Title: Davis v. Cotton States Mut. Ins. Co.
Citation: 604 So. 2d 354
Docket Number: 1910557
State: Alabama
Issuer: Alabama Supreme Court
Date: August 21, 1992

604 So. 2d 354 (1992)
Lewis K. DAVIS
v.
COTTON STATES MUTUAL INSURANCE COMPANY and Shield Insurance Company.
1910557.

Supreme Court of Alabama.
August 21, 1992.
*355 Sam E. Loftin and W. Banks Herndon of Loftin, Herndon &amp; Loftin, Phenix City, for appellant.
W.H. Brittain II of Ball, Ball, Matthews &amp; Novak, Montgomery, for appellees.
HORNSBY, Chief Justice.
The defendant, Lewis K. Davis, appeals from a partial summary judgment entered in favor of the plaintiffs, Cotton States Mutual Insurance Company ("Cotton States") and Shield Insurance Company ("Shield"), on his counterclaim alleging the plaintiffs' bad faith refusal to provide uninsured motorist benefits. We affirm.
The parties entered into the following stipulation of facts, which we set out as a partial statement of the facts of this controversy:
In their complaint for a declaratory judgment, Cotton States and Shield asked the trial court to determine that they had no obligation to Davis under the uninsured motorist provisions of the two policies because they alleged that, under the policies, "the vehicle driven by C.J. Hawkins does *357 not constitute an `insured vehicle.'" The second amended complaint of Cotton States and Shield asserts their specific contention that the vehicle driven by C.J. Hawkins was a "dirt bike or trail bike," prohibited from being driven on a public road. They further asserted that the vehicle was not an uninsured motor vehicle under Ala.Code 1975, § 32-7-2 and § 32-7-23.
The parties each moved for a summary judgment with respect to the declaratory judgment aspect of the case. The trial court's order ruling on the parties' motions stated the following:
Cotton States and Shield did not appeal from that judgment of the trial court. Cotton States and Shield then moved for a summary judgment on Davis's counterclaim alleging that Cotton States and Shield had refused in bad faith to provide uninsured motorist benefits. The trial court entered a summary judgment in favor of Cotton States and Shield on Davis's bad faith claim after having noted, in reference to its ruling on the parties' initial motions for summary judgment, "that there was a debatable issue as to a matter of law for failure to pay this claim initially." Davis appeals from the summary judgment in favor of Cotton States and Shield on Davis's bad faith counterclaim.
Davis contends that there was no lawful basis for Cotton States and Shield to refuse to provide uninsured motorist benefits. Davis asserts that the absence of a lawful basis for refusal is established by the trial court's summary judgment in favor of Davis based on its holding that Davis was entitled to uninsured motorist benefits. Davis asserts that he presented substantial evidence that Cotton States and Shield knew that there was no lawful basis for refusal of the uninsured motorist benefits or that Cotton States and Shield intentionally failed to determine whether a lawful basis existed.
Cotton States and Shield contend that the trial court's conclusion, on its ruling on the parties' first motions for summary judgment, that "there was a debatable issue" with regard to the obligation of Cotton States and Shield to provide uninsured motorist benefits precludes the existence of a genuine issue of material fact with regard *358 to Davis's bad faith claim.[2]
Rule 56, A.R.Civ.P., sets forth a two-tiered standard for entering a summary judgment. The rule requires the trial court, in order to enter a summary judgment, to determine (1) that there is no genuine issue of material fact, and (2) that the moving party is entitled to a judgment as a matter of law. The burdens placed on the moving party by this rule have often been discussed by this Court:
Berner v. Caldwell, 543 So. 2d 686, 688 (Ala.1989) (quoting Schoen v. Gulledge, 481 So. 2d 1094, 1096-97 (Ala.1985)).
The standard of review applicable to a summary judgment is the same as the standard for granting the motion, that is, we must determine whether there was a genuine issue of material fact and, if not, whether the movant was entitled to a judgment as a matter of law. Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and resolve all reasonable doubts against the movant. Wilson v. Brown, 496 So. 2d 756, 758 (Ala.1986); Harrell v. Reynolds Metals Co., 495 So. 2d 1381 (Ala.1986). See also Hanners v. Balfour Guthrie, Inc., 564 So. 2d 412 (Ala.1990).
Because this action was not pending on June 11, 1987, Ala.Code 1975, § 12-21-12, mandates that Davis meet his burden by "substantial evidence." Bass v. South-Trust Bank of Baldwin County, 538 So. 2d 794, 797-98 (Ala.1989). Under the substantial evidence test the nonmovant must present "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So. 2d 870, 871 (Ala.1989). More simply stated, "[a]n issue is genuine if reasonable persons could disagree." Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 481 (1982).
In National Sec. Fire &amp; Casualty Co. v. Bowen, 417 So. 2d 179 (Ala.1982), this Court stated the following principles applicable to a "bad faith refusal" case:
Id. at 183. In LeFevre v. Westberry, 590 So. 2d 154 (Ala.1991), we noted that "the insured must eliminate any arguable reason propounded by the insurer for refusing to pay the claim." Id. at 159 (quoting Burns v. Motors Ins. Corp., 530 So. 2d 824, 827 (Ala.Civ.App.1987)).
Since recognizing the tort of bad faith in Alabama, this Court has held that proof of mere negligence or mistake is not sufficient to support a claim of bad faith; there must be a refusal to pay, coupled with a conscious intent to injure. See King v. National Found. Life Ins. Co., 541 So. 2d 502 (Ala.1989); Pierce v. Combined Ins. Co. of America, 531 So. 2d 654 (Ala. 1988); Coleman v. Gulf Life Ins. Co., 514 So. 2d 944 (Ala.1987); Blue Cross &amp; Blue Shield of Alabama v. Granger, 461 So. 2d 1320 (Ala.1984); Gulf Atl. Life Ins. Co. v. Barnes, 405 So. 2d 916 (Ala.1981). Applying the principles stated above to the circumstances of this case, we hold that Davis failed to meet his burden of presenting substantial evidence of an absence of any lawful basis for the refusal of Cotton States and Shield to provide him with uninsured motorist benefits and the insurers' knowledge of that fact or the insurers' intentional failure to determine whether a lawful basis existed for their refusal. Le-Fevre, 590 So. 2d  at 159.
Crucial to the insurers' showing that they did not act in bad faith is their employment of a lawyer in private practice to research the coverage of the motor vehicle. The insurers contend that they were uncertain whether the vehicle at issue in this case fell within the uninsured motorist provisions of their policies, and the advice of their lawyer confirmed that uncertainty. Their lawyer advised them that the issue of coverage under the circumstances of this case was an issue of first impression in this state. In other circumstances reliance on the advice of informed counsel has often been sufficient in itself to establish good faith or to rebut a claim of bad faith. Lynch v. Green Tree Acceptance, Inc., 575 So. 2d 1068 (Ala.1991); Hanson v. Couch, 360 So. 2d 942 (Ala.1978); and Uphaus v. Charter Hospital of Mobile, 582 So. 2d 1140 (Ala.Civ.App.1991). There is no indication in the record that the insurers were not entitled to rely on their lawyer's advice. It is a reasonable inference from these facts that the insurers' complaint for a declaratory judgment was filed with the aim of resolving the doubt raised by their lawyer's advice.
After a thorough review of the record, we find no evidence that Cotton States and Shield denied Davis's claim for uninsured motorist benefits in bad faith with an intent that he be injured by the denial. The record reflects an attempt by Cotton States and Shield to legitimately determine, in good faith, whether the kind of vehicle at issue was covered by the uninsured motorist provisions of the policies. That effort included employment of legal counsel to *360 determine the extent of coverage and it indicates reliance on the lawyer's advice. Under these facts, Cotton States and Shield have demonstrated an arguable reason for denying uninsured motorist benefits to Davis.
Davis's effort to controvert the insurers' showing of a reason for the denial is essentially an argument in hindsight that the vehicle upon which Davis's son was riding may fit within the uninsured motorist provisions of the policies at issue. In addressing the alleged bad faith of an insurer, our focus is on the events and circumstances surrounding the investigation and ultimate denial of the claim rather than on subsequent determinations with respect to coverage, whether erroneous or not, that come after the initiation of litigation. The trial court did not err in recognizing that an arguable question existed as to whether the vehicle at issue was covered by the policies. The existence of such an arguable question, the creation of which is not motivated by bad faith, precludes the imposition of liability on an insurance company for bad faith refusal to pay an insurance claim. "If any one of the reasons for denial of coverage is at least `arguable,' this Court need not look any further." McLaughlin v. Alabama Farm Bureau Mut. Casualty Ins. Co., 437 So. 2d 86, 91 (Ala.1983). See also King v. National Found. Life Ins. Co., 541 So. 2d 502, 505 (Ala.1989).
Therefore, the judgment of the trial court is affirmed.
AFFIRMED.
MADDOX, SHORES, HOUSTON and KENNEDY, JJ., concur.
[1]  Although James Derle Patterson was originally named as a defendant in the plaintiffs' complaint for a declaratory judgment, he was subsequently dismissed from the action.
[2]  In Safeco Ins. Co. of America v. Sims, 435 So. 2d 1219, 1223 (Ala.1983), this Court explained:

"We are of the opinion that the finding of a justiciable controversy is not the determining factor of whether there was or was not bad faith on the part of an insurance company to pay a claim. The standard for testing a bad faith claim is not found in either the adjudication of a justiciable controversy or the judgment on the merits of the contract claim."
In his special concurrence, Justice Jones stated:
"The standard for testing a bad faith claim is to be found neither in the adjudication of a justiciable controversy, standing alone, nor in the judgment on the merits of the contract claim. This is not to say, of course, that either of these holdings is irrelevant to the bad faith issue. To be sure, the filing of a declaratory judgment action, under appropriate circumstances, may evidence a good faith attempt to seek a prompt resolution of a disputed claim. If, on the other hand, the refusal to pay is without legal excuse, the mere filing of a declaratory judgment action, followed by a finding of justiciable controversy, may enhance rather than diminish the degree of bad faith."
Id. at 1224 (Jones, J., concurring specially).