Ex Parte a & B Transport, Inc.

• Decision Date: 28 December 2007
• Docket Number: 1060310.
• Citation: 8 So.3d 924
• Parties: Ex parte A & B TRANSPORT, INC., and James Allemang. (In re Henry Graben, individually and as personal representative of the estate of Una J. Graben, deceased v. A & B Transport, Inc., and James Allemang).
• Court: Alabama Supreme Court

8 So.3d 924

Ex parte A & B TRANSPORT, INC., and James Allemang (In re Henry Graben, individually and as personal representative of the estate of Una J. Graben, deceased v. A & B Transport, Inc., and James Allemang).

1060310.

Supreme Court of Alabama.

December 28, 2007.

Rehearing Denied October 17, 2008.

Shane M. Oncale and Cynthia N. Williams of Clark, Oncale, Hair & Smith, PC, Birmingham, for petitioners.

William W. Smith, Nicole L. Judge, and W. Cone Owen, Jr., of Smith & Alspaugh, P.C., Birmingham, for respondent.

MURDOCK, Justice.

A & B Transport, Inc., a Louisiana corporation, and James Allemang petition this Court for a writ of mandamus directing the Calhoun Circuit Court to vacate its order granting relief pursuant to Rule 60(b)(6), Ala. R. Civ. P., and to enter an order denying such relief. We grant the petition and issue the writ.

In November 1999, a vehicle occupied by Henry Graben and his wife, Una J. Graben, collided with a tractor-trailer rig operated by Allemang, an employee of A & B. Una died as a result of the collision; Henry was injured. In November 2000, Henry, both in his individual capacity and in his capacity as the personal representative of Una's estate, filed an action in the Calhoun Circuit Court against A & B and Allemang based on the alleged wrongful death of Una and his personal injuries.

A & B and Allemang were insured by Legion Insurance Company, which was placed in receivership in Pennsylvania in April 2002.¹ In October 2002, on the date scheduled for the trial of Henry's action, Henry, A & B, and Allemang entered into a settlement agreement on the record. The transcript of the settlement-agreement colloquy reflects that a judgment would be entered against A & B and Allemang for $750,000, but that "[e]nforcement of the judgment [would] be limited specifically to the insurance carriers that could have applicable coverage and/or the guarantee funds that may have applicable coverage." The coverage limits under Legion's insurance policies insuring A & B and Allemang exceeded the amount of the judgment. The transcript of the settlement-agreement colloquy also reflects the following discussion between Shane Oncale, the attorney representing A & B and Allemang; Henry's counsel; and the trial court:

"[Shane Oncale]: ... In addition I will say for the record that Legion Insurance and their third party administrator have objected vigorously to any sort of consent judgment to be entered, but I'm here and I represent A & B Transport, and A & B Transport wishes to protect its interests and protect itself against future exposure on this claim.[²]

". . . .

"[Henry's counsel]: Judge, just for the record too, I'd like the record to reflect that it is [Henry's] understanding that the insurance carrier, Legion Insurance, who insures all the defendants in the case and also had the excess coverage, has been ordered into liquidation according to what has been represented to us, and they have that, you know, on appeal, and that is a factor in entering into our decision in entering into the settlement.

"[Shane Oncale]: Sure. Let me make sure this is clear. I think there's been a liquidation order entered that is being challenged and there's a hearing on that in about three weeks on a stay that was technically in effect until December 30. I don't think it's correct to say it's on appeal. I want to make sure that's clear. It would be the same as if you entered an order and someone entered a motion for a new trial, for example.

"THE COURT: But the order is being contested in some manner?

"[Shane Oncale]: Correct.

"THE COURT: Okay. All right."

On December 20, 2002, the trial court entered a "Consent Decree"; that order states:

"The above referenced case came before this Honorable Court for trial on October 21, 2002. At that time, the parties engaged in significant negotiations that resulted in an agreement that a compromise judgment of $750,000 be entered in favor of [Henry] ... and against the defendants [A & B and Allemang]. As an express condition of this compromise judgment, [Henry] agreed to limit execution and enforcement of the judgment to any and all applicable policies of insurance and/or any and all available funds from the applicable Guarantee [Fund] Associations. [Henry] agree[s] to hold harmless [A & B and Allemang] against any attempts to collect against their personal or corporate assets and further release them from any and all claims associated with the automobile accident in question. The defendants make no representation as to the collectability of the judgment and all risks associated with the collectability of the judgment herein entered falls upon [Henry].

"Consistent with the agreement of the parties, it is, therefore, ORDERED, ADJUDGED, and DECREED:

"A. That [Henry] ... recover the sum of Seven Hundred Fifty Thousand Dollars ($750,000) from the defendants [A & B and Allemang].

"B. That the recovery by [Henry] ... be expressly limited to any and all insurance proceeds and/or any and all funds available under any and all applicable Guarantee Fund Associations and are expressly prohibited from any collection attempts against the assets of [A & B and Allemang] ...."

In July 2003, Legion was declared insolvent. Thereafter, Henry filed a proof of loss with the Louisiana Insurance Guaranty Association ("LIGA"),³ which allegedly provided coverage for Henry's claims against Legion. If Henry's claims qualified as covered claims, Henry apparently would have been entitled to $150,000 per claim, or a total of $300,000, less a small deductible. LIGA refused to pay Henry's claims.

In June 2004, Henry filed a motion in the trial court to enforce the consent judgment against LIGA. In August 2004, the trial court entered an order stating that the consent judgment was binding on LIGA and that Henry could "pursue all remedies available to collect the judgment." LIGA filed a motion to quash the August 2004 order, claiming that LIGA was not a party to Henry's action that had resulted in the consent judgment, that it was not served with process in connection with the action, and that it had had no opportunity to be heard concerning the alleged settlement. In October 2004, the trial court entered an order setting aside its August 2004 order, with leave for Henry to serve LIGA with process and subsequently to request that the court readdress the issue of LIGA's liability.

On November 16, 2004, Henry apparently filed a separate action directly against LIGA in the Calhoun Circuit Court.

In June 2006, Henry filed a Rule 60(b)(6), Ala. R. Civ. P., motion in his action against A & B and Allemang, seeking relief from the trial court's December 20, 2002, consent judgment. Among other things, Henry asserted as follows in his Rule 60(b)(6) motion:

"5. On November 16, 2004, [Henry] filed a Complaint against LIGA, and [A & B and Allemang] in this suit, under Alabama's direct action statute, Ala. Code [1975,] § 27-23-1.[⁴] (In the Circuit Court of Calhoun County, Alabama, Civil Action No. 04-1011).

"6. LIGA has vigorously defended the collateral suit, raising a number of defenses to enforcement of the Consent Decree, chief among these the fact that A & B and Allemang consented to entry of the Consent Decree without permission of Legion, and therefore breached the policy at issue.

"7. In the course of discovery, it has come to light that between the time the Consent Decree was read into the record (October 21), and the time it was actually entered as a judgment (December 20), Legion officials authorized attorney Shane Oncale to settle this cause for $300,000.00, with the provision that [Henry] would have to wait out Legion's ongoing problems before seeking payment. According to an e-mail from Oncale, dated Friday, November 22, 2002:

"`... [I]n order to avoid further litigation of the issue and to protect Legion's exposure, Tom [Carey, an insurance adjuster for Legion,] has authorized a post judgment settlement in the amount of 300K.'

"8. At no time between the date of the e-mail (November 22) and the date the Consent Decree was entered was [Henry] made aware that Legion was prepared to settle this case. In fact, [Henry] did not become aware of this fact until the deposition of Legion adjuster Tom Carey, taken in late 2005.[⁵] Had [Henry] been aware that Legion offered to indemnify its insureds in return for entry of a judgment of $300,000.00, [Henry] would have readily accepted same, in light of the fact that the coverage issues which have dogged this case for years would have evaporated.

"9. Rule 60(b)(6) allows a party to be relieved from a judgment more than four (4) months after the judgment has been entered in cases involving exceptional circumstances which implicate equitable grounds for allowing the moving party relief. Shipe v. Shipe, 477 So.2d 430, 432 (Ala.Civ.App.1985) (citation omitted).

"10. If ever a circumstance cried out for the steady hand of equity, the present one certainly qualifies. Henry Graben lost his wife in a terrible accident, as well as suffering his own personal injuries. Through no fault of his own, his effort to obtain justice has been stymied by the fact that the tortfeasors secured liability and umbrella insurance with the same mediocre company, which subsequently went belly up. In an effort to protect Mr. Graben's chances at any future recovery, [Henry's] counsel agreed to a Consent Decree which would at least allow for the opportunity to pursue relief at a later stage. However, unbeknownst to anyone, a month before the Consent Decree was made final Legion was in fact willing to settle this claim for a fair and reasonable amount. The fact that [Henry] was not aware that Legion was willing to settle this case on behalf of its insureds was an incidence of severe prejudice that can only be corrected by setting aside the Consent Decree and allowing this case to proceed."

(References to exhibits omitted.)

A & B and Allemang filed a response to Henry's...