TWIN CITY FIRE INS. v. COLONIAL LIFE INS.

CourtSupreme Court of Alabama
Citation839 So.2d 614
PartiesTWIN CITY FIRE INSURANCE COMPANY et al. v. COLONIAL LIFE & ACCIDENT INSURANCE COMPANY et al.
Decision Date21 June 2002

839 So.2d 614

TWIN CITY FIRE INSURANCE COMPANY et al.
v.
COLONIAL LIFE & ACCIDENT INSURANCE COMPANY et al

1001831.

Supreme Court of Alabama.

June 21, 2002.


Micheal S. Jackson of Beers, Anderson, Jackson, Hughes & Patty, P.C., Montgomery, for plaintiffs.

Steven K. Herndon and Philip S. Gidiere, Jr., of Gidiere, Hinton & Herndon, Montgomery, for defendants.

MOORE, Chief Justice.

This case stems from a dispute over the manner in which one insurance company represented another insurance company in an underlying action alleging the wrongful termination of an employee. It comes to this Court via two certified questions from the United States District Court for the Middle District of Alabama. Our answer

839 So.2d 615
to the first question moots the second question

I. Factual Background

Twin City Fire Insurance Company ("Twin City") provided commercial general liability ("CGL") coverage to Colonial Life & Accident Insurance Company ("Colonial") from 1994-1996. One of Colonial's former employees filed a wrongful-termination action in 1996, and, as provided by the policy, Twin City helped defend Colonial in that action under a reservation of rights. Pursuant to the reservation of rights, Twin City filed a declaratory-judgment action in the United States District Court for the Middle District of Alabama, seeking a declaration that it had no duty to continue defending Colonial and no duty to indemnify Colonial in the event that a judgement was entered against it. The wrongful-termination action was settled out of court for $1.3 million; that amount was provided by Colonial and the other insurance companies that had provided Colonial with CGL coverage. Twin City contributed nothing to the settlement.

The settlement rendered the declaratory-judgment action moot, but before that action was dismissed Colonial filed a counterclaim against Twin City alleging fraud, breach of contract, and breach of the insurer's enhanced duty of good faith under the reservation-of-rights defense. Judge Ira DeMent dismissed the fraud claim but allowed the breach-of-contract and breach-of-duty-of-good-faith claims to go to trial. After hearing the evidence, Judge DeMent entered an order indicating that he would find no breach of contract by Twin City, but that he would find that under Alabama law Twin City had breached its enhanced duty of good faith. However, before entering a final order to this effect, Judge DeMent, pursuant to Rule 18, Ala. R.App. P., certified the following two questions to this Court:

"1) Does breach of the insurer's enhanced duty of good faith, imposed by L & S Roofing Supply Co. v. St. Paul Fire & Marine Ins. Co., 521 So.2d 1298 (Ala. 1988), sound in contract or tort? If [in] tort, and under the facts of this case, if Alabama choice-of-law rules dictate application of South Carolina law on a claim of breach of insurance policy, would Alabama law apply to a claim of breach of the insurer's enhanced duty of good faith?" and
"2) Are punitive damages available for breach of the insurer's enhanced duty of good faith in cases where the insurance policy does not cover the
...

To continue reading

Request your trial
12 cases
  • Sabbah v. Nationwide Mut. Ins. Co., Case No.: 2:15–CV–1772–VEH
    • United States
    • United States District Courts. 11th Circuit. United States District Court of Northern District of Alabama
    • May 11, 2017
    ...alleging a breach of the enhanced duty of good faith are contract claims. Twin City Fire Ins. Co. v. Colonial Life & Acc. Ins. Co. , 839 So.2d 614, 616 (Ala. 2002) (emphasis added). Accordingly, these claims as well are subject to a six year statute of limitations. The first-party/third-par......
  • Certain Underwriters At Lloyd's, London, & Certain London Mktg. Ins. Cos. v. S. Natural Gas Co., 1110698 and 1110769.
    • United States
    • Supreme Court of Alabama
    • September 20, 2013
    ...underlying claim while still fulfilling its obligations under the policy. Twin City Fire Ins. Co. v. Colonial Life & Accident Ins. Co., 839 So.2d 614 (Ala.2002). In the present case, Sonat presented evidence at Phase I and Phase II indicating that LMI initially received notice of Sonat's po......
  • Certain Underwriters at Lloyd's v. S. Natural Gas Co., 1110698
    • United States
    • Supreme Court of Alabama
    • June 28, 2013
    ...underlying claim while still fulfilling its obligations under the policy. Twin City Fire Ins. Co. v. Colonial Life & Accident Ins. Co., 839 So. 2d 614 (Ala. 2002). In the present case, Sonat presented evidence at Phase I and Phase II indicating that LMI initially received notice of Sonat's ......
  • Pharmacia Corp. v. Suggs, 1040623.
    • United States
    • Supreme Court of Alabama
    • December 16, 2005
    ...would have been settled, and their right to appeal would have been moot."); Twin City Fire Ins. Co. v. Colonial Life & Acc. Ins. Co., 839 So.2d 614 (Ala.2002) (settlement of underlying wrongful-termination action renders moot declaratory-judgment action to decide duty-to-indemnify question)......
  • Request a trial to view additional results

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT