Bailey v. Progressive Specialty Ins. Co..

• Decision Date: 29 April 2011
• Docket Number: 1081801.
• Parties: Ginger BAILEYv.PROGRESSIVE SPECIALTY INSURANCE COMPANY.
• Court: Alabama Supreme Court

72 So.3d 587

Ginger BAILEY

v.PROGRESSIVE SPECIALTY INSURANCE COMPANY.

1081801.

Supreme Court of Alabama.

April 29, 2011.

Gene T. Moore, Tuscaloosa, for appellant.R. Larry Bradford and Shane T. Sears of Bradford & Sears, P.C., Birmingham, for appellee.MURDOCK, Justice.

Ginger Bailey appeals from a summary judgment entered by the Tuscaloosa Circuit Court against her and in favor of Progressive Specialty Insurance Company (“Progressive”) on her claims seeking uninsured-motorist benefits and alleging breach of contract and bad-faith failure to pay. We affirm the judgment of the trial court.

I. Facts and Procedural History

On June 3, 2006, Bailey was a passenger in an automobile that was struck by a van being driven by Luvert Caver. The accident occurred in the City of Tuscaloosa. After the collision, Caver fled the scene. As a result of the accident, Bailey suffered physical injuries, including fractured vertebrae in her back, and she incurred medical bills for the treatment of those injuries. Bailey had an automobile insurance policy with Progressive that provided uninsured-motorist (“UM”) coverage up to $50,000 for a single person for one accident. She timely informed Progressive of the accident.

On October 23, 2006, Bailey informed Progressive that she had outstanding medical bills from the accident and that she was filing a claim under her policy for UM benefits to pay the medical bills. It is undisputed that Bailey had already settled with a “primary” UM insurer, ALFA Insurance, for $20,000.

On May 17, 2007, Bailey sued Caver and fictitiously named parties, alleging against various parties negligence, wantonness, and negligent entrustment. It is undisputed that Bailey timely informed Progressive of the filing of the action against Caver.

On June 12, 2007, Progressive filed a motion to intervene in the action in order to “evaluate its exposure for possible UM benefits for the plaintiff.” On the same date, Progressive filed what it styled to be a “Complaint in Intervention” in which it asked the trial court to “determine that [Bailey] is not entitled to recover UM benefits from [Progressive] or, in the alternative, [Progressive] requests the court to enter a judgment in its favor and against the defendant Caver to the extent of any payment made by Progressive to [Bailey].” ¹ The trial court granted Progressive's motion to intervene.

On August 24, 2007, Progressive filed a cross-claim against Caver in which it averred that “[i]f Progressive is liable to [Bailey] for UM benefits, it is liable because [Bailey] is legally entitled to recover damages from Caver as a result of the accident.” Accordingly, Progressive sought a judgment against Caver for any amount it might be forced to pay Bailey as a result of the accident.

Bailey attempted service upon Caver several times, eventually serving Caver by publication. Caver never responded to the summons or to Bailey's complaint. Bailey also ran a check for vehicle-registration information on Caver, attempted to obtain Caver's insurance information from the accident report, and telephoned the State Department of Insurance in order to locate insurance information pertaining to Caver. All of Bailey's inquiries concerning Caver failed to produce information on Caver's insurance status or to cause Caver to make any appearance in the Tuscaloosa Circuit Court to defend the claims against him. Accordingly, on December 27, 2007, Bailey filed a motion for a default judgment against Caver. The trial court entered a default judgment against Caver the following day.

On January 22, 2008, Bailey filed a motion to set a hearing for the determination of damages on the default judgment. She filed an affidavit averring that her damages amounted to $125,000 for the “injuries and damages to her person and incurred expense for the associated medical treatment, as well as great pain and suffering.”

On January 23, 2008, Progressive filed a “Motion to Set Aside Entry of Default Judgment.” In the motion, Progressive sought from the trial court an order “to set aside the default judgment entered against Luvert Caver ... to the extent that [Bailey] seeks to bind Progressive by that judgment.” Following a hearing on Bailey's motion for a determination of damages and Progressive's motion to set aside the default judgment, the trial court on January 30, 2008, entered an order denying Progressive's motion and setting the amount of damages against Caver. The order provided, in pertinent part:

“This Court having reviewed both briefs finds the cases cited by [Bailey] specifically, Lowe v. Nationwide Ins. Co., 521 So.2d 1309 (Ala.1988), and Champion Ins. Co. v. Denney, 555 So.2d 137 (Ala.1989), to be the authority in this matter and thus binding upon the parties.

“It is therefore ORDERED, ADJUDGED, and DECREED that this Court's Order of Default Judgment against Defendant Caver of December 28, 2007, was proper and therefore, Progressive's Motion to Set Aside Entry of Default is denied. However, this court specifically finds and orders that the defendant Progressive Specialty Insurance Company is not bound by the default judgment.

“This Court after reviewing [Bailey's] Affidavit of Damages further finds that the amount stated of $125,000 for the bodily injury claim is fair and reasonable given the nature and conduct of [Caver] as well as the severity of the injuries to [Bailey]. And thus:

“It is further ORDERED, ADJUDGED, and DECREED that damages are hereby set against Defendant Luvert Caver in the amount of $125,000, all costs taxed to [Caver].”

(Capitalization in original; emphasis added.)

On March 31, 2008, Progressive filed a motion for a default judgment on its cross-claim against Caver. On May 15, 2008, the trial court entered an order of default against Caver on Progressive's cross-claim.

On May 30, 2008, Bailey filed what she styled a “Supplemental Complaint” pursuant to Rule 15(d), Ala. R. Civ. P.,² in which she brought claims against Progressive for UM benefits, alleging breach of contract and bad-faith failure to pay the UM benefits she alleged were due to her based on the default judgment. In the complaint, Bailey noted that Progressive had intervened in her action against Caver, that Progressive had made legal filings and conducted discovery in the action, and that Progressive was aware of the default judgment entered against Caver in the amount of $125,000 and yet had intentionally refused to pay the amount of $50,000, the maximum payable for UM benefits under Bailey's insurance policy. Subsequently, Progressive filed a motion to dismiss Bailey's supplemental pleading, but the trial court denied the motion and accepted Bailey's “supplemental complaint.”

On June 17, 2008, Progressive filed what it styled as a “Counterclaim” against Bailey in which it averred that “[i]t is Progressive's position that Bailey has not established she is ‘legally entitled to recover’ and is not yet entitled to benefits under the Progressive policy as a result of injuries she attributes to this accident,” and that “this court has already found that Bailey's default judgment against Caver is not binding upon Progressive.” Progressive requested that the trial court issue a judgment declaring that “the default judgment entered against Caver by Bailey is not binding upon Progressive.”

On June 25, 2008, Bailey filed her answer to Progressive's “counterclaim” in which she argued that the trial court's citation of Lowe v. Nationwide Insurance Co., 521 So.2d 1309 (Ala.1988), and Champion Insurance Co. v. Denney, 555 So.2d 137 (Ala.1989), as binding authority in its order denying Progressive's motion to set aside the default judgment meant that Progressive is bound by the finding of liability and the damages award in the default judgment. On December 14, 2008, Progressive filed its answer to Bailey's “supplemental complaint” in which it denied all the material allegations in the complaint.

On January 29, 2009, Progressive filed a motion for a summary judgment as to Bailey's “supplemental complaint.” In its brief accompanying its motion, Progressive argued that it was “entitled to a summary judgment because it is not liable under the facts of this case” in that the trial court had stated that the default judgment was not binding upon Progressive and Progressive was contesting liability and damages. In support of its motion, Progressive filed an affidavit from one of its claims adjusters, Bill Adams, who noted that Progressive had obtained Bailey's medical records during discovery in her action against Caver. Adams averred that Bailey's “medical bills were mostly paid by Blue Cross/Blue Shield of Alabama” and that “Blue Cross is asserting a subrogation claim in the amount of about $358.” He also claimed that based on Bailey's medical records Progressive “determined that the $20,000 settlement with ... Alfa contributed significantly toward compensating Bailey for her damages” but that Progressive had “nonetheless offered Bailey an additional $10,000 in settlement in order to avoid excessive litigation expenses.” ³ Adams noted that Bailey had rejected the settlement offer and instead filed her “supplemental complaint.”

On March 5, 2009, Bailey filed her response to Progressive's motion for a summary judgment. Bailey reiterated the argument from her answer to Progressive's “counterclaim” that Progressive was bound by the default judgment against Caver because the fact-finder had determined liability and damages to a certainty, which triggered payment of UM benefits under the insurance policy.

On May 25, 2009, the trial court entered an order granting Progressive's motion for a summary judgment. The order provided, in pertinent part:

“The Court has reviewed all submissions in support of and in opposition to the motion, including the case of Ex parte Safeway Ins. Co. of Alabama, Inc., 990 So.2d 344 (Ala.2008), as argued by [Progressive]. Based upon those submissions, this Court finds that the motion is...