Lady Corinne Trawlers, Inc. v. Zurich Ins. Co.

• Decision Date: 08 May 1987
• Citation: 507 So.2d 915
• Parties: LADY CORINNE TRAWLERS, INC. v. ZURICH INSURANCE COMPANY, et al. 85-559.
• Court: Alabama Supreme Court

Page 915

507 So.2d 915

LADY CORINNE TRAWLERS, INC. v. ZURICH INSURANCE COMPANY, et al.

85-559.

Supreme Court of Alabama.

May 8, 1987.

Herman D. Padgett and Stephen P. Coleman, Mobile, for appellant.

G. Hamp Uzzelle III and Kathryn E. Errington of Hand, Arendall, Bedsole, Greaves & Johnston, Mobile, for appellees.

ADAMS, Justice.

This is an appeal from a summary judgment entered by the Circuit Court of Mobile County against plaintiff, Lady Corinne Trawlers, Inc. We affirm.

On October 20, 1983, plaintiff corporation filed suit against several defendants for damages allegedly sustained as a result of "breakdowns" of its fishing vessel, the "Lady Corinne." Plaintiff asserted that defendants Union Indemnity Insurance Company and Zurich Insurance Company issued insurance policies covering the fishing vessel through their agent, Molton, Allen and Williams Corporation, and that another defendant, Commercial Claims Services, reviewed plaintiff's claims for loss. Plaintiff further alleged in its complaint that Saunders Engine Company negligently repaired the fishing vessel on several occasions and that, as a result, it suffered economic loss.

In March 1985, plaintiff entered into an agreement with Saunders Engine Company whereby Saunders paid the plaintiff $55,000.00 and, in return, plaintiff executed a release in favor of Saunders and filed a motion with the court to dismiss Saunders from the action, which the court granted.

The court then granted summary judgment in favor of Molton, Allen and Williams, which left as defendants Union Indemnity, Zurich, and Commercial Claims Services. On December 31, 1985, the remaining defendants filed a motion for summary judgment, and the court granted it as to all three defendants. In its brief on appeal, however, plaintiff questions the propriety of the court's summary judgment only as to Zurich Insurance Company.

The issue of whether the trial court erred when it granted summary judgment in favor of Zurich is to be determined upon an interpretation of two main documents--the release, and the contract of insurance between Zurich and the plaintiff. The release, in pertinent part, states:

WHEREAS, the parties hereto have reached a compromise settlement and Lady Corinne Trawlers, Inc. and William A. Schollian are desirous of settling all claims as a result of said allegedly faulty and defective repairs made to the "Lady Corinne";

NOW, THEREFORE, in consideration of the sum of FIFTY-FIVE THOUSAND AND NO/100 ($55,000.00) DOLLARS, paid by or on behalf of Saunders Engine Co. and The Hartford Insurance Company, hereinafter referred to as PAYERS, paid to Lady Corinne Trawlers, Inc. and William A. Schollian, the receipt and sufficiency of which is hereby acknowledged, Lady Corinne Trawlers, Inc. and William A. Schollian do hereby release and forever discharge said PAYERS their agents, servants, employees, officers, directors and representatives of and from all claims, damages, actions, causes of action, suits at law, or in equity, arising, or to arise as a result of said allegedly faulty and defective repairs to the "Lady Corinne" described above, including future developments thereof....

The contract of insurance contains a clause which specifically addresses agreements of this kind. That clause provides:

Upon making payment under this policy the Company shall be vested with all of the assured's rights of recovery against any person, corporation, vessel or interest and the assured shall execute and deliver instruments and papers and do whatever else is necessary to secure such rights.

Any agreement, contract or act, past or future, expressed or implied, by the assured whereby any right of recovery of the assured against any vessel, person or corporation is released, decreased, transferred or lost which would, on payment of claim by this Company, belong to this Company but for such agreement, contract or act shall render this policy null and void as to the amount of any such claims, but only to the extent and to the amount that said agreement, contract or act releases, decreases, transfers, or causes the loss of any right of recovery of this Company, but the Company's right to retain or recover the full premium shall not be affected. [Emphasis added.]

In its motion for summary judgment, Zurich argued that plaintiff violated the express terms of the contract of insurance, destroyed Zurich's subrogation rights, and discharged Zurich's obligations under the insurance contract when it executed the release in favor of Saunders. Plaintiff argues that the summary judgment was erroneous because Zurich, by its conduct, either waived its subrogation rights or was not entitled to any; or, alternatively, that Zurich's subrogation rights were not lost as a result of the release because it was executed subject to Zurich's subrogation rights. We disagree with both arguments advanced by plaintiff.

First, with respect to plaintiff's waiver argument, the president of Lady Corinne Trawlers, William Schollian, admitted in his deposition...