Wiley v. State Farm Fire & Casualty Co
MEMORANDUM OPINION. Signed by Judge Corey L. Maze on 11/21/2022. (SRD)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
Case No. 4:20-cv-1533-CLM
STATE FARM FIRE AND
Brenda Wiley argued with Valisha Dabbs at a party. Wiley left the
party, then returned in her daughter’s car and ran over Dabbs. Wiley later
pleaded guilty to first-degree assault, and Dabbs sued Wiley in state court
for negligence and wantonness. After Wiley failed to appear at trial, the
state court entered a judgment against Wiley for $2.5 million.
Wiley was covered by her daughter’s State Farm Insurance policy
as a resident relative. That policy requires the insured to give State Farm
notice of an accident, and if a claim is made or lawsuit filed against the
insured, the policy requires the insured to immediately send State Farm
the documents from the claim or lawsuit. Wiley’s daughter notified State
Farm of the damage to her car, and Dabbs sent State Farm pre-suit and
post-suit notice, including a copy of the complaint she filed against Wiley.
But Wiley never contacted State Farm. That is, until she filed this lawsuit.
Wiley sues State Farm for breach of policy and bad faith. State
Farm has moved for summary judgment on both counts. (Doc. 60). For the
reasons stated below, the court will GRANT State Farm’s motion for
summary judgment on both counts.
The court will also DENY as MOOT all other pending motions.
1. The Incident: In June 2016, Brenda Wiley went to a house party
in Guntersville, Alabama where she argued with Valisha Dabbs. Wiley
left the party and went back to her daughter’s house where she was living
at the time. But her night was not over. Wiley drove her daughter’s car
back to the party, where she saw Dabbs—who Wiley thought was carrying
a wrench. So Wiley ran Dabbs over with the car and left the scene.
Wiley was indicted for first-degree assault. She pleaded guilty.
Dabbs sued Wiley in state court, alleging negligence and
wantonness. When Wiley failed to appear at trial, the Circuit Court of
Marshall County entered a judgment against Wiley for $2.5 million.
2. The Policy: Wiley’s daughter insured the car through State Farm,
and Wiley was covered under the policy as a resident relative. The policy
requires the insured to “give us or one of our agents notice of the accident
or the loss as soon as reasonably possible.” And under the policy, “[i]f a
claim is made against an insured, then that insured must immediately
send us every demand, notice, and claim received,” and “[i]f a lawsuit is
filed against an insured, then that insured must immediately send us
every summons and legal process received.” There is no right of action
against State Farm until all the terms of the policy are met.
After the incident, Wiley’s daughter contacted State Farm to notify
them of the property damage to her car. And Dabbs notified State farm
before and after suing Wiley, including forwarding State Farm the
complaint she filed against Wiley. Dabbs even requested State Farm cover
Wiley, which State Farm denied after it determined Wiley acted
intentionally in running over Dabbs.
But Wiley said nothing. According to her own testimony, Wiley
never tried to contact anyone at State Farm about the incident—not a
phone call, not an email. (Doc. 61-1, p. 58).
Instead, Wiley sued State Farm in this court for breach of contract
and bad faith. Wiley alleged State Farm breached its contract by refusing
to provide either a defense or indemnity under its policy. She also alleged
that State Farm lacked a debatable reason for denying coverage, and that
State Farm did not conduct an appropriate investigation into the incident
before denying coverage.
STANDARD OF REVIEW
In reviewing a motion for summary judgment, this court views the
facts and draws all reasonable inferences in the light most favorable to
the non-moving party. See Cuesta v. Sch. Bd. of Miami-Dade Cty., 285
F.3d 962, 966 (11th Cir. 2002). Summary judgment is appropriate when
there is no genuine dispute of material fact, and the moving party is
entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a). A genuine
dispute of material fact exists when “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.” Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
Count I: Breach of Contract
Wiley claims that because she was insured under her daughter’s
insurance policy and because all conditions precedent for State Farm’s
performance under the contract were met, that State Farm breached its
contract when it refused to defend or indemnify her in the Dabbs lawsuit.
Doc. 1, ¶¶ 19–21.
State Farm argues that summary judgment is due for two reasons:
(1) Wiley did not satisfy all conditions precedent under the contract
because she failed to notify State Farm of the incident and lawsuit, and
(2) Wiley acted intentionally in running over Dabbs, and thus the policy
does not require State farm to defend or indemnify Wiley. Because the
first argument (lack of notice) warrants summary judgment, the court
needn’t consider whether the evidence supports a finding that Wiley acted
A. Applicable Law
In Alabama, “the failure of an insured to comply within a reasonable
time with . . . conditions precedent in an insurance policy requiring the
insured to give notice of an accident or occurrence releases the insurer
from obligations imposed by the insurance contract.” Reeves v. State Farm
Fire and Cas. Co., 539 So. 2d 252, 254 (Ala. 1989); see also State Farm
Fire and Cas. Co. v. Bullin, 537 F. Supp. 3d 1295, 1300 (S.D. Ala. May 6,
2021) (“[c]ompliance with the notice requirements in an insurance policy
is a condition precedent to recovery.”). Indeed, “the obligation to pay or to
evaluate the validity of the claim does not arise until the insured has
complied with the terms of the contract with respect to submitting
claims.” United Ins. Co. of America v. Cope, 630 So. 2d 407, 411 (Ala.
Here are the relevant portions of the policy that covered Wiley:
1. Notice to Us of an Accident of Loss
The insured must give us or one of our agents notice of the
accident or loss as soon as reasonably possible. The notice must
a. your name;
b. the names and addresses of all persons involved in the
accident or loss;
c. the hour, date, place, and facts of the accident or loss; and
d. the names and addresses of witnesses to the accident or loss.
2. Notice to Us of a Claim or Lawsuit
a. If a claim is made against an insured, then that insured
must immediately send us every demand, notice, and claim
b. If a lawsuit is filed against an insured, then that insured
must immediately send us every summons and legal process
13. Legal Action Against Us
There is no right of action against us:
a. until all the terms of this policy have been met
(Doc. 61-8, pp. 23, 27).1
When the insured gives delayed notice, courts in Alabama consider
the length of the delay and the reason for the delay to determine whether
notice was given “as soon as reasonably possible.” See Bullin, 537 F. Supp.
3d at 1300. But there was no delay here; Wiley never gave notice. In
response to an interrogatory, Wiley admitted that “[b]efore this lawsuit, I
did not submit a claim to State Farm.” (Doc. 61-2, pp. 8–9). Wiley then
testified at her deposition that she never contacted State Farm about the
incident or Dabb’s lawsuit against her; she never presented a claim; she
never requested a defense; and, she never sought indemnification. (Doc.
61-1, p. 17).
Wiley makes much of her daughter and Dabbs notifying State Farm
in various ways about the incident and Dabb’s lawsuit. But that’s not what
the policy requires, and the court is unaware of any caselaw that supports
Wiley’s claim that third-party notice is sufficient for an insured to recover
under an insurance policy. See Alfa Ins. Co. v. Templeton, 919 So. 2d 300,
306 (Ala. Civ. App. 2005) (explaining in Alabama, there is “no case in
which an insured who has breached his contractual obligation to forward
suit papers to his insurer has been able to take advantage of notice
provided to the insurer by the injured party so as to enable the insured to
1 Wiley correctly points out that another provision of the insurance policy states that “[i]f the
insured is unable to give us notice, then any other person may give us the required notice.”
But that provision only applies to Medical Payments Coverage, Uninsured Motor Vehicle
Coverage, Death, Dismemberment and Loss of Sight Coverage, or Loss of Earnings Coverage.
So it cannot overcome the relevant notice requirement.
recover from the insurer.”).2 And Alabama law does not “place on an
insurance company an obligation to either investigate or pay a claim until
the insured has complied with all the terms of the contract with respect
to submitting claims for payment.” Cope, 630 So. 2d at 412. So even
though State Farm knew about the incident, and knew that Dabbs sued
Wiley, State Farm was under no duty to defend Wiley because Wiley failed
to satisfy necessary conditions precedent to enforcing the contract.3
Wiley also claims that State Farm waived its lack of notice defense
when it denied Dabbs’ request for coverage based on Wiley acting
intentionally in running over Dabbs. Wiley points out that “[u]nder
Alabama law, when an insurer specifically denies liability on one ground,
it waives other grounds or defenses it might later seek to assert.” First
Alabama Bank of Montgomery v. First State Ins. Co., Inc., 899 F.2d 1045,
1063 (11th Cir. 1990). That may be the case when the insurer denies
liability to the insured, but not when the insurer denies liability to a third
party, as is the case here. So this argument fails, too.
Because Wiley failed to satisfy a condition precedent to invoke
coverage from State Farm, State Farm had no duty to defend Wiley. And
because State Farm had no duty to defend Wiley, it also had no duty to
indemnify her. See USF Ins. Co. v. Metcalf Realty Co., Inc., 2013 WL
4679833, at *4 (N.D. Ala. Aug. 30, 2013) (“no duty to indemnify exists
where there is no duty to defend.”). So the court will grant State Farm’s
motion on Count I, breach of contract.
In Alfa Ins. Co. v. Templeton, the Alabama Court of Civil Appeals held that an insurance
company can be held liable to a victim when the victim provides the insurance company with
timely notice of filing a complaint against the insured, even when the insured does not provide
notice to the insurer. 919 So. 2d 300. Here, it is the insured—not the victim—who is seeking to
hold the insurer liable. Thus, Templeton is distinguishable.
3 The same is true for Wiley’s argument that the Dabbs complaint triggered a duty for State
farm to defend Wiley under Tanner v. State Farm, 874 So. 2d 1058 (Ala. 2003) (“If the allegedly
injured person's complaint against the insured alleges a covered accident or occurrence, then
the insurer owes the duty to defend even though the evidence may eventually prove that the
gravamen of the complaint was not a covered accident or occurrence.”). While the complaint may
have alleged a covered accident or occurrence, Wiley failed to forward the complaint to State
Farm. So State Farm did not owe Wiley a duty to defend based on the complaint because Wiley
did not forward it to State Farm.
Count II: Bad Faith
In her second count, Wiley alleges that State Farm acted in bad
faith by intentionally refusing to provide her with a defense or
indemnification without having a debatable reason for doing so, and
without conducting a proper investigation into the incident. Doc. 1 ¶¶ 23–
27. State Farm argues that summary judgment is proper on this count
because Wiley cannot prove State Farm breached its insurance contract,
and even if it did, State Farm had at least a debatable reason for denying
the claim. State Farm is right on both points.
1. No breach of contract: To succeed on a bad faith claim, Wiley must
prove “(a) an insurance contract between the parties and a breach thereof
by the defendant; (b) an intentional refusal to pay the insured’s claim; (c)
the absence of any reasonably legitimate or arguable reason for that
refusal (the absence of a debatable reason); (d) the insurer’s actual
knowledge of the absence of any legitimate or arguable reason; (e) if the
intentional failure to determine the existence of a lawful basis is relied
upon, the plaintiff must prove the insurer’s intentional failure to
determine whether there is a legitimate or arguable reason to refuse to
pay the claim.” National Sec. Fire & Cas. Co. v. Bowen, 417 So. 2d 179,
183 (Ala. 1982). But the court found in its analysis of Count I that State
Farm did not breach its contract with Wiley because Wiley failed to satisfy
a condition precedent to invoking the contract. So Wiley’s bad faith claim
2. Debatable reason: Even if Wiley could prove that State Farm
breached its contract, she has not carried her burden of proving that State
Farm lacked a debatable reason for not defending or indemnifying her. An
insured has a high bar to overcome to prove an insurer’s bad faith. Indeed,
“a finding of bad faith based upon rejection of an insurer’s legal argument
should be reserved for extreme cases.” Shelter Mut. Ins. Co. v. Barton, 822
So. 2d 1149, 1154 (Ala. 2001) (citing Safeco Ins. Co. of America v. Sims,
435 So. 2d 1219, 1226 (Ala. 1983)). And “[t]o defeat a bad faith claim, the
defendant does not have to show that its reason for denial was correct,
only that it was arguable.” Liberty Nat. Life Ins. Co. v. Allen, 699 So. 2d
138, 143 (Ala. 1997); see also Voss v. State Farm, 2022 WL 3449598, at *3
(11th Cir. Aug. 17, 2022) (“even if a jury could find that State Farm’s
investigation was sloppy, it couldn’t find that State Farm had no
‘legitimate reason’ for its decision requiring Voss to litigate. The accident
report, State Farm’s photographs of the scene, and State Farm’s
investigator’s conclusions all reasonably led it to believe that Voss might
have been contributorily negligent—and therefore not ‘entitled to
State Farms says that it had no duty to defend Wiley because she
intentionally ran Dabbs over with a car. To support its position, State
Farm considered (a) Wiley’s assault conviction for running over Dabbs, (b)
the advice of outside coverage counsel who recommended State Farm had
no duty to defend Wiley,4 and (c) State Farm’s own investigation of the
incident. Taken together, State Farm has established that it had at least
a debatable reason to deny coverage, and no reasonable juror could find
Wiley’s bad faith claim fails as a matter of law for either of these
reasons. So the court will grant State Farm’s motion for summary
judgment on count II.
4 Wiley, in her motion to unredact documents produced by State Farm, has moved for the court
to prohibit State Farm from relying on the advice of counsel defense (doc. 83). The court has
denied that motion as moot because the court does not rely on the advice of counsel defense in
deciding the bad faith claim. Instead, the court considers State Farm’s decision to retain outside
counsel, who agreed with State Farm’s decision to deny coverage, as a factor in determining
State Farm had at least a debatable reason for denying coverage.
For these reasons, the court GRANTS State Farm’s motion for
summary judgment (doc. 60).
The court DENIES AS MOOT Wiley’s motion to strike (doc. 69)
and motion to unredact documents produced by State Farm (doc. 83). The
court also DENIES AS MOOT State Farm’s motion to strike (doc. 75) and
motion to exclude (doc. 76).
The court will enter a separate order consistent with this
DONE and ORDERED on November 21, 2022.
COREY L. MAZE
UNITED STATES DISTRICT JUDGE
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