Ex Parte Safeway Ins. Co. of Alabama, Inc.

• Decision Date: 29 February 2008
• Docket Number: 1061613.
• Citation: 990 So.2d 344
• Parties: Ex parte SAFEWAY INSURANCE COMPANY OF ALABAMA, INC. (In re Michelle J. Galvin v. Clifford W. Monday, an individual; and Safeway Insurance Company of Alabama, Inc., a corporation).
• Court: Alabama Supreme Court

990 So.2d 344

Ex parte SAFEWAY INSURANCE COMPANY OF ALABAMA, INC.

(In re Michelle J. Galvin v. Clifford W. Monday, an individual; and Safeway Insurance Company of Alabama, Inc., a corporation).

1061613.

Supreme Court of Alabama.

February 29, 2008.

J. Mark Hart of Haskell Slaughter Young & Rediker, LLC, Birmingham, for petitioner.

James H. Wettermark of Wettermark Holland & Keith, LLC, Birmingham, for respondent.

STUART, Justice.

Safeway Insurance Company of Alabama, Inc., petitions this Court for a writ of mandamus directing Judge J. Scott Vowell of the Jefferson Circuit Court to vacate his order denying its motion to dismiss Michelle J. Galvin's bad-faith claim against it and to enter an order dismissing that claim without prejudice. We grant the petition and issue the writ.

Facts

Safeway issued an insurance policy to Galvin that included uninsured-motorist ("UM") coverage; that policy was in effect on March 31, 2006, when Galvin's automobile was struck by an automobile driven by Clifford W. Monday.

On April 16, 2007, Galvin filed a complaint, alleging claims of negligence and wantonness against Monday and a claim of bad-faith failure to pay an insurance claim against Safeway and asserting a demand for the payment of UM benefits under the policy. According to Galvin's complaint, Galvin was injured in the accident and Monday, an uninsured motorist at the time of the accident, was driving while intoxicated. Galvin further stated that after she filed a claim for UM benefits with Safeway, Safeway "refused to negotiate in good faith to pay the appropriate proceeds of the [UM] policy to [her] to compensate her for her injuries and damages." Specifically, she averred:

"As the insurance carrier for the Plaintiff, Michelle J. Galvin, the Defendant, Safeway Insurance Company of Alabama, Inc., had a duty to negotiate in good faith with the Plaintiff and to fairly and promptly pay the proceeds of her insurance policy with Safeway to her following a covered event.

"The Defendant, Safeway Insurance Company of Alabama, Inc., breached its duty of fair dealing. Instead, the Defendant refused to negotiate in good faith with Mrs. Galvin, needlessly delayed the payment of proceeds which are due her under the uninsured motorist policy, repeatedly engaged in obstructionist tactics to delay the payment of the claim, and otherwise acted in bad faith in its dealings and negotiations with Mrs. Galvin and her representatives."

On May 20, 2007, Safeway filed a motion to dismiss pursuant to Rule 12(b)(1), Ala. R. Civ. P., alleging that the trial court lacked subject-matter jurisdiction over the bad-faith claim. Safeway argued that this Court's holding in Pontius v. State Farm Mutual Automobile Insurance Co., 915 So.2d 557, 565 (Ala.2005), that "there can be no bad-faith action based on conduct arising before the uninsured motorist's liability is established and damages are fixed...." required dismissal of the bad-faith claim for lack of subject-matter jurisdiction. Safeway argued that Galvin's bad-faith claim was not ripe for adjudication and that it should be dismissed because the amount of damages had not yet been fixed.¹ Safeway stated:

"The amount of [Galvin's] damages against Monday have not been fixed. There is a dispute about the amount of those damages. It will take a trial of the accident claim to fix the damages. Because the amount of damages is not fixed, the claim for bad faith for the failure to pay [uninsured-motorist] benefits is not ripe, the court lacks subject matter jurisdiction of that claim, and it is to be dismissed without prejudice under Pontius."

On June 27, 2007, Galvin filed a response, attaching in support of her argument that the bad-faith claim against Safeway should not be dismissed an affidavit of her attorney, James H. Wettermark. Wettermark averred as follows:

"This is a clear case of liability. Mrs. Galvin was struck by a drunk driver who apparently had been convicted on multiple previous occasions for drunk driving. She incurred $15,884 in medical bills.

"Because the defendant driver was uninsured, on Mrs. Galvin's behalf, I made a claim for uninsured motorist benefits from her uninsured motorist carrier, Safeway Insurance Company of Alabama.

"I made an initial settlement demand on Safeway on August 31, 2006. For the next seven months, Safeway refused to negotiate in good faith. Rather, they made an initial offer of $10,000 on October 4, 2006. This offer is less than the medical specials on a case of clear liability.

"I repeatedly requested that Safeway at least engage in good faith negotiations. I was never successful at getting them to make any additional offers.

"Throughout the entire time, Mrs. Galvin has not had money with which to pay her medical bills. Many of them remain unpaid to this date. She paid good premiums for uninsured motorist coverage for just this sort of occurrence. Now, her insurance company has simply refused to negotiate with her in [good] faith.

"This is not a case where there is a reasonable dispute over a fair settlement. Safeway has yet to make an offer that even equals the medical bills in a case of clear liability. Rather, this is a clear-cut case where Safeway has simply obfuscated, dragged their feet, and otherwise refused to negotiate in good faith with its own insured to timely settle a claim."

On July 5, 2007, the trial court denied Safeway's motion to dismiss. Safeway filed a motion for reconsideration. In its motion, Safeway, relying on Pontius, argued that because the amount of damages had not been fixed and Safeway did not have all Galvin's medical records relating to the accident, Safeway could not have engaged in bad faith in failing to negotiate in good faith and that, consequently, the claim was not ripe for adjudication and should be dismissed. In support of its motion for reconsideration, Safeway attached an affidavit from Richard Mizell, Safeway's assistant claim manager. Mizell averred:

"The auto accident occurred on March 31, 2006. The accident involved a minor impact. ...

"The insured did not seek medical attention the day of the accident. Three days later she visited her primary care physician who diagnosed her with sprains of the neck, shoulder and wrist and prescribed pain medication. Three days later the insured began treating with a chiropractor and had twenty-six visits to the chiropractor over a two-month period. The insured did not receive evaluation or treatment by a medical doctor during this time.

"A June 2006 MRI showed osteophyte formation with no neural compromise and a small herniation at C5-6. The insured then traveled to Georgia for further diagnostic studies. The findings were to continue with conservative treatment and to possibly have an MRI (it appears from that record that the Georgia physician was unaware the insured had an MRI in Birmingham earlier that week).

"Ultimately, the insured submitted medical bills of approximately $15,000. Blue Cross, however, paid only $3,929.62 of the bills (Blue Cross sought subrogation of this amount). ... The medical bills themselves did not show the charges which Blue Cross reduced or did not correlate Blue Cross payments with `write-offs' with specific charges. Therefore, Safeway requested the explanation of benefit forms (`EOB's') from the insured so it could analyze the discrepancy between the bills submitted and the Blue Cross subrogation amount for this accident. The EOB's were important to determine what treatments and injuries were proximately caused by this accident given the low amount of the Blue Cross subrogation.

"This analysis was especially important because plaintiff had many prior, unrelated medical problems. On her pharmacy records submitted to Safeway, plaintiff blacked out several prescription medications she took. The prescription she did not black out showed she was on four different pain medications after the accident. ...

"The insured also contended [Monday] had been convicted of DUI [driving under the influence] from this accident. The police report did not show any alcohol use. Safeway could not find a record that [Monday] was convicted of DUI. Therefore, Safeway wrote [Galvin] asking for records showing the DUI conviction, but [Galvin] never furnished this information.

"Safeway paid [Galvin's] collision damage benefit and med pay benefits after the accident. On August 31, 2006, [Galvin] demanded that Safeway pay $80,000 or the uninsured motorist policy limits (which were $60,000). On October 4, 2006, Safeway responded with an opening counteroffer of $10,000. [Galvin] never made another offer in response before filing suit. The insured had not complied with Safeway's request for EOB's to help complete analysis of the value of [her] personal injury claim when she filed suit on April 16, 2007. In Safeway's evaluation, the insured has not submitted evidence establishing that she is entitled to recover the $60,000 uninsured motorists limits, and that the extent of the damages to which she is entitled to recover from the uninsured motorist are unknown."

On August 2, 2007, the trial court denied Safeway's motion for reconsideration. On August 10, 2007, Safeway filed its petition for a writ of mandamus in this Court, requesting this Court to order the trial court to dismiss the bad-faith claim against it.

Standard of Review

"`The question of subject-matter jurisdiction is reviewable by a petition for a writ of mandamus.' Ex parte Liberty Nat'l Life Ins. Co., 888 So.2d 478, 480 (Ala.2003). However, `[f]or the writ of mandamus to issue "`[t]he right sought to be enforced by mandamus must be clear and certain with no reasonable basis for controversy about the right to relief.'"' Ex parte Vance, 900 So.2d 394, 398-99 (Ala.2004)."

Ex parte Tuscaloosa County Special Tax Bd., 963 So.2d 610, 611-12 (Ala.2007).

"This Court has consistently held that the writ of mandamus is an extraordinary and drastic writ and that a party seeking such a writ must...