Opinion ID: 1688734
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Heading: The Suppression Claim Against Gulf Agency

Text: Gulf argues in its petition for the writ of certiorari that an action alleging the wrongful cancellation of an insurance policy does not sound in tort, but in contract. The seminal Alabama case addressing this topic is Hamner v. Mutual of Omaha Insurance Co., 49 Ala.App. 214, 270 So.2d 87 (Civ.1972). In Hamner, the Court of Civil Appeals distinguished between nonfeasance, which may support an action only in contract, and misfeasance, which may support an action in tort. The court wrote: There is little question ... that the line of distinction between actions in tort and [actions in] contract is thin and often nebulous in many instances. The courts of this State have recognized that under certain circumstances, for the breach of a contract there may be available either an action of assumpsit or [an action] in tort. Wilkinson v. [Moseley], 18 Ala. 288 [(1850)]; Mobile Life Ins. Co. v. Randall, 74 Ala. 170 [(1883)]; Vines v. Crescent Transit Co., 264 Ala. 114, 85 So.2d 436 [(1955)]; Garig v. East End Memorial Hospital, 279 Ala. 118, 182 So.2d 852 [(1966)]. The theory on which the cases have been decided is often difficult to discern, but basically [it] may be stated that if there is [a] failure or refusal to perform a promise the action is in contract; if there is a negligent performance of a contractual duty or the negligent breach of a duty implied by law, such duty being not expressed in the contract, but arising by implication of law from the relation of the parties created by the contract, the action may be either in contract or [in] tort. In the latter instance, whether the action declared is in tort or [in] contract must be determined from the gist or gravamen of the complaint. Basically, the line of division between [an action in contract and an action in] tort in such instances is [the line between] nonfeasance and misfeasance. If there is a defective performance there is a breach of contract and [there may also be] a tort. [William L. Prosser, The Law of Torts (4th ed.1971) p. 614.] Count Two of appellant's complaint attempts to charge a tort arising from a denial of a claim under a policy of insurance. Such [a denial], if wrongful, amounts only to a breach of a promise to perform and could only be complained of in an action for breach of contract. [ National] Cas. Co. v. Thompson, 38 Ala.App. 338, 84 So.2d 363 [(1955)]. The manner or intent of such breach does not change the form of action, nor as a general rule, add damages not ordinarily recoverable in a breach of contract action. 84 A.L.R. 1346; Western Union Tel. Co. v. Rowell, 153 Ala. 295, 45 So. 73 [(1907)]; Deavors v. Southern Exp. Co., 200 Ala. 372, 76 So. 288 [(1917)]; Sloss-Sheffield Steel & Iron Co. v. Greek, 211 Ala. 95, 99 So. 791 [(1924)]; Vines v. Crescent Transit Co., 264 Ala. 114, 85 So.2d 436 [(1955)]. No cause of action in tort being available to plaintiff under the facts pleaded, the trial court did not err in sustaining [the] demurrer to Count Two. 49 Ala.App. at 218, 270 So.2d at 90-91 (emphasis added). But see Blackburn v. Fidelity & Deposit Co. of Maryland, 667 So.2d 661, 667-68 (Ala.1995); Nat'l Sec. Fire & Cas. Co. v. Bowen, 417 So.2d 179, 183 (Ala.1982) (stating elements of a claim alleging the tort of bad-faith failure to pay an insurance claim). More recently, in Alfa Mutual Insurance Co. v. Northington, 604 So.2d 758 (Ala.1992), this Court stated reasons for not recognizing a tort remedy for wrongful cancellation. Those reasons suggest an affirmance of the summary judgment for Gulf on the fraudulent-suppression claim: The law in Alabama has been that the remedy for an alleged wrongful cancellation of an insurance policy is in contract, not in tort. Watkins v. Life Ins. Co. of Georgia, 456 So.2d 259 (Ala. 1984). This remedy is recognized in a majority of jurisdictions as being the only remedy available where an insurer cancels, repudiates, or terminates a contract of insurance. Watkins, supra . This Court in Watkins declined to overrule this general rule in favor of a rule that there is an `implied contract of good faith and fair dealing in every insurance contract, and that this implied contract can be breached by the wrongful cancellation of an insurance policy, just as it can be by the wrongful refusal to pay a claim.' Watkins at 263. Watkins made it clear that Alabama does not recognize a tort claim for bad faith cancellation of insurance and that such an action is barred as a matter of law. See Baker v. State Farm General Ins. Co., 585 So.2d 804 (Ala.1991). This Court has twice recently upheld the decision in Watkins. See Baker v. State Farm General Ins. Co. and Raybon v. Allstate Ins. Co., 589 So.2d 710 (Ala.1991). Justice Kennedy, writing for the Court in Baker, held that a wrongful cancellation of an insurance policy does not give rise to a bad faith cause of action, because the tort of bad faith addresses refusal to pay a claim. Justice Kennedy stated that this was the current law concerning the tort of bad faith. Justice Shores, writing for the Court in Raybon, also reaffirmed that Watkins was the current law in this area. We note that in each of those cases the trial court had entered a summary judgment in favor of the insurer. After a review of the record, as well as the well-written briefs of the parties, this Court, in this case, is not inclined to overrule, or create any exception to, the rule of law set out in Watkins.  Alfa Mut. Ins. Co. v. Northington, 604 So.2d at 759-60. In reviewing the summary judgment for Gulf, we must view the facts in a light most favorable to the Deflerons. If we accept that Gulf never mailed a notice of cancellation, a point that Gulf vehemently contests, then, at best, that fact would present a situation of nonfeasance. Accepting the Deflerons' allegations as true, we would have to conclude that the contract was never canceled, because of a failure by Gulf to give notice of cancellation. This failure would leave the Deflerons with an action in contract, not tort. The Deflerons alleged no breach of contract based upon Gulfs failure to pay their claim. The summary judgment was properly entered for Gulf on the fraudulent-suppression claim. Insofar as it reverses as to that claim, the judgment of the Court of Civil Appeals is reversed.