Safeway Ins. Co. of Alabama, Inc. v. Amerisure Ins. Co.

• Decision Date: 07 November 1997
• Citation: 707 So.2d 218
• Parties: SAFEWAY INSURANCE COMPANY OF ALABAMA, INC. v. AMERISURE INSURANCE COMPANY, as assignee of, and successor-in-interest to, Greg Acton and Sherry Acton. SAFEWAY INSURANCE COMPANY OF ALABAMA, INC. v. AMERISURE INSURANCE COMPANY, as assignee of, and successor-in-interest to, Ray Williams and Martha Williams. 1951122, 1951123.
• Court: Alabama Supreme Court

Page 218

707 So.2d 218

SAFEWAY INSURANCE COMPANY OF ALABAMA, INC. v. AMERISURE INSURANCE COMPANY, as assignee of, and successor-in-interest to, Greg Acton and Sherry Acton.

SAFEWAY INSURANCE COMPANY OF ALABAMA, INC. v. AMERISURE INSURANCE COMPANY, as assignee of, and successor-in-interest to, Ray Williams and Martha Williams.

1951122, 1951123.

Supreme Court of Alabama.

Nov. 7, 1997.

Tom R. Ellis and Ronald C. Wall, Jr., of Kracke, Thompson & Ellis, Birmingham, for appellant.

H.L. Ferguson, Jr., and Terry McElheny of Dominick, Fletcher, Yeilding, Wood & Lloyd, P.A., Birmingham, for appellee.

Russell Jackson Drake of Cooper, Mitch, Crawford, Kuykendall & Whatley, Birmingham, for amicus curiae Alabama Trial Lawyers Ass'n, in support of appellee Amerisure Ins. Co.

SEE, Justice.

In these appeals from two garnishment actions, Amerisure Insurance Company ("Amerisure") seeks post-judgment interest from Safeway Insurance Company of Alabama, Inc. ("Safeway"). The claim for post-judgment interest arises from a judgment in an automobile-accident case in which Safeway, the insurer for one of the defendants, was held liable for a portion of the judgment. The trial court held: (1) that Safeway's conditional offers to pay its policy limits to the plaintiffs in the earlier case did not prevent post-judgment interest from accruing; and (2) that Safeway was liable for interest on the entire amount of the judgment, including the amount in excess of its policy limits. We affirm.

In 1991, Robert Caldwell was driving a vehicle owned by Paul Dunn when that vehicle collided with a vehicle in which Greg and Sherry Acton were riding. The accident also involved a vehicle in which Ray and Martha Williams were riding. ¹ The Actons and the Williamses filed actions against Caldwell and Dunn.

Amerisure insured Caldwell, and Safeway insured Dunn. Amerisure and Safeway secured counsel to represent Caldwell and Dunn. Before the trial of the two cases, which were tried together, counsel for the Actons and the Williamses offered to settle the case for the policy limits of the insurance coverage provided by Amerisure ($50,000) and by Safeway ($50,000), provided that counsel for Caldwell and counsel for Dunn accepted the offer at least seven days before trial. After the offer by the Actons and the Williamses had expired, and before a judgment was entered, counsel for Caldwell and counsel for Dunn made two offers of the insurance policy limits. These offers were conditioned on the Actons and the Williamses' releasing Caldwell and Dunn from all liability in excess of the policy limits. Counsel for the Actons and the Williamses refused these late offers and tried the case.

In March 1992, the trial court entered a judgment against Caldwell and Dunn, jointly, for a total of $353,000. Caldwell and Dunn filed for bankruptcy protection. Counsel for Caldwell and counsel for Dunn made two post-judgment offers to pay the total insurance policy limits of $100,000. These offers were conditioned on the Actons and the Williamses' releasing Caldwell and Dunn from all liability in excess of the policy limits. Counsel for the Actons and the Williamses refused these conditional offers. The judgment was appealed to this Court, which affirmed without an opinion. Caldwell v. Acton and Caldwell v. Williams (Nos. 1911830 and 1911831, August 20, 1993) 629 So.2d 814 (Ala.1993) (table).

In May 1995, the Actons and the Williamses filed garnishment actions against Amerisure and Safeway, seeking to recover the amount of the outstanding judgments, plus accumulated post-judgment interest. Amerisure and Safeway admitted liability for their respective policy limits, but denied any liability for post-judgment interest. After a hearing, the trial court entered a judgment holding Amerisure and Safeway liable for their respective $50,000 policy limits and jointly and severally liable for post-judgment interest on the entire amount of the judgment, $353,000, which included the amount in excess of the $50,000 limit of each of the policies.

Amerisure settled with the Actons and the Williamses in exchange for an assignment of their rights against Safeway. Amerisure, now realigned as a plaintiff/appellee in these appeals, seeks to enforce the trial court's order holding Safeway jointly and severally liable for post-judgment interest on the entire amount of the judgment, not only on its $50,000 policy limits.

Conditional Offers to Pay Policy Limits

Safeway first argues that under the terms of its policy it is not liable for any post-judgment interest because it made two prejudgment offers to pay its policy limits to the plaintiffs. Safeway's policy provides in pertinent part: "Our duty to pay [post-judgment interest] ends when we offer to pay that part of the judgment which does not exceed our limit of liability for this coverage." (Emphasis added.) Safeway argues that under this language its liability for post-judgment interest ended when it made the prejudgment offers, even though the offers were conditioned on the release of all claims for damages in excess of the amount of the policy limits. See Farmers Alliance Mut. Ins. Co. v. Bethel, 812 F.2d 412 (8th Cir.1987); Insurance Co. of Pennsylvania v. Giles, 196 Ga.App. 271, 395 S.E.2d 833, cert. denied, 196 Ga.App. 908 (1990). We disagree.

A close examination of the cases cited by Safeway convinces us that these cases do not support Safeway's contention that an offer conditioned on settlement is sufficient to terminate its obligation to pay post-judgment interest. In Farmers Alliance, 812 F.2d at 413, the insurer's counsel made several offers to pay the insurer's policy limits to the plaintiffs. The Court of Appeals for the Eighth Circuit held that these offers, which were not conditioned on the plaintiffs' abandonment of claims for damages in excess of the policy limits, terminated the insurer's liability to pay post-judgment interest. Id. ("[The insurer's counsel's] offers were refused through no fault of the insurer."). Similarly, in Giles, 196 Ga.App. at 271-72, 395 S.E.2d at 834, the insurer's counsel made several offers to pay the insurer's policy limits, but the plaintiffs agreed to delay receipt of the insurance proceeds until after final judgments were obtained in several actions so that the insurance proceeds could be prorated among the plaintiffs accordingly. Id. at 273, 395 S.E.2d at 835. The Court of Appeals of Georgia held that the offers, which were not conditioned upon a release of all liability in excess of policy limits, relieved the insurer of its obligation to pay post-judgment interest. Id. at 274, 395 S.E.2d at 836 (citing Farmers Alliance, supra).

In contrast to the offers in Farmers Alliance and Giles, supra, every prejudgment and post-judgment offer made by Safeway was expressly conditioned on the Actons and the Williamses' releasing all claims against Dunn in excess of the policy limits. Safeway, thus, did not offer its policy limits, but instead offered something substantially less--its policy limits minus all claims for damages in excess of those limits. ² See Cochran v. Auto Club Ins. Ass'n, 169 Mich.App. 199, 425 N.W.2d 765 (1988) (holding that insurer's offer to pay policy limits, conditioned on a full release of the defendants, was insufficient to stop the running of post-judgment interest); see generally Equitable Life Assurance Soc. of the United States v. Roberts, 232 Ala. 539, 168 So. 569 (1936) (holding that an offer containing material conditions was ineffective to terminate an obligation to pay interest on life insurance proceeds owed to the plaintiff). ³ Thus, we hold that because Safeway imposed a material condition on its offers to pay the policy limits, those offers did not terminate Safeway's contractual liability for post-judgment interest. ⁴

Scope of Insurer's Liability for Post-Judgment Interest

Safeway next argues that its joint and several liability for post-judgment interest should not extend to the entire amount of the judgment, $353,000, but should be confined to the interest on $50,000, the amount of its policy limits. In interpreting an insurance policy, we will construe ambiguities against the insurer that drafted the clause in question, but will give effect to the reasonably determined intent of the parties. See Alabama Ins. Guaranty Ass'n v. Magic City Trucking Serv., Inc., 547 So.2d 849, 855-56 (Ala.1989); Employers Ins. Co. of Alabama, Inc. v. Jeff Gin Co., 378 So.2d 693, 695 (Ala.1979); Billups v. Alabama Farm Bureau Mut. Cas. Ins. Co., 352 So.2d 1097, 1102 (Ala.1977). The relevant portion of Safeway's policy provides:

"SUPPLEMENTARY PAYMENTS

"In addition to our limit of liability, we will pay on behalf of a covered person:

"....

"3. Interest accruing after a judgment is entered in any suit we defend. Our duty to pay ends when we offer to pay that part of the judgment which does not exceed our limit of liability for this coverage."

(Emphasis added.)

If the first sentence of paragraph 3 had stated that Safeway was liable for "all interest" or "interest on the entire judgment," we could easily conclude that it was liable for post-judgment interest on the entire amount of the judgment. Alternatively, if the first sentence had stated that Safeway would pay only the interest accruing on "that part of the judgment which does not exceed our limit of liability," a phrase we know Safeway was fully capable of using because it did so in the very next sentence, we could easily conclude that Safeway was liable only for post-judgment interest on an amount equal to its policy limits. Instead, Safeway's "supplementary payments" clause is ambiguous. It simply does not define the numerical base on which post-judgment interest is to be computed. Thus, the general rule that requires the construction of ambiguous insurance policy language against the insurer militates in favor of requiring payment of post-judgment interest on the entire amount of the judgment.

We would not...