Alabama State Docks v. Saxon

• Decision Date: 14 January 1994
• Citation: 631 So.2d 943
• Parties: ALABAMA STATE DOCKS, et al. v. Dewey M. SAXON and Edna Saxon. Paul HUNT, et al. v. Dewey M. SAXON, et al. 1921214, 1921292.
• Court: Alabama Supreme Court

Page 943

631 So.2d 943

ALABAMA STATE DOCKS, et al. v. Dewey M. SAXON and Edna Saxon.

Paul HUNT, et al. v. Dewey M. SAXON, et al.

1921214, 1921292.

Supreme Court of Alabama.

Jan. 14, 1994.

Carl Robert Gottlieb, Jr. and William W. Watts III of Reams, Philips, Brooks, Schell, Gaston & Hudson, P.C., Mobile, for Alabama State Docks, John Dutton and Frank Daniels.

James P. Green and Thomas H. Nolan, Jr. of Brown, Hudgens, P.C., Mobile, for Paul Hunt, et al.

Andrew T. Citrin, Gregory B. Breedlove and David G. Wirtes, Jr. of Cunningham, Bounds, Yance, Crowder and Brown, Mobile, for appellees.

HOUSTON, Justice.

Dewey M. Saxon and his wife, Edna Saxon, sued the Alabama State Docks; its director, John Dutton; its safety director, Frank Daniels; and the State Docks' liability insurance carriers, Lloyd's Underwriters and various other insurance companies, seeking damages for personal injuries Dewey Saxon claimed to have sustained while he was delivering computer equipment to a building owned by the State Docks. ¹ Edna Saxon sought damages for loss of consortium. The Saxons alleged negligence and wantonness on the part of the State Docks, Dutton, and Daniels; they sought to recover insurance proceeds directly from the insurance carriers pursuant to Ala.Code 1975, § 33-1-25. ² The State Docks, Dutton, and Daniels moved for a summary judgment, invoking the doctrine of sovereign immunity under Article I, § 14, Alabama Constitution, as a defense to the Saxons' claims. Lloyd's Underwriters and the other insurance carriers also moved for a summary judgment, arguing that the State Docks' liability insurance policy did not authorize a direct action against them. The trial court denied these motions, and we granted the defendants' requests for permission to appeal. See Rule 5, Ala.R.App.P. ³

The trial court's order denying the motion for summary judgment filed by the State Docks, Dutton, and Daniels reads, in pertinent part, as follows:

"This court is of the opinion that the defendants have waived their immunity under Section 14 of the Alabama Constitution by virtue of the purchase of insurance pursuant to Section 33-1-25, Code of Alabama [1975], without providing for a direct right of action against the insurer in the contract of insurance."

The Saxons contend that the trial court properly denied the motion, because, they argue, the State Docks, Dutton, and Daniels waived their constitutional immunity when the State Docks purchased liability insurance without providing for a direct action against the insurance carriers, at least to the extent of the liability insurance coverage.

The State Docks, Dutton, and Daniels maintain that their immunity under § 14 was unaffected by the State Docks' procurement of liability insurance, regardless of whether Dutton, acting within his discretion under § 33-1-25, provided in the insurance policy for a direct action against the State Docks' insurance carriers. We agree.

Article I, § 14, Alabama Constitution, is the basis for sovereign immunity in this state, and that section provides that "the State of Alabama shall never be made a defendant in any court of law or equity." Under this provision, the state and its agencies have absolute immunity from suit in any court. State officers and employees, in their official capacities and individually, also are absolutely immune from suit when the action is, in effect, one against the state. Phillips v. Thomas, 555 So.2d 81 (Ala.1989). See, also, Jones v. Alabama State Docks, 443 So.2d 902 (Ala.1983), wherein this Court specifically held that an action for damages against the State Docks, such as the one filed by the Saxons in this case, is prohibited by § 14.

As noted, however, the Saxons insist that the State Docks, Dutton, and Daniels waived their constitutional immunity, at least to the extent of the liability insurance coverage purchased by the State Docks. An express waiver is "[t]he voluntary, intentional relinquishment of a known right." Black's Law Dictionary 1581 (6th ed. 1990). A waiver is implied where one party has pursued such a course of conduct with reference to the other party as to evidence an intention to waive his rights or the advantage to which he may be entitled, or where the conduct pursued is inconsistent with any honest intention other than an intention to effect such a waiver, provided that the other party concerned has been induced by such conduct to act upon the belief that there has been a waiver and has incurred trouble or expense thereby. Black's. It is familiar law in this state that § 14 "wholly withdraws from the Legislature, or any other state authority, the power to give consent to a suit against the state." Dunn Construction Co. v. State Board of Adjustment, 234 Ala. 372, 376, 175 So. 383, 386 (1937). This Court has recognized the " 'almost invincible' 'wall' of the state's immunity, as established 'by the people through their Constitution.' " Jones v. Alabama State Docks, 443 So.2d at 905, quoting Hutchinson v. Board of Trustees of University of Alabama, 288 Ala. 20, 24, 256 So.2d 281, 284 (1971). Therefore, it is clear that neither the legislature nor the State Docks had the power to waive, either expressly or impliedly, the state's immunity under § 14 and thereby consent to a damages action against the state. We note that the record provides no indication of an attempt on the part of either the legislature or the State Docks to waive the state's sovereign immunity when liability insurance has been purchased. In Jones v. Alabama State Docks, supra, at 904, we specifically addressed the intent of the legislature in enacting § 33-1-25:

"Appellants' argument that a decision to except the State Docks Department from the cloak of state immunity is supported by the fact that the department is authorized to provide insurance 'for the payment of damages on account of the injury to or death of persons,' Code 1975, § 33-1-25, is not persuasive. As the United States Court of Appeals for the Fifth Circuit has observed, 'The entire statute is couched in permissive tones,' and 'clearly contemplates limited insurance coverage.' Centraal Stikstof Verkoopkanter, N.V. v. Walsh Stevedoring Co., 380 F.2d 523, 533 (5th Cir.1967). The statute is not directory; it does not require the department to obtain coverage for all risks enumerated in it. Id. Moreover, the statute expressly provides that it should not be interpreted as sanctioning suit against the department:

"Nothing herein shall be construed to authorize or permit the institution of any civil action or proceeding in any court against the department for or on account of any matters referred to in this section....

"Code 1975, § 33-1-25. We think the inclusion of this language clearly necessitates our rejection of appellants' strained interpretation of the statute."

"[A] governmental unit's immunity from tort liability is unaffected by its procurement of insurance which purports to protect it from such liability." St. Paul Fire & Marine Ins. Co. v. Nowlin, 542 So.2d 1190, 1195 (Ala.1988), quoting Thompson v. Druid City Hospital Board, 279 Ala. 314, 315, 184 So.2d 825, 826 (1966). This principle, broadly stated, embodies the idea that an intent to waive governmental immunity should not be presumed from the purchase of liability insurance, especially when, as here, there is no power to waive governmental immunity.

We hold, therefore, that the trial court erred in denying the motion for summary judgment filed by the State Docks, Dutton and Daniels on the ground that they had waived their constitutional immunity. ⁴

The trial court's order denying the insurance carriers' motion for summary judgment reads, in pertinent part, as follows:

"After having heard oral argument by counsel for Plaintiffs and Defendants, having examined the applicable statutory law allowing the Alabama State Docks to purchase insurance providing coverage for injuries such as those sustained by the Plaintiff in this case (§ 33-1-25, Code of Alabama 1975), and in consideration of the court's denial of the motions for summary judgment filed by Defendants Alabama State Docks, John Dutton, and Frank Daniels, the court is of the opinion that the Plaintiffs' motion to reconsider the interlocutory order of summary judgment on behalf of 'the insurance defendants' is due to be granted and the summary judgment motions of said defendants are due to be denied.

"However, the rulings on these motions regarding Lloyd's are correct only if the trial court is wrong in its ruling on the motion for summary judgment filed by the State Docks. There the court denied the summary judgment sought by the Docks, because the court found that the Docks had waived its sovereign immunity by purchasing the policy of liability insurance with knowledge of the provisions of the direct action statute but without inclusion of an express direct action term in the policy itself.

"If this purchase by the Docks under these circumstances did not constitute a waiver of its sovereign immunity, then knowledge of the laws preserving the sovereign immunity of the Docks under these circumstances is imputed to Lloyd's of London in the sense that every person is deemed to know the law. Thus, at the time Lloyd's sold the policy to the Docks, Lloyd's knew that, because the Docks was immune, the only way the policy could be anything but a sham was for it to be construed as a direct action policy. Likewise, this very same knowledge is imputed to the Docks itself as of the time it purchased the policy.

"With this knowledge, the Docks paid the premium for the policy; and Lloyd's accepted the premium and issued the policy. Thus, the minds of the parties met, either actually or constructively, to the effect that Lloyd's would be subject to direct action on the policy.

"If Lloyd's contends that it sold the policy with the understanding that it would not be enforceable under any circumstances, then the court will not countenance such a defense. Ra...