Dumas v. Southern Guaranty Ins. Co.
| Decision Date | 18 December 1981 |
| Citation | 408 So.2d 86 |
| Parties | Samuel T. DUMAS, Jr., d/b/a Samuel T. Dumas Construction Company v. SOUTHERN GUARANTY INSURANCE COMPANY. 80-541. |
| Court | Alabama Supreme Court |
Marc E. Bradley of Turner, Onderdonk, Bradley & Kimbrough, Chatom, for appellant.
Bert S. Nettles and Kenneth O. Simon of Nettles, Cox & Barker, Mobile, for appellees.
On April 13, 1972, fire destroyed a warehouse building which Samuel T. Dumas (contractor/insured) was constructing for Dumas Brothers Manufacturing Company, Inc. (owner). Southern Guaranty Insurance Company (insurance company) had issued a contractor's liability insurance policy providing coverage in the amount of $50,000.00 for Dumas's operations.
After the fire, the owner brought a negligence action against the contractor in which compensation was sought for the damage done to the warehouse by the fire. The defense of this action was undertaken by the insurance company and ultimately, after trial, resulted in a jury verdict and judgment against Samuel T. Dumas on February 26, 1975, in the amount of $234,000.00.
That case was appealed to this Court. The judgment in its full amount was affirmed against Dumas by this Court on April 2, 1976. Dumas v. Dumas Brothers Manufacturing Co., Inc., 295 Ala. 370, 330 So.2d 426 (1976).
Thereupon the insurance company paid into the United States District Court for the Southern District of Alabama the sum of $89,324.82 which was to be applied against the judgment and the costs, penalties, and interest relative thereto. However, Dumas is still liable to the owner for the amount of money by which the judgment exceeds coverage under the policy. Dumas's excess liability under the judgment in the previous negligence action is approximately $184,000.00.
The action resulting in this appeal began in March, 1977, with the filing of a complaint by the owner against Dumas and the insurance company, in which the owner claimed damages from both defendants for: (a) negligent failure to settle the previous action relating to fire damage; and (b) the bad faith refusal of the insurance company to settle the fire damage claim.
On January 18, 1979, Dumas filed a cross-claim against the insurance company, which sought damages for the negligent failure or refusal of the insurance company to settle the previous action for the fire damage to the manufacturing company's warehouse and also damages for the insurance company's bad faith refusal to settle that claim within the limits of liability coverage afforded by Dumas's policy with the insurance company.
The insurance company's answer to Dumas's cross-claim was filed on August 23, 1979, and set up, as an affirmative defense, that the cross-claim was barred by the applicable tort statute of limitations. Additionally, on the same day, the insurance company moved for summary judgment, with supporting affidavit, on the same ground, i.e., that Dumas's cross-claim was barred by the applicable tort statute of limitations.
The trial court granted the insurance company's motion for summary judgment on March 31, 1981, expressly directing the entry of a final judgment in favor of the insurance company on Dumas's cross-claim for damages. This appeal followed.
What statute of limitations applies to an action alleging the bad faith refusal to pay an insurance claim made by the insured against the insurance company? This is the sole issue presented by this appeal.
We hold that the one-year statute of limitations governing tort actions applies, and the action is barred. Ala.Code 1975, § 6-2-39(5). An action by an insured against its insurer alleging negligence or bad faith in settling a third party claim is a tort claim, not a contract action. Waters v. American Casualty Insurance Co., 261 Ala. 252, 73 So.2d 524 (1954). There, the Court noted that there exists a division among the jurisdictions as to whether the...
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