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LOYAL AMERICAN LIFE INS. v. MATTIACE5/24/1996
erred, I dissent and in this dissenting opinion I will state once again why I think the constitutional rights of Loyal American were violated by the court's allowing this jury to punish it even though there was a debatable issue presented on the question of the plaintiff's entitlement to benefits under the policy.
This is not the first time, of course, that this Court has allowed for the recovery of punitive damages even though there was a debatable issue to be resolved by a jury, but it is the first time the Court has issued for publication an opinion showing the extent of the modification of the Chavers rule. In another case that involved comparable circumstances, the Court issued an opinion but later withdrew it. The holding in this case, unfortunately, adds more subjectivity to the Chavers test and will be confusing to trial judges when they are faced with an insurer's motion for a directed verdict, as the trial judge in this case was.
I, and other members of this Court, were concerned about the creation of the tort of bad-faith failure to pay an insurance claim 15 years ago in Chavers, and the views we expressed in Chavers should be considered in addition to those I expressed in the case of Life Insurance Co. of Georgia v. Johnson, [Ms. 1940357, April 26, 1996] ___ So.2d ___ (Ala. 1996).
Most of the concerns I have about the bad faith remedy were previously expressed in a dissenting opinion that I wrote in Continental Assur. Co. v. Kountz, 461 So.2d 802 (Ala. 1984), where I said:
"These 'bad faith' cases, unfortunately, in my opinion, fail to give to the bench and bar some settled principles to guide them in determining when, and under what circumstances, the tort can be established. That is the reason I consistently dissented, until I joined every member of the Court in National Security Fire and Casualty Co. v. Vintson, 454 So.2d 942 (Ala. 1984), in which this Court concluded that a plaintiff had a very heavy burden in establishing a bad faith failure to pay, and that that burden was to show that the insurer, to quote from Vintson, 'had no legal or factual defense to the insurance claim.' The Vintson test at least provided a more objective standard which trial judges, lawyers, and appellate judges could apply."
461 So.2d at 811. I believe the concerns I expressed in Kountz were reiterated by the United States Supreme Court in its recent opinion in BMW, where that Court stated:
"Elementary notions of fairness enshrined in our constitutional jurisprudence dictate that a person receive fair notice not only of the conduct that will subject him to punishment but also of the severity of the penalty that a State may impose."
___ U.S. at ___, 116 S.Ct. at 1591. (Emphasis added.)
It is apparent to me that today the tort of bad faith refusal to pay an insurance claim does not resemble the tort that was initially created. As the quantum and standard of proof are relaxed more and more, as in this case, the size of the awards of punitive damages concomitantly increases, creating serious constitutional due process questions.
Several years ago, then Chief Justice Torbert, in Aetna Life Ins. Co. v. Lavoie, 470 So.2d 1060, 1080 (Ala. 1984), suggested that this Court should consider alternatives to the tort of bad faith refusal to pay. He noted:
"By making it attractive to sue alternatively, or even exclusively, in contract, this Court could have avoided many of the problems associated with developing a new tort. As an added benefit, much of the appellate workload would be reduced in reviewing excessive jury awards of punitive damages, since punitive damages are not available in contract."
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