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State Farm Fire and Casualty Co. v. Owen3/12/1999
REL:08/21/98State Farmv.Owen
Released/03/12/1999 as modified on denial of rehearing
The defendant State Farm Fire and Casualty Company appeals from the judgment entered on a jury verdict awarding the plaintiff Katherine Owen $1,339 in compensatory damages and $130,000 in punitive damages for fraudulent suppression. Owen's claim arose from the sale of a State Farm personal articles insurance policy by State Farm's agent George Jones. State Farm argues that the trial court erred in denying its renewal of the motion for a judgment as a matter of law, or in the alternative, for a new trial.
In determining whether State Farm was entitled to a judgment as a matter of law, we apply the same standard the trial court applied in addressing the motion initially. Thus, we must determine whether Owen produced sufficient evidence in support of each element of her fraudulent-suppression claim to produce a conflict warranting a jury's consideration. Ogle v. Long, 551 So.2d 914, 915 (Ala. 1989). The standard for testing the sufficiency of the evidence is the "substantial evidence rule." Substantial evidence is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala. 1989). In considering the sufficiency of the evidence, we must view the evidence in the light most favorable to the non-movant, Owen. Bussey v. John Deere Co., 531 So.2d 860, 863 (Ala. 1988).
The evidence presented at trial, either undisputed or viewed in the light most favorable to Katherine Owen, was substantially as follows. Owen is a schoolteacher who holds a master's degree. In 1985, her mother gave her a .42 carat diamond as a gift. Intending to use it as an engagement ring, Owen had a Mobile jeweler mount the diamond in a gold band. In 1987, when she filed insurance claims on two bicycles that had been stolen from her home, Owen became concerned about insuring the ring. On April 9, 1987, Owen went to the office of George Jones to inquire about insuring the engagement ring and another ring. Jones, a State Farm agent who lived in Owen's neighborhood, had previously sold Owen a renter's policy and a homeowner's policy. Owen executed an application for a personal-articles policy. Jones told Owen that, to purchase the policy, she needed to have the jewelry appraised "to see how much insurance needed." Owen took both pieces of jewelry to a jeweler, who appraised the engagement ring for $1,000. She returned the appraisal form to Jones's office the next day, but did not speak to Jones because he was out of the office.
The application Owen signed contained the following language immediately above the signature line:
"I understand that State Farm has the option of repairing or replacing the lost or damaged property and, that in the event of a cash settlement, I will be paid no more than the Company's cost to replace the item." (Emphasis added.)
Owen did not recall reading the application before signing it. State Farm subsequently issued Owen what is commonly known as a "replacement cost" policy. This type of policy provides that, in the event of a loss, either the insured item will be replaced or the policyholder will be paid the lower of the policy limits or the amount it would cost the insurer to replace the item. Owen believed that State Farm's cost to replace the jewelry would be the same as the appraisal price of the jewelry. Owen's policy included a liability limit of $3,700 and an "inflation guard," which increased the policy limits each year according to the rise in jewelry prices. Owen ask
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