Continental Assur. Co. v. Kountz

461 So. 2d 802
CourtSupreme Court of Alabama
DecidedDecember 21, 1984
Docket82-793
StatusPublished
Cited by40 cases

This text of 461 So. 2d 802 (Continental Assur. Co. v. Kountz) is published on Counsel Stack Legal Research, covering Supreme Court of Alabama primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Continental Assur. Co. v. Kountz, 461 So. 2d 802 (Ala. 1984).

Opinions

This appeal arises from a suit filed by Mrs. Freddie Kountz against Continental Assurance Company in which Kountz sought damages for Continental's failure to pay an insurance claim. Continental appeals from the entry of judgment on a jury verdict of $23,000.00 in favor of the plaintiff.

The case arose from the following facts:

Plaintiff Freddie Kountz was insured by defendant Continental as a beneficiary on her husband Dominick Kountz's group health and accident policy, which he obtained through his employer, Grady Buick, Inc., of Mobile. The written insurance policy delineates limitations on major medical expense benefits, noting that the policy does not cover expenses incurred "[i]n connection with dental care and treatment except that necessitated by accidental bodily injury, occurring while insured, to sound natural teeth."

Mrs. Kountz received a blow to the mouth during a robbery attempt against her in January of 1980. As a result of this injury, one of Kountz's front teeth was knocked out, several of her front teeth were loosened, her mouth bled, and her face swelled. Kountz reported this attack to the police and although her dentist, Dr. Brown, was not seeing patients that day, she talked with him by telephone and thereby obtained medicine for her pain.

According to Kountz, she had been able to chew and eat normally prior to her injury and had no real problems with her teeth before this time. Subsequent to the attack, however, Kountz was forced to eat soft foods and use only her back teeth for chewing, because her teeth were loose. *Page 804

After examinations by Dr. Brown and later by Dr. Woodall, Kountz was eventually examined by Dr. Charles Black, an oral surgeon, on March 28, 1980. Dr. Black found that Kountz suffered from chronic periodontal disease, a condition causing deterioration of the gums. Dr. Black found the disease to be fairly uniform throughout the mouth, but that the back teeth and molars were nevertheless fairly sound while the front teeth were very mobile and non-salvageable. Dr. Black recommended an extraction of Kountz's eight front teeth and was of the opinion that the surgery was necessitated at that particular time because of the blow to Kountz's mouth.

Before undergoing the surgery, Kountz wanted to know whether her insurance coverage through Grady Buick's Continental policy would pay for this operation. Since Kountz is blind, she had her mother telephone Continental, but Kountz herself talked to the representative. The number called was that of a Mobile insurance agency listed in a Yellow Pages advertisement as being a representative of Continental.

Kountz talked first with a female insurance representative and several days later with a male agent at the same number. Kountz could not name the persons with whom she talked. During each conversation however, Kountz communicated that she was inquiring about coverage under Grady Buick's policy with Continental. She explained the circumstance of her injury and was assured by each of the unidentified representatives that Continental would pay for the oral surgery necessitated by such an attack.

On April 10, 1980, relying on the representations made by the agents, Kountz underwent the extractions recommended by Dr. Black. After receiving her bill from the hospital, Kountz submitted an insurance claim to Continental for $2,600.00. Continental denied payment of the claim.

Freddie Kountz and Dominick Kountz filed suit against Continental on June 15, 1981, alleging breach of contract, false representation, bad faith, and outrage on behalf of Freddie Kountz and breach of contract, outrage, and bad faith on behalf of Dominick Kountz. The case was tried before a jury on February 22, 1983. At the close of the plaintiff's case, Continental moved for a directed verdict on all counts. This motion was granted as to the three counts alleged by plaintiff Dominick Kountz and denied as to the other counts.

The defendant failed to put on any evidence and renewed its motion for a directed verdict. This motion was denied on all counts except for the claim of outrage. This count was voluntarily withdrawn by plaintiff Freddie Kountz and the defendant's motion for a directed verdict was then granted on that count. Plaintiff Freddie Kountz made no motion for a directed verdict.

After being charged on breach of contract, false representation, and bad faith, the jury returned a verdict for plaintiff Freddie Kountz and against Continental in the amount of $23,000.00. The trial court denied Continental's motion for a judgment notwithstanding the verdict, or alternatively for a remittitur or new trial. Continental appeals.

Continental asserts four reasons why we should reverse this case and render judgment in its behalf: 1) The trial court erred in submitting the bad faith claim to the jury; 2) the trial court erred in submitting the false representation claim to the jury; 3) the evidence does not support an award of punitive damages; and 4) the trial court erred in excluding the use of relevant evidence at trial. We find no merit in these assertions of error and therefore affirm the judgment entered on the jury verdict rendered below.

I.
Continental claims that its motion for a directed verdict on the bad faith count was erroneously denied and that therefore the claim was incorrectly sent to the jury. Defendant argues first that Kountz was not entitled to a directed verdict on the breach of contract claim, thereby negating the bad faith action, and second, that the evidence *Page 805 failed to support the bad faith claim anyway.

The tort of bad faith refusal to pay an insurance claim was recognized by this court in Chavers v. National Security Fire Casualty Co., 405 So.2d 1 (Ala. 1981). We discussed the standard of proof in a bad faith action in this way:

[A]n actionable tort arises for an insurer's intentional refusal to settle a direct claim where there is either "(1) no lawful basis for the refusal coupled with actual knowledge of that fact or (2) intentional failure to determine whether or not there was any lawful basis for such refusal."

Chavers, 405 So.2d 7. Therefore, a claim may be proven in one of two ways. The plaintiff can show that the insurer knew there was no lawful basis to refuse payment of the claim, or, alternatively, that the insurer intentionally failed to discover whether the refusal to pay had a lawful basis.

In Gulf Atlantic Life Insurance Co. v. Barnes, 405 So.2d 916 (Ala. 1981), this alternative method of proof was further examined:

The second tier of the test is an elaboration on the first. The trier of fact, by finding, on the part of the insurer, an "intentional failure to determine whether or not there was any lawful basis for refusal," may use that fact as an element of proof that no lawful basis for refusal ever existed. The relevant question before the trier of fact would be whether the results of the investigation were subjected to a cognitive evaluation and review. Implicit in that test is the conclusion that the knowledge or reckless disregard of the lack of a legitimate or reasonable basis may be inferred and imputed to an insurance company when there is a reckless indifference to facts or to proof submitted by the insured.

Barnes, 405 So.2d at 924. Barnes indicates that the plaintiff in a bad faith suit must prove that no lawful basis for refusing payment existed, but that proof of an intentional failure to determine whether a lawful basis existed will militate toward the finding that no such basis in fact existed.

Subsequent to Barnes, we decided

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Bluebook (online)
461 So. 2d 802, Counsel Stack Legal Research, https://law.counselstack.com/opinion/continental-assur-co-v-kountz-ala-1984.