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01/27/95 JOHN HENRY MCBRIDE v. ACCEPTANCE INSURANCE

January 27, 1995

JOHN HENRY MCBRIDE, INDIVIDUALLY AND D/B/A/ J & H ENTERPRISES
v.
ACCEPTANCE INSURANCE COMPANY



Appeal from Jefferson Circuit Court. (CV-92-3908). Marvin Cherner, Trial Judge.

Released for Publication April 25, 1995.

Shores, Maddox, Houston, Kennedy, Ingram, and Cook, JJ., concur.

The opinion of the court was delivered by: Shores

SHORES, JUSTICE.

Acceptance Insurance Company filed a declaratory judgment action against its insured, John Henry McBride, contesting his claim that it owed him uninsured motorist coverage benefits as a result of a judgment he had obtained against an uninsured motorist. McBride appeals from 1) an order granting a new trial after a jury had returned a verdict in his favor on his contract claim for uninsured motorist benefits and 2) a summary judgment for Acceptance on his counterclaims alleging fraud and a bad-faith denial of his insurance claim.

On January 25, 1991, McBride was involved in a traffic accident at the intersection of Arkadelphia Road and 12th Avenue West in Birmingham. The vehicle McBride was driving was struck by one being driven by Donnie Joe Hicks. McBride sustained bodily injuries and other damage as a result of the accident. Hicks's insurer refused to pay for the accident, because at the time of the accident Hicks was not operating a vehicle covered by his policy. McBride then sued Hicks and got a default judgment for $7,500 in compensatory damages and $25,000 in punitive damages. McBride sought to have the judgment satisfied by Acceptance, under the uninsured motorist provisions of his policy with that company. Acceptance refused to pay the punitive damages award, claiming a punitive damages exclusion in McBride's policy prohibited it from doing so.

Acceptance then sued McBride, individually and d/b/a J & H Enterprises, for a judgment declaring that the company was not obligated to pay the compensatory or punitive damages. McBride answered the complaint and filed counterclaims against Acceptance. He counterclaimed for 1) uninsured motorist benefits under his policy; 2) damages based on an allegation that Acceptance had denied his claim in bad faith; and 3) damages for fraud, based on a claim that an Acceptance employee had falsely stated to him that his policy provided no benefits.

In November 1992, Acceptance moved for a summary judgment; it later supported its motion with a brief contending that McBride had forfeited his right to uninsured motorist benefits by not timely notifying the company of the accident and contending that, as a matter of law, uninsured motorist coverage does not apply to punitive damages. McBride opposed the motion. In January 1993, the trial Judge entered an order holding: 1) that McBride was entitled to recover under the uninsured motorist provision of his policy all damages that he would be entitled to recover against the uninsured motorist; *fn1 and 2) that Acceptance was entitled to a summary judgment on McBride's claims of bad faith and fraud.

The case was tried beginning October 5, 1993, solely on McBride's counterclaim for uninsured motorist benefits. The trial Judge ruled that Acceptance was not bound by the default judgment against the uninsured motorist and allowed Acceptance to retry the issue of the amount of damages McBride was entitled to recover against Hicks, the uninsured motorist. The jury awarded McBride damages of $47,500. The court entered a final judgment against Acceptance in November 1993, ruling that McBride was entitled to stack coverages under the insurance policy issued to him by Acceptance.

Acceptance moved for a new trial or, in the alternative, to alter, amend, or vacate the judgment. On March 1, 1994, the trial Judge granted Acceptance a new trial on the grounds that McBride's counsel had made "improper and highly prejudicial arguments" to the jury, although at trial Acceptance had not objected to those arguments.

In granting the new trial, the Judge quoted the argument each party's counsel had made at trial:

"In the initial argument to the jury, counsel for McBride [Nat Bryan] made the following argument:

"'One thing that's very important, ladies and gentlemen, that I told you about yesterday morning when I talked to you is this right here. This is a part of the policy that I have blown up. This insurance company, Acceptance Insurance Company, has the right to go after Mr. Hicks if you find against them. And they state, "If we make any payment, we are entitled to recover what we paid from other parties." Donnie Joe Hicks. "Any persons to or for whom we make payment must transfer to us his or her rights of recovery against any other party." John McBride would transfer his right to get that money from Donnie Joe Hicks. "This person must do everything necessary to secure these rights and must do nothing that would jeopardize them."

"'MR. HICKS NEEDS TO PAY. I am standing before you as this man's lawyer and telling you that. And I want him to pay. AND THIS INSURANCE COMPANY CAN MAKE HIM PAY. But what you've got to decide is, is he ...


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