Nationwide Mutual Ins. Co. v. J-Mar Machine & Pump, Inc.
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Nationwide Mutual Insurance Company (Nationwide) appealed a trial court’s order that denied its "renewed motion for a judgment as a matter of law" in its case against J-Mar Machine & Pump. J-Mar is a repair shop that held a commercial liability and property insurance policy with Nationwide. In 2004, in anticipation of its policy renewal, Nationwide sent an inspector to the shop. In his report, the inspector noted several safety hazards and a messy shop. The insurance policy was renewed in March but several months later Nationwide cancelled the policy. Nationwide cited the inspector’s report as reason for the cancellation. J-Mar management was not aware of the cancellation until late that year when shop property was stolen. When it tried to file a claim, Nationwide declined J-Mar’s claim. A jury trial was held on the disputed policy cancellation and coverage. At the close of J-Mar’s case, Nationwide moved the court for a "judgment as a matter of law" which was denied. Nationwide unsuccessfully motioned again at the close of all evidence. Upon review of the trial court record, the Supreme Court found that the evidence J-Mar presented at trial was insufficient to support the jury verdict in its favor. Accordingly, the Court reversed the trial court’s judgment denying Nationwide’s motion and rendered a judgment in Nationwide’s favor.
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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 formal 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 R e p o r t e r o f D e c i s i o n s , 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 1090685 N a t i o n w i d e M u t u a l I n s u r a n c e Company v. J-Mar M a c h i n e & Pump, I n c . Appeal from J e f f e r s o n C i r c u i t (CV-05-7158) PARKER, Court Justice. Nationwide appeals from motion f o r a Mutual thet r i a l judgment Insurance Company court's judgment as matter a ("Nationwide") denying of i t s "renewed law o r , i n the 1090685 alternative, verdict." 1 motion We reverse Facts In and [a] procured judgment and render & Pump, repair shop a commercial l i a b i l i t y insurance policy") The the cancellation located in of the insurance a vacuum Birmingham, insurance Nationwide pertinent portion of the insurance "A. f o r Nationwide. I n c . ("J-Mar"), and p r o p e r t y from the History $100,000 i n p e r s o n a l - p r o p e r t y coverage. is notwithstanding a judgment and P r o c e d u r a l 1997, J-Mar M a c h i n e centrifugal-pump ("the for that policy afforded At issue i n this policy policy by case Nationwide. stated: Cancellation "1. The f i r s t Named Insured shown i n the Declarations [J-Mar] may cancel this policy by mailing or delivering to [Nationwide] advance written notice of c a n c e l l a t i o n . "2. [Nationwide] may c a n c e l this policy by m a i l i n g o r d e l i v e r i n g t o [J-Mar] w r i t t e n n o t i c e o f cancellation at l e a s t : "a. 10 d a y s b e f o r e t h e e f f e c t i v e d a t e of c a n c e l l a t i o n i f [Nationwide] cancel[s] f o r nonpayment o f p r e m i u m ; o r E f f e c t i v e O c t o b e r 1, 1 9 9 5 , R u l e 5 0 , A l a . R. C i v . P., was amended t o rename a " m o t i o n f o r a j u d g m e n t n o t w i t h s t a n d i n g t h e v e r d i c t " as a renewed "motion f o r a judgment as a m a t t e r o f law." 1 2 1090685 "b. 30 d a y s b e f o r e t h e e f f e c t i v e d a t e of c a n c e l l a t i o n i f [ N a t i o n w i d e ] c a n c e l [ s ] for any o t h e r r e a s o n . "3. [Nationwide] will mail or d e l i v e r [ i t s ] n o t i c e t o [ J - M a r ' s ] l a s t m a i l i n g a d d r e s s known t o [Nationwide]. "4. Notice of c a n c e l l a t i o n will state the e f f e c t i v e d a t e o f c a n c e l l a t i o n . The p o l i c y p e r i o d w i l l e n d on t h a t d a t e . "5. I f t h i s p o l i c y i s c a n c e l l e d , [Nationwide] will send [J-Mar] any premium refund due. I f [ N a t i o n w i d e ] c a n c e l [ s ] , t h e r e f u n d w i l l be p r o r a t a . I f [ J - M a r ] c a n c e l s , t h e r e f u n d may b e l e s s t h a n p r o r a t a . The c a n c e l l a t i o n w i l l be e f f e c t i v e e v e n i f [ N a t i o n w i d e h a s ] n o t made o r o f f e r e d a r e f u n d . "6. I f n o t i c e i s m a i l e d , p r o o f s u f f i c i e n t proof of notice." be In early 2004, Nationwide's i n s p e c t i o n o f J-Mar's f a c i l i t i e s renewal March independent was The sent The facilities: indicated which inspection which was up f o r r e n e w a l was conducted r e c e i v e d i t on M a r c h the following "aluminum w i r i n g " ; vented"; serviced"; ordered by s u r v e y o r i n March 2004, and t h e i n s p e c t i o n to Nationwide, report properly 2004. underwriter will "[f]ire problems extinguishers that 3 i s poor, with on an report 23, 2004. with "[s]pace heaters and " [ h ] o u s e k e e p i n g an i n anticipation of i t s yearly of the insurance policy, 29, of mailing J-Mar's that arenot have not been large pump a n d 1090685 machine parts grounds." The insurance 30, cancellation notice a.m. [November on ... s t a t e d t h a t the surveyor. received N o v e m b e r 1, policy 1, take said care of deposition The being of by who had notice of insurance sold ... he's got i t , don't worry testimony, received any document insurance p o l i c y had about Jones from been [ n o t i c e of to find out i t , so testified Nationwide reinstated: 4 based on independent he that knew local J-Mar duration 12:01 he that policy effective Nationwide the insurance of the p o l i c y , cancellation. the at is cancellation the that notice "This Jones, t e s t i f i e d and 2004. a terminated Jones then telephoned h i s Lowe, outside J-Mar part: notice Gerald s e r v i c e d i t f o r the that mailed prepared the the i s terminated cancellation "[Lowe] wasn't aware of [Lowe] policy report" on pertinent p o l i c y was of a s k e d Lowe a b o u t t h e that your going to c a n c e l Allen had and r e n e w e d on M a r c h 2 9 , in 2004]." ... 2004. John and that notice N a t i o n w i d e was agent, stated, J-Mar's p r e s i d e n t , the area p o l i c y was insurance "unfavorable floor 2004, N a t i o n w i d e that required the the September On of through Jones testified cancellation] about i t and I didn't." that that and he'd In J-Mar indicating and his never the 1090685 "[Nationwide's t r i a l c o u n s e l : ] D i d you ever r e c e i v e any l e t t e r s from N a t i o n w i d e after the [notice of cancellation] ... t h a t e v e r s a i d t h a t y o u r p o l i c y was reinstated? "[Jones:] No, ma'am. "Q. D i d y o u e v e r g e t a n o t h e r c o p y o f a p o l i c y f r o m N a t i o n w i d e s h o w i n g t h a t t h e p o l i c y was p u t b a c k i n t o effect? "A. No, ma'am. "Q. D i d y o u e v e r g e t a d o c u m e n t f r o m M r . L o w e , a n d I'm t a l k i n g a b o u t a w r i t t e n d o c u m e n t , t h a t e v e r s a i d t h a t your p o l i c y had been r e i n s t a t e d ? "A. Jones's No, ma'am." deposition testimony informed him that Nationwide also indicates that Lowe h a d would not r e i n s t a t e the insurance policy: " [ N a t i o n w i d e ' s t r i a l c o u n s e l : ] Do y o u r e m e m b e r e v e r b e i n g t o l d b y Mr. Lowe t h a t he h a d t a l k e d t o t h e u n d e r w r i t e r s and t h e y were n o t w i l l i n g t o r e i n s t a t e it? "[Jones:] Yes." On Mar, o r about which stolen from telephoned about December 19, 2004, p r o p e r t y b e l o n g i n g had been covered J-Mar's premises. Lowe the state to notify by the insurance On D e c e m b e r him of the t h e f t of the insurance 5 policy t oJ - policy, 20, 2004, was Jones and t o i n q u i r e and whether i t had 1090685 been r e i n s t a t e d ; Lowe reinstated. time near Jones Jones a l s o t e s t i f i e d Lowe told reinstated informed but him that the that that t h a t was insurance Lowe had i t had policy informed him not been not the had first not of this been sometime "the end o f O c t o b e r . " On December 24, 2004, Jones q u a r t e r l y premium f o r the c a n c e l e d attempted insurance to pay p o l i c y by the sending Lowe a c h e c k i n t h e amount o f $ 3 1 3 , w h i c h Lowe d e p o s i t e d . Mar had not indicating received that a billing the premium was t h e p r e m i u m b a s e d on a b i l l i n g May 13, notifying December 2004, before J-Mar that 29, 2004. the statement due. from Rather, Nationwide Jones had November refunded 1, amount: paid s t a t e m e n t J-Mar had r e c e i v e d insurance i t s next premium policy payment was on canceled, w o u l d be due on N a t i o n w i d e r e f u n d e d $111 o f t h e $313 t o J - Mar, n o t i n g t h a t t h e c a n c e l l a t i o n d a t e o f t h e i n s u r a n c e was J- 2004, and "payment i n d i c a t i n g as more than the reason required on a policy f o r the cancelled policy." Despite been Jones's canceled, insurance knowledge J-Mar f i l e d that the insurance a claim with Nationwide p o l i c y f o r the s t o l e n property. 6 On June p o l i c y had under the 10, 2005, 1090685 Nationwide "the denied J-Mar's claim because, Nationwide stated, [ i n s u r a n c e ] p o l i c y was n o t a c t i v e f o r t h i s d a t e o f l o s s . " On December 2, 2 0 0 5 , J - M a r sued N a t i o n w i d e and Lowe. Mar a l l e g e d c l a i m s o f b r e a c h o f c o n t r a c t and b a d - f a i t h to p a y an i n s u r a n c e c l a i m Lowe had "negligently purported cancellation uncorrected filed " motions d e n i e d on May Lowe f i l e d judgment court The November or December 14, a "joint motion their summary-judgment Nationwide and Lowe's ... to and the t r i a l the t r i a l motions. motion to a go Lowe court and court's The trial r e c o n s i d e r on 2009. trial court conducted 30, 2009. a jury At the close motion which the t r i a l court denied. f o r a judgment evidence, which close allowed 2006, N a t i o n w i d e to reconsider" a written the that On S e p t e m b e r 2 2 , 2 0 0 9 , N a t i o n w i d e filed motion negligently f o r a summary j u d g m e n t , w h i c h denying 5, caused failure and a l l e g e d o f the [ i n s u r a n c e ] p o l i c y 18, 2009. denied November On against Nationwide J- trial, of J-Mar's f o r a judgment Nationwide as a m a t t e r the t r i a l as 7 case, began a matter also orally denied. on Nationwide of law, made an oral of law at the c l o s e court also o f a l l t h e e v i d e n c e , J-Mar which ofa l l Also at the moved t o d i s m i s s i t s 1090685 claim against did not Lowe. Lowe, w i t h p r e j u d i c e . enter On an actual D e c e m b e r 4, order, 2009, the However, the oral written, dismissing a judgment on t h e j u r y ' s v e r d i c t i n f a v o r o f J - M a r a n d for $416,466.87. On the August cause court Court the trial court, was not final Lowe On had one August dismissing, against this to options, Lowe. 2010, with [Lowe]." not a been 2010, 416, 419 Stephens ( A l a . 2000), the trial "every Court then of because and judgment the giving the court claim remanding the claims the trial claims entered against an a l l e g e d by r e i n s t a t e d the order [J-Mar] appeal. Review Enterprises, we Nationwide order that to d i s m i s s Standard I n A.T. an stating adjudicated prejudice, This entered judgment o f w h i c h was 10, against appealed. from appealed against 3, Nationwide court court entered trial or trial Inc. v. Johns, 757 So. held: " I n r e v i e w i n g a r u l i n g on a m o t i o n f o r a j u d g m e n t as a m a t t e r o f l a w , t h i s C o u r t i s b o u n d b y t h e same s t a n d a r d as t h e t r i a l c o u r t : "'We must d e t e r m i n e w h e t h e r the p a r t y w i t h t h e b u r d e n of p r o o f has p r o d u c e d s u f f i c i e n t evidence of a c o n f l i c t w a r r a n t i n g a j u r y ' s consideration. Macon County Comm'n v. S a n d e r s , 555 So. 2 d 1 0 5 4 , 1056 (Ala. 1990); B u s s e y v . J o h n D e e r e Co., 531 So. 2d 860, 8 2d 1090685 862 (Ala. 1988). The evidence must be v i e w e d i n a l i g h t m o s t f a v o r a b l e t o ... t h e n o n m o v i n g p a r t y . T w i l l e y v. D a u b e r t C o a t e d P r o d u c t s , I n c . , 536 So. 2d 1 3 6 4 , 1367 (Ala. 19 8 8 ) ; W a d s w o r t h v . Y a n c e y B r o s . Co., 423 So. 2d 1 3 4 3 , 1345 (Ala. 1982).' " C o n t i n e n t a l Eagle Corp. 3 1 3 , 319 (Ala. 1992)." v. Mokrzycki, 611 So. 2d Discussion Nationwide its argues motion a for contention insurance policy the policy had as trial a canceled claim arose. Court recently insurer's right to cancel I n s u r a n c e Co. set under We forth an of erred law evidence been J-Mar's court matter undisputed This Underwriters the judgment that before that based shows the denying on that terms the of the the So. law concerning an policy in Hartford 3d 742 (Ala. 2010): "The l a w c o n c e r n i n g an i n s u r e r ' s r i g h t t o c a n c e l a policy is well settled: ' [ T ] h e r i g h t v e l non of cancellation i s a matter of contract The q u e s t i o n of t h e m o t i v e of t h e p a r t i e s or company i n that behalf is immaterial when there is a cancellation under the terms of the contract.' P a c i f i c M u t . L i f e I n s . Co. o f C a l i f o r n i a v . S t r a n g e , 226 A l a . 98, 100, 145 So. 4 2 5 , 426 ( 1 9 3 2 ) . Further, " ' [ i ] t i s w e l l s e t t l e d i n Alabama t h a t " i n an a c t i o n on an i n s u r a n c e p o l i c y when the insurer sets up c a n c e l l a t i o n as a defense, the i n s u r e r has the burden of p r o v i n g t h e p o l i c y was c a n c e l e d . " M i d - S t a t e 9 its agree. insurance v . R e e d , 57 in 1090685 Homes, I n c . v . C h e r o k e e I n s . Co., 51 A l a . A p p . 2 4 7 , 2 4 8 , 284 So. 2d 2 7 4 , 275 (1973). However, i t i s " e q u a l l y t r u e t h a t i n the absence of a restrictive statutory provision, the parties to an insurance c o n t r a c t may s p e c i f y t h e m e t h o d b y w h i c h i t may be c a n c e l e d a n d t h e p a r t i e s a r e t h e r e b y b o u n d . P u t a n o t h e r way, an i n s u r a n c e p o l i c y may be c a n c e l e d a c c o r d i n g t o i t s t e r m s . " 51 Ala. App. at 249, 284 So. 2d at 276. (Citation omitted).' " A m e r i c a n I n t e r s t a t e I n s . Co. v . K e l l e y , 797 So. 2 d 4 7 9 , 482 ( A l a . C i v . App. 2 0 0 0 ) . See a l s o G r e e n v . S t a n d a r d F i r e I n s . Co. o f A l a b a m a , 398 So. 2 d 671, 675 ( A l a . 1981) (holding that ' [ i ] t i s well settled i n Alabama law t h a t the r i g h t of the i n s u r e r to c a n c e l an i n s u r a n c e p o l i c y i s s t r i c t l y c o n s t r u e d a n d the c o n d i t i o n imposed upon i t w i t h r e s p e c t to g i v i n g notice of cancellation must be strictly performed')." Hartford, 57 So. Regardless undisputedly 3d at of its canceled terms of the p o l i c y . Mar a cancellation was to be Therefore, terms that his at the the or insurance and policy Nationwide 1, J-Mar was 2004. occurred he according the to the sent J- insurance received the policy notice. canceled pursuant Further, Jones and knew t h a t 10 Nationwide that Nationwide days b e f o r e that theft reasons, policy I t i s undisputed November time claim with the insurance effective motives n o t i c e 30 canceled the 748. at the the time to i t s testified he insurance filed policy 1090685 had been canceled and that i t had not been Accordingly, the t r i a l c o u r t ' s judgment denying judgment a of reinstated. as presented jury's matter sufficient and bad on evidence consideration contract law of concerning faith was the a basis that conflict i t s claims i n error Nationwide's and J-Mar had warranting of thus breach i s due a of to be reversed. We J-Mar note that, appears i n i t sappellate brief to argue cancellation of check paying t h e premiums However, the that Nationwide insurance i t i s undisputed before this had waived policy by i t s prior accepting f o r the canceled that Nationwide Court, J-Mar's insurance policy. refunded a pro rata amount o f t h e p r e m i u m payment c o n s i s t e n t w i t h t h e t e r m s o f t h e insurance that is no that policy. the refunded merit i t s J - M a r d o e s n o t make an a r g u m e n t on a m o u n t was to this insufficient. argument. "reasonable J-Mar expectations" c a n c e l l a t i o n of the insurance p o l i c y . cite any consider Moreover, applicable this claim. the rule of also legal See reasonable 11 Therefore, there appears argue barred to Nationwide's However, J-Mar f a i l s authority; Rule appeal thus, 28(a)(10), we need A l a . R. expectations is a to not App. P. rule of 1090685 construction policies Fire that applies to interpret a n d h a s no a p p l i c a t i o n & C a s . Co. v . S l a d e , to this ambiguous case. 747 S o . 2 d 2 9 3 , 311 insurance See S t a t e Farm ( A l a . 1999). Conclusion Based on the foregoing, this Court reverses c o u r t ' s judgment denying N a t i o n w i d e ' s motion a matter the trial f o r a judgment as o f law and r e n d e r s a judgment i n f a v o r o f N a t i o n w i d e . R E V E R S E D AND JUDGMENT Cobb, C . J . , and S t u a r t , RENDERED. Shaw, a n d W i s e , J J . , c o n c u r . 12
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