Opinion ID: 1908944
Heading Depth: 1
Heading Rank: 2

Heading: The Fraud and Suppression Claims

Text: The defendants argue that the trial court should have entered a judgment as a matter of law in their favor on the fraud and suppression claims because, they say: (a) the evidence was insufficient to support the jury's verdict, and (b) Mrs. Thomas could not have justifiably relied on Ledbetter's representation. The elements of a misrepresentation claim are 1) that the representation was false, 2) that it concerned a material fact, 3) that the plaintiff relied on the false representation, and 4) that actual injury resulted from the reliance. § 6-5-101, Ala. Code 1975; Boswell v. Liberty Nat'l Life Ins. Co., 643 So.2d 580, 581 (Ala.1994). The elements of a suppression claim are 1) that the defendant suppressed a material fact, 2) that the defendant had a duty to communicate that material fact, either because of a confidential relationship between the parties or because of the particular circumstances of the case, and 3) that the plaintiff suffered actual injury as a result of the suppression. § 6-5-102, Ala. Code 1975; Boswell, 643 So.2d at 581. A jury could reasonably conclude that Ledbetter told Mrs. Thomas she was going to receive full coverage, that this representation was false, that this representation was material to Mrs. Thomas's decision to purchase the Alfa policy, that at the time of the sale Mrs. Thomas relied on the false representation, and that she was injured, by being induced to purchase a policy that did not provide full coverage and then by Alfa's refusing to pay the damage claims arising from the water-heater episode and Hurricane Opal. Alfa and Ledbetter claim that Mrs. Thomas could not have justifiably relied on the representation regarding full coverage, because Mrs. Thomas did not read her copy of the policy, which, the defendants say, disclosed just what coverage she had purchased. See Locklear Dodge City, Inc. v. Kimbrell, 703 So.2d 303, 306 (Ala. 1997). Whether Mrs. Thomas's reliance on Ledbetter's representation allows the recovery of damages is to be determined under the justifiable reliance standard. Foremost Ins. Co. v. Parham, 693 So.2d 409 (Ala.1997). [2] Under the justifiable-reliance standard, as stated in Hickox v. Stover, 551 So.2d 259 (Ala.1989), `[a] plaintiff, given the particular facts of his knowledge, understanding, and present ability to fully comprehend the nature of the subject transaction and its ramifications, has not justifiably relied on the defendant's representation if that representation is one so patently and obviously false that he must have closed his eyes to avoid the discovery of the truth.' 551 So.2d at 263 (quoting Southern States Ford, Inc. v. Proctor, 541 So.2d 1081, 1091-92 (Ala.1989) (concurring opinion)). The evidence presented at trial does not indicate that Mrs. Thomas's reliance on Ledbetter's representation was, as a matter of law, not justifiable. Mrs. Thomas was 74 years old, a widow, and could barely read or write. She had known Earl Ledbetter for many years (Ledbetter had handled Mrs. Thomas's late husband's insurance needs), and she trusted him to provide a full-coverage policy. Ledbetter himself testified that he had a relationship of trust with Mrs. Thomas. Moreover, an Alfa vice president testified that an agent has a higher degree of responsibility to explain a policy when he is dealing with an illiterate person. Whether Mrs. Thomas's reliance on Ledbetter's representation was justified was a question of fact to be resolved by the jury. AT & T Info. Sys., Inc. v. Cobb Pontiac-Cadillac, Inc., 553 So.2d 529, 532 (Ala. 1989). Our analysis with respect to the suppression claim is similar to that with respect to the fraudulent misrepresentation claim. This Court will not disturb the jury's conclusion that Alfa and Ledbetter suppressed the material facts that the plaintiff's house did not meet Alfa's underwriting requirements for a full-coverage policy and that only a limited-coverage policy would be issued to Mrs. Thomas. A jury could reasonably conclude from the substantial evidence that the suppression induced Mrs. Thomas to buy a limited-coverage policy and that her doing so resulted in her having unpaid claims. Alfa and Ledbetter argue, citing Trio Broadcasters, Inc. v. Ward, 495 So.2d 621 (Ala.1986), that there was no confidential relationship with Mrs. Thomas and that there were no particular circumstances on which a duty to disclose the limited coverage could rest. We disagree. In Trio Broadcasters, this Court concluded that the particular-circumstances exception giving rise to a duty to disclose was not present when both parties were experienced in commercial real estate transactions and were dealing with each other at arm's length through real estate brokers. Id. at 624. Given the facts in this case, we cannot hold that the particular circumstances surrounding this case were insufficient as a matter of law to create a duty to disclose material facts about the insurance policy. See State Farm Fire & Casualty Co. v. Owen, 729 So.2d 834 (Ala.1998). Alfa and Ledbetter argue that the circuit court should have granted them a judgment as a matter of law on the fraud and suppression claims because, they say, the denial of the claim based on water-heater damage put her on notice that Ledbetter's representations had been false. Alfa and Ledbetter contend that, after that denial, her continuing to pay premiums constituted a waiver of her fraud cause of action because she could not have acted in reliance on the fraudulent misrepresentation after that time. However, this argument does not affect the right to recover damages under the fraud and suppression claims based on the lack of coverage for the water-heater claim. Although Alfa and Ledbetter argue at trial that Mrs. Thomas had had notice of the fraud before Hurricane Opal occurred, they did not present to the court any basis for directing a verdict on the fraud claim in its entirety, and they did not request any limiting instructions that would have told the jury it could award damages for fraud only in regard to the water-heater claim, not in regard to the Hurricane Opal claim. Indeed, at the conclusion of the argument on the directed-verdict motion, the court noted the defendants' argument that Mrs. Thomas could not have relied on the fraud for Hurricane Opal damages. The court said, however, that this question of damage was more an argument than a legal something I need to charge on. In other words, the judge said that he would not instruct the jury on this question, but that Alfa and Ledbetter's attorney could argue that any damages awarded for fraud should be based only on the water-heater claim. Alfa and Ledbetter did not object to this ruling and did not argue the damages issue in this way in their closing argument. The circuit court did not err when it denied Alfa and Ledbetter's motion for a JNOV. We affirm the judgment as it relates to the fraud and suppression counts.