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Shelter Mutual Insurance Company v. Barton9/7/2001
court submitted the foregoing claims to the jury; the jury awarded Barton $250,000 on her breach-of-contract claims, $250,000 in compensatory damages on her bad- faith claims, and $200,000 in punitive damages on her bad-faith claims.
II.
Turning first to Barton's claims against Shelter Mutual related to Vaden's alleged negligence, Barton has stated claims for rights as a first party to insurance benefits because, she says, she qualifies as an insured under Walters's UM policy with Shelter Mutual. Notwithstanding that Missouri law governs the contract, no one contends that Missouri law should be applied to Barton's bad-faith claim.
This Court recently summarized the standards applicable to bad-faith claims arising from first-party insurance benefits in Acceptance Insurance Co. v. Brown, [Ms. 1991938, June 29, 2001] ___ So. 2d ___ (Ala. 2001). In that case, we stated:
"A plaintiff has two methods by which to establish a bad-faith refusal to pay an insurance claim: he or she can prove the requirements necessary to establish either an 'ordinary' case or an 'extraordinary' case. State Farm Fire & Cas. Co. v. Slade, 747 So. 2d 293, 306 (Ala. 1999); Employees' Benefit Ass'n v. Grissett, 732 So. 2d 968, 976 (Ala. 1998).
"In an 'ordinary' bad-faith claim, the plaintiff bears a heavy burden. LeFevre v. Westberry, 590 So. 2d 154, 159 (Ala. 1991) (citing National Sav. Life Ins. Co. v. Dutton, 419 So. 2d 1357, 1362 (Ala. 1982)). To recover on such a claim, the plaintiff must prove: (1) the existence of an insurance contract; (2) an intentional refusal to pay the claim; and (3) the absence of any lawful basis for the refusal and the insurer's knowledge of that fact or the insurer's intentional failure to determine whether there is any lawful basis for its refusal. National Sec. Fire & Cas. Co. v. Bowen, 417 So. 2d 179, 183 (Ala. 1982); see Slade, 747 So. 2d at 304 (reviewing the law of bad faith). 'In short, plaintiff must go beyond a mere showing of nonpayment and prove a bad faith nonpayment, a nonpayment without any reasonable ground for dispute.' Bowen, 417 So. 2d at 183. In such a case, the plaintiff's contract claim must be so strong that the plaintiff is entitled to a preverdict JML [judgment as a matter of law]; if a fact issue makes a JML inappropriate, then the defendant is entitled to a JML on the plaintiff's bad-faith claim. National Sav. Life Ins. Co. v. Dutton, 419 So. 2d 1357, 1362 (Ala. 1982).
"However, 'keenly aware of the fact that there were countervailing policy considerations that weighed in favor of an insured's right to have his claim properly evaluated and promptly paid by the insurer,' this Court recognized 'a different standard to be applied in certain unusual or extraordinary cases.' Thomas v. Principal Fin. Group, 566 So. 2d 735, 742-43 (Ala. 1990). 'The rule in [extraordinary] cases [of bad faith] dispensed with the predicate of a preverdict JML for the plaintiff on the contract claim if the insurer had recklessly or intentionally failed to properly investigate a claim or to subject the results of its investigation to a cognitive evaluation.' Employees' Benefit Ass'n v. Grissett, 732 So. 2d 968, 976 (Ala. 1998) (citing Blackburn v. Fidelity & Deposit Co. of Maryland, [667 So. 2d 661 (Ala. 1995)]; and Thomas v. Principal Fin. Group, supra). In State Farm Fire & Casualty Co. v. Slade, 747 So. 2d at 318, this Court held that, in order to recover under a theory of an 'extraordinary' case of bad-faith failure to investigate an insurance claim, an insured must show (1) that the insurer failed to properly investigate the claim or to subject the results of the investigation to a cognitive evaluation and review and (2
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