Opinion ID: 471407
Heading Depth: 1
Heading Rank: 6

Heading: Liberty's denial of coverage and refusal to defend amounted to outrageous conduct;

Text: VI. Liberty breached the oral agreement made by its agent Sharples to provide adequate insurance to Lampliter; VII. Liberty breached the insurance contract as to Mocabee because of its bad faith in refusing to defend the Hickman and Bass lawsuits; VIII. Liberty misled Lampliter as to the scope of its insurance policy when it renewed the policy in 1981; IX. Liberty perpetrated a fraud on Lampliter by knowingly misrepresenting the scope of its insurance policy; X. Liberty drafted and issued a policy that failed to express the intent of the parties and therefore the contract should be reformed to reflect the parties' true intentions; XI. Liberty breached an oral contract describing Lampliter's coverage entered into by Sharples at the time the contract was renewed; and XII. Liberty perpetrated a fraud on Lampliter by failing to disclose the actual scope of the coverage it had sold to Lampliter. 2 The court struck Lampliter's counts IV, VIII and XI as redundant. Lampliter does not challenge this determination, but contends that the court erred by granting Liberty summary judgment on these claims. We note, however, that summary judgment was not granted on these claims. The district court determined that counts IV, VI, VIII, and XI were based on an alleged oral agreement to provide insurance and best stated in count VI which was a viable claim. Accordingly, we will address Lampliter's arguments advancing claims IV, VIII, and XI in our consideration of the court's disposition of count VI Lampliter also contends that the district court erred by granting Liberty summary judgment on count V. Beyond making this assertion in a point heading, Lampliter does not pursue this contention. Again we point out that the district court did not grant summary judgment on this claim. It struck count V because Lampliter, as a corporate entity, could not maintain an action for outrageous conduct. The tort of outrageous conduct, recently recognized in Alabama, is also known as the intentional infliction of emotional distress. See American Rd. Serv. Co. v. Inmon, 394 So.2d 361 (Ala.1980). We agree with the district court that corporations cannot experience emotional distress and cannot therefore maintain a suit for outrageous conduct. Although this count was dismissed for failure to state an actionable claim, it does not appear that the court went beyond the pleadings to reach this conclusion. Therefore dismissal of this count did not amount to summary judgment. See Fed.R.Civ.P. 12(b)(6). 3 Ala.Code 1975 Sec. 6-2-39 4 Lampliter points out that Ala.Code Sec. 6-2-3 was amended to provide a two year limitations period for fraud claims. The effective date of the amendment is January 9, 1985--nearly six months after Lampliter filed its action. Nothing in the statute suggests that the amendment should be applied retroactively. Moreover, the Alabama courts have not applied the amendment retroactively, instead they apply the law in effect at the time the suit arose. See, e.g., Schoen v. Gulledge, 481 So.2d 1094, 1097 (Ala.1985). Because we conclude that Lampliter's fraud claim was time barred when Lampliter brought its suit, we also conclude that Lampliter's fraud claims expired before they could receive the benefit of the 1985 amendment 5 Lampliter argues that it purchased the liquor liability coverage because a Liberty agent indicated that would expedite Liberty's decision to defend Lampliter. Why Lampliter bought the coverage is irrelevant; the question is whether a reasonable person would have suspected fraud if he were required to purchase coverage he thought he already had 6 The Eleventh Circuit, in the en banc decision Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.1981), adopted as precedent decisions of the former Fifth Circuit rendered prior to October 1, 1981 7 We construe the district court's dismissal of these claims as a grant of summary judgment. Liberty moved for summary judgment on the grounds that Lampliter's fraud claims were untimely, and, in disposing of these claims the district court considered testimony beyond the pleadings (i.e.--the date Lampliter purchased liquor liability coverage). See Fed.R.Civ. P. 12(b)(6) 8 These claims were for attorneys' fees, damage to business reputation, lost profits and punitive damages. Lampliter argues that the court improperly read its assignment as transferring its fraud claims to the parents. We need not address this argument because we have already concluded that this claim is time barred. Lampliter also argues that its claim for punitive damages was improperly struck. We disagree. Having concluded that Lampliter's fraud and bad faith claims were properly dismissed, Lampliter is left with contract claims which do not give rise to actions for punitive damages. See Hood v. Prudential Ins. Co., 460 So.2d 1227, 1232 (Ala.1984) 9 Liberty did not address this claim in its brief or at oral argument 10 Although a Rule 21 motion to drop a party may be recast as a Fed.R.Civ.P. 12(b)(6) motion to dismiss for failure to state a claim upon which relief may be granted, Undergraduate Student Ass'n v. Peltason, 359 F.Supp. 320, 322 (N.D.Ill.1973) (three judge court), we do not construe dropping Mocabee from this suit as such a dismissal. Were we to recast the court's order as a 12(b)(6) dismissal, Mocabee would be barred from relitigating these claims. Where a 12(b)(6) dismissal is raised by a defendant and, as here, materials beyond the pleadings are considered, the dismissal motion is treated as one for summary judgment and the plaintiff is afforded the right to respond to the motion. It is well settled that a court's sua sponte grant of summary judgment must be preceded by 10 days notice. Herron v. Beck, 693 F.2d 125, 127 (11th Cir.1982). It would be inequitable to dismiss Mocabee with attendant res judicata effect on the court's sua sponte invocation of Rule 21 It is possible that Mocabee's individual complaint will be dismissed because it fails to state a claim under any set of facts consistent with his allegations. See Hishon v. King & Spalding, 467 U.S. 69, 104 S.Ct. 2229, 2233, 81 L.Ed.2d 59 (1984). Indeed, numerous circuits have held that a trial court may dismiss a complaint on its own motion for failure to state a claim. Shawnee Int'l, N.V. v. Hondo Drilling Co., 742 F.2d 234, 236 (5th Cir.1984) (citing cases). At this juncture, Mocabee has been dropped pursuant to Rule 21. That rule focuses on parties, not claims, and we therefore decline to address the merits of Mocabee's individual claims at this point.