Washington Nat. Ins. Co. v. Strickland

Rule of Law:

An insurance company is vicariously liable for the fraudulent misrepresentations of its soliciting agents under the doctrine of respondeat superior when those acts occur within the scope of employment, and punitive damages for such fraud require only an intent to deceive, not gross or malicious conduct.

Facts:

• Bruce Palmer met with Carol Strickland and her family to discuss medical insurance.
• Strickland chose a Washington National plan, paid a $100 premium, and received a conditional receipt stating coverage began that day.
• Palmer verbally assured Strickland she was immediately covered, specifically stating she would be covered 'going home from that meeting.'
• Relying on this assurance, Strickland cancelled an existing insurance application with a different company.
• The written receipt actually contained a clause stating agents could not modify contracts and coverage was subject to underwriting approval.
• Four days later, Strickland fell and injured her ankle.
• Palmer submitted Strickland's application late, and Washington National ultimately denied coverage because Strickland was overweight.
• Strickland was left without coverage for her injury due to the cancellation of her other policy.

Procedural Posture:

• Strickland filed suit against Washington National and Palmer for fraud and misrepresentation in the trial court.
• Washington National moved for a directed verdict at the close of plaintiff's evidence and at the close of all evidence, which the trial court denied.
• The jury returned a verdict in favor of Strickland, awarding compensatory and punitive damages.
• Washington National filed a post-trial motion for Judgment Notwithstanding the Verdict (JNOV) and/or a new trial.
• The trial court denied the post-trial motions.
• Washington National appealed the judgment to the Supreme Court of Alabama.