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Rel 06/13/2008

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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2007-2008 _________________________ 1060179 _________________________ Harold Jones and Pam Jones v. Alfa Mutual Insurance Company Appeal from Coffee Circuit Court (CV-98-315) COBB, Chief Justice.

Harold Jones and Pam Jones, plaintiffs in a bad-faith and breach-of-contract action in the Coffee Circuit Court, appeal from a partial summary judgment entered in favor of Alfa

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Mutual Insurance Company on the Joneses' bad-faith claims. We affirm in part, reverse in part, and remand. I. Factual Background and Procedural History

On October 4, 1995, Hurricane Opal made landfall along the Florida Gulf Coast. Much of south Alabama, including

Coffee County, sustained damage as a result of the storm, which retained hurricane status as it arrived inland. The

Joneses, who reside on their cattle farm in Coffee County, awoke on October 5, 1995, to find that their house, garage, and barn had suffered damage from the wind associated with Hurricane Opal. Specifically, the Joneses contend that there

were cracks in their interior drywall, the seams in the drywall ceiling of their house were visible, cracks appeared in the mortar of the exterior brick veneer of their house, and there were loose bricks in the veneer. The Joneses also

contend that a tree near their house was partially uprooted by the wind and that the tree fell onto and damaged the roof of their house. They further contend that at least one of the

metal trusses in an addition to their barn was bent during the hurricane. The Joneses had a farm owner's policy with Alfa at the time, and they submitted a claim to Alfa on October 6,

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1995, for the damage to their property they say was caused by Hurricane Opal. At an unspecified date, two Alfa adjusters

came to the Joneses' residence to inspect the damage to the house. According to Harold Jones, the two adjusters noted the damage to the roof of his house. Harold Jones then showed the

two adjusters damage to the drywall ceiling and the walls in his house. The adjusters told Jones that that damage was

outside the realm of their expertise and that someone else would inspect that damage. According to Pam Jones, Alfa agent Wendell Sanders came to the Joneses' house soon after Hurricane Opal, looked at the house, and told the Joneses that they could proceed with replacing their roof. Sanders, however, testified that he did not make any such representation to the Joneses nor would he have had the authority to do so. Alfa adjuster Gary Bradshaw also inspected the Joneses' house. Bradshaw inspected the roof, walked around the

exterior of the house, and noted cracks in the exterior brick veneer and interior drywall that Harold Jones contended were caused by Hurricane Opal. Bradshaw was uncertain about Harold Jones's contention that the cracking of the brick veneer and

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drywall

was

the

result

of

Hurricane

Opal,

and

Bradshaw

consulted his supervisor Hilton Godwin, an Alfa district claims manager, and the two determined that an engineer's opinion was warranted. Alfa then hired structural engineer

Ralph E. Jones to inspect the Joneses' house and to render an opinion as to the causation of the cracks in the drywall and the brick veneer. Ralph Jones inspected the Joneses' house on November 13, 1995. Harold Jones and Bradshaw were both present during the

inspection, and Harold Jones showed Ralph Jones various cracks in the exterior and interior of the house. inspected the crawl space under Ralph Jones also During his

the house.

inspection Ralph Jones never went into the attic or onto the roof. While he was inspecting the interior of the house, Ralph

Ralph Jones saw a crack in the fireplace surround.

Jones stated that he asked Harold Jones about the crack and that Harold Jones told him that the crack had been present for an extended time. According to Harold Jones, after Ralph Jones completed his inspection, Ralph Jones told Harold Jones that if the Joneses' house was located in Montgomery County he would say

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the damage was most likely caused by soil settlement but that the soil in Coffee County did not tend to cause settlement problems in structures. Harold alleges that Ralph Jones

continued by saying that it was his belief that wind had become trapped in the carport of the house during Hurricane Opal and that the trapped wind had lifted the roof and had shifted the top of the house. Harold Jones recalls that Pam

Jones and possibly Bradshaw were present when Ralph Jones made this statement. Ralph Jones, however, testified by deposition that he did not recall making such a statement. On December 4, 1995, Ralph Jones submitted a two-page written report on the Joneses' house to Hilton Godwin. In his report, Ralph Jones wrote: "It is my opinion that the brick cracks, caulk separations, [S]heetrock cracks, and related damage along the north and east sides of the carport are due to settlement of the foundation in the vicinity of the northeast corner of the carport, and that this settlement and damage was not caused by wind forces or otherwise related to Hurricane Opal." According to Bradshaw, he had a telephone conversation with Harold Jones the day after Bradshaw received Ralph Jones's report. Bradshaw contends that he told Harold Jones that

Ralph Jones's report had arrived and that the cracks in the

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drywall and exterior brick veneer were not covered by the insurance policy and that Alfa would pay benefits only for the damage to the roof. Harold Jones, however, denies that

Bradshaw ever told him that the claim would not be paid. On December 29, 1995, Bradshaw wrote a letter to the Joneses' attorney, Bruce McLean.1 stated: "I understand that you are representing our above insured for a hurricane claim which was filed with ALFA for the October 4 hurricane that occurred in our area. Enclosed is an estimate for the replacement of the insured's shingle roof and a draft representing payment less the deductible for that roof. "I also understand that you are in possession of a copy of the engineer's report which indicates that shifting and settlement of the insured house was not In this letter, Bradshaw

According to Harold Jones, "At that time Bruce [McLean] was, I guess, advising or helping me with [the claims process] to make sure that I wasn't

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