Farr v. Gulf Agency
Annotate this Case
Justia Opinion Summary
Want to stay in the know about new opinions from the Supreme Court of Alabama?
Sign up for free summaries delivered directly to your inbox. Learn More ›
You already receive new opinion summaries from Supreme Court of Alabama. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here.
Petitioner Brady Farr appealed a circuit court judgment in favor of Respondents The Gulf Agency, Orange Beach Insurance Agency and Lexington Insurance Company. Mr. Farr finished renovating his house in 2003. In 2004, he decided to sell his property to a developer who wished to turn the property into condominiums. In anticipation of the sale, Mr. Farr obtained a $1 million loan, secured by a mortgage. As part of the loan process, the mortgage company ordered an appraisal of the property. The property was appraised at $1.3 million and the improvements were valued at $313,000. In 2004, Mr. Farr contacted Orange Beach to insure the property against "total loss." Lexington, acting as Orange Beach's agent, submitted an insurance application for policy limits based on the appraisal to The Gulf Agency, who ultimately served as underwriter for the policy. In the fall of 2004, Mr. Farr was concerned that the policy limits were not sufficient to adequately cover a total loss of the property. In September, Mr. Farr's concerns were realized when Hurricane Ivan destroyed the property. He filed a claim with Orange Beach. In November, Mr. Farr sold his property for $1.18 million. The sales agreement was amended to reflect the total loss he suffered as a result of the hurricane. Lexington's adjuster visited the property to determine the cause of Mr. Farr's loss. The adjuster found the hurricane was the "proximate cause". Lexington subsequently paid Mr. Farr $50,000 for the damage. Alleging that the policy did not provide adequate coverage and that Lexington failed to pay the proper benefits under the policy, Mr. Farr sued the insurance companies for breach of contract, fraud, misrepresentation, negligence, conspiracy, and bad-faith failure to pay an insurance claim. The trial court granted the companies' motion for summary judgment, finding that some of Mr. Farr's claims were barred by a two-year statute of limitations. Upon review of the trial court record, the Supreme Court affirmed the lower court's judgment pertaining to Mr. Farr's tort claims. The Court found that those claims were indeed barred by a statute of limitations. The Court however found that the breach of contract and bad faith claims should not have been dismissed through summary judgment. The Court affirmed part and reversed part of the lower court's order and remanded the case for further proceedings.
Download PDF
Rel: 06/17/2011 Notice: T h i s o p i n i o n i s s u b j e c t t o f o r m a l r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e Reporter o f Decisions, Alabama A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ((334) 2 2 9 - 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . SUPREME COURT OF ALABAMA OCTOBER TERM, 2010-2011 1090073 Brady Farr v. The G u l f Agency e t a l . Appeal PARKER, Agency, Court Justice. Brady judgment from Montgomery C i r c u i t (CV-07-1724) Farr entering appeals summary t h e Montgomery judgments I n c . ( " G u l f A g e n c y " ) , Orange Circuit i n favor Court's o f The Beach I n s u r a n c e Gulf Agency, 1090073 Inc. ("Orange Beach"), and 1 Lexington Insurance ("Lexington") (hereinafter c o l l e c t i v e l y insurance in part companies"). and r e v e r s e We affirm the t r i a l and P r o c e d u r a l l o t i n Orange property"). renovating $568,000. Farr property 2003 further of total Perdido the Holyfield on M a r c h property was judgment appraised indicates that 1990s and cost of that, completed approximately in early who 2004, was of the sale, F a r r ' s mortgage which was complex. he obtained company o r d e r e d performed ("the H o l y f i e l d for a value of he buying b y a m o r t g a g e on t h e p r o p e r t y . property, 2004 Boulevard a h i g h - r i s e condominium secured 8, s i t u a t e d on a Beach to a developer, that, i n anticipation of the loan process, appraisal a testified to b u i l d a l o a n o f $1,000,000 part at the property on w h i c h Farr t e s t i f i e d on the house i n the l a t e i t in to s e l l Beach a house Farr's deposition testimony he b e g a n r e n o v a t i n g decided court's History In the e a r l y 1980s, F a r r p u r c h a s e d ("the r e f e r r e d t o as " t h e i t in part. Facts beachfront Company by As an Ronald appraisal"). $1,325,710; The the A t some p o i n t d u r i n g t h e l i t i g a t i o n , O r a n g e B e a c h b e c a m e McCarron Insurance Group, I n c . However, i n t h e i n t e r e s t o f c l a r i t y , we w i l l c o n t i n u e t o r e f e r t o t h i s e n t i t y a s " O r a n g e Beach." 1 2 1090073 improvements on testified that h o u s e was too the he low property thought and were that t h a t he valued the contacted concerns. Farr t e s t i f i e d any additional information concerning and that additional In did not hire t h a t he another $313,000. appraised his he at value Holyfield d i d not the value appraiser of to give express the house perform March 2004, Farr sought to obtain homeowner's c o v e r a g e f o r t h e h o u s e s i t u a t e d on t h e p r o p e r t y . that end, Farr testified that requested "full coverage" to i n s u r e a g a i n s t a " t o t a l t h e h o u s e on t h e p r o p e r t y a n d secure Farr contacted t h a t he h a d and submitted an Orange or agent," loss" On M a r c h 29, for To and of Beach 2004, homeowner's to Orange Beach, which i s a worth of c o v e r a g e a g a i n s t w i n d damage f o r t h e d w e l l i n g on the p r o p e r t y and retail Beach t r u s t e d Orange application coverage with Lexington "sub-agent insurance he the a p p r o p r i a t e coverage l i m i t s . signed insurance an appraisal. insurance to the Holyfield of to Farr requesting $300,000 $20,000 w o r t h of c o n t e n t s - i n s u r a n c e $300,000 p o l i c y limit was based on the coverage. Holyfield The appraisal. 2 A p p a r e n t l y O r a n g e B e a c h h a d o r d e r e d i t s own a p p r a i s a l o f t h e p r o p e r t y when F a r r r e q u e s t e d i n s u r a n c e c o v e r a g e . However, a m i s t a k e was made r e g a r d i n g t h a t a p p r a i s a l , a n d t h e p a r t i e s relied on the Holyfield appraisal in setting the policy 2 3 1090073 Orange Beach forwarded Farr's application for coverage to G u l f Agency, a surplus lines broker. did Farr's the underwriting on application policy policy"). The 2004, the to Farr effective t o M a r c h 24, 2005. policy to Orange specifically addition policy from Assurant of for delivery Farr flood also Lexington were to Farr. a Insurance in ("the March The insurance. secured Agency a n d i s s u e d an On M a r c h 2 5 , 2 0 0 4 , L e x i n g t o n the N a t i o n a l Flood 25, mailed policy Thus, in flood-insurance Program ("NFIP") S o l u t i o n s i n t h e c o v e r a g e amount o f $250,000 f o r t h e house and $20,000 included behalf of the p o l i c y primary to the p o l i c y , through dates Beach excluded on Gulf to Lexington accordance w i t h g u i d e l i n e s g i v e n i t by L e x i n g t o n insurance insurance for personal property. the f o l l o w i n g The p o l i c y also provision: "Other I n s u r a n c e . I f a l o s s covered by t h i s p o l i c y i s a l s o c o v e r e d b y o t h e r i n s u r a n c e , we w i l l p a y o n l y the proportion of the loss that the limit of l i a b i l i t y t h a t a p p l i e s under t h i s p o l i c y bears to t h e t o t a l amount o f i n s u r a n c e c o v e r i n g t h e l o s s . " On the down May 18, property 2004, Farr to a t h i r d signed party a sales agreement f o r $1,500,000 payment. limits. 4 with a to sell $100,000 1090073 In the late concerned that adequately summer cover consulted or a total h i s attorney of were not loss expert witness. Sanspree Farr's insurance coverage Farr had executed was a general Farr to he listed by and John Farr insurance policies Farr of the opinion inadequate. On M a r c h power o f a t t o r n e y property. Farr personally made no a t t e m p t s the p r o p e r t y . affidavit contacted had On to increase regarding concerning and G u l f the p o l i c y the t h a t he limits on however, i n d i c a t e d i n t h e i r or deposition Orange Beach limits i n place 1, i n favor i n h i s deposition testimony Sanspree and A l l e n , testimony requested policy indicated had as an were b o t h of Sanspree f o r t h e purpose of d e a l i n g w i t h matters any was sufficient Chris Sanspree, consultant and A l l e n 2004, As a r e s u l t , of the house. at the time, an i n s u r a n c e - c l a i m s 2004, fall limits the policy Allen, that early testimony Agency that on b e h a l f they had o f F a r r and an i n c r e a s e i n coverage under the p o l i c y . were never increased. September destroyed by contacted Orange 16, 2004, Hurricane Beach t h e house Ivan. and On The insurance companies filed Sanspree's a f f i d a v i t , which the t r i a l 5 the property September filed 3 on a 3 claim 20, 2004, for The was Farr insurance a motion to court granted. strike 1090073 benefits claim under the policy. to Lexington on Orange September Beach 21, forwarded 2004. Farr Farr's included a c l a i m f o r b e n e f i t s under the contents p o r t i o n of the p o l i c y i n the amount o f On $53,421.61. November agreement w i t h from 12, down p a y m e n t . to house not be " r e s t o r e d , of the declared repaired, On a "full February W e l l s was the f l o o d claim his claim loss" or r e b u i l t party to o f t h e h o u s e was a n d was 7, $250,000. $29,548.95 policy Wells limit also of the paid adjuster that Farr i t could location policy. that the assigned According replacement 6 0 % o f t h e damage t o was attributable flood-insurance determined that w o r t h o f damage t o t h e c o n t e n t s 6 the $1,280,000. W e l l s d e t e r m i n e d t h a t F a r r was the that deeded f o r the NFIP determined $100,000 acknowledged 2005, $454,272 and t h a t Accordingly, to sales decreased i n the present h o u s e , o r t h e amount o f $ 2 7 2 , 5 3 6 . 2 0 , full amended and under the f l o o d - i n s u r a n c e summary, W e l l s f l o o d damage. the agreement to the t h i r d Farr's the in addition improvement." to an amended s a l e s had been Alvin signed $1,180,000, The the property Farr t h e t h i r d p a r t y ; t h e s a l e s p r i c e was $1,500,000 value 2004, Farr policy, had to due or suffered of the house. On 1090073 April his 22, 2005, Assurant flood-insurance $20,000 Solutions policy f o r the damage t o Farr's for request, At Engineering property Associates, and to the the "was the associated with that roof of the associated 2006, with Farr 4 paid Nothing cause house i n the Ivan. record Alleging that the policy on under November Lexington the policy, 2, 2007, misrepresentation, the surge for and had Farr sued and the wave also on determined by winds January damage Lexington the pay conspiracy the paid adequate the insurance claims to 19, policy. provide to of action that not failed asserting negligence, destruction and of the Halliwell the portion did inspect damaged indicates contents benefits house loss. a result, $50,000 the that the been As under and under Halliwell to Halliwell had anything coverage of storm Ivan." Farr the retained c a u s e " of ... Hurricane Lexington house. high to ("Halliwell"), "proximate the damage $250,000 contents. the Hurricane house Farr Lexington determine that the the Inc. determined paid proper companies of to defraud. fraud, Farr T h e $ 5 0 , 0 0 0 p a y m e n t f r o m L e x i n g t o n t o F a r r was initially c h a r a c t e r i z e d as an " a d v a n c e . " H o w e v e r , f o l l o w i n g L e x i n g t o n ' s investigation into Farr's claim, Lexington determined that t h e r e was no b a s i s f o r a n y f u r t h e r p a y m e n t s . 4 7 1090073 later amended contract and the complaint bad-faith against Lexington. asserted various The j u d g m e n t , and on August opposition to motions. former 2009. the Attached attorney, moved t o s t r i k e various granting 1, On 6 set the August insurance to Farr's Chris and the 2009, the the judgment. court insurance Farr filed an claim answered motions 2009, r e s p o n s e was The an for a Farr and hearing filed affidavit of motions a motion to a l t e r , c o u r t ' s judgment pursuant to Rule the motion. entered a for for On judgment a summary amend, o r v a c a t e 59(e), his companies from F a r r ' s response court an summary-judgment insurance c i r c u i t court granted companies' insurance of a m o t i o n f o r a summary companies' circuit breach Farr. 21, Sanspree. of companies against Sanspree's a f f i d a v i t reasons, September circuit circuit claims pay companies each f i l e d the 24, to insurance counterclaims insurance include failure The 5 to A l a . R. the Civ. F a r r a l s o f i l e d a s e c o n d amended c o m p l a i n t a d d i n g S t a t e F a r m I n s u r a n c e C o m p a n y as a p a r t y a n d a l l e g i n g a c l a i m o f b r e a c h of c o n t r a c t a g a i n s t i t . That c l a i m i s not the s u b j e c t o f t h i s a p p e a l and r e m a i n s p e n d i n g i n t h e c i r c u i t c o u r t . 5 The h e a r i n g motions a c t u a l l y 6 on t h e i n s u r a n c e c o m p a n i e s ' s u m m a r y - j u d g m e n t o c c u r r e d on A u g u s t 2 6 , 2 0 0 9 . 8 1090073 P., which this the c i r c u i t court not insurance been companies' adjudicated court's partial against State then entered noting an summary that appealed the c o u n t e r c l a i m s against 2010, State 2009, judgment P., stating that to court entered final "[t]here on b e h a l f [Farr's] claims. also i s no The remain pending. This Court Standard We review a summary Farm") had not this judgment Court court because companies and F a r r ' s adjudicated. On to Rule 54(b), reason claims then claims March 10, making i t s September of A l a . R. C i v . f o r delay of the [insurance The claims a final counterclaims pending." Farr's the c i r c u i t just had circuit to an o r d e r pursuant Farr the As a r e s u l t , case was n o t f r o m had not been judgment i s entered companies] remain the appealed ("State 5). of the insurance Farm the c i r c u i t note against likewise, Company remanding the appeal Farr judgment; Farm I n s u r a n c e order counterclaims at the time been a d j u d i c a t e d ( s e e supra to Farr Court. The 1, denied. and c o m p a n i e s ] as the [insurance against reinstated State the Farm appeal. of Review judgment by t h e f o l l o w i n g "'"In reviewing the d i s p o s i t i o n of a m o t i o n f o r s u m m a r y j u d g m e n t , we u t i l i z e t h e 9 standard: 1090073 same s t a n d a r d a s t h a t o f t h e t r i a l c o u r t i n d e t e r m i n i n g whether t h e evidence b e f o r e t h e c o u r t made o u t a g e n u i n e i s s u e o f m a t e r i a l f a c t " a n d w h e t h e r t h e m o v a n t was e n t i t l e d to a judgment as a m a t t e r o f law. B u s s e y v . J o h n D e e r e C o . , 5 3 1 S o . 2 d 8 6 0 , 862 ( A l a . 1 98 8 ) ; R u l e 5 6 ( c ) , A l a . R. C i v . P. When t h e movant makes a p r i m a f a c i e s h o w i n g that t h e r e i s no g e n u i n e i s s u e o f m a t e r i a l f a c t , the burden t h e n s h i f t s t o t h e nonmovant t o present s u b s t a n t i a l evidence c r e a t i n g such an issue. Bass v. S o u t h T r u s t Bank o f Baldwin County, 538 So.2 d 7 9 4 , 7 9 7 - 9 8 (Ala. 1989). Evidence i s " s u b s t a n t i a l " i f it i s o f "such weight and q u a l i t y that fair-minded persons i n the exercise of i m p a r t i a l judgment can r e a s o n a b l y i n f e r t h e e x i s t e n c e o f t h e f a c t s o u g h t t o be p r o v e d . " West v. F o u n d e r s L i f e Assurance Co. o f F l o r i d a , 547 S o . 2 d 8 7 0 , 871 ( A l a . 1 9 8 9 ) . ' "Ex p a r t e G e n e r a l M o t o r s C o r p . , 7 6 9 S o . 2 d 9 0 3 , 906 (Ala. 1 9 9 9 ) . When t h e b a s i s o f a s u m m a r y - j u d g m e n t motion i s a f a i l u r e o f t h e nonmovant's e v i d e n c e , t h e movant's burden, however, i s l i m i t e d t o i n f o r m i n g the c o u r t o f t h e b a s i s o f i t s m o t i o n -- t h a t i s , t h e moving party must indicate where t h e nonmoving p a r t y ' s c a s e s u f f e r s an e v i d e n t i a r y f a i l u r e . See G e n e r a l M o t o r s , 7 6 9 S o . 2 d a t 909 ( a d o p t i n g J u s t i c e Houston's s p e c i a l c o n c u r r e n c e i n Berner v. C a l d w e l l , 543 S o . 2 d 68 6, 691 ( A l a . 1 98 9 ) , i n which he discussed the burden shift attendant to summary-judgment m o t i o n s ) ; and C e l o t e x Corp. v. C a t r e t t , 477 U.S. 3 1 7 , 3 2 3 , 10 6 S . C t . 2 5 4 8 , 91 L. E d . 2 d 2 6 5 (1 98 6) (stating that 'a p a r t y s e e k i n g summary judgment always bears the initial r e s p o n s i b i l i t y of informing the [ t r i a l ] court ofthe b a s i s o f i t s m o t i o n ' ) . The m o v i n g p a r t y m u s t s u p p o r t i t s motion with s u f f i c i e n t evidence only i f that p a r t y has t h e burden of proof at t r i a l . General M o t o r s , 769 So. 2 d a t 9 0 9 . " 10 1090073 Rector v. Better Houses, 2001). Additionally, evidence most a l l reasonable party." B r u c e v. 820 So. 2d "accept we favorable resolve Inc., the tendencies to the nonmoving doubts Cole, 854 in So. 75, favor 2d 47, 54 7 9-80 party of (Ala. of and the the must nonmoving (Ala. 2003). Discussion The circuit insurance court company's entered a general summary-judgment motion. summary-judgment m o t i o n s , the Farr's barred tort limitations insurance that claims were for tort claims companies m a i n t a i n on M a r c h 2 9 , Lexington for insurance by this worth he of filed by Each the of November he two-year Farr's statute of The alleged complaint barred two-year that arguing $300,000 after the the appeal, companies argue t h a t the years of companies argued a r g u m e n t on insurance one-half In each each i n § 6-2-38, A l a . Code 1975. 2004, the date on granting causes of a c t i o n u n d e r l y i n g the F a r r knew o f t h e torts order had insurance tort 2007, n o t i c e of s t a t u t e of tort s t a t u t e of l i m i t a t i o n s 7, signed his application claims set f o r t h 11 coverage. allegations approximately the policy limitations. i s governed to The in Farr's three and limits, are We by the in § 6-2-38(l). See agree. two-year Boyce v. 1090073 Cassese, year statute claims Co. 941 S o . 2 d 9 3 2 , 9 4 3 - 4 4 of of fraud v. Abston, "any fraud accrual Booker limitations v. set forth and c o n s p i r a c y must be the claim. United brought in § 6-2-38 to bar Auto-Owners I n s . ( A l a . 2001) ( n o t i n g within A l a . Code American ( a p p l y i n g t h e two- to defraud); 822 S o . 2 d 1 1 8 7 , 1194 claim of ( A l a . 2006) 1 975, I n s . Co., two § 7 00 years of the 6-2-38(l)"); So. 2d that and 1 3 3 3 , 1339 (Ala. 1997) ( a p p l y i n g t h e t w o - y e a r s t a t u t e o f l i m i t a t i o n s s e t forth i n § 6-2-38 t o b a r c l a i m s The of negligence and w a n t o n n e s s ) . s t a t u t e o f l i m i t a t i o n s b e g a n t o r u n on F a r r ' s claims when Farr signed the a p p l i c a t i o n tort Lexington to alleged for insurance c o v e r a g e on M a r c h 2 9 , 2 0 0 4 , a n d was e f f e c t i v e l y p u t on notice of the coverage. v. Ingram, statute insured's tort See L i b e r t y N a t ' l 887 S o . 2 d 2 2 2 , 227 of l i m i t a t i o n s tort effectively the 7 claims ( A l a . 2004) i n § 6-2-38 claims asserted i n Farr's I n s . Co. (holding that the had begun when he r e c e i v e d p u t t i n g h i m on n o t i c e Life t o r u n on t h e h i s insurance policy, of h i s claims). Therefore, complaint, more filed than We n o t e t h a t t h e p o l i c y was a c t u a l l y i s s u e d a n d d e l i v e r e d t o F a r r on M a r c h 2 5 , 2 0 0 4 , f o u r d a y s b e f o r e the date Farr s i g n e d t h e a p p l i c a t i o n f o r t h e p o l i c y . T h e r e a p p e a r s t o b e no e v i d e n c e e x p l a i n i n g why t h e p o l i c y was i s s u e d b e f o r e t h e a p p l i c a t i o n was s i g n e d . However, t h e p a r t i e s a r e i n agreement as t o t h e s e d a t e s . 7 12 1090073 three years statute of In a f t e r M a r c h 29, 2004, were b a r r e d limitations. his brief limitations paying by t h e t w o - y e a r appeal, tolled Farr argues by v a r i o u s the statute of Lexington's F a r r $ 5 0 , 0 0 0 on J a n u a r y 1 9 , 2 0 0 6 , a n d f a c t s surrounding negotiations However, Farr provides claim. In University I n s u r a n c e Co., between no of events, that namely additional was on the legal South parties authority Alabama 904 S o . 2 d 1 2 4 2 , 1 2 4 7 - 4 8 at to v. that support held: " R u l e 2 8 ( a ) ( 1 0 ) , A l a . R. A p p . P., r e q u i r e s t h a t arguments i n an appellant's ... brief contain 'citations to the cases, statutes, other a u t h o r i t i e s , a n d p a r t s o f t h e r e c o r d r e l i e d o n . ' The e f f e c t of a f a i l u r e to comply w i t h Rule 28(a)(10) i s well established: " ' I t i s s e t t l e d t h a t a f a i l u r e to comply w i t h the requirements of Rule 28(a)([10]) requiring citation of authority for arguments p r o v i d e s the Court w i t h a b a s i s f o r d i s r e g a r d i n g those arguments: 13 his Progressive ( A l a . 2004) t h i s "'"When an appellant fails to cite any authority for an a r g u m e n t on a p a r t i c u l a r issue, this Court may affirm the j u d g m e n t as t o t h a t i s s u e , f o r i t i s n e i t h e r t h i s Court's duty nor its function to perform an appellant's legal research. Rule 28(a)([10]); Spradlin v. time. Court 1090073 Birmingham A i r p o r t A u t h o r i t y , So. 2 d 347 (Ala. 1993)." 613 " ' C i t y o f B i r m i n g h a m v. B u s i n e s s Realty I n v . Co., 722 So. 2 d 7 4 7 , 752 ( A l a . 1 9 9 8 ) . See a l s o M c L e m o r e v . F l e m i n g , 604 So. 2d 353 ( A l a . 1 9 9 2 ) ; S t o v e r v. A l a b a m a Farm Bureau I n s . Co., 467 So. 2d 251 (Ala. 1 9 8 5 ) ; a n d Ex p a r t e R i l e y , 464 So. 2d 92 (Ala. 1985).' "Ex p a r t e S h o w e r s , 812 So. 2d 2 7 7 , 281 ( A l a . 2 0 0 1 ) . '[W]e cannot create l e g a l arguments f o r a p a r t y based on undelineated general propositions unsupported by a u t h o r i t y or argument.' S p r a d l i n v. S p r a d l i n , 601 So. 2 d 76, 79 ( A l a . 1 9 9 2 ) . " Therefore, we will not consider Farr's tolling argument on appeal. Next, by the Farr circuit court was claims error. in "replacement house alleges that at the time to the Farr's full that the contract entered argues and that the judgment destroyed i t would by bad-faith was t h a t , b a s e d on t h e v a l u e by Hurricane of $300,000, L e x i n g t o n policy into summary policy breach-of-contract assertion a Farr limit amount of and i t was the p o l i c y entry his breach-of-contract value policy" despite pay on the cost argument limits is were Sanspree, to on was Ivan the premised behalf of and house. on by his an oral Farr, O r a n g e B e a c h a n d / o r G u l f A g e n c y , on b e h a l f o f L e x i n g t o n . 14 the obligated replace increased of a and Farr 1090073 argues t h a t , based on t h e i n c r e a s e d breached the policy the cost of r e p l a c i n g t h e house. was worth at least by p a y i n g $568,000 policy him only limits, $50,000, Lexington rather Farr alleges that -- t h e c o s t of the policy The policy by f a i l i n g only limits Sanspree, t o pay t o have evidence were to support increased representing by Farr, t h e house Farr's an oral and Orange Agency, r e p r e s e n t i n g Lexington, Sanspree's states, i n pertinent affidavit contract i s the a f f i d a v i t breached replaced. assertion Beach t h e house renovations F a r r h a d c o m p l e t e d o n t h e h o u s e -- a n d t h a t L e x i n g t o n the that the between and/or Gulf of Sanspree. part: "Later i n t h e summer o f 2 0 0 4 , after Dr. F a r r r e c e i v e d h i s p o l i c i e s f o r h i s home ( f l o o d a n d w i n d ) , Dr. F a r r e x p r e s s e d c o n c e r n t h a t h i s b e a c h r e s i d e n c e was underinsured based upon the remodeling and u p g r a d e s i n m a t e r i a l s on t h e b e a c h p r o p e r t y a n d a s k e d i f I w o u l d c o n t a c t O r a n g e B e a c h . . . a n d The G u l f A g e n c y t o e n s u r e t h a t he h a d a d e q u a t e c o v e r a g e s covering h i s property. I a g r e e d t o do s o a n d D r . Farr subsequently p r o v i d e d me w i t h d e t a i l e d c o p i e s of r e c e i p t s and c a n c e l l e d checks d i r e c t l y r e l a t e d t o the remodeling and upgrades t o the beach home l o c a t e d i n Orange Beach, Alabama, f o r t h e p e r i o d o f 1998 t h r o u g h 2004 In the middle to l a t t e r part of A u g u s t o f 2004, I p r e s e n t e d copies of those r e c e i p t s and c a n c e l e d checks t o Kevin McCarron and Jo-Jo McCarron i n Orange Beach and a l s o presented copies o f t h e same t o T e r r i M a n t a y a t The G u l f Agency i n Montgomery. 15 than 1090073 "At e a c h of the above m e e t i n g s , I s p e c i f i c a l l y r e q u e s t e d an i n c r e a s e o f $ 2 5 0 , 0 0 0 . 0 0 i n h o m e o w n e r ' s i n s u r a n c e c o v e r a g e t o c o v e r any damages c a u s e d by w i n d on D r . F a r r ' s b e a c h home a n d an i n c r e a s e i n f l o o d c o v e r a g e o f $ 2 5 0 , 0 0 0 . 0 0 t o c o v e r a n y damage c a u s e d b y f l o o d a n d w a t e r t o D r . F a r r ' s b e a c h home. D u r i n g t h e m e e t i n g w i t h T e r r i M a n t a y , Ms. M a n t a y a n d I reviewed Dr. Farr's initial policies, the p o l i c i e s ' coverage l i m i t s , d i s c u s s e d the l o c a t i o n of the p r o p e r t y , t h e f a c t t h a t t h e p r o p e r t y was not u s e d as a r e n t a l p r o p e r t y a n d d i s c u s s e d how much t h e a d d i t i o n a l p r e m i u m s w o u l d be t o i n c r e a s e D r . F a r r ' s coverages as set forth above. I reviewed the r e c e i p t s a n d c a n c e l e d c h e c k s w i t h Ms. M a n t a y a n d Ms. Mantay told me that The Gulf Agency had the a u t h o r i t y to b i n d the coverage f o r the additional l i m i t s w i t h o u t h a v i n g to i n v o l v e L e x i n g t o n or h a v i n g t o f i l l o u t an a d d i t i o n a l a p p l i c a t i o n b e c a u s e i t was w i t h i n The Gulf Agency's u n d e r w r i t i n g l i m i t s . Ms. M a n t a y t o l d me t h a t s h e w o u l d i n c r e a s e t h e c o v e r a g e s immediately on the wind and flood insurance c o v e r a g e s a n d t o l d me t h a t t h e i n c r e a s e i n c o v e r a g e was b o u n d a n d w o u l d t a k e e f f e c t as o f t h a t d a y . I p a i d t h e a d d i t i o n a l p r e m i u m on b e h a l f o f D r . Farr f o r the i n c r e a s e d premium c o s t s a s s o c i a t e d w i t h the i n c r e a s e d l i m i t s and I d e p a r t e d t h e o f f i c e s o f The Gulf Agency." As noted strike above, the insurance Sanspree's a f f i d a v i t . motions, setting summary-judgment forth The companies circuit i t s reasoning at filed court the motions granted hearing their on motions: "THE COURT: T h i s i s w h a t I c a n ' t u n d e r s t a n d . I f y o u read the complaint, i t talks in terms of representations made i n M a r c h o f 2004. And Mr. S a n s p r e e ' s a f f i d a v i t , a l l he w a n t s t o t a l k a b o u t i s something t h a t happened i n August of 200[4]. You n e v e r amended t h e complaint to discuss anything 16 to the 1090073 about a r e p r e s e n t a t i o n 200[4]. that occurred "[Farr's t r i a l counsel]: Well, that's not a v e r i f i e d complaint "THE COURT: W e l l , on M o n d a y . Judge, i n August of number o n e , i t ' s t h e one we're g o i n g to t r i a l "[Farr's trial counsel]: Well, on t h e amended c o m p l a i n t . When t h a t f i r s t c o m p l a i n t was d r a w n u p , I d o n ' t know who s i g n e d t h e c o m p l a i n t . Okay. "THE COURT: W e l l , i t i s what i t i s . " [ F a r r ' s t r i a l c o u n s e l ] : But I don't t h i n k t h a t , i n regard t o whatever the evidence whatever the evidence i s subsequently produced, I think that [Lexington] has f i l e d some c o u n t e r c l a i m s . And I t h i n k most e v e r y b o d y d i d on t h e b a s i s t h a t w e ' r e going t o amend o u r c o m p l a i n t t o conform t o the evidence. "THE COURT: N o t w i t h me, y o u ' r e n o t L e t me t e l l y o u w h a t I'm g o i n g t o d o . I'm g o i n g t o g r a n t summary j u d g m e n t . I'm g o i n g t o s t r i k e t h e a f f i d a v i t . T h a t ' s not an affidavit. I t ' s an amendment to the complaint. You're adding a t o t a l l y d i f f e r e n t l a w s u i t by b r i n g i n g i n a b u n c h o f a l l e g a t i o n s made i n 200[4], n o t a one o f w h i c h y o u r w i t n e s s , [Farr], testified to i n h i s deposition. He d o e s n ' t s a y a n y t h i n g a b o u t a new c o n t r a c t i n A u g u s t o f ' 0 [ 4 ] . " The c i r c u i t strike circuit granted Sanspree's actuality, In court affidavit an a t t e m p t his brief court erred the insurance on the basis t o amend t h e before this i n striking 17 companies' that motions t o i t was, i n complaint. Court, Farr Sanspree's argues that affidavit, the b u t he 1090073 fails to address the c i r c u i t Instead, Farr addresses insurance companies' F a r r has f a i l e d court's the motions to provide reasoning reasoning to strike this f o r doing set forth Sanspree's Court with so. i n the affidavits. any l e g a l argument a s t o why he b e l i e v e s t h a t t h e c i r c u i t c o u r t e r r e d i n s t r i k i n g Sanspree's affidavit as Therefore, we the c i r c u i t insurance See Rule Alabama, second affirm companies' 28(a)(10), supra. As in striking by Farr in denying this attempt motions t o amend court's to strike A l a . R. A p p . P.; a result, breach-of-contract Moreover, an there argument. the ruling complaint. granting the Sanspree's affidavit. and U n i v e r s i t y o f i s no b a s i s South f o r Farr's 8 the c i r c u i t court d i d not exceed i t s d i s c r e t i o n Sanspree's affidavit t o amend h i s c o m p l a i n t . as an i m p e r m i s s i b l e As t h e c i r c u i t a t t e m p t t o amend h i s c o m p l a i n t , came 12 d a y s b e f o r e court Farr's t h e c a s e was t o go t o t r i a l . attempt Rule noted attempt 15(a), We note t h a t F a r r does a d d r e s s t h e c i r c u i t court's reasoning for striking Sanspree's affidavit i n his reply brief. However, " [ w ] h e r e an a p p e l l a n t f i r s t c i t e s a u t h o r i t y f o r an a r g u m e n t i n h i s r e p l y b r i e f , i t i s as i f t h e a r g u m e n t was f i r s t r a i s e d i n t h a t r e p l y b r i e f , and i t w i l l n o t be considered." S t e e l e v . R o s e n f e l d , L L C , 936 S o . 2 d 4 8 8 , 493 (Ala. 2005). 8 18 1090073 Ala. R. C i v . P., provides, governs i n pertinent amendments to pleadings. It part: " U n l e s s a c o u r t h a s o r d e r e d o t h e r w i s e , a p a r t y may amend a p l e a d i n g w i t h o u t l e a v e o f c o u r t , b u t s u b j e c t to disallowance on t h e c o u r t ' s own m o t i o n o r a m o t i o n t o s t r i k e o f an a d v e r s e p a r t y , a t any t i m e more t h a n forty-two (42) d a y s b e f o r e the f i r s t s e t t i n g o f t h e c a s e f o r t r i a l , a n d s u c h amendment s h a l l b e f r e e l y a l l o w e d when j u s t i c e s o r e q u i r e s . T h e r e a f t e r , a p a r t y may amend a p l e a d i n g o n l y b y l e a v e o f c o u r t , a n d l e a v e s h a l l be g i v e n o n l y u p o n a showing o f good c a u s e . " (Emphasis added.) 1993), explained: we In Boros v. B a x l e y , 621 S o . 2 d 240 ( A l a . "Although Rule 15(a) i t s e l f calls for liberal amendment, t h i s C o u r t h a s h e l d c o n s i s t e n t l y that ' t h e g r a n t o r d e n i a l o f l e a v e t o amend i s a m a t t e r t h a t i s w i t h i n t h e d i s c r e t i o n o f t h e t r i a l c o u r t and i s s u b j e c t t o r e v e r s a l on a p p e a l o n l y f o r an a b u s e of d i s c r e t i o n . ' " 621 S o . 2 d a t 245 R. C i v . P . ] , i s not complaint 388 (citations a t any t i m e . " S o . 2 d 9 4 2 , 947 carte omitted). Thus, blanche Stallings (Ala. 1980). "Rule authority v. A n g e l i c a "[U]ndue d e l a y a m e n d m e n t , when i t c o u l d h a v e b e e n f i l e d earlier to an Schreiber amendment." Corp., Puckett, Taul 551 S o . 2 d 9 7 9 , 984 19 [Ala. amend Uniform a Co., in filing an b a s e d on t h e information a v a i l a b l e or discoverable, i s i n i t s e l f denying 15, ground f o r & Underwood, ( A l a . 1989). I n c . v. " [ I ] f the 1090073 court determines opportunity leave 351 to ... state t o amend may So. 2d 917, Farr's that a claim properly 922 a party ... be has but has denied." (Ala. Civ. sufficient failed to W a l k e r v. App. must do so, Traughber, 1977). claim breach-of-contract had because there i s no evidence to support h i s a s s e r t i o n t h a t the p o l i c y limits were ever increased. In 9 argument i n h i s b r i e f such were failed in their behalf thereby It not duty house and agreed duty to the that insurance that the incumbent the the were the companies by insurance that only concerning were set the the on were Farr's a t p. 51. information value of accordingly. application. companies and policy companies] insurance the address Farr's Farr's brief, signing satisfied alternative [insurance adequate policy limits upon policy limits then a p p r a i s a l was policy limits an Court to attempt to F a r r damages." the makes arguendo, to procure causing Farr this "Assuming increased, i s undisputed provided the before a determination: limits fact, fail the Farr Any in establishing agreed t o by Farr. F a r r a l l e g e s t h a t the d e p o s i t i o n t e s t i m o n y of A l l e n a l s o s u p p o r t s F a r r ' s a s s e r t i o n t h a t an o r a l c o n t r a c t i n c r e a s i n g t h e p o l i c y l i m i t s e x i s t e d . However, n o t h i n g i n A l l e n ' s d e p o s i t i o n t e s t i m o n y i n d i c a t e s t h a t an o r a l c o n t r a c t was made, t h a t t h e policy limits w o u l d be increased, or that Sanspree had a c t u a l l y p a i d a d d i t i o n a l p r e m i u m s on F a r r ' s b e h a l f . 9 20 1090073 Thus, we construe allegation that originally amended. the quote Lexington agreed to, but claim that the c i r c u i t c o u r t ' s only as that not policy policy above, t h e r e p o l i c y was as was i s no "failed in their behalf," the as allegedly evidence claim, the that is affirmed breached the as to policy brief, a t p. Totten v. 42. on of Farr's by not allegation paying insurance Further, companies adequate insurance tort Farr claims on are had Farr's barred by limitations. in relation i s "not unrelated However, appeal; the above, F a r r ' s [ i t ] caused, completely time that duty to procure Lexington source first argument argues, damages to companies' statute also was judgment g r a n t i n g the i n s u r a n c e discussed two-year Farr to Farr's an i t b e n e f i t s under the wind-damage p o r t i o n of the p o l i c y . concerning as Therefore, had the the brief amended. summary-judgment m o t i o n s Lexington Farr's breached H o w e v e r , as d i s c u s s e d support Farr's that from L i g h t i n g & Supply, his breach-of-contract entitled to amounts paid to Farr thus, to we 21 by as a a set raises this will 507 not So. Farr's argument consider 2d 502, off collateral [ i t s ] wrongdoing." Inc., 1987). claim for i t . 503 the See (Ala. 1090073 Alternatively, however, Farr breached t h e p o l i c y by f a i l i n g contents motion coverage opposing motions, Farr suffered of the house. the of at least policy evidence argues by f a i l i n g o f damage fails that under to h i s summary-judgment indicating on a p p e a l t o pay Farr Lexington Lexington Attached companies' $29,548.95 w o r t h Farr the p o l i c y . the p o l i c y . insurance included that t o p a y h i m t h e $20,000 w o r t h o f he h a d u n d e r the alleges that he to the contents Lexington breached the contents to address had this claim portion in i t s brief. Lexington portion not pay Farr suffered the any Farr produced Therefore, flood-insurance suffered contents contents and at least that portion under the p o l i c y t o the house. under the contents substantial $29,548.95 w o r t h damage t o h i s c o n t e n t s , Farr $50,000 sustained amount at least the house. Farr Farr o f t h e damage policy. in paid evidence limit of that of the he Solutions $20,000 Lexington worth d i d not of the p o l i c y . 22 of pay Therefore, had damage Farr we paid f o r the the undisputed evidence indicates $29,548.95 did to the contents even though A s s u r a n t policy Lexington portion o f damage as i t s that to h i s under the reverse the 1090073 circuit not court's breached under the j u d g m e n t i n s o f a r as the contents Next, Farr judgment p o l i c y by Farr's bad-faith of Security Fire a provision a l s o a r g u e s on granting elements failing of to pay in error. Co. v. any the proceeds circuit summary-judgment This bad-faith-refusal-to-pay & Casualty Farr Bowen, motion on forth the Court set claim 417 So. court's in 2d National 179 1982): " [ T ] h e p l a i n t i f f i n a 'bad the burden of p r o v i n g : and faith r e f u s a l ' case " ( a ) an i n s u r a n c e c o n t r a c t b e t w e e n a b r e a c h t h e r e o f by t h e d e f e n d a n t ; "(b) claim; an i n t e n t i o n a l r e f u s a l t o p a y the the has parties insured's " ( c ) t h e a b s e n c e o f any r e a s o n a b l y l e g i t i m a t e o r a r g u a b l e r e a s o n f o r t h a t r e f u s a l (the absence of a debatable reason); "(d) the a b s e n c e o f any insurer's actual knowledge of l e g i t i m a t e or a r g u a b l e reason; the "(e) i f i n t e n t i o n a l f a i l u r e to determine the existence of a l a w f u l b a s i s is relied upon, the plaintiff must prove the insurer's intentional f a i l u r e to determine whether there i s a l e g i t i m a t e or a r g u a b l e r e a s o n to r e f u s e to pay the c l a i m . "In showing short, p l a i n t i f f m u s t go of nonpayment and prove 23 had policy. appeal that Lexington's c l a i m was the i t held that Lexington b e y o n d a mere a bad faith (Ala. 1090073 nonpayment, a nonpayment w i t h o u t any reasonable ground for dispute. Or, stated differently the p l a i n t i f f m u s t show t h a t t h e i n s u r a n c e company had no l e g a l o r f a c t u a l d e f e n s e t o t h e i n s u r a n c e claim." 417 So. Cas. 2d Co., at 183. 405 So. B a s e d on policy Farr by our paying cannot particular maintain See also 1 (Ala. 2d conclusion Farr maintain for that court's Farr under fails the Farr's operated contents t o p r e s e n t any c l a i m b a s e d on Rule 28(a) Alabama, judgment g r a n t i n g concerning could, Lexington on South Farr on that however, this it of based f a i l e d to d i r e c t has c o n t e n t s p o r t i o n of the p o l i c y ; University claim house, contents portion the See the the concerning his bad-faith appeal. to f a i l u r e t o pay indicating & the insurance evidence Farr breach the any In f a c t , Fire against However, F a r r pay Sec. d i d not damage claim. claim policy. i t s f a i l u r e to the bad-faith breach-of-contract the policy. that Lexington his his bad-faith National 1981). $50,000 concerning Lexington's in C h a v e r s v. supra. Court i n bad portion of a r g u m e n t on we Ala. will R. Therefore, not App. the of to faith the appeal Lexington's breach thus, (10), companies of consider P.; and circuit L e x i n g t o n ' s summary-judgment m o t i o n bad-faith claim Conclusion 24 is affirmed. 1090073 Based judgment on insofar insurance claim Lexington's contract as on his judgment claim favor to with AFFIRMED Stuart, Bolin, IN this J., Cobb, C.J., concurs recuses We judgment his the on to the to damage to the Farr's cause f o r for relates wind pay court's breach-of- claim reverse failure circuit breach-of- the contents proceedings 1 0 PART; R E V E R S E D IN Wise, for remand the opinion. Shaw, a n d that Lexington Lexington's we as claim. of circuit claims, policy bad-faith p o r t i o n o f t h e p o l i c y , and consistent the the summary tort Lexington under in as affirm a Farr's against and we i t entered payment house, court's foregoing, companies contract the the JJ., i n the PART; AND REMANDED. concur. result. herself. F a r r i n c l u d e d two o t h e r a r g u m e n t s we do n o t a d d r e s s on appeal: 1) that "the h o u s e was not under c o n s t r u c t i o n or u n o c c u p i e d when t h e i n s u r a n c e a p p l i c a t i o n was s i g n e d " a n d 2) t h a t " t h e r e i s no a b s o l u t e r u l e t h a t r e g a r d l e s s o f t h e f a c t u a l circumstances, a s u r p l u s l i n e s b r o k e r c a n n e v e r h a v e an a g e n c y r e l a t i o n s h i p w i t h an i n s u r e d . " F a r r ' s b r i e f , a t pp. 39-42 and 5 8 - 5 9 , r e s p e c t i v e l y . H o w e v e r , b a s e d on o u r d e c i s i o n on o t h e r i s s u e s , we p r e t e r m i t d i s c u s s i o n o f t h o s e a r g u m e n t s . 1 0 25
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
