"FINAL JUDGMENT
"This case has been submitted for decision by this Court on the motion for a partial summary judgment filed by Alabama Hospital Association Trust, a self insurance plan (hereinafter "AHAT"), with respect to its claim by way of subrogation or indemnity. This case has also been submitted for decision on the motion for summary judgment filed by the defendant, Mutual Assurance Society of Alabama, a mutual insurance company (hereinafter "MASA") with respect to all of the claims asserted by AHAT in this case.
"This case involves a dispute between AHAT and MASA with respect to MASA's obligation to reimburse AHAT in the amount which AHAT paid in satisfaction of a judgment rendered against Lloyd Noland Foundation, Inc. ("Lloyd Noland"), in the
case styled Albert May v. Lloyd Noland Foundation, Inc., et al., Civil Action No. CV 79-0583. In that case, the complaint filed by Albert May made claim for damages against Lloyd Noland and Dr. Janette Habachy and Dr. Han Young Park, alleging that Lloyd Noland undertook to treat and care for Albert May's minor child, Lepo Hatarar May, during the course of an operation; that Dr. Habachy and Dr. Park were practicing anesthesiologists who also undertook to treat and care for Lepo May during the course of an operation; and that the negligence of all three defendants concurred and combined to cause Lepo May's death on August 12, 1978.
"Lloyd Noland had insurance coverage with respect to May's claim as a member of the AHAT self insurance plan with coverage limited as follows:
" 'Regardless of the number of: (a) insureds under this exhibit; (b) persons or organizations who sustain loss; (c) claims made or suits brought on account of loss; the trust's liability for any one member hospital is limited to:
" '$1,000,000 per occurrence
" '$3,000,000 report year aggregate
" 'for loss resulting from any one claim or suit or all claims or suits first made during the fiscal period because of damages insured under any of the above Agreements.'
"The insuring agreement with respect to Lloyd Noland provided in pertinent part as follows:
" 'The trust will pay on behalf of each member all sums which the member shall become legally obligated to pay as damages because of any claim or claims made against the member during the fiscal period because of:
" 'AGREEMENT A--HOSPITAL PROFESSIONAL LIABILITY ARISING OUT OF THE PERFORMANCE OF PROFESSIONAL SERVICES RENDERED OR WHICH SHOULD HAVE BEEN RENDERED DURING THE FISCAL PERIOD, BY THE MEMBER OR BY ANY PERSON FOR WHOSE ACTS OR OMISSIONS THE MEMBER IS LEGALLY LIABLE, AND
" 'AGREEMENT B--PERSONAL INJURY LIABILITY ARISING OUT OF AN OCCURRENCE DURING THE FISCAL PERIOD....'
"The self insurance trust also defines persons covered in part as follows:
" 'II. PERSONS COVERED
" 'Each of the following is a member under this Trust to the extent set forth below:
" 'A. The member, as named in the Trust Participation Agreement;
" 'B. Any chief executive officer, hospital administrator, hospital supervisor or member of the governing body or stockholder of the member, while acting within the scope of his duties as such;
" '....
" 'E. Under Agreement A, any person included as an employee, student or authorized volunteer worker (except interns, externs, residents, dental, osteopathic or medical doctors) for which coverage is afforded under this Trust, while such person is acting within the scope of his duties as an employee, student, or authorized volunteer worker; provided that the coverage afforded to any such person under this paragraph shall not apply to injury to any employee, student, or authorized volunteer worker of the member arising out of or in the course of his employment by the member, except injury arising out of the rendering of or failure to render professional services to such employee, student or authorized volunteer worker.
" 'F. Under Agreements B and C, any employee, student or authorized volunteer worker (except interns, externs, residents, dental, osteopathic or medical doctors) of the member, while acting within the scope of his duties as such, but the coverage afforded to such employee, student or authorized volunteer worker does not apply:
" '1. To personal injury to (a) another employee, student or authorized volunteer worker of the member arising out of or in the course of his employment, or (b) the member or, if the member is a
partnership or joint-venture, any partner or member thereof....'
"The above quoted provisions indicate that liability coverage was provided to Lloyd Noland itself for all possible liability, whether the same resulted from the conduct of physicians or from the conduct of persons other than physicians. The AHAT insuring agreement also provided coverage for individuals rendering professional services for Lloyd Noland, excluding, however, individuals who were interns, externs, residents, dental, osteopathic or medical doctors.
"The two doctors, Habachy and Park, had liability insurance coverage with respect to May's claim under an insurance policy issued by MASA. This insurance policy had a limit of liability of $1,000,000 for each person and $1,000,000 annual aggregate amount.
"By special endorsement, MASA also provided liability insurance coverage to Lloyd Noland and the Medical Clinic Board of the City of Fairfield for liability resulting to either of those two entities arising out of acts or omissions of Habachy or Park.
"Pursuant to its obligation to Lloyd Noland under the self insurance trust agreement, AHAT employed Robert Parsons as attorney to represent Lloyd Noland and defend it against May's claim.
"MASA employed W. Stancil Starnes as the attorney to represent and defend Habachy against May's claim and also employed Charles A. Stakely, Jr., as the attorney to represent and defend Park against May's claim.
"Following the commencement of the trial, the case was then submitted to the jury on May's claim against Lloyd Noland based at least in part, if not wholly, on the negligence of Habachy and Park. No request was made by either party for any special findings of fact by the jury. The jury returned a general verdict in favor of May against Lloyd Noland in the amount of $4,000,000, which was then reduced as the result of a remittitur ordered by the trial court to $2,000,000.
"Thereafter, AHAT paid the sum of $1,000,000 in partial payment of the judgment rendered against Lloyd Noland, and MASA thereafter paid the sum of $725,000 plus a certain amount of interest in full satisfaction of the entire judgment.
"In the present case now before this Court, AHAT makes claim as a subrogee of Lloyd Noland for the recovery from MASA of the $1,000,000 paid by AHAT in partial satisfaction of the judgment. As the basis for its claim, AHAT says that May's claim against Lloyd Noland and the subsequent verdict and judgment rendered against Lloyd Noland were based only and could have been based only on the negligence of the two physicians, Habachy and Park, employed by Lloyd Noland.
"AHAT says that because Lloyd Noland's liability resulted from the acts or omissions of its physician employees, the MASA insurance coverage is primary and the AHAT insurance contract is secondary. In addition to the claim asserted by AHAT by subrogation, AHAT also says that MASA was negligent in failing to settle May's claim within the limits of its primary coverage and, finally, that MASA acted in bad faith in refusing to settle the claim of May within the policy limits and in refusing to pay the remitted judgment with respect to which it was the primary obligor.
"In support of its contention that the jury verdict was based solely and entirely on the negligence of Habachy and Park, AHAT has submitted the affidavit of Jerry Argo, the person who was elected as foreperson of the jury which rendered the verdict. This affidavit executed by Argo on December 8, 1986, long after the jury verdict in 1983, states as follows:
" '1. I was the duly elected foreman and spokesman for the jury which decided the case of May v. Lloyd Noland Hospital, et al.
" '2. This Affidavit is given with my personal knowledge.
" '3. During the course of our deliberations, the jury considered and discussed issues relating to the actions of several physician employees of Lloyd Noland Hospital regarding various decisions
about the medical treatment of Lepo May.
" '4. We understood that the hospital would be responsible for the negligent acts of its physician employees.
" '5. In agreeing to award the plaintiff a verdict of $4,000,000, our unanimous decision was based solely on the conduct of the physicians. The jury did not base its verdict on the determination that any non-physician employees of Lloyd Noland Hospital were in any way negligent.'
"AHAT has also submitted the affidavit of Robert Parsons, the attorney representing and defending Lloyd Noland in CV 79-0583. Noting that Lloyd Noland was named as an additional insured on the insurance policies issued by MASA insuring physician employees of Lloyd Noland, Parsons states under oath that it was AHAT's position in the May case that the alleged malpractice was solely the...
