Gaught v. Evans
| Decision Date | 18 August 1978 |
| Citation | 361 So.2d 1027 |
| Parties | Kathy Lynn GAUGHT et al. v. Robert Earl EVANS et al. SC 2826, SC 2827, SC 2828. |
| Court | Alabama Supreme Court |
R. B. Jones of Jones & Monroe, Birmingham, for appellants.
J. Gusty Yearout and Robert D. Hunter, Birmingham, for appellee, Allstate Ins. Co.
This appeal is from a summary judgment in favor of Allstate Insurance Company denying recovery under the uninsured motorist provision of a policy of insurance issued to Lawson Gaught. The trial court ruled that Allstate was not liable because the appellants settled their claims with the "primary" insurer, St. Paul Insurance Company without exhausting the coverage of the St. Paul policy.
On June 8, 1974, the minor daughters of Lawson Gaught, Kathy Lynn and Brenda Gaught, were riding as passengers in an automobile driven by Clayton O. Fowlkes and owned by Oran R. Fowlkes, Jr. The Fowlkes automobile collided at an intersection with an automobile driven by Robert Evans and owned by Jerry R. Hooper, both uninsured motorists. After colliding with the Evans/Hooper vehicle, the Fowlkes vehicle collided a second time with a vehicle driven by Mrs. Arlie O. Jennings and owned by T. Z. Jennings.
The Fowlkes vehicle was covered by a policy of liability insurance containing uninsured motorist coverage issued by St. Paul. The limits were $10,000 per person and $20,000 per accident. Lawson Gaught owned an automobile liability policy containing uninsured motorist coverage issued by Allstate. It is conceded that the Gaught girls were covered under the terms of each policy. Allstate's coverage is under policy provisions supplying coverage while riding in a "non-owned" automobile.
Lawson Gaught, as next friend, filed suit against St. Paul, the Fowlkes, the Jennings, Evans, and Hooper. On April 1, 1975, by way of Pro tanto release, Gaught settled the claim against St. Paul and its insureds, the Fowlkes, for $5,500.00. The release recites that it is for medical, liability, and uninsured motorist coverage. The claim against St. Paul and the Fowlkes was dismissed with approval of the trial court with leave to proceed against any other defendants. The motion to dismiss recites that the settlement was not intended to be the actual damages sustained by the plaintiffs.
In March, 1976, after oral testimony, the Gaughts obtained default judgments against Robert Evans and Jerry Hooper, the uninsured motorists, totaling $25,500.00. Based on these judgments, Gaught instituted the present action against Allstate to recover under the uninsured motorist coverage up to the limits of the policy.
Allstate denied liability based on policy limitations. Allstate contends that its uninsured motorist coverage provided only "excess" coverage for the plaintiffs when injured while occupying a non-owned automobile which is involved in an accident in which an uninsured motorist is at fault; i. e., St. Paul is the "primary" insurer and Allstate is not liable on its policy until St. Paul's coverage is exhausted.
The position taken by Allstate is fully supported by decisions of the Court of Civil Appeals in Barnwell v. Allstate Insurance Co., 55 Ala.App. 447, 316 So.2d 696 (1975), and Almeida v. State Farm Mutual Insurance Co., 53 Ala.App. 175, 298 So.2d 260 (1974). In upholding the policy limitations, the Court of Civil Appeals relied on the decision of this court in Continental National American Group v. Burleson, 283 Ala. 671, 220 So.2d 611 (1969), distinguishing the principles announced in Safeco Insurance Co. of America v. Jones, 286 Ala. 606, 243 So.2d 736 (1970).
The issue is whether the concept of "primary" and "secondary" coverage in the uninsured motorist context violates Safeco and the requirements of the Alabama Uninsured Motorist Statute. Tit. 36, § 74(62a), Code of Alabama 1940, Recompiled 1958 (Sec. 32-7-23, Code 1975).
The provision in dispute is known as an "other insurance" clause which is commonly found in automobile liability and uninsured motorist provisions. This clause attempts to limit the insurance companies' liability when a person is insured under two or more policies covering the same risks. The facts of this case demonstrate the effect of such a clause.
Ordinarily, under "other insurance" provisions, there are combinations of clauses commonly referred to as "excess clauses," "excess-escape clauses" and "pro-rata clauses." We are not here dealing with a pro-rata clause, but some of the cases cited involve this type clause and reference will be made to them Infra . . .
The "excess-escape clause" provides that the insurance shall apply " 'only in the amount by which the limit of liability for this coverage exceeds the applicable limit of liability of such other insurance.' " Widiss, Uninsured Motorist Coverage, § 2.59, p. 106 (1969). The effect of this clause allows insurance companies to escape all liability in cases where the insured comes under the coverage of another policy unless its maximum coverage limit exceeds the other insurance. This court declared such clauses unenforceable as violative of the Uninsured Motorist Statute in Safeco Insurance Co. of America v. Jones, supra, and has been followed in later decisions. Employers Liability Assur. Corp., Ltd. v. Jackson, 289 Ala 673, 270 So.2d 806 (1972); State Farm Mutual Automobile Ins. Co. v. Cahoon, 287 Ala. 462, 252 So.2d 619 (1971). Allstate does not challenge the validity of these decisions.
The "excess clause" provides that the claimant's own policy applies " 'only in excess insurance over any other similar insurance available to such an insured (claimant) and applicable to such vehicle as primary insurance' that is, the uninsured motorist insurance which applies to the vehicle he is occupying is viewed as primary insurance . . . ." Widiss, Supra. The enforceability of the "excess clause" is the issue at hand.
In Almeida v. State Farm Mutual Ins. Company, supra, the Court of Civil Appeals addressed this issue and stated the following:
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