s u e h e r e i s 
w h e t h e r H a r t f o r d c a n c e l e d t h e H a r t f o r d p o l i c y i n 
a c c o r d a n c e w i t h t h e t e r m s o f t h e p o l i c y . We h o l d t h a t i t 
d i d . 
C o n c l u s i o n 
B a s e d on t h e f o r e g o i n g , 
t h i s 
C o u r t 
r e v e r s e s 
t h e 
t r i a l 
c o u r t ' s 
j u d g m e n t 
and 
remands 
t h i s 
c a s e 
f o r p r o c e e d i n g s 
c o n s i s t e n t w i t h 
t h i s 
o p i n i o n . 
REVERSED AND REMANDED. 
Cobb, C . J . , and W o o d a l l , S m i t h , P a r k e r , and Shaw, J J . , 
c o n c u r . 
21