Opinion ID: 1136255
Heading Depth: 1
Heading Rank: 5

Heading: (b) Suppression

Text: The elements of a suppression claim are 1) a duty to disclose the facts, 2) concealment or nondisclosure of material facts by the defendant, 3) inducement of the plaintiff to act, and 4) action by the plaintiff to his injury. Wilson v. Brown, 496 So.2d 756 (Ala.1986). Silence is not fraud unless an obligation to communicate a material fact exists. Such an obligation may arise where a confidential relation or particular circumstances exist. Ala.Code 1975, § 6-5-102; Trio Broadcasters v. Ward, 495 So.2d 621 (Ala.1986). Under § 6-5-102, the particular circumstances that impose upon a party a duty to speak may arise from the relationship of the parties; the relative knowledge of the parties; the value of the particular fact; and other factors. Lowder Realty, Inc. v. Odom, 495 So.2d 23 (Ala.1986). As previously noted, the plaintiffs presented evidence indicating that Foremost allocated a specific premium to the adjacent structures coverage provided under its mobile home homeowner's policies and that that coverage, upon request, could have been dropped, with a corresponding reduction in the premium. Although the record contains no evidence that the plaintiffs and Banks had a confidential or fiduciary relationship that would have created a duty on Banks's part to disclose this information, or that the plaintiffs informed Banks that they had no adjacent structures and asked if this coverage could be deleted, the evidence does indicate that none of the plaintiffs, either personally or through the operation of a business, had any meaningful experience in buying property insurance or that they otherwise had any knowledge of the insurance industry that could have put them on notice that they did not have to purchase adjacent structures coverage if they did not want or have any need for it. The plaintiffs, as ordinary consumers, had no way of knowing at the time they purchased their mobile homes and their mobile home homeowner's insurance that they could request that adjacent structures coverage not be included in their Foremost policies. Furthermore, as previously noted, a fact question was presented as to whether the plaintiffs acted reasonably in not reading their policies upon receiving them, even though those policies would have disclosed that adjacent structures coverage was included. In this respect, we note that the acts of suppression occurred at the time the plaintiffs purchased their mobile homes and submitted their applications for mobile home homeowner's insurance, not at the time they received their policies. See Hicks, at 462. The evidence also indicates that knowledge of the optional nature of the adjacent structures coverage under the Foremost policy would have been of value to the plaintiffs. Although Foremost presented compelling evidence that the policy was marketed as a package for the benefit of all of its customers, even those without adjacent structures at the time of the purchase, the plaintiffs testified that had they known that the adjacent structures coverage could be dropped, they would not have purchased it and incurred the additional expense. This Court has stated that [w]here the defendant had superior knowledge of the suppressed fact and the defrauded party has been induced to take action that otherwise might not have been taken, the obligation to disclose is particularly compelling. Baker v. Bennett, 603 So.2d 928, 935 (Ala.1992). With respect to the specific duty of an insurance company, we note that Carmichael testified as follows: Q. It is also correct that an insurance company should fully disclose all important facts related to an insurance policy [to] the policyholder? A. They should. Q. An insurance company should always tell the truth to the policyholder? A. They should. Based on the evidence presented, we conclude that there was sufficient evidence of each of the elements of the plaintiffs' suppression claim (duty to disclose a material fact; nondisclosure of that fact; inducement of the plaintiffs to act; and damage) to submit those claims to the jury. See Lowder Realty, Inc. v. Odom, supra; Berkel & Co. Contractors, Inc. v. Providence Hospital, 454 So.2d 496 (Ala.1984). We emphasize, however, that by this holding we do not decide whether an insurer marketing a package policy with no optional coverages (coverages that could, upon request by the customer, be dropped with a corresponding reduction in the premium) is under a duty to inquire of the customer as to whether he or she wants or has a need for a specific coverage included in the policy and to disclose the existence of that coverage under the policy. We hold only that a duty does arise on the part of an insurer to disclose the existence of a specific coverage under the policy when, as shown by the evidence in this case, the insurer has specific knowledge that a significant number of customers may not want or have a need for the coverage and that the coverage could be dropped with a corresponding savings in premium to the customer. Under these circumstances, the customer should be informed that the coverage may not be desired or necessary for everyone and the customer should be allowed to make an informed decision as to whether to purchase the coverage.