FARMERS INS. EXCHANGE V. MORRIS, [MS. 1121091, ALA., FEB. 12, 2016] 2016 WL 661671, __ SO.3D __ (ALA. 2016), REH'G DENIED, FEB. 24, 2017.
Kyle Morris sued Farmers Insurance for fraudulently inducing him to become a Farmers agent. Kyle was already an agent in his father's insurance agency, and Farmers agents assured him that continuing this relationship was not prohibited by any Farmers rules. After he worked successfully for Farmers for more than two years, Farmers terminated him because of an alleged conflict of interest from working with his father's agency. The termination caused him to lose the value of the work he did over that time.
Despite amicus support from the Business Council of Alabama; Alfa Insurance Corporation, Alfa Mutual Fire Insurance Company, Alfa Mutual General Insurance Corporation, Alfa Life Insurance Corporation, Alfa Mutual Insurance; The Alabama Civil Justice Reform Committee; Automobile Dealers Association of Alabama, Inc.; National Federation of Independent Business; Alabama Road Builders Association; Alabama Retail Association; Home Builders Association of Alabama; Alabama Associated General Contractors of America; Alabama Rural Electric Association of Cooperatives; Alabama Bankers Association; Association of Alabama Life Insurance Companies; and the Alabama Defense Lawyers Association, the Supreme Court of Alabama affirmed the $2.4 million fraud judgment and on February 24, 2017, denied rehearing.
The Supreme Court rejected Farmers' three arguments for judgment as a matter of law on the fraud claim. First, it argued that Morris was only an employee at will and so could not have any injury from reasonable reliance on the misrepresentation that he could become a Farmers agent while continuing in his father's agency. The Court held that Morris's status as an employee at will did not prevent him from asserting that he reasonably relied by altering his relationship with his father's business (i.e., by concentrating instead on selling Farmers policies). Second, the Court rejected an argument that the merger and integration clause precluded reliance on earlier oral misrepresentations – a statement in a contract that no other representations have been made does not bar a fraud action alleging that oral misrepresentations fraudulently induced the plaintiff to enter into the contract. Third, the Court rejected Farmers' argument that a statement available to Mr. Morris in its training materials should have alerted him to a Farmers rule against maintaining an office in another insurance agency; that rule was buried deep within training materials and both Mr. Morris and the Farmers agents who trained him testified that they had never seen it and were not aware of it, so a jury question was presented on whether it precluded reasonable reliance.