Howell v. Alfa Ins. Corp. (In re Alfa Ins. Corp.)

Decision Date06 April 2018
Docket Number1170077
Citation263 So.3d 689
Parties EX PARTE ALFA INSURANCE CORPORATION et al. (In re: R.G. "Bubba" Howell, Jr., and M. Stuart "Chip" Jones v. Alfa Insurance Corporation et al.)
CourtAlabama Supreme Court

William P. Gray, Jr., Douglas N. Robertson, and John David Gray of Gray & Associates, LLC, Birmingham, for petitioner.

R. Matt Glover of Prince, Glover & Hayes, P.C., Tuscaloosa; and P. Ted Colquett of Colquett Law, LLC, Birmingham, for respondents.

BOLIN, Justice.

Alfa Insurance Corporation, ALFA Mutual General Insurance Corporation, ALFA Life Insurance Corporation, and ALFA Specialty Insurance Corporation (hereinafter referred to collectively as "Alfa") petition this Court for a writ of mandamus seeking review of an order entered by the Montgomery Circuit Court on December 18, 2015. Alfa requests this Court to order the circuit court to vacate its December 18, 2015, order and to grant its motion for a protective order.

Although Alfa sets forth three issues for this Court's review, we review only one of those issues: Whether the circuit court had jurisdiction to enter the December 18, 2015, order and whether it exceeded its discretion by not setting that order aside. Our conclusion that the circuit court exceeded its discretion in entering the December 18, 2015, order compelling discovery pretermits discussion of the two discovery issues.


The issues presented by this petition are primarily procedural. However, a brief recitation of the underlying facts is necessary for a complete understanding of the case. R.G. "Bubba" Howell, Jr., and M. Stuart "Chip" Jones were insurance agents for an Alfa insurance agency in Mississippi. Their agency agreements with Alfa included an arbitration provision, as well as a provision requiring Howell and Jones to purchase "errors and omissions" insurance coverage.

Howell and Jones purchased errors and omissions insurance policies from Alfa Mutual General Insurance Corporation ("the E & O policies"). The certificate of insurance for the E & O policies provided that Alfa, as the insurer, would

"pay on behalf of the Individual Insured all sums in excess of deductible amount for which Individual Insured is legally obligated to pay as damages as a result of CLAIMS FIRST MADE AGAINST INDIVIDUAL INSURED DURING THE COVERAGE PERIOD by reason of acts, errors, or omissions in the performance of Professional Services by the Individual Insured, provided that such acts, errors, or omissions occurred (i) when acting on behalf of [Alfa] or with the specific consent of [Alfa], and (ii) during the Coverage Period."

(Capitalization in original.) The certificate also sets forth three "key exclusions" to coverage under the E & O policies: "(1) Intentional, dishonest, fraudulent, etc., acts; (2) Commingling of funds; (3) Suits/claims by business enterprises owned by Individual Insured and not named on declarations."

In 2012, Alfa accused Howell and Jones of selling competing products in contravention of their agency agreements; Howell and Jones, however, alleged that their actions had been approved by Alfa. Regardless, Alfa forced Howell to resign his position as an Alfa agent on December 31, 2012, and discharged Jones on January 1, 2013.

Procedural History
A. The First Arbitration Proceeding

On March 27, 2013, Howell and Jones invoked the arbitration provision in their agency agreements by initiating separate arbitration proceedings against Alfa, seeking post-separation benefits and damages. On June 19, 2013, Alfa answered the complaints in arbitration and filed counterclaims against Howell and Jones alleging breach of contract, breach of fiduciary duty, fraudulent misrepresentation, suppression, and intentional interference with business relations.

Howell's arbitration proceeding began on February 10, 2014; Jones's arbitration proceeding began on February 16, 2014. In March 2014, arbitrators awarded Howell and Jones post-separation benefits and arbitration fees. Alfa's counterclaims against Howell and Jones, however, remained pending.

On May 23, 2014, Howell and Jones submitted insurance claims under the E & O policies demanding that Alfa defend and/or indemnify costs to combat Alfa's counterclaims against them. On June 4, 2014, Alfa denied Howell's and Jones's insurance claims on the basis that the E & O policies do not cover intentional torts. On July 9, 2014, Alfa voluntarily dismissed its counterclaims against Howell and Jones without prejudice.

B. The StateCourt Proceedings

On November 13, 2014, Howell and Jones filed a complaint in the Montgomery Circuit Court asserting claims of breach of contract, bad faith, abuse of process, the tort of outrage, and conspiracy against Alfa. Howell and Jones alleged, among other things, that Alfa breached the E & O policies by refusing to provide them defense and/or indemnity coverage on the counterclaims and that Alfa had filed the counterclaims, which it knew were not covered under the E & O policies, in the arbitration proceedings for the purpose of causing Howell and Jones to incur thousands of dollars in unnecessary legal expenses.

Along with their complaint, which they subsequently amended, Howell and Jones propounded discovery requests, including a request for admissions and a request for production of documents, in which they requested:

"1. Any and all claim files pertaining to the subject matter of [Howell and Jones's] complaint and amended complaint.
"2. Any and all legal department files pertaining to the subject matter of [Howell and Jones's] complaint and amended complaint.
"3. Any and all documents, by whatever name called, pertaining to the subject matter of [Howell and Jones's] complaint and amended complaint including but not limited to electronic mail, memoranda, correspondence, notes, minutes, and records or recordings."

They also submitted a notice of depositions, including a request for the depositions of Angela Cooner, Thomas Treadwell, Tom David, and Charles Elmore, all of whom were legal counsel for Alfa, as well as for "[o]utside legal counsel of [Alfa] who participated in or contributed to the drafting and filing of the counterclaims against [Howell and Jones] as dated June 19, 2013."

On December 9, 2014, Alfa filed a "Response to Requests to Admit" in which it denied most of the requested admissions, but it also repeatedly stated that "[d]iscovery is ongoing and will be supplemented as permitted under the Alabama Rules of Civil Procedure, and any request for additional information not contemplated by Rule 36 will be responded to within the bounds of the Alabama Rules of Civil Procedure."

On May 6, 2015, Howell and Jones filed a motion to compel Alfa to answer and to respond to the first discovery requests filed on November 13, 2014. That same afternoon, Alfa filed its response and objection to the motion to compel discovery, as well as a motion for a protective order. Alfa argued that the matters, documents, and depositions requested by Howell and Jones were all protected by the attorney-client privilege. Alfa also filed on that date a Rule 12(b)(6), Ala. R. Civ. P., motion to dismiss, arguing that Howell and Jones's claims were barred by the doctrine of res judicata, having been resolved in arbitration.

On August 13, 2015, the circuit court granted Howell and Jones's motion to compel discovery, giving Alfa three weeks (until September 3, 2015) to respond. The court also denied Alfa's motion to dismiss the complaint.

On August 21, 2015, Alfa filed a petition for a writ of mandamus with this Court seeking an order directing the circuit court to vacate its order denying Alfa's motion to dismiss and to enter an order dismissing the complaint or, alternatively, directing the circuit court to vacate its order compelling discovery. Ex parte Alfa Ins. Corp. (No. 1141255). In its petition, Alfa reiterated its argument that the claims asserted by Howell and Jones in the circuit court should be barred by the doctrine of res judicata because, Alfa said, they were resolved in arbitration. On August 27, 2015, Alfa filed a motion in the circuit court requesting that it extend the time for filing an answer until the same date as discovery responses were due under the motion to compel because the delay would give this Court an opportunity to review Alfa's mandamus petition. The following day the circuit court granted Alfa's motion to extend the time for filing its answer. This Court denied the petition for a writ of mandamus on August 31, 2015, without an opinion.

On September 3, 2015, Alfa filed a "Motion to Compel Arbitration, Dismiss, and Stay Proceedings." The motion to compel was based upon the arbitration provision in the agency agreements. Simultaneously, Alfa filed its answer to the complaint in which it noted that it was "specifically reserving the right to arbitrate these matters pursuant to the requirements of the Independent Exclusive Agency Agreement in effect between the parties in accordance with the Motion to Compel Arbitration filed prior to this initial Answer." On the same date, Alfa also filed an "Objection to Discovery Request and Notice of Service of Discovery Documents" along with a privilege log listing items Alfa identified as protected by the attorney-client privilege and the work-product doctrine. On October 30, 2015, the circuit court denied Alfa's motion to compel arbitration, to dismiss, and to stay the proceedings.

On November 2, 2015, Howell and Jones propounded their first set of interrogatories to Alfa. They also submitted their second set of requests for production of documents to Alfa, in which they sought the following:

"1.... [E]ach document in the custody or control of Alfa that it relied upon when it authorized the filing of counterclaims in arbitration against Chip Jones and Bubba Howell.
"2.... [E]ach piece of correspondence and/or memo in the custody or control of Alfa that touches upon or concerns the counterclaims in arbitration against Chip Jones and Bubba Howell.
"3.... [E]ach document provided to Dennis Bailey[, an

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2 cases
  • Howell v. Alfa Ins. Corp. (In re Alfa Ins. Corp.)
    • United States
    • Alabama Supreme Court
    • 5 Abril 2019
    ...and Procedural History The parties recently were before this Court regarding an earlier discovery order. In Ex parte Alfa Insurance Corp., 263 So.3d 689 (Ala. 2018) (" Alfa I"), Alfa sought mandamus review of a December 18, 2015, discovery order entered during the pendency of Alfa's appeal ......
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    • United States
    • Alabama Supreme Court
    • 3 Septiembre 2021
    ... ... proceeding was Brian Howell. Judge Howell would also preside ... over ... 2004))." ... Ex parte Alfa Ins. Corp. , 263 So.3d 689, 695 (Ala ... ...

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