Mitchell v. State Farm Mut. Auto. Ins. Co. (In re State Farm Mut. Auto. Ins. Co.)
Decision Date | 21 September 2012 |
Docket Number | 1110088. |
Citation | 118 So.3d 699 |
Parties | Ex parte STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY (In re: Tracy Mitchell v. State Farm Mutual Automobile Insurance Company). |
Court | Alabama Supreme Court |
OPINION TEXT STARTS HERE
A. David Fawal of Butler, Snow, O'Mara, Stevens & Cannada, PLLC, Birmingham; and Michael B. Beers of Butler, Snow, O'Mara, Stevens & Cannada, PLLC, Montgomery, for petitioner.
Wilson F. Green, Fleenor & Green, LLP, Tuscaloosa, AL, Thomas W. McCutcheon of McCutcheon & Hamner, P.C., Florence, for respondent.
Following an automobile accident in which Tracy Mitchell was injured when the vehicle in which she was an occupant was struck by a vehicle being driven by Amy Kirk, State Farm Mutual Automobile Insurance Company (“State Farm”), Mitchell's insurer, paid Mitchell's medical expenses, among other coverage payments, and then sought, through subrogation, reimbursement from Kirk's insurer, Cotton States Mutual Insurance Company (“Cotton States”). Mitchell filed a personal-injury action against Kirk, State Farm, and fictitiously named defendants, alleging as to State Farm, among other things, that State Farm's right to recover from any damages awarded its payment of Mitchell's medical expenses was subject to a reduction, pursuant to the common-fund doctrine, for attorney fees incurred by Mitchell in pursuing the personal-injury action.
The circuit court granted State Farm's summary-judgment motion, holding that the common-fund doctrine did not obligate State Farm to pay a pro rata share of Mitchell's attorney fees. Mitchell appealed the circuit court's decision to the Court of Civil Appeals. The Court of Civil Appeals reversed the circuit court's summary judgment, concluding that a common fund was created requiring State Farm to contribute to Mitchell's attorney fees; that the common-fund doctrine had not been contractually abrogated; and that the common-fund doctrine was not negated by State Farm's “active participation” in pursuing subrogation recovery. Mitchell v. State Farm Mut. Auto. Ins. Co., 118 So.3d 693 (Ala.Civ.App.2011). This Court granted certiorari review to determine, as a matter of first impression, the narrow question whether, under the common-fund doctrine, the subrogated insurance carrier is responsible for a pro rata share of the injured insured's attorney fees incurred in the process of obtaining an award against which the carrier has asserted a right of reimbursement. We affirm the Court of Civil Appeals' judgment.
The factual background and procedural history of this case are set forth in detail in the Court of Civil Appeals' opinion:
“In the case giving rise to this appeal, Tracy Mitchell (‘the insured’), who was insured under an automobile-insurance policy issued by State Farm Mutual Automobile Insurance Company (‘State Farm’), was injured, and her property was damaged, in a December 2008 automobile collision when the vehicle she was occupying was struck by a second automobile operated by Amy Kirk (‘the driver’). The insured then retained counsel to represent her, who, after having agreed to a contingent fee of one-third of any recovery by the insured (plus expenses), interviewed the insured, investigated the scene of the collision, gathered the insured's medical records, and reviewed those records with the insured.
Mitchell, 118 So.3d at 695–96 (footnote omitted).
“ ‘ “Alabama follows the ‘American rule,’ whereby attorney fees may be recovered if they are provided for by statute or by contract or if they are called for by special equity, such as in proceedings where the attorney's efforts create a ‘common fund’ out of which fees may be paid.” ' ” Jones v. Regions Bank, 25 So.3d 427, 441 (Ala.2009) (quoting City of Bessemer v. McClain, 957 So.2d 1061, 1078 (Ala.2006), quoting in turn Battle v. City of Birmingham, 656 So.2d 344, 347 (Ala.1995)). The Court of Civil Appeals aptly set out the development of the common-fund doctrine in insurance-subrogation cases in Alabama in Government Employees Insurance Co. v. Capulli, 859 So.2d 1115 (Ala.Civ.App.2002), as follows:
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