Colonial Life & Acc. Ins. v. Hartford Fire Ins., No. 03-11688.
| Court | United States Courts of Appeals. United States Court of Appeals (11th Circuit) |
| Writing for the Court | Black |
| Citation | 358 F.3d 1306 |
| Parties | COLONIAL LIFE & ACCIDENT INSURANCE COMPANY, and Colonial Companies, Inc., Plaintiffs-Appellants, v. HARTFORD FIRE INSURANCE COMPANY, Twin City Fire Insurance Company, et al., Defendants-Appellees. |
| Decision Date | 05 February 2004 |
| Docket Number | No. 03-11688. |
v.
HARTFORD FIRE INSURANCE COMPANY, Twin City Fire Insurance Company, et al., Defendants-Appellees.
Page 1307
J. Ross Forman, III, Robert S. Given, Burr & Forman, Birmingham, AL, for Plaintiffs-Appellants.
Michael S. Jackson, Beers, Anderson, Jackson & Smith, P.C., Judy B. Van Heest, Montgomery, AL, James Stanley Witcher, III, Gladden & Sinor, P.C., Birmingham, AL, for Defendants-Appellees.
Appeal from the United States District Court for the Middle District of Alabama.
Before ANDERSON, BLACK and HILL, Circuit Judges.
BLACK, Circuit Judge:
Colonial Life & Accident Insurance Company, and Colonial Companies, Inc. (collectively Colonial) appeal the district court's order partially dismissing their lawsuit against Hartford Fire Insurance Company, Twin City Fire Insurance Company, and Hartford Casualty Insurance Company (collectively Hartford). The district court dismissed Colonial's breach of enhanced duty of good faith claim solely because South Carolina classifies the breach of good faith and fair dealing as a tort, and held Alabama law controls the remedy in contract claims even though South Carolina controls the substantive claims. We reverse.1
Colonial sued Hartford for breach of contract, breach of the enhanced duty of good faith, negligence, and bad faith, in a cross-claim and third party complaint. These claims arose out of a reservation of rights defense provided by Hartford and Hartford's failure to settle the Parker White lawsuit.2
Page 1308
While this case was pending, the Alabama Supreme Court, in response to a certified question in a related case, held that a claim of breach of the enhanced duty of good faith sounds in contract. Twin City Fire Ins. Co. v. Colonial Life & Accident Ins. Co., 839 So.2d 614, 616 (Ala. 2002). Following briefs by the parties, the district court conducted a hearing to discuss the impact of Twin City on this case. Subsequently, the district court issued an order dismissing Colonial's claim for breach of the enhanced duty of good faith. The court held that under Alabama choice of law provisions and the decision in Twin City, Colonial's breach of the enhanced duty of good faith claim sounds in contract and is governed by South Carolina contract law. Because South Carolina recognizes the breach of the duty of good faith and fair dealing as a tort claim, rather than a contract claim, the district court dismissed Colonial's claim for breach of the enhanced duty of good faith. The district court also found that, while Colonial's contract claims are governed by South Carolina substantive law, in the event contract liability exists, the remedy is governed by Alabama law. The district court's interlocutory order certified the following holding for immediate appeal:
In sum, this is what the court concludes. Alabama law mandates that Colonial's "enhanced duty" claims be construed as contract claims. Because they are contract claims, South Carolina law governs. When the court looks to South Carolina contract law, these claims do not exist as contract claims. Under South Carolina law, the claims are construed as tort claims. If the court were then to apply Alabama law to these tort claims, this avails Colonial nothing because under Alabama law, no such tort claims exist. See Twin City, supra. Therefore, putting aside terminological problems, counts two and four of the cross-claim and third party complaint [breach of the enhanced duty of good faith and bad faith] must be dismissed because they do not exist as contract claims in South Carolina or as tort claims in Alabama.
A. Alabama Choice of Law
"A federal court in a diversity case is required to apply the laws, including principles of conflict of laws, of the state in which the federal court sits." O'Neal v. Kennamer, 958 F.2d 1044, 1046 (11th Cir.1992). This case was brought in the Middle District of Alabama, and the district court did not err in applying Alabama choice of law rules.
B. Application of South Carolina Substantive Law
Alabama applies the traditional doctrines of lex loci contractus to contract claims and lex loci delicti to tort claims. The doctrine of lex loci contractus governs the validity, interpretation, and construction of the contract. Cherry, Bekaert & Holland v. Brown, 582 So.2d 502, 506 (Ala. 1991). The doctrine states that "a contract is governed by the laws of the state where it is made except where the parties have legally contracted with reference to the laws of another jurisdiction." Id. The doctrine of lex loci delicti, on the other hand, requires the court to "determine the substantive rights of an injured party according to the law of the state where the injury occurred." Fitts v. Minnesota Mining & Mfg. Co., 581 So.2d 819, 820 (Ala.1991).
The breach of the enhanced duty of good faith sounds in contract. Twin City, 839 So.2d at 616. The doctrine of lex loci contractus, therefore, applies to Colonial's
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breach of the enhanced duty of good faith claim. The parties agree the insurance contracts at issue were made in South Carolina, and thus, South Carolina law applies to any contract claims. The district court did not err in finding Colonial's breach of the enhanced duty of good faith claim should be decided under South Carolina law.
C. Breach of the Enhanced Duty of Good Faith
In Alabama, insurers have an enhanced duty of good faith to defend their insured under a reservation of rights. L & S Roofing Supply Co. v. St. Paul Fire & Marine Ins. Co., 521 So.2d 1298, 1303-04 (Ala.1987). South Carolina does not...
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...have legally contracted with reference to the laws of another jurisdiction." Colonial Life & Accident Ins. Co. v. Hartford Fire Ins. Co., 358 F.3d 1306, 1308 (11th Cir. 2004) (citing Cherry, Bekaert & Holland v. Brown, 582 So. 2d 502, 506 (Ala. 1991)) (internal quotations omitted). The Cont......
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...of conflict of laws, of the state in which the federal court sits." Colonial Life & Accident Ins. Co. v. Hartford Fire Ins. Co. , 358 F.3d 1306, 1308 (11th Cir. 2004), quoting O'Neal v. Kennamer , 958 F.2d 1044, 1046 (11th Cir. 1992). Thus, the beginning point of the analysis is application......
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...that a contract is governed by the laws of the state where it is made ...." Colonial Life & Acc. Ins. Co. v. Hartford Fire Ins. Co. , 358 F.3d 1306, 1308 (11th Cir. 2004) (citing Cherry, Bekaert & Holland v. Brown , 582 So. 2d 502, 506 (Ala.1991) ; Fitts v. Minn. Mining & Mfg. Co. , 581 So.......
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Ashmore v. Dodds, Civil Action No.: 8:15–cv–00561–JMC
...of that claim is determined by reference to the law of the forum. See Colonial Life & Acc. Ins. Co. v. Hartford Fire Ins. Co. , 358 F.3d 1306, 1309–10 (11th Cir. 2004) ; Fahs v. Martin , 224 F.2d 387, 396 (5th Cir. 1955) ; Restatement (First) of Conflict of Laws § 7. Here, then, South Carol......
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Oden v. Vilsack, CIVIL ACTION NO. 10-00212-KD-M
...have legally contracted with reference to the laws of another jurisdiction." Colonial Life & Accident Ins. Co. v. Hartford Fire Ins. Co., 358 F.3d 1306, 1308 (11th Cir. 2004) (citing Cherry, Bekaert & Holland v. Brown, 582 So. 2d 502, 506 (Ala. 1991)) (internal quotations omitted). The Cont......
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DJR Assocs., LLC v. Hammonds, Case No. 2:16–cv–1729–TMP
...of conflict of laws, of the state in which the federal court sits." Colonial Life & Accident Ins. Co. v. Hartford Fire Ins. Co. , 358 F.3d 1306, 1308 (11th Cir. 2004), quoting O'Neal v. Kennamer , 958 F.2d 1044, 1046 (11th Cir. 1992). Thus, the beginning point of the analysis is application......
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Setty v. Shrinivas Sugandhalaya LLP, No. 18-35573
...that a contract is governed by the laws of the state where it is made ...." Colonial Life & Acc. Ins. Co. v. Hartford Fire Ins. Co. , 358 F.3d 1306, 1308 (11th Cir. 2004) (citing Cherry, Bekaert & Holland v. Brown , 582 So. 2d 502, 506 (Ala.1991) ; Fitts v. Minn. Mining & Mfg. Co. , 581 So.......