Zajic v. Payne (Ex parte Allstate Prop. & Cas. Ins. Co.)
| Decision Date | 05 May 2017 |
| Docket Number | 1150511,1150269,1151266 |
| Parties | EX PARTE ALLSTATE PROPERTY AND CASUALTY INSURANCE COMPANY (In re: Elizabeth Rebecca Zajic v. Kimberly D. Payne and Allstate Property and Casualty Insurance Company) Ex parte Allstate Property and Casualty Insurance Company (In re: Danielle Carter v. Alvin Lee Walker and Allstate Property and Casualty Insurance Company) Ex parte GEICO Indemnity Company (In re: Rasheena Harris–Williams v. Frederick Chamberlin IV and GEICO Indemnity Company) |
| Court | Alabama Supreme Court |
William F. Smith II of Vernis & Bowling of Birmingham, LLC, Birmingham, for petitioner Allstate Property and Casualty Insurance Company.
S. Reid Dunlap, GEICO staff counsel, Birmingham, for petitioner GEICO Indemnity Company.
Ralph W. Hornsby, Jr., and S.A. Watson, Jr., of Hornsby, Watson & Hornsby, Huntsville, for respondent Elizabeth Rebecca Zajic.
Larry B. Moore and Kimberly E. Linville of Moore, Berry & Linville, Florence, for respondent Kimberly D. Payne.
Paul A. Miller and Patrick W. Franklin of Miller, Christie & Kinney, P.C., Vestavia, for respondent Frederick Chamberlin IV.
Alex L. Holtsford, Jr., of Holtsford, Gilliland, Higgins, Hitson & Howard, P.C., Montgomery, for respondent Alvin Lee Walker.
In these three matters, Allstate Property and Casualty Insurance Company ("Allstate") and GEICO Indemnity Company ("GEICO") separately petition this Court for a writ of mandamus. The petitions seek writs directing the Madison, Macon, and Jefferson Circuit Courts to vacate their respective orders purporting to allow separate parties who have underinsured-motorist ("UIM") insurance with Allstate or GEICO to enter into, without the applicable insurer's consent, settlement agreements with an alleged underinsured tortfeasor. In case no. 1150269, we dismiss the petition as untimely filed. In case no. 1150511 and case no. 1151266, we grant the petitions and issue the writs.
Each of these matters resulted from separate automobile accidents between either an Allstate or a GEICO insured with UIM coverage and allegedly underinsured tortfeasors. In each case, it appears undisputed that the applicable insurance policy contained a "consent-to-settle" clause requiring the provision of notice to, and the consent of, the affected insurer prior to the insured's settlement of any claims against the alleged underinsured tortfeasors and/or a release of the tortfeasors' liability.
On November 1, 2012, Elizabeth Rebecca Zajic filed in the Madison Circuit Court a complaint against Kimberly D. Payne, alleging that the two had been involved in an automobile accident on November 1, 2010, in which Payne had acted negligently and wantonly. Zajic also included a claim against her insurer, Allstate, seeking to recover UIM benefits. Thereafter, Payne's liability insurer offered to tender the entire $50,000 available under Payne's policy limits in exchange for a full release of Payne's liability.
Pursuant to the procedure outlined by this Court in Lambert v. State Farm Mutual Automobile Insurance Co., 576 So.2d 160, 167 (Ala. 1991), Zajic notified Allstate of the settlement offer and sought its consent to settle. Allstate, however, declined to consent; instead, as also permitted by Lambert, Allstate opted to advance the $50,000 to Zajic. Allstate then opted out of participation in further proceedings determining Payne's liability and Zajic's damages.
Approximately 10 months after Allstate opted out, Payne filed a "Motion to Enforce Settlement and for Pro Tanto Dismissal of Defendant, Kimberly D. Payne." In her motion, Payne, citing Lambert, among other authorities, argued that "the only permissible reason for a UIM carrier to advance or front the tortfeasor's liability limits is to preserve subrogation." Payne, citing Pennsylvania National Mutual Casualty Insurance Co. v. Bradford, 164 So.3d 537 (Ala. 2014), and Hardin v. Metlife Auto & Home Insurance Co., 982 So.2d 522 (Ala. Civ. App. 2007), further argued that Allstate had, after advancing the money in Zajic's case, failed to file either a subrogation cross-claim or a separate action against Payne, and that the applicable statute of limitations had, by that time, expired on any such action. Thus, Payne contended:
"As [Zajic] originally reached a settlement agreement with ... Payne, to accept her policy limits of $50,000.00 and to release and dismiss ... Payne from [the] case, and because the only delay was an alleged subrogation claim by ... [Allstate] which no longer exists as a matter of law, the original settlement agreement ... should not be prevented from proceeding forward."
In response, Allstate argued, among other things, that, despite the expiration of the statute of limitations on direct actions it might have against Payne, under Bradford and pursuant to the terms of the policy, it retained certain reimbursement rights to any funds Zajic might obtain from Payne in excess of the liability policy.
After a hearing and over Allstate's objection, the trial court, on October 20, 2015, granted Payne's motion. More specifically, the trial court directed that the parties "effectuate the settlement" and submit appropriate pleadings seeking to dismiss the claims against Payne. In response, Allstate filed, on November 4, 2015, a motion requesting that the trial court "alter, amend, or vacate" its order. The trial court denied that motion by order entered the following day. Following the denial of its motion seeking relief from that order, Allstate filed the instant petition for a writ of mandamus on December 16, 2015.
As the result of an automobile accident that occurred in Tuskegee on August 5, 2013, Danielle Carter sued, in the Macon Circuit Court, the alleged tortfeasor, Alvin Lee Walker. Carter's complaint also included a count against Allstate, her UIM insurer, pursuant to which Carter, who alleged that Walker was underinsured, sought to recover UIM benefits under her own policy. Walker's liability insurer subsequently made a $25,000 policy-limits offer to settle Carter's claims against Walker. Carter notified Allstate of the settlement offer; Allstate refused to consent to the settlement and, pursuant to the Lambert guidelines, instead elected to advance Carter $25,000. In addition, on May 12, 2014, Allstate obtained leave from the trial court to opt out of further participation in the litigation.
Over one year later, in September 2015, Walker filed a motion seeking "enforcement" of the original settlement offer and his dismissal from the action. In his motion, Walker noted that, despite the fact that "the only permissible reason for a UIM carrier to ‘front’ liability limits is to preserve subrogation," Allstate had not filed either a cross-claim or a separate subrogation action against him; thus, according to Walker, because the statute of limitations applicable to any such claim against him had expired with no action by Allstate, the settlement offer was due to be "enforced." Citing Bradford, Allstate responded that, although the statute of limitations might foreclose the right of a UIM insurer to maintain a direct action against the tortfeasor for recovery of amounts paid to its insured, the insurer had other means to seek reimbursement if the UIM insured obtained amounts from the tortfeasor in excess of the liability policy.
On January 7, 2016, the trial court ordered the parties to effectuate settlement of Carter's claims against Walker and dismissed Walker with prejudice. The trial court further noted: "The case will remain pending only against the underinsured motorist carrier, Allstate ...." Allstate responded with the instant petition for a writ of mandamus, which was filed on February 17, 2016.
On October 22, 2013, Rasheena Harris–Williams was, while driving a vehicle insured under a policy issued by GEICO, injured as the result of an automobile accident in Birmingham. Harris–Williams filed, in the Jefferson Circuit Court, a complaint against the alleged tortfeasor, Frederick Chamberlin IV. The complaint did not name GEICO as a party. Thereafter, Harris–Williams placed GEICO on notice, in light of the amount of Chamberlin’s policy limits, of her intent to also seek UIM benefits under the GEICO policy. Harris–Williams also notified GEICO that Chamberlin's insurer had extended a $25,000 policy-limits offer to settle her claims against Chamberlin in exchange for Chamberlin's dismissal and that bills related to her medical treatment already exceeded $20,000. Harris–Williams requested that GEICO consent to the settlement or advance funds in the amount of the settlement offer. GEICO declined to consent and, instead, remitted the requested amount, stating that it reserved its right of subrogation and to pursue reimbursement of the advanced settlement.
In May 2016, Harris–Williams amended her complaint to add GEICO as a named defendant and to formally assert a claim for UIM benefits. In June 2016, Chamberlin filed a motion seeking "enforcement" of the settlement offer to Harris–Williams and the dismissal of all claims against him. More specifically, Chamberlin argued, as in the above cases, that preservation of its subrogation rights was the only "permissible" reason for GEICO's decision and that, pursuant to Bradford and Hardin, supra, the two-year statute of limitations applicable to any subrogation claim against him had expired without action by GEICO. Thus, according to Chamberlin, "[t]he settlement agreement is due to be enforced in its entirety and upon payment of $25,000.00 by [his insurer], [he was] due to be released and dismissed from this case, with prejudice." The trial court, over GEICO's claim that Bradford and Hardin concerned only the filing of "new actions" and were, thus, inapposite, granted, on August 2, 2016, Chamberlin's motion in all respects and dismissed Chamberlin as a defendant. Following the denial of its motion requesting that the trial court "reconsider" that decision, GEICO...
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