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Littlejohn v. Prudential Insurance Co. of America
Citations: 785 So. 2d 345; 1999 Ala. Civ. App. LEXIS 337; 1999 WL 318886Docket: 2980019
Court: Court of Civil Appeals of Alabama; May 21, 1999; Alabama; State Appellate Court
On February 6, 1997, Franklin D. Littlejohn and Essie D. Littlejohn filed a lawsuit against The Prudential Insurance Company of America, Pruco Life Insurance Company, and agents Jimmy Blue, Clarence Edwards, and Thomas Delligatti, alleging fraud, deceit, and misrepresentation regarding life insurance policies. The defendants moved for summary judgment, which was granted by the trial court after considering oral testimony. The Littlejohns appealed, and the case was transferred to this court by the Alabama Supreme Court. Under Alabama law, a motion for summary judgment is granted when there is no genuine issue of material fact, and the moving party is entitled to judgment as a matter of law. If the moving party shows no genuine issue exists, the burden shifts to the nonmovant to present substantial evidence to create such an issue. Evidence is deemed substantial if it allows reasonable inference of the fact in question. The court reviews the record favorably for the nonmovant and resolves doubts against the movant. In 1986, the Littlejohns purchased two variable appreciable life (VAL) insurance policies from Prudential, believing their premiums would be covered by the cash value of existing policies and dividends. They later signed blank forms that authorized loans against their old policies without understanding the nature of the transaction. Mr. Littlejohn learned of the loans in Spring 1990 and subsequently complained to Prudential and the Alabama Department of Insurance, stating they were misled about the loan authorizations. Despite Prudential agents reaffirming the legitimacy of the loans and a response from the Department finding no violations of Alabama law, the Littlejohns did not pursue legal action and maintained their policies until a class-action lawsuit against Prudential prompted them to seek legal advice and file their lawsuit in 1997. The trial court's summary judgment was partly based on the argument that the claims were barred by statutes of limitations. On appeal, the Littlejohns contended that the limitations period should be tolled due to their reliance on Prudential's and the Department's statements. To establish a fraud claim, the following elements must be met: 1) a party misrepresented a material fact; 2) the misrepresentation was made willfully to deceive or recklessly without knowledge; 3) the plaintiff justifiably relied on the misrepresentation; and 4) the plaintiff suffered damages as a direct result of that reliance. A fraud action must be filed within two years of its discovery, or it will be time-barred. The "justifiable reliance" standard, as clarified by the Alabama Supreme Court, indicates that a plaintiff cannot justifiably rely on a representation that is blatantly false. In a case involving the Littlejohns, the court found they acted diligently in addressing their concerns about Prudential's representations, and that the determination of their justifiable reliance and the timing of fraud discovery should be resolved by a jury. The court reversed the lower judgment and remanded the case for further proceedings, noting a change to a "reasonable reliance" standard in fraud cases filed after March 14, 1997, does not apply to this case, filed on February 6, 1997.