Opinion ID: 1601607
Heading Depth: 2
Heading Rank: 1

Heading: Are the Joneses' bad-faith claims barred by the statute of limitations?

Text: On appeal, the Joneses argue that the trial court erred in entering a summary judgment based on Alfa's statute-of-limitations argument because, they claim, Alfa did not close the file on their claim resulting from Hurricane Opal until January 20, 1997, less than two years before they filed this action, and because Alfa's actions following the issuance of Ralph Jones's report were not in accordance with the denial of the claim. Alfa, however, argues that Ralph Jones's report, as well as Bradshaw's letter of December 29, 1995, sufficiently placed the Joneses on notice that their claim for damage to their drywall and brick veneer following Hurricane Opal was being denied. In Jones I, this Court summarized the law concerning the statute of limitations of a bad-faith claim, stating: Bad faith is an intentional tort, Shelter Mutual Insurance Co. v. Barton, 822 So.2d 1149, 1154 (Ala.2001), and a species of fraud. Dumas v. Southern Guaranty Ins. Co., 408 So.2d 86, 89 (Ala.1981). `The cause of action for bad faith refusal to honor insurance benefits accrues upon the event of the bad faith refusal, or upon the knowledge of facts which would reasonably lead the insured to a discovery of the bad faith refusal. The accrual of the tort of bad faith is a question of fact to be determined by the circumstances of each case.'  Safeco Ins. Co. of America v. Sims, 435 So.2d 1219, 1222 (Ala.1983) (citation omitted). `The statute of limitations for bad faith claims arising on or after January 9, 1985, is for two years.' ALFA Mut. Ins. Co. v. Smith, 540 So.2d 691, 692 (Ala.1988) (citations omitted). 875 So.2d at 1193. Further, in regard to a statute of limitations, the Court has held: When a claim accrues, for statute-of-limitations purposes, is a question of law if the facts are undisputed and the evidence warrants but one conclusion. See LeBlang Motors, Ltd. v. Subaru of America, Inc., 148 F.3d 680 (7th Cir. 1998); JN Exploration & Production v. Western Gas Resources, Inc., 153 F.3d 906 (8th Cir.1998); DXS, Inc. v. Siemens Medical Systems, Inc., 100 F.3d 462 (6th Cir.1996). However, when a disputed issue of fact is raised, the determination of the date of accrual of a cause of action for statute-of-limitations purposes is a question of fact to be submitted to and decided by a jury. Id.  Kindred v. Burlington Northern R.R., 742 So.2d 155, 157 (Ala.1999). Alfa argues that the December 29, 1995, letter from Bradshaw to McLean, as well as Ralph Jones's December 4, 1995, report, constituted a denial of the Joneses' claim seeking proceeds for damage to the drywall and exterior brick veneer of their house. The Joneses aver that the facts are disputed and thus that summary judgment was not warranted on the statute-of-limitations issue. In support of their argument, the Joneses note that the December 29, 1995, letter from Bradshaw to McLean does not explicitly state that the claim was being denied and does not reference all the items the Joneses claimed were damaged by the hurricane. Likewise, the Joneses note that, according to Godwin's deposition testimony, Alfa's policy is to deny a claim orally whenever possible or, in the alternative, to deny the claim in writing. The Joneses testified that they had several face-to-face conversations with both Sanders and Bradshaw after Ralph Jones had completed his report, yet Alfa never orally denied the Joneses' claim. In fact, Harold Jones testified that while he was adjusting the peanut-boil-over claim, Bradshaw informed him that Alfa had not ruled on the Joneses' hurricane claim, that Alfa had not informed him how to handle the claim, and that as of that date there had been no settlement of the claim. The Joneses argue that Alfa's actions after Ralph Jones issued his report indicated that their claim had not been denied. They argue that after the report was issued Alfa invited them to submit additional information to support their claim and that Alfa continued to investigate the claim for almost two years following Ralph Jones's report. Specifically, they note that Alfa reinspected the Joneses' house in November 1997 and again in December 1997. The Joneses further argue that Alfa did not close the file on their hurricane claim until January 20, 1997, and that Alfa was making payments on the claim as late as that date, thus indicating that the claim was still open. Similarly they note that Sanders did not know that the claim had purportedly been denied and that he assured the Joneses on numerous occasions that their hurricane claim would ultimately be paid. Alfa notes that this Court has previously held that `fraud is discoverable as a matter of law for purposes of the statute of limitations when one receives documents that would put one on such notice that the fraud reasonably should be discovered.' Kelly v. Connecticut Mut. Life Ins. Co., 628 So.2d 454, 458 (Ala.1993) (quoting Hickox v. Stover, 551 So.2d 259, 262 (Ala. 1989), overruled on other grounds, Foremost Ins. Co. v. Parham, 693 So.2d 409 (Ala.1997)). The sentence immediately preceding the above-quoted sentence from Kelly, however, states: `The question of when a plaintiff should have discovered fraud should be taken away from the jury and decided as a matter of law only in cases where the plaintiff actually knew of facts that would have put a reasonable person on notice of fraud.' 628 So.2d at 458 (quoting Hicks v. Globe Life & Acc. Ins. Co., 584 So.2d 458, 463 (Ala.1991), overruled on other grounds, Foremost Ins. Co., supra); see also Gilmore v. M & B Realty Co., 895 So.2d 200, 210 (Ala.2004) (`[t]he question of when a party discovered or should have discovered the fraud is generally one for the jury' (quoting Ex parte Seabol, 782 So.2d 212, 216 (Ala.2000), quoting in turn Liberty Nat'l Life Ins. Co. v. Parker, 703 So.2d 307, 308 (Ala.1997))). Bradshaw's December 29, 1995, two-paragraph letter to McLean does not quote applicable policy language or explicitly state whether Alfa agreed with Ralph Jones's report. Nor does it explicitly state that the claim has been denied as claim-denial letters typically do. There is also evidence that Alfa took actions subsequent to writing the letter that could have led the Joneses to doubt whether their claim had been denied. Among other things, this includes Alfa's continuing to investigate the cracks in the walls of the house, Bradshaw's stating in October 1996 that Alfa had not instructed him as how to handle the Joneses' claim and that it had not ruled on their claim, and the fact that Sanders, the Joneses' insurance agent, was unaware until March 1997 that the claim had been denied. This Court cannot conclude as a matter of law that Alfa put the Joneses on such notice that the fraud reasonably should [have been] discovered. Kelly, 628 So.2d at 458. A review of the evidence in a light most favorable to the nonmovant, the Joneses, indicates that genuine issues of material fact exist as to when Alfa actually denied the Joneses' claim and as to when the Joneses would have or should have known of facts that would reasonably lead them to discover the denial. Thus, the partial summary judgment on the Joneses' bad-faith claims is not barred by the statute of limitations.