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Collins v. Nationwide Mutual Insurance Co.

United States District Court, S.D. Alabama, Southern Division

May 9, 2017




         This matter is before the Court on the defendant's motion to dismiss. (Doc. 2). The plaintiff has filed a response and the defendant a reply, (Docs. 9, 10), and the motion is ripe for resolution. After careful consideration, the Court concludes the motion is due to be granted in part and denied in part.


         According to the complaint, (Doc. 1-1 at 3-14), the plaintiff was injured when the vehicle he was driving was struck head-on, in his own lane of travel, by a vehicle driven by non-party Stephen Holley, who died in the collision. The insurer of the latter vehicle denied coverage on the grounds Holley was driving it without permission of the insured. The plaintiff then sought uninsured motorist (“UM”) benefits from two carriers. The primary carrier paid policy limits of $100, 000, but the defendant offered less than $7, 000. The six-count complaint asserts claims for negligence; wantonness; breach of contract; normal bad faith; abnormal bad faith; and fraud.

         The defendant initially sought dismissal of all six claims. In its reply brief, however, it “concede[s]” its motion as to the negligence and wantonness claims. (Doc. 10 at 1). The defendant asserts that the remaining four claims are “not ripe and do not present a justiciable controversy.” (Doc. 2 at 4).


         Uninsured motorist coverage is required by Alabama statute. With exceptions and qualifications not pertinent herein, an automobile policy must include coverage “for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles.” Ala. Code § 32-7-23(a). The parties do not quote the policy language, but the plaintiff acknowledges that the defendant's contractual obligation to pay extends no further than the “legally entitled” statutory standard. (Doc. 9 at 4).

         An insured may bring an action to recover uninsured motorist benefits at any time and establish therein the fact and extent of the insurer's liability. This is the purpose of the plaintiff's claims for negligence and wantonness (of Holley), and it is why the defendant has conceded that those claims may proceed. (Doc. 9 at 5-6; Doc. 10 at 1).

         A claim for breach of contract, on the other hand, presupposes that the insurer has already violated a contractual duty to pay uninsured motorist benefits. Alabama law holds that such a claim is premature before the fact and extent of the insurer's payment obligation has been satisfactorily established. The defendant argues that this critical point has not been reached.

         “The term ‘legally entitled to recover as damages' has been interpreted to mean … that the insured must be able to establish fault on the part of the uninsured motorist, which gives rise to damages, and must be able to prove the extent of those damages.” Quick v. State Farm Mutual Automobile Insurance Co., 429 So.2d 1033, 1035 (Ala. 1983) (emphasis in original, internal quotes omitted).[1] “Thus, there can be no breach of an uninsured motorist contract … until the insured proves that he is legally entitled to recover, ” which cannot occur when “the amount of damages ha[s] not been determined.” Id. “Without a determination of whether liability exists on the part of the underinsured motorist and the extent of the plaintiff's damages, a claim of … breach of contract is premature” and “not ripe for adjudication.” Pontius v. State Farm Mutual Automobile Insurance Co., 915 So.2d 557, 564 (2005).

         “The question arises: when is a carrier of uninsured motorist coverage under a duty to pay its insured's damages?” LeFevre v. Westberry, 590 So.2d 154, 159 (Ala. 1991). Under Quick and Pontius, there must first be a “determination, ” based on “proof” (or, presumably, the insurer's agreement or acquiescence), that the uninsured motorist was at fault; that the insured suffered damages as a result; and that the amount of those damages is a particular amount (or, presumably, that it exceeds policy limits).

         The plaintiff presented the defendant with a demand letter, accident report, supplemental crash reconstruction report, medical records, medical bills and lost wage documentation. (Doc. 9 at 2; Docs. 1-2, 9-1, 9-2). The plaintiff asserts that Holley's conduct, combined with the plaintiff's documented medical bills and lost wages, his “painful injuries” and his emotional distress, support a “reasonabl[e] infer[ence]” that his “claimed damages … are established damages.” (Doc. 9 at 10-11).

         The Court assumes without deciding that Quick and Pontius can be satisfied by evidentiary presentations to the insurer. The Court also assumes without deciding that the plaintiff's presentation satisfactorily determined that Holley was at fault and that he acted wantonly. The question remains whether this presentation satisfactorily determined the extent of the plaintiff's resulting damages. Plainly, it did not.

         As noted, the plaintiff's primary insurer paid uninsured motorist policy limits of $100, 000. (Doc. 1-1 at 6). The plaintiff then demanded from the defendant its policy limits of $200, 000. (Doc. 1-2 at 2, 4). The plaintiff capped his special damages (medicals and lost wages) at $36, 239.71, (id. at 3), meaning that the primary insurer had covered all of the plaintiff's specials and also $63, 760.29 in general damages. The plaintiff thus demanded of the insurer an additional $200, 000 for pain and suffering, mental anguish and punitive damages. To support an award for pain and suffering, the plaintiff pointed to a torn PCL, a partially torn ACL, and two meniscus tears, with resulting pain sufficient to keep him out of work for fifteen weeks. To support an award for mental anguish, the plaintiff pointed to anxiety and flashbacks from the collision and from Holley's death (of which he is reminded every day he engages in his occupation as a commercial driver), resulting in ...

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