Opinion ID: 1452808
Heading Depth: 1
Heading Rank: 5

Heading: Under the Facts of This Case, Defendant Insurance Company Performed its Duty to Make a Diligent and Good Faith Investigation of the Accident.

Text: In determining whether defendant performed or failed to perform its duty to make a diligent and good faith investigation of the accident in this case, on appeal from a plaintiff's judgment, we must, of course, consider the facts most favorable to plaintiffs, as we shall now proceed to do. As previously stated, shortly after the accident in this case defendant was notified by a representative of plaintiff's insurance company not only of the fact of the accident, but that it involved a vehicle that possibly was owned by Kellum Motors, and it might be advisable for him    to look into the matter. Later, plaintiff's complaint alleged, as a fact, that the car was owned by Kellum Motors. Thus, defendant was put on notice that plaintiff seriously contended that the car was owned by Kellum at the time of the accident. Defendant then undertook to make an investigation of the case. Defendant's agent first then went to Kellum Motors, where he examined and was given a copy of the car order and the retail installment contract. He noted the alteration of the date on the car order and was told by the bookkeeper that the alteration was made for financing reasons only. He did not examine or take copies of any additional records. Defendant's agent did, however, then interview both Steele and Smith, the used car lot manager, and they both told him that the car was sold to Steele on the day before the accident. He did not check the accident report, which showed that the vehicle was owned by Kellum Motors at the time of the accident. Neither did he interview the officer who prepared that report, based upon a statement to that effect by Steele shortly after the accident and while the facts were fresh in his mind. Instead, defendant's agent terminated his investigation and recommended to defendant that it deny coverage. We recognize that these facts present an extremely close case. We cannot escape the conclusion, however, that defendant performed its duty to make a diligent and good faith investigation of this matter. To be more specific, we hold that after defendant's investigator, in the course of his investigation, was told by both Steele and by Smith, the used car manager (later repeated under oath on deposition), that the vehicle had been sold to Steele prior to the accident and after he was told the same thing by Kellum's bookkeeper, who also gave a plausible explanation for the alterations appearing on the records, defendant was entitled to rely upon such statements. In other words, we hold that under the facts of this particular case there was no substantial evidence that defendant suspected, or had any good reason to suspect, that both Steele and Smith had deliberately lied to its investigator or that Kellum's records had been falsified, so as to require defendant to make a further investigation of the matter. Accordingly, under these facts and for these reasons, it follows that the judgment in favor of plaintiff must be reversed and the case dismissed. Reversed.