Champion Ins. Co. v. Denney

• Decision Date: 15 December 1989
• Citation: 555 So.2d 137
• Parties: CHAMPION INSURANCE COMPANY v. Dianna O'Kelley DENNEY. 88-377.
• Court: Alabama Supreme Court

Page 137

555 So.2d 137

CHAMPION INSURANCE COMPANY v. Dianna O'Kelley DENNEY.

88-377.

Supreme Court of Alabama.

Dec. 15, 1989.

J.L. Klinefelter and Patrick S. Burnham of Burnham, Klinefelter, Halsey, Jones & Cater, Anniston, for appellant.

John S. Casey, Heflin, for appellee.

KENNEDY, Justice.

Dianna O'Kelley Denney sued her automobile liability insurer, Champion Insurance Company, to recover the amount of a default judgment rendered against an uninsured motorist. Champion appeals from a summary judgment in favor of Denney. We affirm.

The issue is whether the default judgment, obtained by Denney against an uninsured motorist, was conclusive as to liability and as to damages that Denney was entitled to recover pursuant to the uninsured motorist coverage provision of the liability policy issued by Champion, even though Denney did not have Champion's consent to sue the uninsured motorist.

On August 22, 1986, Denney was involved in an automobile accident with Jerry W. Martin, an uninsured motorist. Denney's liability policy included an uninsured motorist endorsement, which provided in pertinent part:

"SECTION C--UNINSURED MOTORISTS INSURANCE

"1. COVERAGE D-UNINSURED MOTORISTS (Damages for Bodily Injury): The company will pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured highway vehicle; provided, for the purposes of this coverage, determination as to whether the insured or such representative is legally entitled to recover such damage, and if so the amount thereof, shall be made by agreement between the insured or such representative and the company or, if they fail to agree, by arbitration.

"No judgment against any person or organization alleged to be legally responsible for the bodily injury shall be conclusive, as between the insured and the company, of the issues of liability of such person or organization or of the amount of damages to which the insured is legally entitled unless such judgment is entered pursuant to an action prosecuted by the insured with the written consent of the company."

Dianna Denney, through counsel, notified Champion of the possibility of a claim under the uninsured motorist provision of the liability policy. Subsequently, she sued the uninsured motorist. Counsel for Denney forwarded a copy of the summons and complaint to Champion with a cover letter, which stated in part, "Your company may wish to respond to this complaint." The suit was uncontested, and a default judgment was entered in the amount of $100,000, plus court costs. Champion did not give written consent to the filing of this action, and it did not participate in the action.

In February 1988, Denney sued Champion, seeking to recover uninsured motorist benefits under her policy. Summary judgment was entered against Champion for the sum of $20,000, the policy limit.

Alabama's uninsured motorist coverage statute, Code 1975, § 32-7-23, provides:

"(a) No automobile liability or motor vehicle liability policy insuring against loss resulting from liability imposed by law for bodily injury or death suffered by any person arising out of the ownership, maintenance or use of a motor vehicle shall be delivered or issued for delivery in this state with respect to any motor vehicle registered or principally garaged in this state unless coverage is provided therein or supplemental thereto, in limits for bodily injury or death set forth in subsection (c) of section 32-7-6, under provisions approved by the commissioner of insurance for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom; provided, that the named insured shall have the right to reject such coverage; and provided further, that unless the named insured requests such coverage in writing, such coverage need not be provided in or supplemental to a renewal policy where the named insured had rejected the coverage in connection with the policy previously issued to him by the same insurer.

"(b) The term 'uninsured motor vehicle' shall include, but is not limited to, motor vehicles with respect to which:

"(1) neither the owner nor the operator carries bodily injury liability insurance;

"(2) any applicable policy liability limits for bodily...