State Farm Fire and Cas. Co. v. Hannig

• Decision Date: 05 February 1999
• Citation: 764 So.2d 538
• Parties: STATE FARM FIRE AND CASUALTY COMPANY v. Scott HANNIG and Staci Hannig.
• Court: Alabama Court of Civil Appeals

764 So.2d 538

STATE FARM FIRE AND CASUALTY COMPANY v. Scott HANNIG and Staci Hannig.

2971247.

Court of Civil Appeals of Alabama.

February 5, 1999.

Rehearing Denied March 26, 1999.

Robert S. Lamar, Jr., and Roderick K. Nelson of Lamar, Nelson & Miller, P.C., Birmingham, for appellant.

Michael K. Beard of Starnes & Atchison, L.L.P., Birmingham, for appellees.

THOMPSON, Judge.

On May 2, 1996, State Farm Fire and Casualty Company ("State Farm") and its insured, Ken Belmore, filed a complaint against Scott Hannig and Staci Hannig in the Circuit Court of Tuscaloosa County, seeking to recover damages for a fire at Belmore's house, and alleging that the Hannigs' negligence or wantonness had caused the fire. On September 3, 1996, the Hannigs filed a motion for a partial summary judgment seeking to have State Farm's claim dismissed. In their motion, the Hannigs asserted that the lawsuit was actually a subrogation action in that State Farm had brought the action to recover moneys it had paid to Belmore for fire damage to his house. They further argued that State Farm's claim was due to be dismissed because, they said, Belmore had not been "made whole" or been "fully compensated" by State Farm for the loss he sustained.

On November 14, 1997, the trial court granted the Hannigs' motion for a partial summary judgment; Belmore remained a party in the lawsuit. On March 3, 1998, State Farm filed a "motion to reconsider" the trial court's partial summary judgment dismissing its claim. The Hannigs and Belmore entered into a settlement agreement, whereby the Hannigs agreed to settle Belmore's claim for $5,000. Thereafter Belmore requested that his claim against the Hannigs be dismissed with prejudice. On May 28, 1998, the trial court entered its final judgment, dismissing Belmore's case with prejudice and denying State Farm's "motion to reconsider." In addition, in its final judgment, the trial court determined that Belmore had not been "made whole" and, therefore, held that State Farm was precluded from pursuing a subrogation claim. State Farm appealed to the Supreme Court of Alabama, which transferred the appeal to this court, pursuant to § 12-2-7(6), Ala.Code 1975.

The record reflects that on March 29, 1994, Belmore and the Hannigs entered into a contract pursuant to which the Hannigs were to sell their house to Belmore. The closing on the loan for the sale of the house was scheduled to occur on or before May 20, 1994, but the Hannigs were allowed until May 27, 1994, to vacate the house. The closing occurred on May 18, 1994.

Belmore had obtained a homeowner's insurance policy from State Farm that became effective on May 18, 1994. This policy provided Belmore with liability coverage, personal property coverage, medical payments coverage, and dwelling coverage. The policy had a $250 deductible per claim and provided that State Farm had subrogation rights.

On May 19, 1994, while the Hannigs were still in possession of the house, but after the closing, a fire occurred that resulted in extensive damage to the structure. The cause of the fire is disputed by the parties; however, State Farm and Belmore assert in their complaint that the fire was caused by the negligence or wantonness of the Hannigs.

Belmore filed a claim with State Farm for the fire loss, and State Farm ultimately paid Belmore $64,884.93 for the damage to the home. Before filing the complaint in this action, State Farm and Belmore entered into an agreement that pertained in part to State Farm's subrogation rights. The agreement provided that State Farm would retain counsel on Belmore's behalf to seek recovery from the Hannigs. The agreement further provided that Belmore was to be paid $5,250 of any recovery. Of this sum, $5,000 was to compensate Belmore for the loss of use of the house, the "aggravation" associated with the repairing of the house, and the expenses for temporary alternative housing. The remaining $250 of this sum was a refund of Belmore's $250 deductible. In addition, the agreement provided that State Farm could give any amount in excess of $64,884.93 (the amount State Farm paid Belmore pursuant to his claim) to Belmore.

On appeal, State Farm argues that the trial court erred in entering the partial summary judgment in favor of the Hannigs on its subrogation claim. It is well settled that in reviewing a motion for summary judgment, the reviewing court will take into account the same factors considered by the trial court in initially ruling on the motion for summary judgment. Hall v. Gaines, 613 So.2d 370, 371 (Ala.1993); Wilma Corp. v. Fleming Foods of Alabama, Inc., 613 So.2d 359, 361 (Ala.1993). A summary judgment "shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Ala. R. Civ. P.

The burden of establishing that there is no genuine issue of material fact is on the movant. Burks v. Pickwick Hotel, 607 So.2d 187, 189 (Ala.1992); and Porter v. Fisher, 636 So.2d 682, 684 (Ala.Civ.App. 1994). Once the movant has made this showing, the nonmovant has the burden of presenting evidence creating a genuine issue of material fact. Danford v. Arnold, 582 So.2d 545, 546 (Ala.1991); and Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989).

The nonmovant must establish the existence of a genuine issue of material fact by substantial evidence. § 12-21-12, Ala.Code 1975; and Bass v. SouthTrust Bank of Baldwin County, supra. Substantial evidence is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989).

Our review is further subject to the caveat that this court must review the record in a light most favorable to the nonmovant and must resolve all reasonable doubts against the movant. Hanners v. Balfour Guthrie, Inc., 564 So.2d 412, 413 (Ala.1990); Harrell v. Reynolds Metals Co., 495 So.2d 1381, 1383 (Ala.1986); and Wilson v. Brown, 496 So.2d 756, 758 (Ala. 1986).

In its brief on appeal, State Farm urges this court to overrule Powell v. Blue Cross & Blue Shield of Alabama, 581 So.2d 772 (Ala.1990), a case in which our supreme court held that an insurer has no right to subrogate "unless and until the insured is made whole for his loss." Id., at 777. In the alternative, State Farm argues that if Powell is not to be overruled, it should be clarified or modified. However, this court lacks the authority to overrule decisions of the Supreme Court of Alabama. Section 12-3-16, Ala.Code 1975, provides:

"The decisions of the Supreme Court shall govern the holdings and decisions of the courts of appeals, and the decisions and proceedings of such courts of appeals shall be subject to the general superintendence and control of the Supreme Court as provided by Constitutional Amendment No. 328."

In reliance on § 12-3-16, Ala.Code 1975, the Supreme Court of Alabama and this court have held that "the Court of Civil Appeals is without authority to overrule the decisions of [the Supreme Court]." Jones v. City of Huntsville, 288 Ala. 242, 244, 259 So.2d 288, 290 (1972); see, also, Fugate v. State Dep't of Indus. Relations, 612 So.2d 1226, 1229 (Ala.Civ.App.1992); Matter of Anonymous, 597 So.2d 709, 711 (Ala.Civ.App.1992).

Our supreme court explained its position on an insurer's subrogation claim to the proceeds of an insured's recovery in a tort action as follows: "It is when the plaintiff's recovery from all sources exceeds the sum total of the plaintiff's damages that the right of subrogation arises." Powell, 581 So.2d at 777. See, also, Sharpley v. Sonoco Products Co., 581 So.2d 792 (Ala.1990); McKleroy v. Wilson, 581 So.2d 796, 798 (Ala.1990); Peck v. Dill, 581 So.2d 800 (Ala.1991).

However, in Complete Health, Inc. v. White, 638 So.2d 784 (Ala.1994), the supreme court expanded the "made-whole" rule and applied it to an insurer's subrogation claim against an alleged tortfeasor. Thereafter, in Alfa Mut. Ins. Co. v. Head, 655 So.2d 975 (Ala.1995), and GEICO Ins. Co. v. Lyons, 658 So.2d 445 (Ala.1995), the supreme court further extended the "made-whole" rule to subrogation claims involving property damage.

In the present case, the Hannigs and Belmore had entered into a settlement agreement, whereby the Hannigs agreed to pay Belmore $5,000 for his uninsured losses. However, Belmore was never compensated for his $250 deductible. The supreme court has precluded an insurer from intervening in an insured's action seeking recovery against a tortfeasor for property damage, holding that an insured who was not compensated for a $500 deductible her insurer had subtracted from a claim payment had not been "made whole." GEICO Insurance Co. v. Lyons, 658 So.2d at 446. In reaching this holding, the supreme court relied on Powell, which held that in the context of an insurer's subrogation right, "calculation of [an insured's] loss requires that all elements of loss be considered, including property damage and personal injury." GEICO Insurance Co. v. Lyons, 658 So.2d at 446, citing Powell, 581 So.2d at 778.

State Farm argues that the Hannigs lack standing to assert that State Farm has no subrogation rights because Belmore was not "made whole." In support of this argument, State Farm cites Economy Fire & Cas. Co. v. Goar, 564 So.2d 867 (Ala.1990); Smith v. Brownfield, 553 So.2d 573 (Ala.1989); and Brown Mechanical Contractors, Inc. v. Centennial Ins. Co., 431 So.2d 932 (Ala.1983). However, these three case...