Wilson v. CNL Ins. America, Inc., 12 F. Supp. 2d 1284 (M.D. Ala. 1998)

James Harvey Tipler, Andalusia, AL, for Plaintiff.

David P. Condon, Birmingham, AL, for Defendant.

ALBRITTON, Chief Judge.

Before the court is Defendant's Motion For Summary Judgment and supporting brief filed June 18, 1998. Plaintiff filed his response and the deposition of John Dattilo *1285 on July 31, 1998. After a careful review of these submissions, relevant precedent and the record as a whole, the court concludes that Defendant's motion should be granted.

On February 21, 1995, Plaintiff purchased automobile insurance with Defendant through Marsh Insurance Agency ("Mr. Marsh"), an independent insurance agent. While at Marsh's office Plaintiff signed a CNL insurance application which listed the policy expiration date of "8/21/95" and time of "12:01 A.M.. Standard Time." (File Doc. # 34, Ex. 2) Through the mail, Plaintiff received a Policy Declarations page from Defendant which specified "FROM: FEBRUARY 21, 1995 TO: 12:01 A.M. AUGUST 21, 1995." (File Doc. # 34, Ex. 4)

On August 21, 1995, Plaintiff had an accident at approximately 9:00 a.m. while driving a rental car. Plaintiff was then taken to the hospital and released after a short time. Someone at the hospital notified Mr. Marsh that the Plaintiff had been in an accident. After the Plaintiff was released from the hospital, he went to Mr. Marsh's office at approximately 12:00 noon. The Plaintiff claims, and the court accepts for purposes of this Motion, that he tendered a premium check to Mr. Marsh at that time for payment on the CNL policy and that the check was refused. Although Mr. Marsh does not specifically remember the tender, he says it would be consistent with normal practice to refuse a late renewal payment when there had been a covered loss after the policy had expired. (Doc. # 34, Ex. 7, pp. 35-36)

Under Federal Rule of Civil Procedure 56(c), summary judgment is proper "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986).

The party asking for summary judgment "always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of the `pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Id. at 323, 106 S. Ct. 2548. The movant can meet this burden by presenting evidence showing there is no dispute of material fact, or by showing that the nonmoving party has failed to present evidence in support of some element of its case on which it bears the ultimate burden of proof. Id. at 322-324, 106 S. Ct. 2548.

If the movant succeeds in demonstrating the absence of a material issue of fact, the burden shifts to the nonmovant to establish with evidence beyond the pleadings that a genuine issue material to the nonmovant's case exists. See Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir. 1991). To avoid summary judgment, the nonmoving party "must do more than show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S. Ct. 1348, 89 L. Ed. 2d 538 (1986). On the other hand, the evidence of the nonmovant must be believed and all justifiable inferences must be drawn in the nonmovant's favor. Anderson v. Liberty Lobby, 477 U.S. 242, 255, 106 S. Ct. 2505, 91 L. Ed. 2d 202 (1986).

Plaintiff makes claims for breach of contract and bad faith refusal to pay a claim. All three of Plaintiff's claims depend upon the existence of a contract with the Defendant. Plaintiff does not dispute that he did not tender his premium payment until after 12:01 a.m., August 21, 1995. More specifically, he claims that he offered payment some twelve hours later, at around noon of August 21, 1995. Plaintiff also does not dispute that the policy application form and the policy declarations page plainly designate that the policy expires at 12:01 a.m. on August 21, 1995. Plaintiff's whole case revolves around a renewal notice which he received well in advance of his attempted payment.

The notice is postmarked July 10, 1995, and is of the standard computer generated variety which are common to the industry. (File Doc. # 34, Ex. 5) The key language on which Plaintiff so heavily relies states: "IF THE PREMIUM IS NOT PAID BY THE DUE DATE SHOWN YOUR POLICY *1286 WILL TERMINATE ON THE EFFECTIVE DATE SHOWN." The due date and the effective dates shown are both "8/21/95." Plaintiff's legal position is that this language is ambiguous and should therefore be construed against the Defendant drafter. Alabama Farm Bureau Mut. Ins. Co. v. Pigott, 393 So. 2d 1379 (Ala.1981).

Whether a contract is ambiguous is a legal question for the court to answer. Hutchinson v. Attorneys Insurance Mutual of Alabama, Inc., 631 So. 2d 975 (Ala.1994). In answering the question, this court should not read the notice in isolation, but rather in the context of the other terms of the agreement. Hall v. American Indemnity Group, 648 So. 2d 556, 559 (Ala.1994).

Assuming arguendo that the renewal notice has some bearing upon the terms of the insurance agreement existing between the parties, this court nevertheless fails to see the ambiguity which the Plaintiff alleges. The renewal notice is in perfect symmetry with the application and declarations page. Clearly the policy had to terminate at some point in time. Plaintiff rejects "8/21/95" at "12:01 A.M." as the policy's time of termination, but he offers the court no alternative date and/or time. The notice admonishes the Plaintiff to renew the policy "BY" August 21, 1995. It further admonishes Plaintiff that if he does not, the policy will terminate "ON" August 21, 1995. Plaintiff did not attempt to renew "BY" August 21, 1995, even though he was given ample notice from the application, declarations page and renewal notice.

Plaintiff argues that the renewal notice allowed him to renew by paying his premium on the due date. That, clearly, is not what the notice said. It did not provide for termination on the effective date shown if the premium were not paid "on or before" the due date, or "no later than" the due date, but "by" the due date. There is simply no ambiguity in this clear language. It is consistent with the Plaintiff's application and the policy declarations page, while the interpretation Plaintiff urges would be inconsistent.

Plaintiff did not meet the requirements of the renewal notice on which he depends. The notice was postmarked a full forty-two (42) days prior to August 21, 1995. The events and consequences warned of in the renewal notice came to pass exactly as indicated. Because a renewal premium was not paid "BY" August 21, 1995, the policy "TERMINATE[D] ON" August 21, 1995. As per the policy application and declarations page, the policy terminated at "12:01 A.M." Since the renewal notice is consistent with the original agreement, it cannot be understood to change the original agreement.

"The well accepted general rule in Alabama is that where the terms of the insurance contract are not ambiguous, there is no room for construction, and this Court will enforce the contract as written." Jackson v. Prudential Ins. Co., 474 So. 2d 1071 (Ala.1985). Absent public policy considerations that dictate a contrary result, the court cannot ignore the express provisions of the policy, including exclusionary clauses or terms limiting the company's liability, in order to create a new contract for the parties. Upton v. Mississippi Valley Title Insurance Co., 469 So. 2d 548 (Ala.1985). Turner v. United States Fidelity & Guaranty Co., 440 So. 2d 1026 (Ala.1983). Lipscomb v. Reed, 514 So. 2d 949, 950 (Ala.1987). This court finds that neither the insurance contract nor the renewal notice was ambiguous.

Since the policy had expired, Defendant was under no obligation to accept Plaintiff's renewal check at noon on August 21, 1995. This is true a fortiori given that there had been an accident after the policy's lapse. Even if the Defendant had accepted the renewal payment, it would not have been required to pay for an accident which had occurred during the policy's lapse. Central National Insurance Group of Omaha v. Grimmett, 340 So. 2d 767 (Ala.1976).

There are no questions of material fact which need to be decided. Each of Plaintiff's claims depends on the existence of a contract. As a matter of law, there was no contract between Plaintiff and the Defendant at the time of the accident. Therefore, Defendant's Motion For Summary Judgment should be granted.