Garber v. Nationwide Mutual Insurance Company

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF ALABAMA

NORTHEASTERN DIVISION

HARRY GARBER, )

)

Plaintiff )

)

vs. ) Case No. 5:21-cv-00546-HNJ

)

NATIONWIDE MUTUAL )

INSURANCE COMPANY, )

)

Defendant. )

MEMORANDUM OPINION AND ORDER

This diversity action proceeds before the court on Defendant’s Motion for

Judgment on the Pleadings. (Doc. 25). Plaintiff, Harry Garber, asserts state law causes

of action for breach of contract, normal bad faith, abnormal bad faith, fraudulent

misrepresentation, fraudulent suppression, and deceit against Defendant, Nationwide

Mutual Insurance Company (Nationwide). All causes of action arise from Nationwide’s

denial of Garber’s claim under a trip cancellation policy. As discussed, the pleadings

present triable issues of material fact as to Garber’s breach of contract and bad faith

causes of action, but not as to his fraudulent misrepresentation, fraudulent suppression,

and deceit causes of action. Therefore, the court will PARTIALLY GRANT

Defendant’s motion for judgment on the pleadings.

STANDARD OF REVIEW

A party may move for judgment on the pleadings only after the pleadings have

closed. See Fed. R. Civ. P. 12(c). Under the typical scenario, “[j]udgment on the

pleadings is proper when no issues of material fact exist, and the moving party is entitled

to judgment as a matter of law based on the substance of the pleadings and any judicially

noticed facts.” Interline Brands, Inc. v. Chartis Specialty Ins. Co., 749 F.3d 962, 965 (11th Cir.

2014) (internal citation omitted). In determining whether a defendant is entitled to

judgment on the pleadings, courts must “accept all the facts in the complaint as true

and view them in the light most favorable to the non-moving party.” Id. If comparison

of the averments in the pleadings reveals a material dispute of fact, the court must deny

judgment on the pleadings. Perez v. Wells Fargo N.A., 774 F.3d 1329, 1335 (11th Cir.

2014).

Rule 12(c) also may serve as a vehicle for asserting a Rule 12(b) motion to dismiss

after pleadings have closed. See Jiles v. United Parcel Serv., Inc., No. 308CV01192J25MCR,

2010 WL 11519465, at *2 (M.D. Fla. May 12, 2010), aff’d, 413 F. App’x 173 (11th Cir.

2011) (“Rule 12(c) is also a vehicle by which litigants may, after the pleadings are closed,

assert a 12(b)(6) motion for their opponent’s failure to state a claim upon which relief

can be granted.”) (citation omitted); Gold v. Markham, No. 98-7036-CIV, 1998 WL

1118629, at *1 (S.D. Fla. Dec. 2, 1998) (“Although Markam styles his motion as one

for judgment on the pleadings, the crux of his arguments is that the Tax Injunction Act,

29 U.S.C. § 1341, and principles of comity bar federal subject matter jurisdiction over

this controversy. Therefore, the Court considers Markam’s motion to be brought

pursuant to Federal Rule of Civil Procedure 12(b)(1) rather than 12(c).”); 5C Charles

Alan Wright, Arthur R. Miller & May Kay Kane, Federal Practice and Procedure § 1367

(3d ed. 1995) (Rule 12(c) may serve “as an auxiliary device that enables a party to assert

certain procedural defenses after the close of the pleadings”).

FACTUAL ALLEGATIONS OF PLAINTIFF’S COMPLAINT

Garber alleges he purchased trip cancellation insurance from Nationwide on

September 4, 2020, for a premium of $462.58, to cover a beach house rental in Gulf

Shores, Alabama, scheduled from October 9-13, 2020. Garber paid $7,107.22 in

advance fees to reserve the property through TurnKey Vacation Rentals, Inc.

(TurnKey). (Doc. 1, ¶¶ 7-9). TurnKey advised Garber

that he had to cancel within 72 hours (3 days) of booking the reservation

to be eligible to receive a refund; that there were no refunds for natural

disasters; and Turnkey strongly encouraged Garber to purchase trip

cancelation insurance and directed him to a link where he could purchase

trip cancellation insurance through Nationwide.

(Id. ¶ 8).

As stated, Garber purchased the recommended insurance policy on September

4, 2021. (Id. ¶ 9). The applicable policy provisions stated:

TRIP CANCELLATION

The Company will reimburse You, up to the Maximum Benefit

shown on the Confirmation of Coverage, if You are prevented from

taking Your Trip for any of the following reasons that are Unforeseen and

takes place after the Effective Date:

. . . .

Natural disaster at the site of Your destination that renders Your

destination accommodations Uninhabitable;

. . . .

Mandatory evacuation (or public official evacuation advisements

where there is no mandatory evacuation) issued by local government

authorities at Your Trip destination due to hurricane or other natural

disaster.

(Id. ¶ 23 (italics and boldface emphasis omitted); see also Doc. 7, at 34-35). The policy

defined “Uninhabitable” as meaning:

(1) the building structure itself is unstable and there is a risk of collapse in

whole or in part; (2) there is exterior or structural damage allowing

elemental intrusion, such as rain, wind, hail or flood; (3) immediate safety

hazards have yet to be cleared, such as debris on roofs or downed electrical

lines; or (4) the building is without electricity or water and/or is not

suitable for human occupancy in accordance with local authority

guidelines.

(Doc. 7, at 27-28).1

On September 16, 2020, the home Garber rented sustained damage to its siding

and exterior as a result of Hurricane Sally. (Doc. 1, ¶¶ 14, 17). On October 4, 2020,

Garber observed the exterior damage, and on October 5, 2020, he asked TurnKey about

1 Garber’s Complaint did not quote the statement providing coverage for Uninhabitable

accommodations, or the definition of “Uninhabitable.” However, Nationwide attached a copy of the

entire policy to its Answer, and Garber does not dispute the applicable policy language. (Doc. 7).

Pursuant to Federal Rule of Civil Procedure 12(d), the court may review that attachment without

converting the motion for judgment on the pleadings to a motion for summary judgment. See Yeager

v. Ocwen Loan Servicing, LLC, 237 F. Supp. 3d 1211, 1215 (M.D. Ala. 2017) (citing Horsley v. Feldt, 304

F.3d 1125, 1134 (11th Cir. 2002)) (“On a motion for judgment on the pleadings, the court may consider

documents attached to the pleadings, such as those documents attached to the complaint and answer

in this case.”); see also Perez v. Wells Fargo N.A., 774 F.3d 1329, 1340 n.12 (11th Cir. 2014) (citations

omitted) (“[O]n a motion for judgment on the pleadings, documents that are not a part of the

pleadings may be considered, as long as they are central to the claim at issue and their authenticity is

undisputed.”).

the availability of the home. “TurnKey replied that the home looked good and would

be accessible on the reservation dates of October 9-13, 2020.” (Id. ¶¶ 17-18).

Also on October 5, 2020, Hurricane Delta approached the Gulf Shores area. The

City of Gulf Shores declared a local state of emergency and “urged residents to take

precautions to protect themselves and their property.” (Id. ¶ 19). On October 6, 2020,

Alabama Governor Kay Ivey declared a state of emergency in response to the threat of

Hurricane Delta, and she issued a mandatory evacuation order taking effect at 7:00 a.m.

on October 7, 2020. (Id. ¶ 20).

On October 7, 2020, Garber cancelled his TurnKey reservation set to commence

on October 9 due to the evacuation order. TurnKey refused to issue Garber a refund

because Garber did not cancel within 72 hours of completing the booking. (Id. ¶¶ 8,

21). Therefore, on October 7, 2020, Garber filed a claim with Nationwide under the

trip cancellation policy. (Id. ¶ 22). At 4:00 p.m. on October 8, 2020, Governor Ivey

rescinded the mandatory evacuation order, but a coastal flood warning and high surf

advisory remained in effect. (Doc. 1, ¶ 25).

On October 21, 2020, Nationwide denied Garber’s claim. The denial letter

stated:

“the plan does provide reimbursement if you are prevented from taking

your trip due to a mandatory evacuation issued by local government

authorities at your trip destination due to hurricane or other natural

disaster; however, based on the information on file, the mandatory

evacuation was lifted on October 8, 2020. Your trip was not scheduled to

begin until October 9, 2020, after the mandatory evacuation was lifted;

therefore, the mandatory evacuation did not prevent you from taking your

trip. Regrettably, your claim does not qualify for reimbursement based on

this reason.”

(Id. ¶ 26).

On October 21, 2020, Garber appealed the denial and stated:

I completely disagree with your denial for this claim. Governor

Ivey lifted the mandatory evacuation order appx. 24 hours before the start

of our trip. People make plans based on the best available information

they have at the time. A travel ban was issued for the Gulf Shores area 2

days prior to our trip due to hurricane Delta being out in the gulf.

Hurricane Sally was also predicted to hit Louisiana and it ended up hitting

the Gulf Shores area just a couple weeks prior to our Vacation. That is

exactly what insurance is for. I really did not think that this would even

be an issue and I am amazed how Nationwide is handling this, I thought

you were a better company. In addition to the travel ban from the

governor I have attached pictures of the house 4 days before we were to

arrive. This damage you see from the missing siding was done from

hurricane Sally. There is no way water did not intrude in this house and

cause mold. I asked the rental company several times if the house was

usable and got a response that it was. It was not until I actually drove out

to the house that I got the true story as you can see in the pictures. I have

property less than a mile from this house and every house in that area

received water and mold damage. I do not intend to let this drop and I

will do everything I need to do to make sure Nationwide lives up to its

end of this agreement.

(Id. ¶ 27).

Nationwide denied the appeal, stating:

We are in receipt of your appeal regarding the Trip Cancellation

claim processed by our office. A thorough review of your claim file and

all supporting documentation has been completed. At this time, we must

uphold our initial claim determination. According to the documentation

. . . provided, your trip scheduled from October 9-13, 2020 was cancelled

because of the mandatory evacuation ordered by Governor Kay Ivey as

well as the damage done to the rental house. The policy purchased lists

specific reasons under each coverage that you must meet in order to

qualify for the related benefit. The Trip Cancellation coverage of the

policy states: “The Company will reimburse You, up to the Maximum

Benefit shown on the Confirmation of Coverage, if You are prevented

from taking Your Trip for any of the following reasons that are

Unforeseen and takes place after the Effective Date:”. The mandatory

evacuation order was lifted on October 8, 2020 and therefore did not

prevent you from taking your Trip. We also reached out to Turnkey

Vacation rentals who confirmed that there was siding that came off during

the hurricane, but the house was not made Uninhabitable as the policy

defines.

(Id. ¶ 28).

Garber submitted a second written appeal on November 9, 2020, stating:

In your discussions with Turnkey how was it determined that the

house was safe to occupy? Did they have a remediation company take

moisture samples of the walls to see if moisture had intruded from the

missing siding which would lead to mold growth? Who was the person

who made the determination the house was “safe” to occupy? As per my

previous email after inquiring to Turnkey about the condition of the house

one week before our trip there was no mention from Turnkey that there

was any damage to the house and you can clearly see from my pictures

there was substantial damage. Is the presence of mold in a house

considered inhabitable under your policy? A reasonable person would

believe there is water intrusion and mold from missing siding and 105

Mph wind and heavy rain. Please provide from Turnkey the letter of

certification from a hygienist that either the mold had been remediated or

that there was no presence of mold prior to our scheduled trip. I strongly

disagree with your determination on both issues you cite.

(Id. ¶ 29).

Nationwide denied Garber’s second appeal on December 6, 2020. The denial

letter stated:

We are in receipt of your second appeal regarding the Trip

Cancellation claim processed by our office. As a result of your concerns,

we have conducted a full review of your claim. At this time, we must

uphold our initial claim determination. According to your second appeal,

there was missing siding from the rental house that you believe allowed

water to intrude and mold to occur. The policy purchased includes Trip

Cancellation coverage if a natural disaster renders Your destination

accommodations Uninhabitable. The response you provided from

Turnkey Vacation Rentals dated September 28, 2020 states: “The home

will be accessible on the dates of your reservation. An update or

notification will be sent to you if your reservation is affected with the

damages of the property. As I have checked, everything looks good.”

You also advised that you asked Turnkey Vacation Rentals if the house

was usable several times and they advised that it was. Turnkey Vacation

Rentals also confirmed with us that some siding came off of the house

during the hurricane, but the house was not Uninhabitable. The house

was walked through and incurred no damage inside. The house was

available to use during the rental dates.

(Id. ¶ 30).

Garber filed this case on April 19, 2021. He asserts claims against Nationwide

for breach of contract, normal bad faith, abnormal bad faith, fraudulent

misrepresentation pursuant to Alabama Code § 6-5-101, fraudulent suppression of

material facts pursuant to Alabama Code § 6-5-102, deceit pursuant to Alabama Code

§ 6-5-103, and deceit pursuant to Alabama Code § 6-5-104. (Doc. 1). For his breach

of contract claim, he requests damages in the amount of $7,107.22 (the amount he paid

for the rental) plus fees. (Id. ¶ 35). For his normal and abnormal bad faith claims, he

requests $7,107.22 plus fees, unspecified emotional distress damages, and unspecified

mental anguish damages. (Id. ¶¶ 44, 56-58). For each of his fraudulent

misrepresentation, fraudulent suppression, and deceit claims, he requests

reimbursement of premiums in the amount of $462.58, the total trip cost of $7,107.22,

unspecified mental anguish damages, unspecified emotional distress damages,

unspecified compensatory damages, and unspecified punitive damages. (Id. ¶¶ 74-75,

80(h)-(k), 81, 85-86, 92-93).

DISCUSSION

Nationwide petitions the court to grant judgment on the pleadings for all of

Garber’s claims. As portrayed below, the pleadings present triable issues of material

fact as to Garber’s breach of contract and bad faith causes of action, but not as to his

fraudulent misrepresentation, fraudulent suppression, and deceit causes of action.

Thus, Nationwide warrants judgment on the fraud, deceit, and suppression causes of

action, but not on the breach of contract and bad faith causes of action.

I. Nationwide Does Not Warrant Judgment on the Pleadings for Garber’s

Breach of Contract Claims, as Disputed Material Facts Will Inform Both

Whether the Mandatory Evacuation Prevented Garber from Taking His

Trip and Whether the Rental Property was “Uninhabitable”

Garber’s Complaint alleges Nationwide breached the insurance contract when it

denied his claim and failed to provide benefits under the policy. (Doc. 1, ¶¶ 31-36). To

state a viable breach of contract claim, Garber must allege: “(1) the existence of a valid

contract binding the parties; (2) [his] performance under the contract; (3) the

defendant’s nonperformance; and (4) damages.” Capmark Bank v. RGR, LLC, 81 So.

3d 1258, 1267 (Ala. 2011) (citation omitted). The parties do not dispute that they

entered into a contract, that Garber satisfied his obligations under the contract, or that

Garber suffered damages (the non-reimbursable cost of his vacation rental) from the

denial of his insurance claim. Rather, the controversy centers upon whether

Nationwide failed to perform its contractual obligations, and that determination

depends in part upon an interpretation of the policy terms.

Pursuant to Alabama statute, “[e]very insurance contract shall be construed

according to the entirety of its terms and conditions as set forth in the policy and as

amplified, extended or modified by any rider, endorsement or application which is a

part of the policy.” Ala. Code § 27-14-17(a). “Insurance contracts, like other contracts,

are construed so as to give effect to the intention of the parties, and, to determine this

intent, a court must examine more than an isolated sentence or term; it must read each

phrase in the context of all other provisions.” Attorneys Ins. Mut. of Alabama, Inc. v. Smith,

Blocker & Lowther, P.C., 703 So. 2d 866, 870 (Ala. 1996) (citation omitted). When an

insurance policy’s intention is clear and unambiguous, the court shall enforce it as

written. Sentinel Ins. Co. v. Alabama Mun. Ins. Corp., 188 So. 3d 640, 644 (Ala. 2015)

(citation omitted).

Garber asserts Nationwide should have reimbursed him for the cost of his trip

under both the policy provision allowing for trip cancellation pursuant to the issuance

of a mandatory evacuation order, and the policy provision allowing for trip cancellation

when a natural disaster renders the destination accommodations “Uninhabitable.” As

discussed below, the pleadings do not warrant a judgment in Nationwide’s favor for

either theory of the breach of contact claim, as disputed material facts will inform both

whether the mandatory evacuation prevented Garber from taking his trip, and whether

the premises were “Uninhabitable” on the relevant dates.

A. The Contractual Term “Prevented” Manifests an Ambiguity, and

the Factfinder Must Evaluate Extrinsic Evidence to Construe the

Term

“If the terms of an insurance policy are plain and unambiguous, the

interpretation of the contract and its legal effect are questions of law.” Sentinel Ins. Co.,

188 So. 3d at 644 (citing Nationwide Ins. Co. v. Rhodes, 870 So.2d 695, 697 (Ala. 2003)).

Garber asserts an ambiguity manifests in construing the policy term “prevented,” in the

context of assessing whether the mandatory evacuation “prevented’ him from taking

the trip.2 “‘In determining whether an ambiguity exists, a court should apply the

common interpretation of the language alleged to be ambiguous. . . . This means that

the terms of an insurance policy should be given a rational and practical construction.’”

Porterfield v. Audubon Indem. Co., 856 So. 2d 789, 799 (Ala. 2002) (citations omitted). “The

terms of an insurance policy are ambiguous only if the policy’s provisions are reasonably

susceptible to two or more constructions or there is reasonable doubt or confusion as

to their meaning.” State Farm Fire & Cas. Co. v. Slade, 747 So. 2d 293, 308-09 (Ala. 1999)

(citation omitted). “A term in a contract is ambiguous only if, when given the context, the

term can reasonably be open to different interpretations by people of ordinary

intelligence.” Once Upon a Time, LLC v. Chappelle Properties, LLC, 209 So. 3d 1094, 1098

(Ala. 2016) (emphasis in original) (citing Lambert v. Coregis Ins. Co., 950 So. 2d 1156, 1162

(Ala. 2006); Safeway Insurance Co. of Alabama v. Herrera, 912 So. 2d 1140 (Ala. 2005)).

2 Nationwide contends Garber failed to argue that the term “prevented” was ambiguous. To the

contrary, Garber cited Certain Underwriters at Lloyd’s, London v. Kirkland, 60 So. 3d 98, 101 (Ala. 2011)

“The question whether a contract is ambiguous is for a court to decide.” Hall v.

Envtl. Litig. Grp., P.C., 248 So. 3d 949, 958 (Ala. 2017) (citations and quotation marks

omitted). In construing contractual language,

the mere fact that a word or a phrase is not defined in a document does

not mean that the word or phrase is inherently ambiguous. . . . In the

absence of a definition, the court should construe the word or phrase

according to the meaning a person of ordinary intelligence would

reasonably give it.

Id. at 959 (citations, quotation marks, and internal alterations omitted). “On the other

hand, if the court determines that the terms are ambiguous (susceptible of more than

one reasonable meaning), then the court must use established rules of contract

construction to resolve the ambiguity.” Once Upon a Time, 209 So. 3d at 1097 (citations

omitted).

As discussed, Nationwide claimed in its denial letters that the Governor’s

mandatory evacuation order did not “prevent” Garber from taking his trip because the

Governor lifted the evacuation order before Garber’s trip commenced. Thus, the

meaning of the contractual term “prevented” materially affected the outcome of

Garber’s insurance claim. Moreover, the policy does not contain a specific definition

of the term “prevented,” and this court’s research located no Alabama case law

construing the term in the context of a trip cancellation policy.

for the proposition that the court should construe insurance policy ambiguities against the insurer,

(Doc. 29 at 6), and then Garber reviewed varying, alleged reasonable interpretations of the term. (Doc.

29 at 6-10). Therefore, Garber clearly argued that the policy’s term “prevented” was ambiguous, or

that reasonable interpretations fall in his favor in contrast to Nationwide’s construal of the term.

Nationwide interprets the term “prevented” as requiring Garber to portray that

the mandatory evacuation order manifestly enjoined him from checking into the rental

on the first scheduled date of his trip. (See Doc. 30, at 2 (“Plaintiff admits that when he was

scheduled to check-in to his rental, no evacuation order was in effect.”)). Thus,

according to Nationwide, the term “prevented” inherently includes a requirement that

the “prevention” be assessed on the trip’s scheduled commencement date. (See id.

(“Plaintiff argues that Nationwide added ‘on the day of the trip’ but this requirement is

already present because it is inherent in the requirement that the insured be prevented

from taking their trip, which begins on the day of departure.”)) (emphasis in original). If

its meaning controls, Nationwide justifiably denied Garber’s claim because, on October

9, 2020, the scheduled commencement date of Garber’s trip, the Governor had already

lifted the evacuation order.

In contrast, Garber asserts the court should construe the term “prevented” more

broadly, without any implicit time frame. According to Garber, an evacuation order

“prevents” an insured from taking a trip if it reasonably precluded travel shortly before

the trip commenced. (See Doc. 29, at 11 (“As any reasonable person in Mr. Garber’s

position would understand the policy, the issuance of a mandatory evacuation order at

your destination shortly before you are scheduled to arrive is sufficient to ‘prevent’ that

individual from taking that trip.”)).

The Merriam-Webster Dictionary assigns three possible meanings to the term

“prevent”: (1) “to keep from happening or existing”; (2) “to hold or keep back:

HINDER, STOP — often used with from”; and (3) “to deprive of power or hope of

acting or succeeding.” See prevent, Merriam-Webster Online Dictionary

https://www.merriam-webster.com/dictionary/prevent (last visited Dec. 7, 2021).3

The first definition supports Nationwide’s construction, but the second and third

definitions support Garber’s broader construction.

The mandatory evacuation order did not “keep” Garber’s trip from “happening”

or “existing” as he conceivably still could have taken the trip upon the lifting of the

order. Contrariwise, a reasonable person may determine that a mandatory evacuation

order “holds” or “hinders” one from taking a trip. And the lifting of the order – in the

late afternoon before the trip was scheduled to commence – does not necessarily arrest

the hindrance if one may reasonably conclude that reinstating the trip at that juncture

would be burdensome, unwise, or perhaps even just disheartening. Likewise, the

mandatory evacuation order could have “deprived” Garber of the “hope of acting or

succeeding” in taking the trip. And one may reasonably conclude that the subsequent

lifting of the order – again, late on the planned trip’s eve – did not forestall the initial

deprivation of hope as plans and expectations may have altered by that point.

Furthermore, construing the policy as whole buttresses the reasonableness of

Garber’s interpretation of the term “prevented.” In particular, the policy listed the

3 Garber also points to a treatise definition of the term “prevent” in the context of occupational

disability policies (Doc. 29, at 7-8), but that definition bears little relevance to the term in the context

of a trip cancellation policy.

following, covered “perils” as other circumstances that would “prevent” a person from

taking a trip: if an insured’s cat or dog dies within seven days prior to a trip’s departure

date; if a company who employed an insured for two continuous years laid her off

within 30 days of a trip departure; or if an employer transfers an insured 250 miles or

more from his former place of employment. (Doc. 7 at 34, 35). Pursuant to the first

dictionary definition of “prevented” cited previously, none of these perils “keep” a

putative trip from “happening” or “existing” because one may conceivably still take the

trip.

However, these perils may reasonably “hold” or “hinder” an insured from taking

a putative trip due to the burden or disheartening effects occasioned by the

circumstances. Likewise, the perils may reasonably “deprive” an insured of the “hope

of acting or succeeding” in embarking on the trip. Hence, interpreting the term

“prevented” in the context of other perils listed in the policy presents reasonable,

diverging constructions of the policy vis-à-vis the mandatory evacuation peril. Indeed,

applying Nationwide’s interpretation of the term “prevented” depicts these events

would not enjoin an insured from taking a trip, yet the policy covers them nonetheless.

And contrary to Nationwide’s assertions, a cancelled, mandatory evacuation

order may reasonably incur lasting, lingering effects in the same manner as the other

afore-listed perils, particularly if a government authority lifts the order on the eve of

scheduled travel that an insured has abandoned. Again, reinstating the trip at that late

juncture could be burdensome, unwise, or even just dispiriting. An ordinary, reasonable

person may have already settled into a judgement that a trip would not be feasible under

the circumstances, and it may be unreasonable to penalize such a person for

disregarding such impressions.

Therefore, both parties present reasonable interpretations of the term

“prevented,” and thus, the term, as used in this context, manifests an ambiguity. See

United Gov’t Sec. Officers of Am., Int’l Union Loc. 22 v. Tennessee Valley Auth., No. 5:16-CV-

00271-MHH, 2020 WL 1285920, at *2 (N.D. Ala. Mar. 17, 2020) (quoting Stewart v.

KHD Deutz of America, Corp., 980 F.2d 698, 704 (11th Cir. 1993)) (“‘That both

[interpretations] are reasonable is sufficient to establish that the [provision] is

ambiguous . . . .’”) (alterations and ellipsis in original).

The court must next determine whether established rules of contract

construction resolve the ambiguity. See Ohio Cas. Ins. Co. v. Holcim (US), 744 F. Supp.

2d 1251, 1259-60 (S.D. Ala. 2010) (“[T]he proper analytical sequence under Alabama

law is as follows: (a) determination of whether the contract is ambiguous; (b) if so,

application of rules of construction to resolve the ambiguity; and (c) if the rules of

construction do not resolve the ambiguity, then look to factual issues, which are

generally for the jury.”). However, no rules of construction that the court may employ

resolves the proper meaning of the ambiguous term “prevented.” For instance, the

court cannot resolve the ambiguity by applying the plain meaning of the term because,

as discussed, the term could possess two reasonable plain meanings. Moreover, the

circumstances do not require the court to choose between “a valid construction and an

invalid construction,” thereby requiring the court “to accept the construction that will

uphold, rather than destroy, the contract and that will give effect and meaning to all of

its terms.” Homes of Legend, Inc. v. McCollough, 776 So. 2d 741, 746 (Ala. 2000) (citing

Voyager Life Ins. Co. v. Whitson, 703 So. 2d 944, 948 (Ala. 1997); Sullivan, Long & Hagerty

v. Southern Elec. Generating Co., 667 So. 2d 722, 725 (Ala. 1995)). Similarly, there exists

no irreconcilable inconsistency between the term “prevented” and any other term of

the contract, thereby requiring the court to resolve the inconsistency in favor of the

prior clause. McCollough, 776 So. 2d at 746 (citing City of Fairhope v. Town of Daphne, 282

Ala. 51, 58, 208 So. 2d 917, 924 (1968); Whitson, 703 So.2d at 949). And there exist no

handwritten clauses that warrant priority over typed clauses. See McKinney Drilling Co. v.

Collins Co., 517 F. Supp. 320, 324 (N.D. Ala. 1981) (citing Bartlett & Company, Grain v.

Merchants Co., 323 F.2d 501, 506 (5th Cir. 1963); Industrial Machinery, Inc. v. Creative Displays,

344 So. 2d 743, 749 (Ala. 1977); Restatement of Contracts § 236(e) (1932)), aff’d, 701 F.2d

132 (11th Cir. 1983).4

4 The Alabama Supreme Court follows the general rule of contra proferentem: when no other

principles of contract construction resolve an ambiguity, the court should construe the ambiguous

term against the drafter of the contract. FabArc Steel Supply, Inc. v. Composite Const. Sys., Inc., 914 So. 2d

344, 357-58 (Ala. 2005) (citations omitted). However, contra proferentem “is generally a rule of last resort

that should be applied only when other rules of construction have been exhausted.” Id. at 357 (citations

and internal quotation marks omitted). Moreover, a court should not apply contra proferentem when

doing so would thwart the legitimate application of the other rules of construction. Id. at 358 (citations

omitted). The other rules the court must apply before resorting to contra proferentem include the

overriding principle that the construction of the contract should reflect the parties’ intent. See

ADTRAV Corp. v. Duluth Travel, Inc., No. 2:14-CV-56-TMP, 2016 WL 4614842, at *18 (N.D. Ala.

Sept. 6, 2016) (citing BellSouth Mobility Co. v. Cellulink, Inc., 814 So. 2d 203, 216 (Ala. 2001); FabArc, 914

So. 2d at 358) (“The purpose of the rules of construction, and the first rule of construction itself, is

that the court must construe a contract to express the intent of the parties.”) (quotation marks

omitted). Thus, the court must await appropriate review by the factfinder at trial (or, if discovery

Therefore, applying the rules of construction does not resolve the ambiguity, and

factual issues arise because “one must go beyond the four corners of the agreement” to

examine “the surrounding circumstances, including the practical construction put on

the language of the agreement by the parties to the agreement . . . .” FabArc Steel Supply,

Inc. v. Composite Const. Sys., Inc., 914 So. 2d 344, 358 (Ala. 2005) (citations omitted). And

“[w]here factual issues arise, the resolution of the ambiguity becomes a task for the

jury.” Id. (citation omitted).

Extrinsic evidence may reasonably indicate the term “prevent” means that a

mandatory evacuation at the destination could have hindered Garber from taking his

trip on October 9, or deprived him of hope of completing the trip, even though the

warrants, summary judgment) to ascertain whether extrinsic evidence can resolve the ambiguous term.

If it does not, then contra proferentem may apply. See Molton, Allen & Williams, Inc. v. St. Paul Fire &

Marine Ins. Co., 347 So. 2d 95, 99 (Ala. 1977) (citing U. S. F. & G. v. Elba Wood Products, Ala., 337 So.

2d 1305 (1976)) (“The ambiguities, therefore, must be interpreted against the party drawing the

contract if the circumstances surrounding the contract do not make the terms clear.”) (emphasis added); FabArc,

914 So. 2d at 359 (quoting Western Sling & Cable Co. v. Hamilton, 545 So. 2d 29, 32 (Ala. 1989)) (“[T]he

rule of contra proferentem is essentially one of legal effect, of ‘construction’ rather than ‘interpretation,’

because it can scarcely be said to be designed to ascertain the intent of the parties.”); see also Equinor

USA Onshore Properties Inc. v. Pine Res., LLC, 917 F.3d 807, 818 n.4 (4th Cir. 2019) (“While ambiguous

contracts are generally construed against their drafter, [t]he general rule of construing an ambiguous

contract against the drafter does not mean automatically holding in favor of the other party. . . .

Otherwise, extrinsic evidence would be irrelevant.”) (alteration and ellipsis in original, citation

omitted); Brady v. Park, 445 P.3d 395, 410 (Utah 2019) (“A determination of the parties’ intent based

on extrinsic evidence is a factual determination that should be made by the fact-finder. In the rare

case where the extrinsic evidence ‘does not reveal the intent of the parties,’ a district court should

then, and only then, ‘resolve the ambiguity against the drafter.’”) (citations omitted); James B. Nutter &

Co. v. Est. of Murphy, 88 N.E.3d 1133, 1139 (Mass. 2018) (“When the language is ambiguous, it is

construed against the drafter, if the circumstances surrounding its use . . . do not indicate the intended

meaning of the language.”) (ellipsis in original, citation and quotation marks omitted); Ash Park, LLC

v. Alexander & Bishop, Ltd., 866 N.W.2d 679, 685 (Wis. 2015) (“When the terms of a contract are

ambiguous, however, evidence extrinsic to the contract itself may be used to determine the parties’

intent, and any remaining ambiguities will be construed against the drafter.”) (emphasis added, footnote

omitted).

evacuation order lifted on October 8. Consequently, the court cannot enter judgment

on the pleadings in Nationwide’s favor on the breach of contract claim. The court will

permit the parties to proceed to discovery to develop the factual record regarding

whether the mandatory evacuation did, in fact, prevent Garber from taking the trip.

B. Disputed Material Facts Will Determine Whether the Rental

Property was “Uninhabitable”

Nationwide also contends it “had no requirement to reimburse [Garber] under

the natural disaster peril because the rental was not Uninhabitable.” (Doc. 26, at 7).

According to Nationwide, “the pleadings demonstrate that [Garber’s] rental was not

Uninhabitable,” as Garber asserts Turnkey Vacation Rentals claimed he could inhabit

the rental home during his rental dates. (Id.). However, Garber proffers the opposing

contention that he could not inhabit the rental home based upon his personal

observations of the home and other homes in the area, including his own property.

Unlike in the previous section, Nationwide’s denial of this claim did not rest

upon its construction of an ambiguous policy term. The parties do not dispute the

meaning of the term “Uninhabitable”; rather, they dispute whether the home actually

was Uninhabitable, and Garber alleges Nationwide failed to conduct a proper

investigation into the home’s habitability. Resolving that dispute will involve assessing

disputed material facts, including the extent of the damage to the home and

Nationwide’s efforts to assess that damage. Consequently, the court cannot grant

judgment on the pleadings in Nationwide’s favor. The parties should proceed to

discovery to develop the factual record.

In summary, the court will deny Nationwide’s motion for judgment on the

pleadings on Garber’s breach of contract claim.

II. Nationwide Does Not Warrant Judgment on the Pleadings for Garber’s

Bad Faith Claim Based Upon His Alleged Inability to Travel Due to a

Mandatory Evacuation Order or the “Uninhabitability” of the Rental

Property

Garber’s Complaint alleges Nationwide denied his insurance claim in bad faith.

The Alabama Supreme Court recognizes the tort of bad faith failure to pay an insurance

claim “where there is either ‘(1) no lawful basis for the refusal coupled with actual

knowledge of that fact or (2) intentional failure to determine whether or not there was

any lawful basis for such refusal.’” State Farm Fire & Cas. Co. v. Brechbill, 144 So. 3d 248,

257 (Ala. 2013) (quoting Chavers v. National Sec. Fire & Cas. Co., 405 So. 2d 1, 7 (Ala.

1981)). Those two scenarios comprise a single tort with two slightly different methods

of proof. Brechbill, 144 So. 3d at 257-58 (“[T]here is only one tort of bad-faith refusal to

pay a claim, not two ‘types’ of bad faith or two separate torts.”) (emphasis in original);

see also Cole v. Owners Ins. Co., 326 F. Supp. 3d 1307, 1329 (N.D. Ala. 2018) (“Under

Alabama law, bad faith is a ‘singular’ tort with two different methods of proof —

‘normal’ bad faith, also known as bad faith refusal to pay, and ‘abnormal’ bad faith, also

known as bad faith failure to investigate.”).

This tort has four elements plus a conditional fifth element, as

follows:

“(a) an insurance contract between the parties and a breach thereof

by the defendant;

“(b) an intentional refusal to pay the insured’s claim;

“(c) the absence of any reasonably legitimate or arguable reason for

that refusal (the absence of a debatable reason);

“(d) the insurer’s actual knowledge of the absence of any legitimate

or arguable reason;

“(e) if the intentional failure to determine the existence of a lawful

basis is relied upon, the plaintiff must prove the insurer’s intentional

failure to determine whether there is a legitimate or arguable reason to

refuse to pay the claim.”

Brechbill, 144 So. 3d at 257 (quoting National Sec. Fire & Cas. Co. v. Bowen, 417 So. 2d

179, 183 (Ala. 1982)).

Courts refer to the first method of proof as “bad faith refusal to pay,” “normal”

bad faith, or “ordinary” bad faith. To succeed on a “normal” bad faith theory, a plaintiff

must prove the first four elements the Alabama Supreme Court set forth in Brechbill.

Courts refer to the second method of proof as “bad faith refusal to investigate,”

“abnormal” bad faith, or “extraordinary” bad faith. To succeed on that theory, a

plaintiff must prove all five elements. Brechbill, 144 So. 3d at 258 (quoting Grissett, 732

So. 2d at 976) (“Thus, for the tort of bad-faith refusal to pay, ‘[r]equirements (a) through

(d) represent the “normal” case. Requirement (e) represents the “abnormal” case.’”); see

also Cole, 326 F. Supp. 3d at 1330-31.

“Regardless of whether the claim is a bad-faith refusal to pay or a bad-faith

refusal to investigate, the tort of bad faith requires proof of the third element, absence

of legitimate reason for denial.” Brechbill, 144 So. 3d at 258. Thus, “[t]he existence of

an insurer’s lawful basis for denying a claim is a sufficient condition for defeating a claim

that relies upon the fifth element of the insurer’s intentional or reckless failure to

investigate.” Brechbill, 144 So. 3d at 258 (emphasis in original). An insurer who presents

a “debatable reason” existing at the time it denied the claim can avoid bad faith liability

even if the insured identifies some deficiencies in the insurer’s investigatory process. Id.

at 259 (citing Weaver v. Allstate Insurance Co., 574 So. 2d 771, 775 (Ala. 1990) (in turn

quoting State Farm Fire & Cas. Co. v. Balmer, 891 F.2d 874, 877 (11th Cir. 1990))); see also

Coleman v. Unum Grp. Corp., 207 F. Supp. 3d 1281, 1284 (S.D. Ala. 2016)

(“The Brechbill decision makes clear that the conditional fifth element is a potential

substitute for the fourth element, but not for the third element, which the plaintiff must

prove in every case.”).

A. Nationwide Does Not Warrant Judgment on the Pleadings for

Garber’s Bad Faith Claim Based Upon His Alleged Inability to

Travel Due to a Mandatory Evacuation Order, as Nationwide’s

Reliance Upon the Ambiguous Policy Term “Prevented” Cannot

Serve as a Legitimate or Debatable Reason for Denying Garber’s

Trip Cancellation Claim

Nationwide does not warrant a judgment on the pleadings for Garber’s bad faith

claim regarding the denial of benefits involving the mandatory evacuation order.

Garber’s Complaint plausibly alleges facts which, if accepted as true, support each

element of the bad faith claim. Garber asserts separate claims for both normal and

abnormal bad faith (Counts II and III). For his normal bad faith cause of action, he

asserts Nationwide “deliberately and/or intentionally wrongfully denied” his insurance

claim, lacked a “reasonably legitimate or arguable reason for denying the claim,” lacked

a “debatable reason for denying the claim,” and “had actual knowledge of the absence

of any legitimate or arguable reason for denying the claim.” (Doc. 1, ¶¶ 40-43). For

his abnormal bad faith claim, he reasserts those same allegations, and he also alleges

Nationwide intentionally and wrongfully and/or recklessly denied the

claim without having a lawful basis to do so and/or intentionally and/or

recklessly failed to investigate Garber’s claim; recklessly failed to submit

the claim to a cognitive evaluation or review; created its own debatable

reason for denying Plaintiff’s claim; or relied on an ambiguous portion of

the policy as a lawful basis to deny the claim.

(Doc. 1, ¶¶ 49-54).

In particular, Garber’s Complaint presents triable issues regarding whether

Nationwide lacked a legitimate, arguable, or debatable reason for denying Garber’s

insurance claim. Garber alleges Nationwide based its denial decision upon its

construction of the ambiguous term “prevented,” and the denial letters Garber quoted

in his Complaint support that assertion. Under Alabama case law, an insurer’s reliance

upon an ambiguous policy term cannot serve as a legitimate, arguable, or debatable

reason for denying an insurance claim, as permitting such reliance would encourage

insurers to draft ambiguous policies so as to escape bad faith liability:

Alabama courts have repeatedly stressed that insurers may not rely on an

ambiguous policy term to deny coverage. See e.g., Blackburn v. Fid. &

Deposit Co., 667 So. 2d 661, 669 (Ala. 1995); Employees’ Benefit Ass’n v.

Grissett, 732 So. 2d 968, 976-77 (Ala. 1998). The oft-cited reason for this

rule is that “if an insurer’s subjective interpretation of an insurance policy

could create the fairly debatable reason needed to defend a bad faith claim,

then insurers would be encouraged to write ambiguous insurance

policies.” Blackburn, 667 So. 2d at 669.

Phillips v. Nat’l Union Fire Ins. Co. of Pittsburgh, Pa., No. 6:12-CV-02757-LSC, 2013 WL

5974906, *7 (N.D. Ala. Oct. 30, 2013).

This principle applies to Garber’s bad faith claim. The Alabama Supreme Court

has primarily addressed an insurer’s reliance upon ambiguous policy terms in the

context of abnormal bad faith. In Blackburn v. Fid. & Deposit Co. of Maryland, 667 So. 2d

661 (Ala. 1995), the Court addressed whether the insurer “failed to properly investigate

[the insured’s] claim for a defense to the Roussel buy-out lawsuits and failed to subject

the results of that investigation to a fair review, resulting in a bad faith failure to defend,”

or in other words, an abnormal bad faith claim. Id. at 668. Relying upon a decision

from the Supreme Court of Arizona, the Alabama Supreme Court held that “an

insurer’s subjective belief that a portion of its insurance contract precludes coverage is

not an absolute defense to a bad faith claim.” Id. at 669 (citing Sparks v. Republic Nat’l

Life Ins. Co., 132 Ariz. 529, 647 P. 2d 1127 (1982), cert. denied., 459 U.S. 1070, 103 S. Ct.

490, 74 L. Ed. 2d 632 (1982)). The Alabama Supreme Court reasoned:

“If the insurer’s interpretation of its own contract as excluding coverage

could render an insured’s claim ‘fairly debatable,’ then insurers would be

encouraged to write ambiguous insurance contracts, secure in the

knowledge that an obscure portion of the policy would provide an

absolute defense to a claim of bad faith.”

Blackburn, 667 So. 2d at 669 (quoting Sparks, 132 Ariz. at 539, 647 P. 2d at 1137).

In White v. State Farm Fire & Cas. Co., 953 So. 2d 340 (Ala. 2006), the Alabama

Supreme Court explicitly stated that,

in an “abnormal [bad faith]” case, [an insurer] cannot use ambiguity in the

contract as a basis for claiming a legitimate or arguable reason for not

paying the claim. Otherwise, an insurance company would have the

incentive to write an ambiguous policy in order to create a defense to a

bad-faith claim.

Id. at 349 (emphasis added). White relied upon the Alabama Supreme Court’s previous

decision in State Farm Fire & Cas. Co. v. Slade, 747 So. 2d 293 (Ala. 1999), which declared:

To this date, the abnormal cases have been limited to those instances in

which the plaintiff produced substantial evidence showing that the insurer

(1) intentionally or recklessly failed to investigate the plaintiff’s claim; (2)

intentionally or recklessly failed to properly subject the plaintiff’s claim to

a cognitive evaluation or review; (3) created its own debatable reason for

denying the plaintiff’s claim; or (4) relied on an ambiguous portion of the policy

as a lawful basis to deny the plaintiff’s claim.

Id. at 306-07 (emphasis added).

Multiple other decisions have recited the quoted language from Slade, thereby

assessing ambiguous policy terms in the context of abnormal bad faith claims. See, e.g.,

Dawson, 2021 WL 3568620, at *8; Houser v. Allstate Ins. Co., No. 2:20-CV-01661-ACA,

2021 WL 824988, at *3 (N.D. Ala. Mar. 4, 2021), clarified on denial of reconsideration, No.

2:20-CV-01661-ACA, 2021 WL 2193582 (N.D. Ala. Apr. 28, 2021); Lord v. Allstate Ins.

Co., 47 F. Supp. 3d 1288, 1299 (N.D. Ala. 2014); Phillips, 2013 WL 5974906, at *6; Nat’l

Ins. Ass’n v. Sockwell, 829 So. 2d 111, 129-30 (Ala. 2002). The foregoing decisions

provide that an insurer’s interpretation of an ambiguous term in an insurance policy

cannot serve as a reasonably legitimate, arguable, or debatable reason for a claim denial,

at least for abnormal bad faith claims.

Contrastingly, the applicability of this principle to normal bad faith claims does

not manifest as clearly. In Employees’ Benefit Ass’n v. Grissett, 732 So. 2d 968 (Ala. 1998),

the Alabama Supreme Court extended Blackburn to normal bad faith claims, holding:

“in a ‘normal’ [bad faith] case, the insurer cannot use ambiguity in the contract as a basis

for claiming a debatable reason not to pay the claim. Otherwise, an insurer would have

the incentive to write ambiguous polices in order to create an absolute defense to a bad-

faith claim.” Id. at 976-77 (citing Blackburn, 667 So. 2d at 669); see also United Servs. Auto.

Ass’n v. Hobbs, 858 So. 2d 966, 974 (Ala. Civ. App. 2003) (“In a ‘normal’ case the insurer

is precluded from using an ambiguity in the contract as a basis for claiming a debatable

reason not to pay a claim.”) (citing Grissett, 732 So. 2d at 976). As one decision has

discerned, this principle from Grissett appears to be an outlier. See Wilson v. Cent. United

Life Ins. Co., No. 6:09-CV-1343-TMP, 2011 WL 13285996, *10-11 (N.D. Ala. Aug. 19,

2011) (observing that in Grissett, the Alabama Supreme Court “seemed to say that the

use of an ambiguous contract provision to avoid payment is simply one form of a

‘normal’ bad faith claim,” while “[t]he more recent cases [Watson v. Life Insurance Co. of

Alabama, 74 So.3d 470 (Ala. Civ. App. 2011); White, 953 So. 2d at 349; and Singleton v.

State Farm Fire & Casualty Co., 928 So.2d 280, 283 (Ala. 2005)] seem to firmly place in

the ‘abnormal’ camp a theory of bad faith grounded on the insurer’s reliance on an

ambiguous contract provision for its refusal to pay.”).

The Alabama Supreme Court has not explicitly overturned or modified Grissett,

and the later decisions may not have effected a reversal or modification. However, the

court need not resolve this issue at this juncture as the abnormal bad faith claim surely

proceeds, and the normal bad faith and abnormal bad faith claims essentially comprise

a single claim. See Brechbill, 144 So. 3d at 257-58; Cole, 326 F. Supp. 3d at 1329.

Therefore, the court will await further review of this issue upon the parties’ opportunity

to address it at the appropriate time.

In summary, because Nationwide’s interpretation of the ambiguous policy term

“prevented” cannot serve as a legitimate or debatable reason for denying Garber’s trip

cancellation claim, the court cannot grant judgment on the pleadings in Nationwide’s

favor on Garber’s bad faith claim based upon his alleged inability to travel due to a

mandatory evacuation order.

B. Nationwide Does Not Warrant Judgment on the Pleadings for

Garber’s Bad Faith Claim Based Upon the “Uninhabitability” of the

Rental Property, as Factual Issues Remain Regarding Whether

Nationwide Intentionally Failed to Determine the Existence of a

Lawful Basis for Denying the Claim

Pursuant to prior analysis, Garber’s bad faith claim stemming from the rental

home’s habitability does not involve the construction of an ambiguous policy term.

Nevertheless, Garber’s Complaint presents a viable bad faith claim under this theory.

As with the claim based upon the mandatory evacuation, Garber’s Complaint plausibly

alleges facts which, if accepted as true, support each element of the bad faith cause of

action.

Regarding whether Garber plausibly alleged Nationwide’s lack of a legitimate,

debatable, or arguable reason for denying the insurance claim, Garber’s Complaint

recites his claims and appeals letters and Nationwide’s denials. Those allegations depict

that Nationwide denied his insurance claim because Turnkey Vacation Rentals

represented the rental home suffered no interior damage and did not become

“Uninhabitable” pursuant to the policy terms.

Ordinarily, that allegation would present at least an arguable reason for denying

the claim. However, the Complaint also calls into question the reasonableness of

Nationwide’s proffered basis for denial. In particular, Garber questions whether

Nationwide adequately investigated how Turnkey determined the house’s habitability,

whether mold existed inside the house, and how the level of damage the house sustained

compared to the level of damage to other houses in the area, particularly given Garber’s

assertion that the rental home lost its siding from two walls in the midst of Hurricane

Sally.

Thus, the Complaint does not conclusively establish that Nationwide possessed

a legitimate, arguable, or debatable reason for denying the claim; rather, it raises factual

issues regarding whether Nationwide intentionally or recklessly failed to investigate

Garber’s claim before denying it. Those issues require development through discovery;

consequently, Garber’s bad faith claim based upon the alleged “Uninhabitability” of the

rental property will survive the motion for judgment on the pleadings.

The court recognizes the general rule that a bad faith claim will fail unless the

plaintiff can demonstrate he should receive a directed verdict on the breach of contract

claim. See Progressive Specialty Ins. Co. v. Hall, No. 2:14-CV-02047-JEO, 2016 WL

3876440, at *7 (N.D. Ala. June 20, 2016), report and recommendation adopted sub

nom. Progressive Specialty Ins. Co. v. Hall, No. 2:14-CV-02047-RDP, 2016 WL 3854232

(N.D. Ala. July 15, 2016) (quoting Nat. Sav. Life Ins. Co. v. Dutton, 419 So. 2d 1357, 1362

(Ala. 1982)) (“For a plaintiff to make out a prima facie case of bad-faith refusal to pay in

the ‘normal’ case, ‘the proof offered must show that the plaintiff is entitled to a directed

verdict on the contract claim and, thus, entitled to recover on the contract claim as a

matter of law.’”). However, an insured may prevail on an abnormal, bad-faith-failure-

to-investigate claim, even in the absence of entitlement to a pre-verdict judgment on

the breach of contract claim, when the insurer intentionally or recklessly failed to

investigate an insured’s claim. See Brechbill, 144 So. 3d at 259 (“[E]vidence for the

insurer’s denial was gathered after the denial was made . . . .”) (emphasis in original). If

the evidence eventually demonstrates Nationwide possessed a legitimate, arguable, or

debatable reason for denying Garber’s claim at the time of the denial decision, Garber’s bad

faith claim will succumb to the “heavy burden” he bears of proving bad faith. See Hall,

2016 WL 3876440, at *6. However, at this stage, factual issues remain regarding the

viability of both the breach of contract and bad faith claims. See Thomas v. Principal Fin.

Grp., 566 So. 2d 735, 750 (Ala. 1990) (“If the ‘directed verdict on the contract claim

standard’ were applied, Principal Mutual would be allowed to obtain a judgment as a

matter of law on the bad faith claim, even though a factual question was presented as

to whether its claims examiners either intentionally or recklessly failed to subject the

results of the investigation to a cognitive evaluation and review and, thereby

intentionally failed to determine prior to denying the claim whether there was, in fact, a

lawful basis for denial.”).

In summary, because factual issues remain regarding whether Nationwide

presented legitimate or debatable reasons for denying Garber’s trip cancellation claim,

the court cannot grant judgment on the pleadings in Nationwide’s favor on Garber’s

bad faith claim based upon the “Uninhabitability” of the rental property.

III. Nationwide Warrants Judgment on the Pleadings for Garber’s Claims of

Fraudulent Misrepresentation and Deceit, as Those Claims Solely Present

Nationwide’s Alleged Failure to Honor Contractual Promises

Garber’s Complaint asserts separate causes of action for “Fraud –

Misrepresentation of Material Facts, § 6-5-101, Code of Alabama 1975” (Count IV);5

“Deceit, § 6-5-103, Code of Alabama (1975)” (Count VI);6 and “Deceit – Fraudulent

5 Section 6-5-101 states: “Misrepresentations of a material fact made willfully to deceive, or recklessly

without knowledge, and acted on by the opposite party, or if made by mistake and innocently and

acted on by the opposite party, constitute legal fraud.” Ala. Code § 6-5-101.

6 Section 6-5-103 states:

Willful misrepresentation of a material fact made to induce another to act, and

upon which he does act to his injury, will give a right of action. Mere concealment of

such a fact, unless done in such a manner as to deceive and mislead, will not support

an action. In all cases of deceit, knowledge of a falsehood constitutes an essential

element. A fraudulent or reckless representation of facts as true, which the party may

not know to be false, if intended to deceive, is equivalent to a knowledge of the

falsehood.

Deceit, § 6-5-104, Code of Alabama (1975)” (Count VII).7 (Doc. 1).

To recover on a claim of fraudulent misrepresentation, see § 6-5-101, Ala. Code

1975, a plaintiff must establish four elements: “(1) a false representation; (2) of a

material existing fact; (3) reasonably relied upon by the plaintiff; and (4) who suffered

damage as a proximate consequence of the misrepresentation.” Southland Bank v. A&A

Drywall Supply Co., Inc., 21 So. 3d 1196, 1210 (Ala. 2008) (citing Ex parte Michelin North

America, Inc., 795 So. 2d 674, 678 (Ala. 2001)).

A claim for deceit

is extremely similar to [a misrepresentation claim], except

that “a[n] action for deceit, under . . . § 6-5-103 and § 6-5-

104, results from either a willful or reckless

misrepresentation or a suppression of material facts with an

Ala. Code § 6-5-103.

7 Section 6-5-104 sates:

(a) One who willfully deceives another with intent to induce him to alter his position

to his injury or risk is liable for any damage which he thereby suffers.

(b) A deceit within the meaning of this section is either:

(1) The suggestion as a fact of that which is not true by one who does not

believe it to be true;

(2) The assertion as a fact of that which is not true by one who has no

reasonable ground for believing it to be true;

(3) The suppression of a fact by one who is bound to disclose it or who gives

information of other facts which are likely to mislead for want of

communication of that fact; or

(4) A promise made without any intention of performing it.

Ala. Code § 6-5-104.

intent to mislead,” Whitlow v. Bruno’s Inc., 567 So. 2d 1235,

1241 (Ala. 1990), while an action for misrepresentation of

material fact can be based on an unintentional

misrepresentation. [§ 6-5-101].

Montgomery Rubber & Gasket Co. v. Belmont Machinery Co., 308 F. Supp. 2d

1293, 1299 (M.D. Ala. 2004).

Fratelli Cosulich Unipessoal, S.A. v. Specialty Fuels Bunkering, LLC, No. CIV.A. 13-00545-

KD-C, 2015 WL 4038979, at *12 (S.D. Ala. July 2, 2015) (alterations and ellipsis in

original).8

In Alabama, “[a] mere breach of a contractual provision is not sufficient to

support a charge of fraud.” Brown-Marx Assocs., Ltd. v. Emigrant Sav. Bank, 703 F.2d

1361, 1370-71 (11th Cir. 1983) (citing McAdory v. Jones, 260 Ala. 547, 71 So.2d 526, 528

(Ala. 1954)). Rather, “failure to fulfill promises does not give rise to actionable fraud

unless it is alleged and proved that the representations were made with intent to deceive

and with no intent at the time the representations were made to carry them out.” Brown-

Marx Assocs., 703 F.2d at 1370 (citing Evans v. Adam’s Rib, Inc., 289 Ala. 377, 267 So. 2d

448, 450 (Ala. 1972); Bracewell v. Bryan, 57 Ala. App. 494, 329 So. 2d 552 (Ala. Civ. App.

1976)). “Failure to perform a promise is not of itself adequate evidence of intent to

support an action for fraud.” Id. (citing Evans, 289 Ala. 377, 67 So. 2d at 450; Bracewell,

57 Ala. App. 494, 329 So. 2d 552). Generally, “to assert a fraud claim that stems from

the same general facts as one’s breach-of-contract claim, the fraud claim must be based

8 A cause of action under § 6-5-104 can also address suppression, as discussed in the next section.

on representations independent from the promises in the contract and must

independently satisfy the elements of fraud.” Hunt Petroleum Corp. v. State, 901 So. 2d 1,

10-11 (Ala. 2004) (Houston, J., concurring) (emphasis omitted).9

To support his causes of action for fraud and deceit, Garber alleges Turnkey

advised him to purchase travel insurance because he could not receive a refund from

9 Justice Houston’s concurrence does not bind this court regarding Alabama law, yet federal court

decisions have heeded Justice Houston’s admonition. See Muncher v. NCR Corp., No. 2:16-CV-782-

VEH, 2017 WL 2774805, at ** 16-17 (N.D. Ala. June 27, 2017) (extensively analyzing Justice

Houston’s concurrence and the Alabama case law preceding it, and remarking, “Justice Houston’s

approach is in line with long-settled Alabama law,” and “several other Judges have also found Justice

Houston’s analysis to be sound.”); NTA Graphics S., Inc. v. Axiom Impressions, LLC, 413 F. Supp. 3d

1164, 1178 (N.D. Ala. 2019); Jimmy Moore Agency, Inc. v. Allstate Ins. Co., No. 2:17-CV-0693-JEO, 2019

WL 10754334, at *8 (N.D. Ala. June 18, 2019); Am. Chemicals & Equip., Inc. v. Cont’l Cas. Co., No. 6:15-

CV-00299-MHH, 2018 WL 4539464, at *5 (N.D. Ala. Sept. 21, 2018); Killough v. Monkress, No. 5:17-

CV-00247-AKK, 2018 WL 3641859, at *5-6 (N.D. Ala. Aug. 1, 2018); Norfolk S. Ry. Co. v. Boatright

R.R. Prod., Inc., No. 2:17-CV-01787-AKK, 2018 WL 2299249, at *11 (N.D. Ala. May 21, 2018), on

reconsideration in part, No. 2:17-CV-01787-AKK, 2019 WL 1199836 (N.D. Ala. Mar. 14, 2019).

To be clear, several cases adjudicate promissory fraud claims based upon the breach of a

contract’s promises (that is, the promise to perform certain obligations under a contract serves as the

alleged misrepresentation), so long as a plaintiff satisfies the other elements of the claim. See Heisz v.

Galt Industries, Inc., 93 So. 3d 918, 925 (Ala. 2012); Target Media Partners Operating Co., LLC v. Specialty

Mktg. Corp., 177 So. 3d 843, 866-67 (Ala. 2013); Purcell Co. v. Spriggs Enterprises, Inc., 431 So. 2d 515, 519

(Ala. 1983). To prevail on a promissory fraud claim, Plaintiffs must satisfy two additional elements in

addition to the afore-cited factors: (5) proof that, at the time of the misrepresentation, the defendant

possessed the intent not to perform the act promised; and (6) proof that Defendants possessed the

intent to deceive. See Robinson v. Sovran Acquisition Ltd. P’ship, 70 So. 3d 390, 396 (Ala. Civ. App. 2011)

(quoting Coastal Concrete Co. v. Patterson, 503 So. 2d 824, 826 (Ala. 1987)). On a promissory fraud claim,

a plaintiff must establish the defendant possessed the requisite intent to deceive when it issued the

promise, i.e., when it executes a contract. Southland Bank v. A&A Drywall Supply Co., Inc., 21 So. 3d

1196, 1211 (Ala. 2008) (citing Martin v. American Medical Int’l, Inc., 516 So. 2d 640 (Ala. 1987)). A

plaintiff cannot satisfy its burden of proving intent to deceive merely on the basis that a defendant

failed to keep its promise. Wright v. AmSouth Bancorporation, 320 F.3d 1198, 1204 (11th Cir. 2003)

(applying Alabama law). Yet, “[c]ircumstantial evidence can be used to establish an intent not to

perform and an intent to deceive.” Target Media, 177 So. 3d at 867. As discussed in subsequent pages

of text, the pleadings reasonably indicate that Nationwide offered a policy designed to insure against

travel perils, not that it intended to deceive Garber into purchasing a policy that it had no intent of

honoring under any circumstances. Accordingly, the pleadings do not provide a basis for a viable

claim of promissory fraud.

Turnkey more than 72 hours after booking. (Doc. 1, ¶ 62). Garber clicked the link

Turnkey provided, which directed him to a Nationwide website that rendered the

following, alleged misrepresentations regarding Travel Protection Insurance:

a. Protect your vacation investment against unforeseen events like a

hurricane . . . .

b. We provide trip cancellation and interruption coverage protecting

up to 100% of your trip costs for reasons like: weather disruptions

. . . .

c. Protection Brands has partnered with world class, respected

underwriters like Nationwide and Berkshire Hathaway to ensure

you have coverage you can count on.

d. Standard coverage provides 100% reimbursement for over 30

events that could cause you to cancel or interrupt your travel plans.

e. Stuff Happens – Prepare for the Unforeseen. . . . One in six

travelers experience unforeseen circumstances such as an illness, a

storm, or other events that can result in a cancelled or delayed trip

and a loss of all or part of your vacation investment. One of the

most common reasons people consider travel insurance is for the

peace of mind in knowing that your prepaid nonrefundable

investment is protected should your vacation get interrupted . . . or

should you have to cancel the trip altogether.

f. Travel Insurance can help: cover nonrefundable payments such as

vacation rental . . . .

g. Reimburse expenses such as accommodations when travel is

delayed or interrupted due to weather, hurricanes, blizzards and

other natural disasters.

(Id. ¶ 63).

Nationwide also allegedly provided Garber a link to a sample policy, which

mirrors the actual policy language as follows:

TRIP CANCELLATION – The Company will reimburse you, up to the

Maximum Benefit shown on the confirmation of Coverage, If You are

prevented from taking Your Trip for any of the following reasons that are

Unforeseen and takes place after the Effective Date:

Mandatory evacuation (or public official evacuation advisements where

there is no mandatory evacuation) issued by local government authorities

at Your Trip destination due to hurricane or other natural disaster.

(Id. ¶ 64).10

The foregoing statements reasonably indicate that Nationwide offered a policy

designed to insure against travel perils, not that it intended to deceive Garber into

purchasing a policy that it had no intent of honoring under any circumstances. Indeed,

the statements do not indicate Nationwide misrepresented its endeavor to provide trip

cancellation insurance. See Slade, 747 So. 2d at 323 (holding that plaintiffs could not

have relied on insurance agent’s statements about quality of insurance policy because

the “statements amounted to nothing more than mere ‘puffery,’ in light of [plaintiffs’]

level of education and degree of sophistication”); Mason v. Chrysler Corp., 653 So. 2d 951,

953-54 (Ala. 1995) (“This Court has held that statements of opinion amounting to

“puffery” or predictions as to events to occur in the future are not statements

concerning material facts upon which individuals have a right to act and, therefore, will

not support a fraud claim.”) (citations omitted); c.f., Am. Pioneer Life Ins. Co. v. Sherrard,

10 Garber also alleges he reasonably relied upon Nationwide’s misrepresentations when he paid the

premiums for the trip cancellation insurance, and he suffered damages as a result of the

misrepresentations when Nationwide failed to pay his insurance claim. (Doc. 1, ¶¶ 66, 73-74, 83-85,

88-92).

477 So. 2d 287, 291 (Ala. 1985) (Statements by insurance company executive that new

policy was “greatest thing he had ever seen,” that it was company’s “number one

priority,” and that it would “revolutionize the industry” were mere puffery and did not

support claim of fraud.). Garber does not allege any facts, other than Nationwide’s

ultimate non-payment of benefits, indicating that Nationwide lacked the intent to honor

the policy at the time it rendered the above representations. See Killough v. Monkress, No.

5:17-CV-00247-AKK, 2018 WL 3641859, at *5-6 (N.D. Ala. Aug. 1, 2018) (dismissing

fraud claim when plaintiff “failed to allege specific conduct, independent from

[defendant’s] purported . . . failure to perform its contractual obligations, to establish

that [defendant] intended to deceive [plaintiff] at the time the agreement was made, or

to show the existence of representations, other than [defendant’s] contractual promises,

capable of supporting an independent fraud claim”).

Garber’s other allegations amount to the assertion that Nationwide represented

it would pay benefits under the trip cancellation policy, but that it eventually failed to

do so. As those allegations intertwine inextricably with Garber’s breach of contract

claim, they do not provide an actionable foundation for fraud. Compare Voss v. State

Farm Mut. Auto. Ins. Co., No. 1:17-CV-01465-SGC, 2018 WL 4635747, at *8 (N.D. Ala.

Sept. 27, 2018) (rejecting fraud claim that “inextricably linked to the promises made in

the insurance contract”), with NTA Graphics S., Inc. v. Axiom Impressions, LLC, 413 F.

Supp. 3d 1164, 1178-79 (N.D. Ala. 2019) (permitting a fraud claim to proceed when

“the alleged conduct giving rise to [the] fraudulent inducement claims is independent

from the conduct underlying [the] breach of contract claim”).

In summary, as Garber’s fraudulent misrepresentation and deceit claims assert

only Nationwide’s alleged failure to honor contractual promises, Nationwide warrants

judgment on the pleadings for those claims.

IV. Nationwide Warrants Judgment on the Pleadings for Garber’s Fraudulent

Suppression Claim, as Nationwide Did Not Owe Garber a Duty to

Disclose It Would Not Honor His Trip Cancellation Claim Under the

Circumstances Presented, and that Claim Solely Presents Nationwide’s

Alleged Failure to Honor Contractual Promises

Garber asserts a cause of action for “Suppression of Material Facts, § 6-5-102,

Code of Alabama 1975” (Count V). Ala. Code § 6-5-102 provides: “Suppression of a

material fact which the party is under an obligation to communicate constitutes fraud.

The obligation to communicate may arise from the confidential relations of the parties

or from the particular circumstances of the case.” To state a viable claim for fraudulent

suppression, Garber must allege that: (1) Nationwide possessed a duty to disclose an

existing material fact; (2) Nationwide concealed or suppressed that material fact; (3)

Nationwide’s suppression induced him to act or refrain from acting; and (4) he suffered

actual damage as a proximate result. Brett/Robinson Gulf Corp. v. Phoenix on Bay II Owners

Ass’n, Inc., – So. 3d – No. 1180945, 2021 WL 2677854, at *15-16 (Ala. June 30, 2021)

(citing Aliant Bank v. Four Star Invs., Inc., 244 So. 3d 896, 930 (Ala. 2017)). Garber’s

claim for deceit pursuant to Ala. Code § 6-5-104 also addresses suppression, as that

statute encompasses “[t]he suppression of a fact by one who is bound to disclose it or

who gives information of other facts which are likely to mislead for want of

communication of that fact.” Ala. Code § 6-5-104(b)(3).

Garber alleges Nationwide had an obligation to communicate truthful, material

facts of coverage to him, arising from the “confidential relations of the parties or from

the particular circumstances of this case.” (Doc. 1, ¶ 80(I)). In contravention of this

alleged obligation, Nationwide allegedly “acted willfully to deceive, or recklessly without

knowledge, when it did not disclose or communicate to Garber the material truth

regarding coverage.” (Id. ¶ 80(II)). In particular, Nationwide allegedly failed to disclose

the following information:

a. That this travel protection insurance would not Protect his vacation

investment against unforeseen events like a hurricane. . . .

b. That this travel protection coverage would not protect up to 100%

of his trip costs for reasons like: weather disruptions. . . .

c. That this travel protection insurance was not coverage that could

be relied upon.

d. That this travel protection insurance does not provide 100%

reimbursement for weather related events that could cause Garber

to cancel or interrupt his travel plans.

e. That this travel protection insurance would not provide coverage

for an unforeseen weather event like a hurricane.

f. That this travel protection insurance would not reimburse expenses

such as accommodations when travel is delayed or interrupted due

to weather or hurricanes.

g. That this travel protection insurance will not follow the terms and

wording of the policy regarding a claim for reimbursement if a trip

is canceled due to an evacuations order issued due to weather

conditions such as a hurricane.

(Id. ¶ 80(III)).

Even though Garber lodges the bare allegation that Nationwide owed him the

duty to disclose the facts it allegedly omitted, the remainder of the alleged facts

demonstrate Nationwide did not owe any duty supportive of a suppression claim. See

Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (Well-pleaded factual allegations supporting a

viable claim for relief do not encompass mere “labels and conclusions,” legal

conclusions, conclusory statements, or formulaic recitations and threadbare recitals of

the elements of a cause of action.).

“A duty to communicate can arise from a confidential relationship between the

plaintiff and the defendant, from the particular circumstances of the case, or from a

request for information, but mere silence in the absence of a duty to disclose is not

fraudulent.” Flying J Fish Farm v. Peoples Bank of Greensboro, 12 So. 3d 1185, 1192 (Ala.

2008) (citations omitted). The following factors apply in assessing whether alleged

circumstances create a duty of disclosure: “‘(1) the relationship of the parties; (2) the

relative knowledge of the parties; (3) the value of the particular fact; (4) the plaintiff’s

opportunity to ascertain the fact; (5) the customs of the trade; and (6) other relevant

circumstances.’” Bethel v. Thorn, 757 So. 2d 1154, 1162 (Ala. 1999) (quoting Owen, 729

So. 2d at 842-43).

“When one party has superior knowledge of a fact that is unknown to the other

party, and the lack of knowledge will induce the other party to act in a manner in which

he otherwise might not act, the obligation to disclose is ‘particularly compelling.’” Flying

J, 12 So. 3d at 1192 (citations and internal quotation marks omitted). However, superior

knowledge of a fact, without more, does not impose upon a party a legal duty to disclose

such information. Id. (citations and internal quotation marks omitted). “One may also

recover for fraudulent concealment by showing active concealment of a material fact

with an intent to deceive or mislead.” Auburn’s Gameday Ctr. at Magnolia Corner Owners

Ass’n, Inc. v. Murray, 138 So. 3d 317, 330 (Ala. Civ. App. 2013) (citations omitted).

Garber has not alleged a confidential relationship existed between him and

Nationwide, that he requested any particular information that Nationwide failed to

disclose, or that the customs of the trade required Nationwide to explain, at the time it

issued the policy, how it would interpret all policy terms in all contexts. Rather, he

asserts

the relative knowledge of the parties, the value of the particular fact and

the plaintiff’s opportunity to ascertain the facts all point to the existence

of a duty to disclose both [Nationwide’s] overly restrictive use of the term

“prevent” and its decision to add a time limit limiting the peril only to

[t]he day on which the trip was supposed to begin.

(Doc. 29 at 13). However, the pleadings demonstrate Garber retained full access to the

policy language; consequently, he possessed as much knowledge as Nationwide

regarding the policy terms. Thus, Garber does not plausibly allege that Nationwide

sustained any duty to disclose, at the time he purchased the policy, the manner in which

it would eventually construe certain policy terms, particularly under circumstances

which had not yet presented themselves.

Moreover, Garber’s allegations of suppression merely mirror his claim for breach

of contract. He alleges Nationwide wrongfully failed to inform him it would not honor

the trip cancellation policy under the circumstances presented. For the same reasons

warranting rejection of the fraudulent misrepresentation and deceit claims, a

suppression claim that inextricably intertwines with a breach of contract claim cannot

succeed.

In summary, Nationwide warrants judgment on the pleadings for Garber’s

fraudulent suppression claim because Nationwide did not owe Garber a duty to disclose

the particular, alleged facts, and because the claim mirrors Garber’s breach of contract

cause of action.

CONCLUSION AND ORDER

As portrayed herein, the pleadings present triable issues of material fact as to

Garber’s breach of contract and bad faith causes of action, but not as to his fraudulent

misrepresentation, fraudulent suppression, and deceit causes of action. Therefore, the

court PARTIALLY GRANTS Nationwide’s motion for judgment on the pleadings.

The court DISMISSES Garber’s fraudulent causes of action for fraudulent

misrepresentation, fraudulent suppression, and deceit (Counts IV, V, VI, and VII).

DONE and ORDERED this 7" day of December, 2021.

Hf N. fanny IR.

UNITED STATES MAGISTRATE JUDGE

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