James C. White, Sr., and WhiteGroup v. State Farm Fire & Casualty Company

Summary

The Alabama Supreme Court reviewed a summary judgment favoring State Farm in a dispute over coverage for storm damage to a commercial building's roof. The court held that material factual disputes existed concerning whether State Farm authorized the repairs, whether the replacement roof was of like kind and quality, whether State Farm acted in bad faith, and whether the insured engaged in bad faith. It reversed the judgment and remanded for further proceedings.

Holdings

1. Summary judgment was improper because genuine issues of material fact existed concerning whether State Farm breached the insurance contract, whether it had a legitimate or arguable basis for withholding the disputed roof-replacement amount, whether it properly investigated and evaluated the claim, and whether the EPDM roof was of like kind and quality to the damaged built-up roof.
2. Summary judgment was improper because material factual disputes existed concerning whether State Farm's adjuster authorized WhiteGroup to proceed with the roof repairs and whether WhiteGroup reasonably relied on that representation.
3. Summary judgment was improper on the claim that State Farm negligently or wantonly failed to supervise its adjuster because material factual disputes existed concerning the adjuster's experience, use of an estimating program, and the adequacy of State Farm's supervision.
4. The conflicting evidence concerning White's knowledge of the lower roofing proposal did not support affirmance of summary judgment on the unclean-hands ground. The court expressly pretermitted whether Alabama should recognize contributory bad faith by an insured as a defense to a bad-faith failure-to-pay claim and, if so, what effect it would have.

Questions Presented

1. Whether genuine issues of material fact precluded summary judgment on WhiteGroup's normal or abnormal bad-faith failure-to-pay claim.
2. Whether genuine issues of material fact precluded summary judgment on the misrepresentation claim based on alleged State Farm authorization to proceed with roof repairs.
3. Whether genuine issues of material fact precluded summary judgment on the negligent or wanton supervision claim concerning State Farm's supervision of its adjuster.
4. Whether the trial court could sustain summary judgment based on unclean hands or contributory bad faith despite the disputed facts and the absence of a pleaded defense.
5. Whether Alabama should recognize contributory bad faith by an insured as a defense to a bad-faith failure-to-pay claim; the court pretermitted this issue.

Disposition

reversed_and_remanded