Burlington Ins. Co. v. Fluid Services
Decision Date | 12 September 2008 |
Docket Number | 2070185. |
Citation | 13 So.3d 965 |
Parties | BURLINGTON INSURANCE COMPANY v. FLUID SERVICES, INC., d/b/a Pirtek. |
Court | Alabama Court of Civil Appeals |
Michael Gillion, Mobile; and Scott W. Hunter, Daphne, for appellant.
James B. Pittman, Jr., and Austin E. James of James B. Pittman, Jr., P.C., Daphne, for appellee.
Fluid Services, Inc., d/b/a Pirtek ("Pirtek"), purchased a commercial general-liability insurance policy from Burlington Insurance Company. The policy was effective from March 14, 2003, to March 14, 2004. Pirtek paid a $15,000 provisional premium to Burlington. According to the policy, Burlington had the right to examine Pirtek's books and records and recalculate any premium due based on that audit. Upon the expiration of the policy, Pirtek did not renew its policy with Burlington, having found alternative coverage at a more competitive rate. Burlington audited Pirtek and assessed an additional premium of $14,800 for the coverage period. Pirtek refused to pay the additional premium, and Burlington sued Pirtek in April 2005, alleging breach of contract. Pirtek answered and asserted breach-of-contract, fraud, and misrepresentation counterclaims, which Burlington later answered.
Burlington moved for a summary judgment on its breach-of-contract claim, seeking an award of the additional premium; it attached the policy and the audit report as exhibits. The trial court granted Burlington's summary-judgment motion on November 15, 2006; however, the trial court set aside that judgment on Pirtek's timely postjudgment motion. Pirtek then responded to Burlington's motion for a summary judgment and sought to have Burlington's action dismissed on the basis of Ala.Code 1975, § 10-2B-15.02, commonly referred to as the "door-closing" statute, see Casa Inv. Co. v. Boles, 931 So.2d 53, 57 (Ala.Civ.App.2005), because Burlington is a foreign insurance company1 that does not have a certificate of authority to do business in this state. After Burlington responded and both parties presented evidence in support of their respective positions, the trial court treated Pirtek's motion to dismiss as a summary-judgment motion and entered a judgment on September 10, 2007, declaring that Burlington was barred from bringing its action. In its judgment, the trial court determined that the door-closing statute and Ala.Code 1975, § 27-10-3(a), barred Burlington's action because Burlington was a foreign company lacking a certificate of authority and because the insurance policy Burlington issued to Pirtek did not qualify as a surplus-lines insurance policy because it lacked an endorsement required by Alabama's surplus-lines insurance law. The trial court also determined that the insurance policy was void. The trial court granted Pirtek's motion to dismiss its counterclaims against Burlington on October 10, 2007, which made the summary judgment final. After its postjudgment motion was denied, Burlington appealed.
Burlington argues that the trial court erred in concluding that it was barred from instituting this action by § 10-2B-15.02(a). That statute provides:
Burlington first argues that the application of § 10-2B-15.02 to preclude its enforcement of the insurance policy is prevented by the fact that Burlington is engaged in interstate commerce. As Burlington suggests, by virtue of the Commerce Clause, U.S. Const., art. I, § 8, cl. 3, Alabama generally cannot preclude the conduct of interstate business by foreclosing access to state courts by out-of-state companies conducting that business. See Cornwall & Stevens Southeast, Inc. v. Stewart, 887 F.Supp. 1490, 1492 (M.D.Ala.1995); TradeWinds Envtl. Restoration, Inc. v. Brown Bros. Constr., L.L.C., 999 So.2d 875, 877 (Ala.2008); and North Alabama Marine, Inc. v. Sea Ray Boats, Inc., 533 So.2d 598 (Ala.1988). However, "the McCarran Ferguson Act[, 15 U.S.C. § 1011 et seq.,] exempts the insurance industry from Commerce Clause restrictions." Metropolitan Life Ins. Co. v. Ward, 470 U.S. 869, 880, 105 S.Ct. 1676, 84 L.Ed.2d 751 (1984). As explained by the United States Supreme Court:
Western & Southern Life Ins. Co. v. State Bd. of Equalization of California, 451 U.S. 648, 653-54, 101 S.Ct. 2070, 68 L.Ed.2d 514 (1981). Thus, Alabama can preclude an insurance company that lacks a certificate of authority from enforcing its contracts in the courts of this state without offending the Commerce Clause.
Burlington further relies on the "equity" provision of § 10-2B-15.02 to urge reversal of the trial court's judgment. According to Burlington, it is not equitable for Pirtek to have received insurance coverage for less than the premium due under the policy. Burlington relies on a statement in Legg v. Fortis Insurance Co., 978 So.2d 776, 781 (Ala.Civ.App.2007), which reads: "[I]t is not `right and just' that an insured receive an extra period of coverage at no cost." We find Legg inapposite here, however, because it did not involve an application of the door-closing statute but instead involved whether an insured should receive coverage for an accident that occurred during the 10-day grace period for renewal when the insured failed to pay the premium payment by the end of that grace period. Legg, 978 So.2d at 781. Application of the door-closing statute in any instance would result in the potential for one side to benefit; thus, we cannot agree that its application in this circumstance is particularly inequitable. Even if we were to find application of the door-closing statute inequitable under these circumstances, Burlington would still not be permitted to bring an action to enforce its policy under Alabama law.
In addition to the general "door-closing statute," Alabama law specifically precludes unauthorized insurance companies from instituting actions on their insurance policies. § 27-10-3(a). Alabama requires that an insurer be authorized to transact business in this state by securing a certificate of authority from the Commissioner of Insurance. Ala.Code 1975, § 27-3-1. An insurer that is not authorized to transact business in this state because it does not possess a certificate of authority is an "unauthorized insurer." Ala.Code 1975, § 27-1-2(10). Section 27-10-3(a) provides that an unauthorized insurer may not institute an action "in this state to enforce any right, claim, or demand arising out of any insurance transaction in this state ...." Burlington argues that, although it does not have a certificate of authority from the commissioner, it is not an "unauthorized insurer" because it meets the requirements of § 27-10-26 and is eligible to provide surplus-lines coverage in Alabama. Indeed, § 27-10-3(b)(2) states that it does not apply to "[s]urplus lines coverages written under this chapter."
Custard Ins. Adjusters, Inc. v. Youngblood, 686 So.2d 211, 213 (Ala.1996). There are several requirements that an unauthorized insurance company and a surplus-lines broker must meet in order for them to be able to provide and to procure, respectively, surplus-lines insurance coverage. See Ala. Code 1975, §§ 27-10-24 and 27-10-26. None of those requirements are at issue in the present case.
Instead, the issue is whether the insurance policy in question is a surplus-lines insurance...
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...Insurance Co. v. Zota, 607 F. Supp.2d 1340 (S.D. Fla. 2009). State Courts: Alabama: Burlington Insurance Co. v. Fluid Services, Inc., 13 So.3d 965 (Ala. App. 2008). Georgia: Kay-Lex Co. v. Essex Insurance Co., 286 Ga. App. 484, 649 S.E.2d 602 (2007). Louisiana: Edwards v. Daugherty, 883 So.......
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