Alabama Farm Bureau Mut. Cas. Ins. Co., Inc. v. Moore

• Decision Date: 09 September 1977
• Citation: Alabama Farm Bureau Mut. Cas. Ins. Co., Inc. v. Moore, 349 So.2d 1113 (Ala. 1977)
• Parties: ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, INC., a Corp. v. Ludie C. MOORE and Iva Nell Strickland. SC 2141.
• Court: Alabama Supreme Court

Page 1113

349 So.2d 1113

ALABAMA FARM BUREAU MUTUAL CASUALTY INSURANCE COMPANY, INC., a Corp. v. Ludie C. MOORE and Iva Nell Strickland.

SC 2141.

Supreme Court of Alabama.

Sept. 9, 1977.

Robert H. Smith, of Collins, Galloway & Smith, Mobile, for appellant.

Maury Friedlander, of Marr & Friedlander, Mobile, for appellee, Ludie C. Moore.

Billy C. Bedsole, of Stockman, Bedsole & Kimbrough, Mobile, for appellee, Iva Nell Strickland.

ALMON, Justice.

Ludie C. Moore filed a declaratory judgment action against Iva Nell Strickland and Alabama Farm Bureau requesting the court to determine the rights of the parties under an insurance policy issued by Farm Bureau to Moore. Prior to this action, Strickland had obtained a $25,000 judgment against Moore for negligently knocking her through a plate glass window on the front of J. V.'s Lounge in downtown Mobile. Moore's policy covered him up to $25,000 for bodily injury caused by him, except for "bodily injury or property damage which is either expected or intended from the standpoint of the insured." (Emphasis added.) The policy also provided that the

". . . company shall have the right and duty, at its own expense, to defend any suit against the Insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, . . ."

Farm Bureau, upon notification of the Strickland-Moore suit, declined to defend, contending that the injury was intentionally caused and not covered by the policy. In this action (Moore's suit against Farm Bureau for declaratory judgment), Farm Bureau contends that it is not collaterally estopped to assert non-coverage because (1) the issues in the two actions are not the same, (2) an inherent conflict of interest existed between itself and Moore, and (3) a defense of fraud and collusion is not affected by the doctrine of res judicata. ¹ The lower court thought otherwise and granted summary judgment in favor of Moore. We reverse.

In the Strickland v. Moore law suit, the original complaint alleged in Count 1 that Moore committed an assault and battery on Strickland and in Count 2, that Moore negligently bumped Strickland causing her to fall through the window. Farm Bureau investigated the claim and concluded that Moore had intentionally knocked Strickland into the window. Without going into the details we note that in opposition to the motion for summary judgment submitted by its co-defendant, Strickland, ² Farm Bureau submitted the affidavit of Officer Smith of the Mobile City Police Department.

". . . She told me that she had been in the J V Lounge and while there met a man by the name of Ludie Moore. During the course of drinking and talking she and Ludie Moore began arguing, using profanity. Moore got up and left going out the front door. She told me that she followed him out. They continued arguing on the street for a few minutes and then Moore grabbed her bodily shoving her through a plate glass window in front of the place, pushing her head through it.

"Ludie Moore was arrested on the scene of the incident and charged with assault and battery. Sometime afterwards the case against Ludie Moore came up in the Municipal Court, City of Mobile, at which time it was nol prossed. On the morning of the Municipal Court hearing Nell Strickland informed me that she did not want to prosecute. When I inquired as to why, she stated that she had been informed by someone whose name she did not mention that if she did not prosecute, that Ludie Moore's homeowner's insurance would pay for her injuries and subsequently she did not want to testify and did not and the case was nol prossed." T. 133-134. ³

The day of the trial Strickland withdrew Count 1 alleging assault and battery, leaving only Count 2 in negligence. At the same time she withdrew her demand for a jury trial. During the trial Moore was examined and cross-examined as to whether he "expected or intended" the injuries. In the closing argument, Strickland claimed to have proven $70,000 to $80,000 damages, but asked for $24,000; she had sued for $50,000.

This case presents a difficult first impression question. Moore's negligence has been litigated once. Farm Bureau, as Moore's insurer, had an opportunity to defend and at first glance would appear to be bound by the result. Indemnity Co. of America v. Bollas, 223 Ala. 239, 135 So. 174 (1931). Such a view is presented in Miller v. United States Fidelity & Guaranty Co., 291 Mass. 445, 448-449, 197 N.E. 75, 77 (1935):

"The grounds on which liability has been imposed upon the insured are to be determined from an investigation into the matters decided in the action which established that liability and not from facts subsequently developed in an action by the insured against the insurer. This is clear from the language of the policy itself wherein the defendant agreed to pay, not such damages as might be imposed upon the plaintiff for bodily injuries which were in fact accidental, but all sums which the assured should 'become liable to pay as damages imposed upon him by law for bodily injury accidentally sustained. * * * ' The defendant further bound itself by the policy to defend 'any claims, suits or other legal proceedings alleging such injuries and demanding damages on account thereof, although such claims, suits, legal proceedings, allegations and demands are wholly groundless, false or fraudulent.' The object of the policy is protection against law suits and legal liability. This object could not be attained if the insured were compelled to try over again in an action against the insurer the same issues upon which he has been found liable in the original action. Where an action against the insured is ostensibly within the terms of the policy, the insurer, whether it assumes the defense or refuses to assume it, is bound by the result of that action as to all matters therein decided which are material to recovery by the insured in an action on the policy. (Citations omitted.)"

Yet, Farm Bureau was caught between a rock and a hard place, as its interests were in one way adverse to those of the insured. Its interests could be protected by proving that the injuries were intentionally inflicted while Moore's liability would be increased by such proof. See Glens Falls Insurance Co. v. American Oil Co., 254 Md. 120, 254 A.2d 658 (1969).

" 'It is true, as a general rule, that a judgment or decree is binding on parties and privies; but, technically speaking, there can be no privity, where there is not an identity of interest.' Winston v. Westfeldt, 22 Ala. 760, 771, 58 Am.Dec. 278." Rowe v. Johnson, 214 Ala. 510, 512, 108 So. 604, 605-606 (1926).

Moreover, even if Farm Bureau decided to defend Moore with the full intent of protecting Moore's interests, Moore could legitimately have preferred independent counsel.

We also have problems deciding exactly what was decided in the Strickland v. Moore decision other than the extent of Moore's liability. The assault and battery count was dropped immediately before trial (without notice to Farm Bureau). Does that, by deduction, mean that an intentional tort was not committed? Is a jury, or in this case a judge, going to say that Moore is not liable because he intended the act, a possibility not within the liability charged? See Burd v. Sussex Mutual Ins. Co., 56 N.J. 383, 267 A.2d 7, 10 (1970).

Assume for...