Court: Court of Civil Appeals of Alabama; July 1, 1981; Alabama; State Appellate Court
Carl S. Smith, Jr. filed a lawsuit against Alabama Farm Bureau Mutual Casualty Insurance Company, claiming rights under a homeowner's insurance policy. Smith's complaint included four counts alleging breach of contract and negligence, seeking damages including the insurance proceeds. Marshia Hewitt also made a claim for the same proceeds. In response, Farm Bureau filed an interpleader, depositing the policy proceeds into court, which the trial court subsequently distributed between Smith and Hewitt.
Smith later amended his complaint to include a new contract theory and sought damages for mental anguish and injury to credit, while the original counts were either stricken or dismissed. The jury ruled in favor of Smith, awarding him $10,000. Farm Bureau appealed, arguing that it had exonerated itself from further liability by filing the interpleader and paying the proceeds into court.
The court disagreed, noting that both Smith and Hewitt claimed the proceeds, and the interpleader was appropriate for resolving those claims. However, Smith's complaint contained counts alleging tortious injury that sought damages exceeding the insurance proceeds, creating a genuine issue of independent liability that could not be resolved by the interpleader. Consequently, the trial court was correct in keeping Farm Bureau in the case to address the broader liability issues beyond just the policy proceeds. The appellate court reversed the judgment and remanded the case for further proceedings.
Farm Bureau argues that the trial court incorrectly allowed the jury to consider damages for mental anguish in a breach of insurance contract case. The relevant facts include that Smith and Hewitt, a divorced couple, had their home insured by Farm Bureau, which was also mortgaged. After the home was destroyed by fire, Farm Bureau paid the mortgage holder and later deposited remaining insurance proceeds into court. Smith amended his complaint to include claims for mental anguish and credit injury after Farm Bureau's delay in paying his debt to First Federal. The trial court permitted the jury to consider mental anguish damages, despite Farm Bureau's objections. In Alabama, mental anguish is generally not recoverable in breach of contract cases, particularly for insurance. The court found that the trial court's instruction on mental anguish was erroneous and that this error could not be deemed harmless since the jury's verdict did not clarify the basis for their award. Consequently, the case is reversed and remanded for further proceedings. Other issues raised by Farm Bureau were not addressed due to this primary error.
