Ex parte State Mut. Ins. Co.

• Decision Date: 16 December 1997
• Parties: Ex parte STATE MUTUAL INSURANCE COMPANY. (Re Aubrey Wayne TIDMORE, et al. v. STATE MUTUAL INSURANCE COMPANY, et al.). STATE MUTUAL INSURANCE COMPANY v. Betty J. PAYNE, et al. Aubrey Wayne TIDMORE, et al. v. Betty J. PAYNE, et al. 1960410, 1960455 and 1960589.
• Court: Alabama Supreme Court

Page 207

715 So.2d 207

Ex parte STATE MUTUAL INSURANCE COMPANY.

(Re Aubrey Wayne TIDMORE, et al. v. STATE MUTUAL INSURANCE COMPANY, et al.).

STATE MUTUAL INSURANCE COMPANY v. Betty J. PAYNE, et al.

Aubrey Wayne TIDMORE, et al. v. Betty J. PAYNE, et al.

1960410, 1960455 and 1960589.

Supreme Court of Alabama.

Dec. 16, 1997.

Gregory H. Hawley and Lorrie L. Lizak of Maynard, Cooper & Gale, P.C., Birmingham; Donald V. Watkins, Birmingham; and Thomas S. Lawson, Jr., and James N. Walter, Jr., of Capell, Howard, Knabe & Cobbs, P.A., Montgomery, for State Mutual Insurance Company.

F. Hilton-Green Tomlinson and Alexander W. Jones, Jr., of Pritchard, McCall & Jones, L.L.C., Birmingham, for Aubrey Wayne Tidmore, et al.

James P. O'Neal of Barnett, Hanes, O'Neal, Duffee & Garfield, L.L.C., Birmingham; and J.L. Chestnut of Chestnut, Sanders, Sanders & Pettaway, Selma, for Betty J. Payne, et al.

Russell Jackson Drake and Joe R. Whatley, Jr., of Cooper, Mitch, Crawford, Kuykendall & Whatley, L.L.C., Birmingham; Steve P. Gregory of Ritchie & Rediker, Birmingham; Bruce J. McKee of Hare, Wynn, Newell & Newton, Birmingham; Michael Straus of Bainbridge & Straus, Birmingham; Richard A. Freese of Langston, Frazer, Sweet & Freese, Birmingham; Cecil Gardner of Gardner, Middlebrooks & Fleming, Mobile; and Garve Ivey, Jr., of King & Ivey, Jasper, for amici curiae various class action law firms.

David R. Donalson, David J. Guin, and Pamela D. Beard of Donaldson & Guin, L.L.C., Birmingham, for amicus curiae Donaldson & Guin, L.L.C.

Robert A. Jones, Jr., of Jones & Davis, P.C., Birmingham, for amicus curiae Dr. Richard Arrington, Jr., mayor of the City of Birmingham.

Alan T. Rogers and Gregory C. Cook of Balch & Bingham, L.L.P., Birmingham; Mac M. Moorer of Lightfoot, Franklin & White, L.L.C., Birmingham; and Wade H. Baxley and Rhonda Pitts Chambers of the Alabama Defense Lawyers Ass'n.

On Applications for Rehearing in Case 1960410 and on Initial Appellate Review in Cases 1960455 and 1960589

COOK, Justice.

The opinion of April 4, 1997, in case 1960410 is withdrawn and the following opinion, dealing with that case and with two related appeals, is substituted therefor.

These proceedings (one petition for the writ of mandamus and two appeals) were brought in this Court to challenge an order of Judge Eddie Hardaway, Jr., of the Greene County Circuit Court, amending a class-action certification in a dispute that arose out of the following facts:

On August 3, 1995, Aubrey W. Tidmore and others (collectively "Tidmore") commenced an action against State Mutual Insurance Company in the Greene County Circuit Court. The complaint was filed by Tidmore "individually and ... on behalf of an opt-out class," as provided by Ala. R. Civ. P. 23(b)(3) (emphasis added). The class was described as "[a]ll persons who have procured the VANISHING PREMIUM DIVIDEND OPTION/VANISHING PREMIUM POLICY from defendants based upon the misrepresentation that the premium would no longer be due upon the expiration of a certain number of years at which time the policy would then pay for itself."

In early February 1996, Carol Bell and others, through the same counsel, commenced in the Marengo County Circuit Court against State Mutual another action containing substantially identical allegations. On February 12, 1996, Tidmore moved the Greene County Circuit Court to certify a non-opt-out class. On February 15, 1996, these two actions were consolidated in the Greene County Circuit Court. The following day, Bell and Tidmore filed a joint "first amended complaint" in Greene County. The amended complaint sought, for the first time in a pleading, certification of a "non-opt-out" class, pursuant to Ala. R. Civ. P. 23(b)(1)(A) and (B) and (b)(2).

On February 21, 1996, the Greene County Circuit Court certified a non-opt-out class, pursuant to Rule 23(b)(1)(A) and (b)(2). Subsequently, a prospective settlement agreement was reached in the Tidmore action, and, on September 13, 1996, the Greene County Circuit Court "preliminarily approved" the proposal, subject to a final determination after a "final settlement hearing," which the court scheduled for November 25, 1996. The preliminary approval was evidenced by a court order, which, in addition, modified the class to exclude "any person who was a named plaintiff in any separate lawsuit filed on or before August 3, 1995, which alleged fraud, concealment, failure to disclose or misrepresentation in connection with the purchase, sale or issuance of any one or more State Mutual policies."

Meanwhile, on January 24, 1996, that is, before Tidmore moved to certify a class in the Greene County action, Betty J. Payne and others (collectively "Payne") filed against State Mutual in the Hale County Circuit Court a complaint containing no class-action allegations. State Mutual was served with the complaint on February 8, 1996.

On March 7, 1996, after Tidmore had amended his complaint to include non-opt-out class allegations and had successfully sought the certification of a non-opt-out class, State Mutual moved the Hale County Circuit Court to abate Payne's action, pursuant to Ala.Code 1975, § 6-5-440, which provides:

"No plaintiff is entitled to prosecute two actions in the courts of this state at the same time for the same cause and against the same party. In such a case, the defendant may require the plaintiff to elect which he will prosecute, if commenced simultaneously, and the pendency of the former is a good defense to the latter if commenced at different times."

(Emphasis added.)

On July 29, 1996, the Hale County Circuit Court entered an order dismissing with prejudice Payne's action. On August 29, 1996, however, it vacated the order of dismissal and reinstated the action. On September 30, 1996, Payne filed in the Greene County Circuit Court a "Motion for Amendment of Class Definition and Limited Intervention." Therein, Payne sought an amendment of the "class definition to exclude persons who had pending actions filed prior to the certification of the class on February 23, 1996." As the sole ground for this motion, she contended that such persons had "a constitutional right under the United States Constitution Fifth, Seventh and Fourteenth Amendments (due process, trial by jury and equal protection) to pursue their prior pending action." (Emphasis added.) She further argued:

"While undoubtedly certification of a ... Rule 23(b)(2) class may prevent subsequent actions filed after date of certification, it cannot and should not defeat the rights of persons such as the movants who have filed their action prior to the motion to certify the class and the order certifying the class. To hold otherwise would allow the class representatives and defendant to usurp or negate actions filed prior to class certification thereby defeating movants' constitutional rights."

(Emphasis added.)

State Mutual and Tidmore opposed the motion, contending that Tidmore's putative class action, which was filed on August 3, 1995, "is a good defense," as that phrase is used in § 6-5-440, to Payne's action, which was filed on January 24, 1996, notwithstanding the fact that the Tidmore action was not certified as a class action until February 21, 1996--well after Payne's individual action was commenced. State Mutual and Tidmore also relied on dictum in Ex parte First Nat'l Bank of Jasper, 675 So.2d 348 (Ala.1995) ("FNB of Jasper I "), in which this Court denied mandamus petitions seeking the abatement of two of six actions commenced on the same day, all containing substantially identical class allegations, but with different named representatives.

On November 18, 1996, Judge Hardaway entered an order granting Payne's motion and excluding Payne from the Greene County action. In his order of November 18, 1996, Judge Hardaway addressed the contentions of Tidmore and State Mutual based on § 6-5-440 and FNB of Jasper I:

"This matter is before the court on a motion by several individuals seeking limited intervention and an order excluding them from a Rule 23(b)(2) class previously certified.

"In brief, the instant class action was filed August 3, 1995, and on February 15, 1996, a Marengo County Circuit Court case with virtually identical claims against [State Mutual] was transferred and consolidated herewith. On January , 1996, movants filed a consolidated but individual complaint in the [Hale] County Circuit Court against [State Mutual] and asserted claims similar to those presented here. On February , 1996, this court certified a Rule 23(b)(2) mandatory non-opt-out class in this action which, by definition, included movants.

"Movants argue they should be excluded from the class because their [Hale] County action was pending before class certification occurred in this action. They cite no case law to support their position and maintain this is an issue of first impression.

"The [other] parties to this action disagree and insist movants are locked into the certified class and invited the court to review ... Ex parte First National Bank of Jasper [, 675 So.2d 348 (Ala.1995) ]. That case is inapplicable.

"In [First National Bank of Jasper,] supra, the same lawyer filed identical, competing, class action lawsuits in three separate counties on the same day against the same defendants. A bank defendant argued that under those circumstances it should not be required to defend against six simultaneous class actions, and [that] all the actions should be abated except the one filed first.

"The Court denied the relief requested by the bank on the ground that class certification had not yet occurred in [any] of the cases....

"In dicta, the Court ... [stated] as follows:

" 'Once a certification occurs in any court, that certification abates all other pending actions and the named plaintiffs in [the] other action[s] would then become members of the certified class in the court in which the certification has occurred.' (Emphasis added [by Judge Hardaway] ).

"The...