MONTGOMERY, Ala. (Legal Newsline) – On Dec. 21, the Supreme Court of Alabama sided with an insurance company in a lawsuit over insurance coverage for a fire at a factory.
Mattress company Somnus Mattress Corp. appealed the decision from the Winston Circuit Court that granted summary judgment for Somnus’ insurance company, Crutchfield & Graves Insurance Agency LLC (CGIA), and Stephen Hilson. The Supreme Court affirmed the Circuit Court's decision.
"Somnus failed to present substantial evidence creating a genuine issue of material fact as to the advice Hilson gave (Somnus founder Charles) Jones in 2012 with respect to Somnus obtaining business-income coverage," the Supreme Court wrote.
"Somnus also failed to establish the Hilson and CGIA had voluntarily assumed a duty to advise Somnus concerning the adequacy of its insurance coverage."
Somnus filed a negligence lawsuit in 2015 after its factory caught fire in 2013 and blamed Hilson for allegedly not advising Somnus to include business-income coverage in its property insurance policy. The coverage was designed to assist with business interruption and any loss of profits amid unexpected events, like a fire.
The Supreme Court ruled that it not only was not Hilson’s duty to advise such a policy, but that Somnus couldn’t prove Hilson failed to do so.
“Without such a duty, as a matter of law Somnus could not establish that Hilson and CGIA were negligent in their actions,” the court said. "Therefore, the Circuit Court did not err in entering a summary judgment in favor of Hilson and CGIA.”
Hilson and Jones began communication about CGIA serving as Somnus’ insurance agency in 2009, the opinion states.
Hilson said during this meeting, he gave Jones a quote for the business-income coverage, but Somnus refused it on multiple occasions because it was too pricey, the opinion states.
While Jones confessed that he couldn’t recall if Hilson had offered the insurance, the opinion states he said he turned it down in 2009 because Hilson was the one who told him that it was too expensive.
The Supreme Court ruled that not remembering if a conversation took place is not enough evidence to combat Hilson’s testimony. Hilson alleged Somnus insisted on not getting the insurance every year during the renewal period, including the 2012 renewal that is in question.
Justice Brady Mendheim Jr. ruled on the case while Chief Justice Lyn Stuart and justices Tom Parker, James Allen Main and Tommy Bryan concurred.