Thompson v. American States Ins. Co.

• Decision Date: 29 March 1988
• Docket Number: Civ. A. No. 87-H-1132-N.
• Citation: 687 F. Supp. 559
• Parties: G.P. THOMPSON, III, Plaintiff, v. AMERICAN STATES INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Alabama

687 F. Supp. 559

G.P. THOMPSON, III, Plaintiff, v. AMERICAN STATES INSURANCE COMPANY, Defendant.

Civ. A. No. 87-H-1132-N.

United States District Court, M.D. Alabama, N.D.

March 29, 1988.

Louis C. Rutland, Union Springs, Ala., and Beasley, Wilson, Allen & Mendelsohn, Frank M. Wilson, Montgomery, Ala., for plaintiff.

Rushton, Stakely, Johnston & Garrett, Ronald G. Davenport, Montgomery, Ala., for defendant.

MEMORANDUM OPINION

HOBBS, Chief Judge.

Underinsured, G.P. Thompson, sued his uninsured motorist carrier, American States Insurance Company, in state court for uninsured motorist coverage pursuant to Alabama Code § 32-7-23, as amended.¹ Defendant removed this cause to federal court. This Court has jurisdiction of this cause pursuant to 28 U.S.C. § 1332 (1982). For the reasons that follow, this Court determines that the defendant's motion for summary judgment is due to be denied.

FACTS

The affidavits and pleadings filed with this Court disclose the following undisputed facts.

On October 18, 1985, plaintiff Thompson, while driving a rental truck for Thompson Enterprises, collided with a car driven by Calvin Ogletree. Plaintiff suffered severe injuries as a result of this accident and Ogletree died as a result of this accident. After the accident, plaintiff settled his claim against Ogletree's estate for $20,000. The $20,000 sum represented the policy limits of Ogletree's insurance, but that sum was less than the damages allegedly sustained by plaintiff. Contemporaneously with the settlement, plaintiff executed a general release in favor of Ogletree's estate and Ogletree's liability insurer.

After execution of this settlement and release, the estate of Ogletree brought a wrongful death action against Thompson and his employer, Thompson Enterprises, alleging Thompson's negligent operation of the rental truck caused the accident which led to Ogletree's death. Thompson and Thompson Enterprises counterclaimed against Ogletree's estate alleging Ogletree's negligence caused the accident. The Thompson counterclaim was dismissed by the court and, upon trial of the Ogletree claim, the jury found for Thompson and Thompson Enterprises.

Prior to the accident at issue, Thompson Enterprises had obtained an insurance policy issued by American States which covered certain listed automobiles (American States policy). Liability coverage under the American States policy did not extend to rented vehicles. The American States policy provided uninsured motorist coverage to Thompson Enterprises.

Plaintiff is seeking to recover under the uninsured motorist coverage provided by the American States policy. Defendant has denied that plaintiff was covered by the uninsured motorist coverage provisions of the American States policy on four grounds. See Motion to Dismiss Or, In the Alternative, Motion for Summary Judgment, filed November 18, 1987.

First, defendant contends that the state court dismissal of Thompson's counterclaim against the estate of Ogletree is a bar to plaintiff's suit against defendant.

Second, defendant asserts that plaintiff may not claim uninsured motorist coverage without first recovering a judgment against the uninsured motorist, Ogletree, which plaintiff has not done.

Third, defendant contends that the American States policy extended liability insurance coverage only to certain listed vehicles. Rented vehicles were not covered by the liability provisions of the American States policy. Because liability insurance coverage did not extend to the rented vehicle which plaintiff was driving at the time of the accident, defendant contends that the American States policy did not have any uninsured motorist coverage for the injuries plaintiff sustained.

Fourth, defendant seeks to deny uninsured motorist coverage because the no-consent-to-settlement clause which was contained in the American States policy was violated by plaintiff. The no-consent-to-settlement clause states that the insured is not covered for any claim he settles without the consent of his insurer. Plaintiff settled his claim against the liability insurer and estate of Ogletree without the consent of defendant. Defendant asserts that because this settlement cuts off its contractual subrogation rights that it violates the no-consent-to-settlement clause, thereby voiding any claim plaintiff may have to uninsured motorist coverage.

This Court will treat defendant's November 18, 1987 motion as a motion for summary judgment, and will consider each of the four grounds asserted by defendant.

I

In determining whether the state court dismissal of Thompson's counterclaim against the estate of Calvin Ogletree is a bar to plaintiff's claim against defendant, state law is used as the measure of preclusion. 18 Wright & Miller, Federal Practice & Procedure § 4472, at 727 (1981). In Alabama, a full and fair adjudication as to the merits of a claim is a bar to relitigation of that claim between the same parties or their privies. Ashurst v. Preferred Life Assurance Soc'y of Montgomery, 282 Ala. 119, 209 So.2d 403, 409 (1968).

In order to recover on his claim for uninsured motorist coverage, plaintiff must prove that the uninsured motorist, Ogletree, was negligent or at fault. State Farm Ins. Co. v. Griffin, 51 Ala.App. 426, 286 So.2d 302 (1973). In the prior state action in which plaintiff brought a counterclaim for negligence against the estate of Ogletree, the state court granted summary judgment because plaintiff Thompson had executed previously a release of all claims he had against the estate of Ogletree and Ogletree's insurer. The state court did not determine that Ogletree was not negligent. Defendant cannot use the prior state court summary judgment as a final adjudication that Ogletree, the uninsured motorist, was not negligent. The issues are not the same.

II

This Court agrees with plaintiff that Alabama law does not require the insured to recover a judgment against the uninsured motorist before he can recover under his uninsured motorist coverage. State Farm Ins. Co. v. Griffin, 51 Ala.App. 426, 286 So.2d 302 (1973). In order to recover uninsured motorist coverage, plaintiff must "establish fault on the part of the uninsured motorist, which gives rise to damages, and he must be able to prove the extent of those damages." Griffin, 286 So.2d at 306. Plaintiff's failure to obtain a prior adjudication that Ogletree, the uninsured motorist, was at fault for the accident at issue, is not a bar to plaintiff's present claim for uninsured motorist coverage. State Farm Ins. Co. v. Baldwin, 764 F.2d 773 (11th Cir.1985).

III

Alabama law is quite clear that uninsured motorist coverage inures to the person and not the vehicle. State Farm v. Jackson, 757 F.2d 1220 (11th Cir.1985); State Farm v. Jackson, 462 So.2d 346 (Ala. 1984); St. Paul Ins. Co. v. Henson, 479 So.2d 1253 (Ala.Civ.App.1985); Gatson v. Integrity Ins. Co., 451 So.2d 361 (Ala.Civ. App.1984). Under Jackson, the American States policy would provide uninsured motorist coverage to all persons defined as "insureds" under the policy terms, notwithstanding that liability coverage extended only to certain named automobiles. Defendant does not dispute that plaintiff was an "insured" within the meaning of the American States policy. However, defendant argues that Jackson should not apply in the commercial context.

An examination of Alabama law does not reveal a basis for making such a distinction. Alabama Code § 32-7-23 (Supp.1987) provides coverage for "the protection of persons insured." For policy reasons, Alabama courts have viewed any arguments for restricting uninsured motorist coverage with particular disfavor. Alabama Farm Bureau Co. v. Mitchell, 373 So.2d 1129, 1133-34 (Ala.Civ.App.1979). This Court does not believe Alabama law would view this argument for restricting uninsured motorist coverage in any other way. For most purposes, as with the instant policy, the corporate entity is considered to be a "person." Alabama's Uninsured Motorist Statute (UMS) provides uninsured motorist coverage for the "person" and that personal coverage cannot be excluded because the insured person was driving a vehicle which was not covered under the liability portions of the insurance policy at the time of the accident. St. Paul Ins. Co. v. Henson, 479 So.2d 1253 (Ala.Civ.App.1985).

IV

Plaintiff's settlement with the estate of the uninsured motorist, Ogletree, violated the no-consent-to-settlement clause of the American States policy. Defendant contends that the no-consent-to-settlement clause protected defendant's contractual right to subrogate. Defendant contends that by settling, plaintiff has unduly prejudiced defendant's contractual right to subrogate and, by operation of the exclusionary clause, has excluded coverage under the American States policy.

In considering the enforceability of the no-consent-to-settlement exclusionary clause, a number of courts have drawn a distinction between settlement with an uninsured motorist tortfeasor and settlement with an insured tortfeasor. See Validity, Construction, and Effect of "No-Consent-To-Settlement" Exclusion Clauses in Automobile Insurance Policy, 18 ALR4th 249 (1982). In Alabama, in the latter situation, the no-consent-to-settlement clause has been held unenforceable. Alabama Farm Bureau Ins. Co. v. Humphrey, 54 Ala.App. 343, 308 So.2d 255 (1975); Alabama Farm Bureau Ins. Co. v. Clem, 49 Ala.App. 457, 273 So.2d 218 (1973). In the former situation, the Alabama state courts have not directly ruled on the enforceability of the no-consent-to-settlement exclusionary clause. Dancy v. State Farm Mutual, 324 F.Supp. 964, 965 (S.D.Ala.1971); Humphrey, 308 So.2d at 258.

Specifically noting that Alabama's UMS, unlike the UMS of other states, does not provide a statutory right to subrogate, the Alabama Court of Civil Appeals has refused to recognize an uninsured motorist carrier's contractual right to subrogate to the rights of its insured as against an insured...