Ex parte Howell

Decision Date10 February 1984
Citation447 So.2d 661
PartiesEx parte Bobby J. HOWELL. (In re Bobby J. HOWELL v. Henry M. LEIMAN, et al.) 83-187.
CourtAlabama Supreme Court

James Whitmire of Brewer, Lentz, Nelson & Whitmire, Decatur, for petitioner.

William B. Eyster of Eyster, Key, Tubb, Weaver & Roth, Decatur, for respondents.

BEATTY, Justice.

Petition for writ of mandamus to issue to the Honorable Rudolph W. Slate, Judge of the Circuit Court of Morgan County. The writ is granted.

The petitioner, Bobby J. Howell, sustained personal injuries in an accident while employed as a construction worker for Henry M. Leiman, Inc., a corporation. Howell was paid workmen's compensation benefits of approximately $21,584 by the Aetna Casualty & Surety Company (Aetna), the workmen's compensation carrier for Howell's employer.

Subsequently, Howell filed an action in the Circuit Court of Morgan County against Henry M. Leiman, individually, Bill Wood, and certain fictitious parties to recover damages on account of those injuries. This was a third-party action brought under Code of 1975, § 25-5-11. It claimed that Howell's injuries resulted from the negligence and/or wantonness of Leiman and Wood, the supervisory employees of the corporate employer. At the time of the accident, Henry M. Leiman was president of Henry M. Leiman, Inc., and Bill Wood was the job superintendent.

After Howell filed this third-party lawsuit, defendant Henry M. Leiman moved that the circuit court order Howell to name Aetna as a party plaintiff. The grounds asserted in support of this motion were:

(1) That Aetna was subrogated to any and all claims for workmen's compensation benefits paid to Howell;

(2) That Aetna has a subrogation interest in the case and that the action should be brought and prosecuted in the name of Howell and Aetna; and

(3) That Aetna is a necessary party to the adjudication of the case in accord with Rules 17(a) and 19(a), A.R.Civ.P.

Judge Slate, in due course, entered the order prayed for. Howell then filed this petition to obtain a rescission of that order.

The basic legal question presented is whether Aetna, the compensation carrier, must be joined in the third-party action as a party plaintiff under Rules 17(a) and 19(a), A.R.Civ.P., in view of Code of 1975, § 25-5-11.

Rule 17(a) provides that:

"Every action shall be prosecuted in the name of the real party in interest....

"In subrogation cases, regardless of whether subrogation has occurred by operation of law, assignment, loan receipt, or otherwise, if the subrogor no longer has a pecuniary interest in the claim, the action shall be brought in the name of the subrogee. If the subrogor still has a pecuniary interest in the claim, the action shall be brought in the names of the subrogor and the subrogee."

Rule 19(a) recites that:

"A person who is subject to jurisdiction of the court shall be joined as a party in the action if ... (2) he claims an interest relating to the subject of the action and is so situated that the disposition of the action in his absence may (i) as a practical matter impair or impede his ability to protect that interest or (ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of his claimed interest. If he has not been so joined, the court shall order that he be made a party."

Respondents contend that Aetna has a pecuniary interest in Howell's claim against Leiman and Wood which derives from the language of Code of 1975, § 25-5-11, which reads in part:

"If the injured employee ... recover[s] damages against such other party, the amount of such damages so recovered and collected shall be credited upon the liability of the employer for compensation, and if such damages so recovered and collected should be in excess of the compensation payable under this chapter, there shall be no further liability on the employer to pay compensation on account of such injury ... and the employer shall be entitled to reimbursement for the amount of compensation theretofore paid on account of such injury or death." (Emphasis added.)

According to the respondents, the case of Roberts v. Hughes, 432 So.2d 1232 (Ala.1983), supports the conclusion that Aetna must be joined here. In that case, Roberts filed an action against Hughes and Super Valu Stores for injuries he sustained in a traffic collision. Roberts had received payments of money from Excalibur Insurance Company under its coverage of him for collision and workmen's compensation benefits. Excalibur moved to intervene in Roberts's action against Hughes and Super Valu Stores. The trial court granted Excalibur's motion and Excalibur became a party plaintiff. Before trial occurred, however, Excalibur and Roberts made an agreement whereby Roberts promised to pay Excalibur $23,887.87 from any recovery from the defendants, whereupon Excalibur promised in exchange to dismiss its complaint in intervention. Excalibur then moved to dismiss that complaint. The trial court denied that motion. After Roberts and Excalibur lost in the trial on the merits, Roberts appealed to this Court, claiming error in the refusal to dismiss Excalibur's complaint in intervention. This Court, in affirming the action of the lower court, took note of Rule 17(a), A.R.Civ.P., observing that "the subrogee, as real party in interest, is the proper plaintiff regardless of the form of the transaction between the insurer and the insured." This Court added:

"It [A.R.Civ.P. 17(a) ] states that the action shall be brought in the name of the subrogee, regardless of whether its subrogation rights arose by virtue of operation of law, assignment, loan receipt, or otherwise. In other words, the acts giving rise to the rights of subrogation, not the form of any agreement between insured and insurer, are determinative of who shall be made a party." 432 So.2d at 1234.

The petitioner, Howell, on the other hand, contends that the earlier decision of this Court in Hughes v. Newton, 295 Ala. 117, 324 So.2d 270 (1975), controls the facts here and compels the issuance of the writ. Hughes was also a third-party action involving the payment of workmen's compensation benefits. In that case, the employee was paid $2,982.56 in such benefits by her employer's insurance carrier. She later filed an action against her employer's "principal executive officer" to recover damages for the same job-related injury. The workmen's compensation insurance carrier for the employer was also the liability insurance carrier for the individual defendant. This insurance carrier petitioned to intervene as a party plaintiff in the action filed against the individual defendant, citing Rule 24, A.R.Civ.P. This Court held that the extraordinary facts of the case prevented

"the discretionary allowance of intervention where the insurance company ... represents the third party defendant and is also seeking, through intervention, status as a party plaintiff. Such a patent conflict of interest exists as to bar the right of unencumbered intervention. The potential for collusion is so inherent as to preclude a showing to the contrary within the spirit of Rule 24." 295 Ala. at 120, 324 So.2d at 272.

See also Southern v. Plumb Tools, A Div. of O'Ames Corp., 696 F.2d 1321 (11th Cir.1983).

Having disposed of the case on that narrow ground, this Court, by way of obiter dictum, proceeded to set guidelines for the allowance of intervention in the ordinary workmen's compensation case brought under Title 26, § 312 (Alabama Code of 1940, Recomp.1958), now § 25-5-11. "Ordinarily," the Court observed:

"Rule 24 anticipates potential future litigation brought by or involving the intervenor. The purpose of allowing intervention in such cases is to discourgage multiplicity of litigation and to relieve the intervenor from the possible prejudice of 'stare decisis in later litigation involving the same questions of law and fact to which the unsuccessful applicant for intervention is finally a party.' ...

"In the § 312 [now § 25-5-11] situation, however, no future litigation is contemplated. [Citing Liberty Mutual Ins. Co. v. Lockwood Greene Engineering, Inc., 273 Ala. 403, 140 So.2d 821 (1962).] The compensation carrier will be reimbursed from the employee's judgment, if any, whether or not it intervenes. Since the employee is seeking exactly the same recovery as the insurer, the usual case will be resolved by the final clause of Rule 24(a)(2), '... the applicant's interest is adequately represented by existing parties.'

"Thus, in the [ § 25-5-11] case, the motives for liberally allowing intervention are absent and the right to intervene by the compensation carrier should be more restricted than in other Rule 24 cases. Before intervention should be allowed over the objection of the plaintiff in a [ § 25-5-11] third party action, the applicant must meet a burden of showing to the satisfaction of the trial court that he can make a substantial contribution toward a favorable outcome of the plaintiff-employee's case.

"A mere showing that the applicant is the employer or his compensation carrier and the extent of its right of reimbursement is insufficient to meet this burden. If, on the other hand, the applicant can demonstrate active participation in the preparation of the third party action; that it has in its possession significant information or data essential to the prosecution of the third party suit; or that the employee-plaintiff is inadequately represented or otherwise less likely to succeed in his effort to effect recovery without the intervenor's active participation; then, in such event unencumbered intervention (i.e., full participation in the litigation) should be allowed." 295 Ala. at 120-121, 324 So.2d at 273.

Of course, it will not have escaped notice that these conditions were considered to apply to a Rule 24 situation, that is, to intervention. Intervention is a method by which "an outsider with an interest...

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