Opinion ID: 1838743
Heading Depth: 1
Heading Rank: 3

Heading: conduct after suit filed

Text: As noted, the record contains a copy of a letter from Kuzmanoff to Mrs. Gregory, dated April 25, 1986. This letter unequivocally and clearly sets forth Continental's position as to Mrs. Gregory's claim. It would constitute a complete defense to any punitive damage claim because Mrs. Gregory never complied with it. We had assumed from reading the record that Mrs. Gregory received the letter, it apparently having been mailed certified mail. When the Court queried both counsel during oral argument about this letter, however, we were told that in fact Mrs. Gregory never received this letter, and there was even an insinuation the original was never mailed. The circuit judge was likewise puzzled with the defense counsel's never raising in his defense before the court that Mrs. Gregory had failed to comply with the policy. He held this requirement had been waived, and there has been no cross-appeal from this ruling. The circuit judge never considered Continental's conduct following filing of the complaint, and here we find he erred. An insurance carrier's duty to promptly pay a legitimate claim does not end because a lawsuit has been filed against it for nonpayment. Put more bluntly, if you owe a debt the duty to pay does not end when you are sued for nonpayment of it. When suit was filed the plaintiff should have been informed by Continental, in a manner from which there could be no misunderstanding, that it recognized a sum in some amount was owed from business interruption caused by the damage to building number 1, and Continental was willing to pay whatever was due for this loss. Yet in order to do so, it was necessary that the plaintiff furnish it written documentation of this loss. Continental should either have done this by communication to Mrs. Gregory's counsel, or else specifically raised plaintiff's failure to comply with the policy in its pleading, and call the matter to the attention of the court for a ruling. There was no occasion to be coy on this policy provision. Because Continental did not insist upon this obvious right which it had under the policy to receive documentation of the loss as a condition precedent to paying anything, but  as the circuit judge ruled  waived it, the question arises why it did not pay the claim? Suit was filed April 7, 1986. No payment was tendered until September 12, 1987, two days before trial. We are left to wonder why the delay? The circuit judge did not address this question when he dismissed Mrs. Gregory's action when she rested her case in chief. We find that Continental owes some explanation for failure to pay the claim after the complaint was filed, and should have been required to go forward on its proof giving some legitimate or arguable reason for the delay. If the circuit judge finds its reasoning insufficient, he should submit the issue of punitive damages for Continental's conduct after suit was filed to the jury. There is another factor. Continental stipulated that a jury would award a $9,000 judgment against it on contractual damages. Continental has not cross-appealed from the amount of this judgment. Yet just before trial it only tendered $1,075.37. This likewise requires explanation for the disparity. We therefore remand this cause for determination of the reasonableness of or arguable reason for Continental's conduct after suit was filed. We find no occasion for censure against Continental prior to the institution of this suit. We take judicial notice that Hurricane Elena was a disaster to that particular area of our Gulf Coast. No doubt hundreds of claims running in the millions of dollars were filed. Insurance carriers were burdened with the task of investigating and paying claims as promptly as possible to relieve the great financial hardship inflicted upon a host of Gulf Coast insureds. In this case Continental promptly paid all hazard claims of the Gregorys and Mr. Biddix. The amount due from loss of business to a sandwich shop and pro shop for 11-14 days could not have been a comparatively large claim, or susceptible to easy and certain proof, and Continental was clearly entitled to documentation in a written proof of loss before it was obligated to pay under any such claim. When suit was filed the emergency was long since over and the situation entirely different. We accordingly reverse and remand for proceedings consistent with this opinion. AFFIRMED IN PART; REVERSED AND REMANDED IN PART FOR PROCEEDINGS CONSISTENT WITH THIS OPINION. ROY NOBLE LEE, C.J., DAN M. LEE, P.J., and PRATHER, ROBERTSON, SULLIVAN, ANDERSON, PITTMAN and BLASS, JJ., concur.