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LOYAL AMERICAN LIFE INS. v. MATTIACE5/24/1996
al court commented:
"I find the state of evidence and the testimony from company representatives to be
at best confusing and at worst misleading. I was just looking here at the affidavit of Ms. Dollarhide [a Loyal American underwriter] in support of motion for summary judgment where there is the unequivocal statement that 'Loyal American does not have an underwriting manual on which it relies in the underwriting process. There are available from insurers a number of guides which are used in the underwriting process. There is no particular guide or manual which is binding on underwriters at Loyal American Life Insurance Company in underwriting a particular risk.'
"And, as I understand it, one of the primary evils complained of by the plaintiff is that claims process, if there is no lodestar, there is no polestar, there is no guiding star as a point of departure, then the potential for abuse, without assuming abuse in this case, becomes unlimited. It would be as if I had the Code of Alabama, the Code of Mississippi, the U.S. Code, and the Republic of Panama Code and when I was making a ruling, I'd pull whichever of those books off the shelf that I could make fit with my predisposition and predilection.
". . . .
"And let me say this about the Loyal American guideline, and I'm a little distressed that it hasn't been cleared up more clearly in the evidence, this business about whether your name is on the book or whether it has a red cover or a black cover, a lot of people use the holy writ for guidance in their daily lives but they don't have to have the Patterson Bible or the Carr Bible or the Whitten Bible written on it to be a ready reference. Some Bibles have blue backs, some have red, and some have green. The critical question to me is whether a guideline prepared by whoever with whatever color cover and with x, y, or z on the front that were the guidelines which measured the underwriting and subsequently measured the claims process. Nobody has to — There's no particular formality with which those guidelines must be adopted, but they must be identified and utilized in specific so a person interested in the process either inter- or intracompany or persons who deal with the company could have reasonable notice as to the measure that was being used.
"It's akin to the old carnival trick of which shell is the pea under? You know, and the rube jumps at the wrong shell and he doesn't get the Browning shotgun."
(Emphasis added.)
We agree with the trial court that Loyal American's use of numerous, differing underwriting manuals and its emphasis on each underwriter's personal subjectivity created an atmosphere in which there was great opportunity for inconsistency, where dissimilar underwriting decisions were reached regarding similar policy applicants.
This conclusion alone, however, does not answer the question whether Sue Mattiace met the "directed verdict on the contract claim" standard necessary for her bad faith claim to be submitted to the jury. Regardless of evidence to the contrary, Loyal American insists that it proved it followed a standard procedure of using the "Hudson" underwriting manual rather than the "Cologne" manual to evaluate DUI risks for life insurance. Loyal American argues that there is at least conflicting evidence on that issue sufficient to warrant a jury decision on the contract claim and, thus, that Sue Mattiace did not meet the "directed verdict on the contract claim" standard.
In response to this argument by Loyal American, the trial court stated: "I think the case is also clear that a defendant can't create its own fairly debatable reason. You know that is
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