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Mental Anguish/ Damages- 9/19/08
In the case, Baldwin & Kelly v. Panetta released 9/19/08, the Court addressed the recovery of mental anguish damages in a breach of a construction contract case. Here the Court did not allow recovery of mental anguish damages over the building of a lake house. It noted three elements are essential to the recovery of mental anguish damages:
1. That the breach be egregious;
2. That the defects in the home render it virtually uninhabitable; and
3. That the breach necessary or reasonably result in mental anguish or suffering.
Here the construction defects which the owners complained of were aesthetic. None were severe enough to render the home uninhabitable. Further, the owners testimony did not indicate they were distressed about the structural integrity of the house. The testimony that they were "very upset" about the problems regarding the construction of the home was not sufficient evidence of compensable mental anguish.
Reasonable Reliance/ Fraud- 9/19/08
AmerAUS Life Insurance Company vs. Smith released 9/19/08. Here the Alabama Supreme Court revered a $6.5 Million dollar jury verdict in a fraud case and found the plaintiff/insured could not have reasonable relied on the agent's representations when the policy language conflicted. The insured was a pastor and one of his flock sold him two insurance policies and made certain oral representations as to the annual premium requried and the length of the policy. The policy had a "C" rating in reducing original projections which had been based on a standard rating. This appeared on each policy with the language that the policy holder was to read and carefully examine same and there was a twenty day period for the policy holder to examine and cancel for any reason.
Later, the pastor met with a new agent and was advised that the policies would not maintain coverage for the number of years represented and not at a fixed premium. The pastor did not make the payment, the policy lapsed and the suit was filed for fraud and breach of contract. The jury returned a verdict awarding $2.5 Million dollars in compensatory damages and $4 Million dollars in punitive damages.
In reversing the award, the court held that no reasonable person could have read the policies and not have been put on inquiry as to the existence of inconsistencies. The court noted that Alabama utilizes the "reasonable reliance standard" and that if the circumstances are such that a reasonably prudent person who exercised ordinary care would have discovered the true facts, the plaintiffs should not recover. This standard imposes a general duty to read the documents received in connection with a particular transaction.
Bad Faith decision - 5/16/08
U. S. District Judge Acker awarded $960,832.00 to Shelby County man in a suit stemming from life insurance benefits he contended his insurer did not pay.
This four page decision was handed down on May 16, 2008 against Mega Life and Health Insurance Company. Judge Acker found Mega Life failed to pay a death benefit in 2005 to the plaintiff following the death of his wife.
Kellie Pieniozek died in a one car accident when a deer ran into the road and she lost control. A claim was made on the life insurance policy the couple had taken out several months. Mega Life denied because the insurance form listed her income at $35,000.00. They contended that she made far less as she was employed in a series of temporary jobs. The company contended it never would have issued a policy with a high death benefit for someone with a smaller income. Mega Life’s underwriting guidelines call for a death benefit 15 times the insured’s person’s yearly income.
The court awarded $600,000.00 as compensatory damages plus interest and an additional accidental death amount.
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