Owens et al v. Nationwide Property and Casualty Insurance Company
MEMORANDUM OPINION. Signed by Judge L Scott Coogler on 8/26/2014. (KAM, )
2014 Aug-26 PM 04:21
U.S. DISTRICT COURT
N.D. OF ALABAMA
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
GEORGE OWENS, et al.,
NATIONWIDE PROP. & CAS.
MEMORANDUM OF OPINION
Before the Court is Defendant Nationwide Property and Casualty Insurance
Company’s (“Nationwide”) motion for summary judgment. (Doc. 90.) Also pending
is a motion to strike evidence submitted in support of the Plaintiffs’ reply to
Nationwide’s motion for summary judgment. (Doc. 95). For the reasons stated below,
the motion for summary judgment is due to be granted in part and denied in part, and
the motion to strike is due to be denied as moot.
The facts set out in this opinion are gleaned from the parties’ submissions of facts claimed
to be undisputed, their respective responses to those submissions, and the Court’s own examination
of the evidentiary record. All reasonable doubts about the facts have been resolved in favor of the
nonmoving party. See Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir.
2002). These are the “facts” for summary judgment purposes only. They may not be the actual
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On April 27, 2011, a tornado struck Tuscaloosa, Alabama, damaging the home
of Plaintiffs George and Laura Owens (“the Plaintiffs”). At that time, the Plaintiffs
insured their home with Nationwide. After the storm, they filed a claim with
Nationwide, and Nationwide assigned J. Drew Mayfield (“Mayfield”) to adjust the
Mayfield first went to evaluate the damage to the Plaintiffs’ home on May 3,
2011. At some point, Mayfield asked the Plaintiffs whether they had hired a contractor,
and they informed him that they were unable to get one. According to the Plaintiffs,
Mayfield specifically recommended GBS Roofing & Restoration (“GBS”) to them.
Mayfield worked with GBS before on a prior trip in April 2011, adjusting
tornado damage claims in Sanford, North Carolina. In addition, Mayfield had worked
with Brian Smith, the son of the owner of GBS, George Smith (“Smith”). Mayfield
recommended GBS for several packouts in North Carolina, but had no experience with
GBS’s work on anything beyond packouts. “Packouts” are a type of job where
contents of a damaged home are removed to prevent further damage to those contents.
Brian Smith was not with GBS in Alabama.
During Mayfield’s first meeting with the Plaintiffs it began to rain on their
facts. See Cox v. Adm’r U.S. Steel & Carnegie Pension Fund, 17 F.3d 1386, 1400 (11th Cir. 1994).
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home’s exposed roof. Mayfield called GBS to come immediately and help tarp the
roof. Smith, along with a GBS employee came to the residence to assist in placing a
tarp over the roof. At this first meeting, Smith offered the Plaintiffs GBS’s services
to repair their home and gave them a contract to look over. Smith told the Plaintiffs
that GBS was a “Nationwide Blue Ribbon Preferred Contractor.” Mayfield did not
directly affirm this statement, but according to the Plaintiffs, Mayfield was present
when the statement was made and did not deny it. GBS was not, in reality, a
Nationwide Blue Ribbon Preferred Contractor.
At some point during this meeting, Mayfield left the Plaintiffs’ home and
returned with Bridget Chiaramonte (“Chiaramonte”). Chiaramonte was a GBS
employee, but the Owens believed that she was a Nationwide employee because she
arrived with Mayfield and was dressed similarly to him in a blue shirt and khakis.
Chiaramonte comforted the Plaintiffs, directed Mayfield’s attention to various parts
of the house that needed fixing, and wrote her number on the back of one of Smith’s
GBS business cards, directing the Plaintiffs to call her if they needed anything. The
Plaintiffs did later call her number, under the belief that she was a Nationwide
employee, but did not speak to Chiaramonte again.2
Plaintiffs assert that Mayfield and Chiaramonte were involved in a romantic relationship
during this time, and that Mayfield used his position as a Nationwide adjuster to steer business
towards Chiaramonte and GBS. This romantic relationship is denied by Mayfield but supported by
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After this meeting, Smith returned almost daily to the Plaintiffs’ home in an
effort to convince them to hire GBS to perform the repair work on their home. The
Plaintiffs had the GBS contract in their possession for two weeks before they decided
to hire GBS. The Plaintiffs also performed limited research on GBS over the internet
and made further attempts to hire a local contractor. At some point before signing the
contract, they met with Mayfield a second time, and he again recommended GBS’s
services and informed the Plaintiffs that he was friends with someone at GBS. On May
16, the Owens signed the contract with GBS. On June 16, 2011, the Plaintiffs wrote
GBS a check for $30,000, a 50 percent deposit for the planned work. Prior to GBS
beginning the repair work, GBS was hired to perform packout and tree removal work
on the Plaintiffs’ home, and Nationwide prepared a check jointly made out to GBS and
the Plaintiffs to pay for this service. GBS began performing repair work on the
Plaintiffs’ home around July 4, 2011. Plaintiffs subsequently began to have serious
doubts about GBS’s performance and met with Mayfield who, once again, urged the
Plaintiffs to give GBS more time to perform the work. On July 20, 2011, the Plaintiffs
his admission that Chiaramonte stayed in his hotel room in Tuscaloosa and the fact that they later
married. Mayfield stated that he was aware that Chiaramonte was working in sales for GBS, that she
would be paid commissions for sales, and that she went with him to meet some Nationwide insureds,
but he believed that she did not do so “as an employee of GBS.” (Doc. 93-1, p. 25).
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The Plaintiffs demanded the return of the money they had paid Smith. While
GBS made multiple offers to return part of the funds, no refund was ever made.
The Plaintiffs then hired Ray Blackwood (“Blackwood”), another contractor,
to repair their home. It is disputed as to whether Blackwood completely repaired the
Plaintiffs’ home. The Plaintiffs contend that they did not have the money to pay
Blackwood to return the home to its pre-tornado condition. The Plaintiffs paid
Blackwood $60,000 to perform his work and also paid additional money out of pocket
for other repairs to their home. The Plaintiffs have no complaints concerning
Blackwood’s work, but say they simply did not have the money to pay him to fully
repair their home, but only to have him return it to a livable condition.
Under the insurance contract, Nationwide paid Plaintiffs a total of $167,665.50;
specifically paying $123,481.23 under Plaintiffs dwelling coverage, $4,018.32 under
coverage for other structures, and $26,900.13 for Additional Living Expenses.
Nationwide’s liability under Plaintiffs dwelling coverage was limited to $138,400.
Under the insurance contract, Nationwide was obligated to pay the cost to repair or
replace Plaintiffs’ home without deduction for depreciation, up to the applicable limit
The Plaintiffs ultimately filed this action against Nationwide, seeking
compensatory damages for their economic loss, emotional distress, mental anguish,
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and punitive damages.
Standard of Review
Summary judgment is appropriate “if the movant shows that there is no genuine
dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). A fact is “material” if it “might affect the outcome of the
suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
(1986). There is a “genuine dispute” as to a material fact
“if the evidence is such that
a reasonable jury could return a verdict for the nonmoving party.” Anderson, 477 U.S.
at 248. The trial judge should not weigh the evidence but must simply determine
where there are any genuine issues that should be resolved at trial. Id. at 249.
In considering a motion for summary judgment, trial courts must give deference
to the non-moving party by “considering all of the evidence and the inferences it may
yield in the light most favorable to the nonmoving party.” McGee v. Sentinel Offender
Services, LLC, 719 F.3d 1236, 1242 (11th Cir. 2013) (citing Ellis v. England, 432 F.3d
1321, 1325 (11th Cir. 2005)). In making a motion for summary judgment, “the moving
party has the burden of either negating an essential element of the nonmoving party’s
case or showing that there is no evidence to prove a fact necessary to the nonmoving
party’s case.” Id. Although the trial courts must use caution when granting motions
for summary judgment, “[s]ummary judgment procedure is properly regarded not as
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a disfavored procedural shortcut, but rather as an integral part of the Federal Rules as
a whole.” Celotex Corp. v. Catrett, 477 U.S. 317, 327, 106 S. Ct. 2548, 2555 (1986).
The Plaintiffs’ amended complaint is organized into eleven counts. Counts I-III
assert claims for breach of contract of repair, negligent and wanton performance of
contract of repair, and fraud against GBS, and assert that Nationwide is liable to
Plaintiffs under these counts because GBS acted as its agent. Counts IV and V assert
claims against Nationwide for breach of the insurance contract and negligent and
wanton performance of that contract. Counts VI and VII allege that Nationwide
breached a contract of repair and negligently and wantonly performed that contract.
Counts VIII and IX assert fraud claims against Nationwide. Count X makes a claim for
negligent and wanton supervision against Nationwide, while Count XI alleges that
Nationwide should be held vicariously liable for the acts of Mayfield. Nationwide seeks
summary judgment on all claims against it.
Nationwide’s Liability for the Actions of GBS - Counts I, II, III, VI,
The first three counts of Plaintiffs’ complaint rely on the premise that
Nationwide is vicariously liable for the actions of GBS because GBS acted as its agent.
Counts VI and VII, alleging that Nationwide breached a contract of repair or
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performed such a contract negligently or wantonly, also depend upon there being an
agency relationship between Nationwide and GBS such that Nationwide elected to
repair the Plaintiffs’ home.
Nationwide’s argument for summary judgment on these claims is solely that
Nationwide is not liable for GBS’s actions, not that GBS did not commit the
underlying acts necessary to sustain these claims. Therefore, to survive summary
judgment, Plaintiffs must present substantial evidence indicating the existence of an
agency relationship. Dickinson v. City of Huntsville, 822 So. 2d 411, 416 (Ala. 2001). An
agency relationship may be demonstrated by actual authority or by apparent authority.
John Deere Const. Equip. Co. v. England, 883 So. 2d 173, 178-79 (Ala. 2003).
To determine the existence of an actual agency relationship, the Court looks at
whether the principal has a “right of control” over the actions of the alleged agent.
Sawyer v. Chevron U.S.A., Inc., 421 So. 2d 1263, 1264-65 (Ala. 1982). The right of
control test considers four factors: “(1) direct evidence of the right or exercise of
control; (2) the method of payment used; (3) whether the alleged principal has the
right to terminate employment; and (4) the right to control another’s time.”
Dickinson, 822 So. 2d at 416.
The only evidence of Nationwide’s right to control GBS’s work that has been
presented by Plaintiffs is a check for tree removal from Nationwide made out to both
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GBS and the Plaintiffs and that Nationwide initially brought GBS to the Plaintiffs’
home. Therefore, there is not substantial evidence that Nationwide and GBS were in
an actual agency relationship.
A principal can also be held liable for the actions of a purported agent if there
is apparent agency. Goodyear Tire & Rubber Co. v. Washington, 719 So. 2d 774, 777-78
(Ala. 1998); Malmberg v. Am. Honda Motor Co., 644 So. 2d 888, 891 (Ala. 1994). “The
doctrine of apparent authority is based upon the actions of the principal, not those of
the agent; it is based upon the principal’s holding the agent out to a third party as
having the authority upon which he acts, not upon what one thinks an agent’s
authority might be or what the agent holds out his authority to be.” Malmberg, 644 So.
2d at 891.
In Malmberg, the Court determined that evidence that Honda logos were
displayed upon signs, literature, products, plaques and brochures at a dealership was
not in itself sufficient to create an inference of agency. Id. (citing Wood v. Shell Oil Co.,
495 So. 2d 1034, 1039 (Ala. 1986)). However, the Court found that there was a genuine
issue of material fact as to whether the dealership was Honda’s agent with respect to
warranties because, combined with the display of the Honda logo, Honda only
provided the warranty through Honda dealerships and instructed and trained the
dealerships concerning the warranty. Id. at 891.
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Nationwide argues that there is no apparent agency in this case because
Nationwide never held GBS out as their agent. Taking the evidence in the light most
favorable to Plaintiffs, Nationwide, through Mayfield, called GBS to the Plaintiffs’
home, made repeated assurances as to the quality of GBS work, and allowed Smith to
present GBS as a “Nationwide Blue Ribbon Preferred Contractor.” After the Plaintiffs
began to experience problems dealing with GBS, Nationwide “stood up for” GBS and
counseled the Plaintiffs to give them more time. (Doc. 87-3, p. 56-57). Taking the facts
in the light most favorable to the Plaintiffs, these actions provide substantial evidence
that would allow a reasonable jury to conclude that, through Mayfield, Nationwide
held out GBS as its agent. Therefore, summary judgment is due to be denied on
Counts I, II, III, VI, and VII of the Complaint.
Breach of the Insurance Contract - Count IV
In order to survive summary judgment on a breach of contract claim, the
Plaintiffs “must show (1) the existence of a valid contract binding the parties in the
action, (2) his own performance under the contract, (3) the defendant’s
nonperformance, and (4) damages.” Ex parte Alfa Mut. Ins. Co., 799 So. 2d 957, 962
(Ala. 2001) (quoting Southern Med. Health Sys., Inc. v. Vaughn, 669 So. 2d 98, 99 (Ala.
1995)) (internal quotation marks omitted). The first two elements are not disputed in
this case. Nationwide argues that summary judgment is proper on the Plaintiffs’
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breach of contract claim because the Plaintiffs’ are unable to show either
nonperformance by Nationwide or any damages. Nationwide argues that it has fully
performed because it paid the Plaintiffs the cost to repair their home in accordance
with the terms of the insurance policy, and in fact argues that the Plaintiffs fully
repaired their home for $90,000 and that therefore the Plaintiffs were
overcompensated. Similarly, Nationwide argues that the Plaintiffs have no damages
because they were able to fully repair their home for less than the amount paid to them
As a general matter, Alabama law does not permit recovery for “personal injury,
inconvenience, annoyance and suffering” in actions for breach of insurance contracts.
Vincent v. Blue Cross-Blue Shield of Ala., Inc., 373 So. 2d 1054, 1056 (Ala. 1979).
However, damages for mental anguish may be recovered in cases “where the
contractual duty or obligation is so coupled with matters of mental concern or
solicitude, or with feelings of the party to whom the duty is owed, that a breach of that
duty will necessarily or reasonably result in mental anguish or suffering.” Liberty
Homes, Inc. v. Epperson, 581 So. 2d 449, 454 (Ala. 1991) (quoting B & M Homes, Inc. v.
Hogan, 376 So. 2d 667, 671 (Ala. 1979)). Contracts that fall within this exception and
allow for mental anguish damages are typically contracts relating to the home. See B
& M Homes, 376 So. 2d at 672 (“contracts dealing with residences are in a special
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category and are exceptions to the general damages rule applied in contract cases
which prohibits recovery for mental anguish.”); Liberty Homes, 581 So. 2d at 454.
The Plaintiffs have testified that their home has still not been returned to its pretornado condition. (Doc. 87-2, p. 271-72). Specifically, they have testified that their
garage needs repairing, (Doc. 87-3, p. 63-64), that there are cracks in the plaster in the
living room and bedroom, (Doc. 87-2, p. 276), and that the value of the bathroom has
been reduced significantly. (Doc. 87-2, p. 278-288). The Plaintiffs have also testified
that they had to spend additional money out of their savings account in order to return
the home to its current diminished state. (Doc. 87-2, p. 174). Taken in the light most
favorable to the Plaintiffs, this evidence creates a genuine dispute as to whether the
Plaintiffs’ home has been fully repaired, and whether the amount paid by Nationwide
was sufficient to fully repair the Plaintiffs’ home. As Nationwide was obligated under
the contract to pay the cost to repair or replace the Plaintiffs’ home up to the
applicable liability limit, this creates a genuine dispute as to whether Nationwide fully
performed under the contract.
As to the element of damages, when taken in the light most favorable to the
Plaintiffs this same evidence also establishes that they may have suffered economic
damage as a result of a breach of contract by Nationwide. In addition, because the
contract at issue relates to the home and is the type of contract where mental anguish
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damages can be obtained for breach, and the Plaintiffs have put forth evidence
concerning mental anguish suffered as a result of the breach of contract, a reasonable
jury could also return a verdict giving the Plaintiffs mental anguish damages. For these
reasons, Nationwide’s motion for summary judgment on the breach of insurance
contract claim is due to be denied.
Negligent or Wanton Performance of the Insurance Contract - Count
As Nationwide correctly points out, Alabama law does not recognize a claim for
negligence or wantonness in the handling of an insurance claim. See Chavers v. Nat’l
Sec. Fire & Cas. Co., 405 So. 2d 1, 5 (Ala. 1981); Kervin v. Southern Guar. Ins. Co., 667
So. 2d 704, 706 (Ala. 1995). Any first party tort claim for the mishandling of an
insurance claim can only arise under the tort of bad faith. Chavers, 405 So. 2d at 6.
Since Plaintiffs allege only negligent and wanton performance of the insurance
contract, summary judgment is due to be granted to Nationwide on Count V of the
Fraud - Counts VIII and IX
Plaintiffs allege that Nationwide, through Mayfield, engaged in fraudulent
misrepresentations and deceit which induced them to hire GBS and suffer damages,
and also allege that Nationwide has engaged in a pattern and practice of such fraud.
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The Plaintiffs advance two alternative fraud arguments: first, that Mayfield
fraudulently concealed his relationship with Chiaramonte, and second that Mayfield
made fraudulent misrepresentations.
Nationwide argues that no fraudulent concealment has occurred because
Mayfield owed the Plaintiffs no duty to disclose, his relationship with Chiaramonte
was not a material fact that required disclosure, and because the Plaintiffs have
suffered no damages. To make out a claim of fraudulent suppression, the Plaintiffs
must show “(1) a duty on the part of the defendant to disclose facts; (2) concealment
or nondisclosure of material facts by the defendant; (3) inducement of the plaintiff to
act; (4) action by the plaintiff to his or her injury.” Freightliner, L.L.C. v. Whatley
Contract Carriers, L.L.C., 932 So. 2d 883, 891 (Ala. 2005) (quoting Lambert v. Mail
Handlers Benefit Plan, 682 So. 2d 61, 63 (Ala. 1996)). Whether a party has a duty to
disclose is a question of law to be determined by the trial court. Id. A duty to disclose
can arise from either a confidential relationship between the parties or the special
circumstances of the case. State Farm Fire and Cas. Co. v. Owen, 729 So. 2d 834, 839
(Ala. 1998). “Where the accused has superior knowledge of the suppressed fact and
the defrauded party has been induced to take action which he might not otherwise
have taken, the obligation to disclose is particularly compelling.” Dominick v. Dixie
Nat. Life Ins. Co., 809 F.2d 1559, 1570 (11th Cir. 1987) (quoting Mann v. Adams Realty
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Co., 556 F.2d 288, 297 (5th Cir. 1977)). The materiality of a fact is a question for the
jury. Courtesy Ford Sales, Inc. v. Clark, 425 So. 2d 1075, 1078 (Ala. 1983).
In State Farm Mut. Auto. Ins. Co. v. Ling, 348 So. 2d 472, 474 (Ala. 1977), the
Alabama Supreme Court addressed a case where an insurance company insured both
the claimant and tortfeasor in a particular case. The court determined that the
insurance company’s repeated assurances to the claimant that they would take care of
his claim “lulled” the claimant into a false sense of security. Id. This “lulling” created
a duty on the part of the insurance company to disclose to the claimant the fact that
the statute of limitations on his claim was about to expire. Id. at 475. See also Dominick,
809 F.2d at 1571 (attempts by insurance company to win insured’s confidence, even
thought not rising to the level of lulling in Ling, still imposed a duty of fair dealing that
required disclosure; even if no duty to disclose initially, “once it undertook to speak,
it was required to make a full and fair disclosure”).
Taking the facts in the light most favorable to the Plaintiff, the special
circumstances of this case justify, as a matter of law, an obligation on Mayfield’s part
to disclose his conflict of interest. Mayfield called GBS to the Plaintiffs home, and
then made repeated attempts to sell the Plaintiffs on GBS services, all while carrying
on a romantic relationship with a GBS salesman who Mayfield admitted would receive
commission’s for sales. The existence of this relationship was known to Mayfield and
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the Plaintiffs had no reasonable opportunity to learn of it, and the Plaintiffs might have
chosen not to hire GBS had they known that their adjuster’s recommendations were
compromised by his romantic relationship with a GBS employee. Therefore, this
situation seems consistent with the situation described in Dominick where disclosure
was “particularly compelling.” Dominick, 809 F.2d at 1570. Once Mayfield undertook
to involve Plaintiffs with GBS and use his prior relationship with GBS to sell the
Plaintiffs on their repair services, he took on an obligation to make a full and fair
disclosure of his exact relationship with GBS.
Whether Mayfield’s relationship with Chiaramonte was material is a question
of fact for the jury, and it is clear that a reasonable jury could find that the fact that
Mayfield’s romantic partner would make money off of sales by GBS was an important
fact that would have influenced the Plaintiffs decision. And finally, a reasonable jury
could also find that the Plaintiffs suffered damages, because if Plaintiffs had not been
induced to hire GBS, they would not have given GBS $30,000 for shoddy work and
had to spend money to fix the work performed by GBS.
The Plaintiffs argue in the alternative that Nationwide committed fraud by
making affirmative fraudulent representations. Nationwide argues that no fraudulent
misrepresentation occurred because there is no proof that Mayfield made any false
statement, the Plaintiffs did not reasonably rely on any representations Mayfield did
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make, and the Plaintiffs have not suffered damages. The elements of fraudulent
misrepresentation (whether the representation is made willfully, recklessly, or
mistakenly) are as follows: “(1) there must be a false representation; (2) the false
representation must concern a material existing fact; (3) the plaintiff must rely upon
the false representation; and (4) the plaintiff must be damaged as a proximate result.”
Jarrard v. Nationwide Mut. Ins. Co., 495 So. 2d 584, 586 (Ala. 1986). Whether a
particular representation is an expression of opinion or a statement of fact depends
upon the circumstances of the particular case, and in cases of doubt the question
should be left to the jury. Harrell v. Dodson, 398 So. 2d 272, 274 (Ala. 1981) (quoting
Fid. & Cas. Co. of N.Y. v. J.D. Pittman Tractor Co., 13 So. 2d 669. 672 (Ala. 1943)).
“Reliance requires that the misrepresentation actually induced the injured party to
change its course of action.” Hunt Petroleum Corp. v. State, 901 So. 2d 1, 4 (Ala. 2004).
Plaintiffs have provided evidence that Mayfield told them that GBS performed
well for him both in the Carolinas and Florida, (Doc. 87-2, p. 68-69), that he assured
them that GBS was a good contractor, (Doc. 87-2, p. 84), that GBS had done a lot of
work for him in the past, (Doc. 87-2, p. 104), and that the Plaintiffs would have their
home repaired faster if they went with GBS over other contractors. (Doc. 87-2, p. 271).
Mayfield has also testified that he did not do any work with GBS in Florida, but only
Brian Smith’s previous unrelated company Skyhigh, (Doc. 93-1, p. 29-30), that
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Mayfield only had experience with GBS performing pack-out work in North Carolina,
(Doc. 93-1, p. 89), and that GBS had only participated in two to three jobs for
Nationwide during Mayfield’s time in North Carolina. (Doc. 93-1, p. 20). Taking all
evidence in the light most favorable to Plaintiffs, a reasonable jury could conclude that
Mayfield’s statements concerning the quality of GBS’s previous work and the length
and location of his history with GBS were false statements of material fact.
Nationwide has argued that Plaintiffs did not rely on Mayfield’s statements
because they performed limited independent research and made further attempts to
hire other contractors, that any reliance was not reasonable because Plaintiffs had a
duty to make reasonable efforts to protect themselves and not rely blindly on
representations made concerning GBS, and that the Plaintiffs did not actually rely on
the statements. The Plaintiffs have also put forward evidence that they heavily relied
on Mayfield’s repeated assurances concerning GBS in making their decision to hire
GBS, and a reasonable jury could determine that they would not have hired GBS
without Mayfield’s statements. It is unclear whether the Plaintiffs would have been
able to discover the truth regarding Mayfield’s statements and thus protect themselves
from his misrepresentations. Taking the facts in the light most favorable to the
Plaintiffs, a reasonable jury could determine that the Plaintiffs had no opportunity to
discover the truth regarding Mayfield’s statements, and that it was therefore
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reasonable for the Plaintiffs to rely on those statements in choosing to hire GBS.
The analysis of the damages element is the same as under the alternative theory
of fraudulent suppression, and therefore the damages element is met under the
fraudulent misrepresentation claim as well. For these reasons, Nationwide’s motion
for summary judgment on the Plaintiffs’ fraud claims is due to be denied.
Negligent and Wanton Supervision - Count X
Nationwide argues for summary judgment as to Plaintiffs’ Negligent and
Wanton supervision claim because there is no evidence that Mayfield committed a
common-law Alabama tort. To survive the motion for summary judgment as to this
claim, Plaintiffs must offer substantial evidence of three elements. First, Plaintiffs
must show that the employee committed a tort recognized under Alabama law.
Stevenson v. Precision Standard, Inc., 762 So. 2d 820, 824 (Ala. 1999). Second, the
employer must have actual or constructive notice of the employee’s conduct.
Armstrong Bus. Servs. v. AmSouth Bank, 817 So. 2d 665, 682 (Ala. 2001). Finally, to be
liable the employer must disregard or fail to adequately respond to this notice.
Armstrong, 817 So. 2d at 682.
Concerning the first element, the Plaintiffs have presented evidence raising a
jury question as to whether Mayfield committed fraud, as discussed in Section III.B,
supra. As to the second element, there is evidence that Mayfield introduced GBS to
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customers, rode with a GBS employee to claims, and made fraudulent
misrepresentations to induce Nationwide insureds to hire GBS, all while carrying on
a romantic relationship with a GBS employee. When “repeated acts of carelessness
and incompetency of a certain character are shown on the part of the servant,” it is
proper to leave it to the jury to determine whether they would have come to the
employer’s attention had they exercised due care. Mardis v. Robbins Tire & Rubber Co.,
669 So. 2d 885, 889 (Ala. 1995). This evidence at least creates a jury question as to
whether Nationwide would have obtained notice of these activities in the exercise of
ordinary care. As to the final element, there is no evidence that Nationwide took any
steps to respond to Mayfield’s allegedly improper conduct at the time. For these
reasons, summary judgment on this claim is due to be denied.
Vicarious Liability - Count XI
Nationwide argues that it is not liable under Count XI because Mayfield did not
commit a tortious act. Under Alabama law, an employer will be liable for the actions
of an employee if the employee is acting within the scope of his employment. Hulbert
v. State Farm Mut. Aut. Ins. Co., 723 So. 2d 22, 23 (Ala. 1998). An act is within the
scope of employment if it is “part of the duties the employee was hired to perform or
if the act confers a benefit on his employer.” Id. The conduct must not be compelled
by wholly personal motives, but must be “in promotion of the business of his
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employment.” Id. (quoting Solmica of the Gulf Coast, Inc. v. Braggs, 232 So. 2d 638, 643
(Ala. 1970)). An agent acts within the scope of his employment when he is performing
actions so “closely connected” with his employment that they may be “regarded as
methods, even though quite improper ones, of carrying out the objectives of the
employment.” Ex Parte Atmore Cmty. Hosp., 719 So. 2d 1190, 1194 (Ala. 1998) (quoting
Prosser & Keeton, The Law of Torts 503 (5th ed. 1984)). This is true even when the
employee’s actions were expressly forbidden by his employer, and even in cases of
intentional torts such as fraud. Lawler Mobile Homes, Inc. v. Tarver, 492 So. 2d 297, 305
(Ala. 1986). “If there is any evidence in the record tending to show directly, or by
reasonable inference, that the tortious conduct of the employee was committed while
performing duties assigned to him, then it becomes a question for the jury to
determine whether he was acting from personal motive having no relationship to the
business of the employer.” Id.
The Plaintiff’s have put forward substantial evidence that Mayfield committed
tortious conduct in the form of fraudulent suppression of material facts or fraudulent
misstatements of material fact. See Part III.D, supra. The Plaintiffs have put forward
evidence that this tortious conduct was committed while Mayfield was in the midst of
adjusting the Plaintiffs claim, and therefore performing duties assigned to him by
Nationwide. Nationwide itself recommends certain contractors and repair shops to its
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customers through its “Blue Ribbon” program. Therefore, a reasonable jury could
determine that making recommendations on a contractor to perform repairs on
Plaintiff’s home was a method, though in this case an improper one, of carrying out his
employment objectives, and was not done entirely for personal reasons having no
relation to his employer’s business. Therefore, summary judgment on this issue is due
to be denied.
Motion to Strike
Nationwide filed a motion to strike certain evidence that was submitted in
support of the Plaintiffs’ response to Nationwide’s motion for summary judgment.
(Doc. 95). However, it was not necessary for the Court to use the evidence at issue in
the motion to strike when ruling on Nationwide’s motion for summary judgment.
Therefore, the motion is denied as moot.
For the foregoing reasons, Nationwide’s motion for summary judgment (Doc.
90) is GRANTED on Count V, alleging negligent and wanton performance of the
insurance contract. Nationwide’s motion is DENIED on all of Plaintiff’s other claims,
and Nationwide’s motion to strike certain evidence (Doc. 95) is DENIED as moot.
A separate order will be entered.
Done this 26th day of August 2014.
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L. SCOTT COOGLER
UNITED STATES DISTRICT JUDGE
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