Nationwide Mutual Insurance Company v. Wood
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Nationwide Mutual Fire Insurance Company and State Farm Mutual Automobile Insurance Company filed a declaratory-judgment action in the federal district court seeking, among other things, a determination of the status of a settlement agreement they had reached with D.V.G., a minor, resolving her claims for coverage stemming from injuries she received in an automobile accident, following her death in a subsequent unrelated automobile accident. The federal district court ultimately concluded that the issue presented involved a question of Alabama law for which there was no clear controlling precedent, and it certified the following question to the Alabama Supreme Court: "Under Alabama law, is an insurance company bound to a settlement agreement negotiated on behalf of an injured minor, if that minor dies before the scheduling of a pro ami hearing which was intended by both sides to obtain approval of the settlement?" The Court answered in the affirmative: "an insurance company is bound to a settlement agreement negotiated on behalf of an injured minor, even if that minor dies before the scheduling of the court hearing that all parties agreed was necessary to obtain approval of the settlement agreement. In accordance with the parties' understanding, such a hearing is still required, and the minor's death does not render that hearing impossible."
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REL: 02/22/2013 Notice: T h i s o p i n i o n i s s u b j e c t t o formal r e v i s i o n b e f o r e p u b l i c a t i o n i n t h e advance s h e e t s o f Southern R e p o r t e r . R e a d e r s a r e r e q u e s t e d t o n o t i f y t h e R e p o r t e r o f D e c i s i o n s , A l a b a m a A p p e l l a t e C o u r t s , 300 D e x t e r A v e n u e , M o n t g o m e r y , A l a b a m a 3 6 1 0 4 - 3 7 4 1 ( ( 3 3 4 ) 2 2 9 ¬ 0 6 4 9 ) , o f a n y t y p o g r a p h i c a l o r o t h e r e r r o r s , i n o r d e r t h a t c o r r e c t i o n s may b e made b e f o r e t h e o p i n i o n i s p r i n t e d i n Southern R e p o r t e r . SUPREME COURT OF ALABAMA OCTOBER TERM, 2012-2013 1111486 Nationwide Mutual Insurance Company and S t a t e Farm Mutual Automobile Insurance Company v. Barbara Walker Wood, as a d m i n i s t r a t r i x o f the e s t a t e o f D.V.G., a minor, deceased, and K.C.T., a minor, by and through E a r n e s t T., h i s f a t h e r and next f r i e n d C e r t i f i e d Question from the U n i t e d S t a t e s D i s t r i c t Court f o r the Northern D i s t r i c t o f Alabama, Southern D i v i s i o n (Case no. 2:11-CV-03967-JHH) STUART, Justice. 1111486 Nationwide Mutual F i r e and State Farm") I n s u r a n c e Company Farm M u t u a l A u t o m o b i l e filed a States D i s t r i c t Southern Insurance declaratory-judgment Division, seeking, Company action Court f o r the Northern among ("Nationwide") ("State i n the District United o f Alabama, other things, a d e t e r m i n a t i o n o f t h e s t a t u s o f a s e t t l e m e n t agreement t h e y had reached with D.V.G., a minor, resolving her claims f o r c o v e r a g e s t e m m i n g f r o m i n j u r i e s she r e c e i v e d i n an a u t o m o b i l e accident, following automobile approved accident that her death before settlement question o f Alabama controlling precedent, the subsequent Jefferson agreement. court u l t i m a t e l y concluded a in a unrelated Circuit Court The f e d e r a l district that the issue presented involved law f o r which and there i t therefore was no clear certified the f o l l o w i n g q u e s t i o n t o t h i s C o u r t p u r s u a n t t o R u l e 18, A l a . R. App. P.: "Under A l a b a m a l a w , i s an i n s u r a n c e company b o u n d t o a s e t t l e m e n t a g r e e m e n t n e g o t i a t e d on b e h a l f o f an i n j u r e d minor, i f t h a t minor dies before the s c h e d u l i n g o f a p r o ami h e a r i n g w h i c h was i n t e n d e d by b o t h s i d e s t o o b t a i n a p p r o v a l o f t h e s e t t l e m e n t ? " We c o n s e n t e d t o answer t h e q u e s t i o n , the a f f i r m a t i v e . 2 a n d we now answer i t i n 1111486 I. The federal district court provided the following s t a t e m e n t o f f a c t s , w h i c h was s t i p u l a t e d t o b y t h e p a r t i e s , i n the certification order filed with this C o u r t on A u g u s t 17, 2012: "On o r a b o u t M a r c h 16, 2 0 1 1 , D.V.G. was an o c c u p a n t o f a v e h i c l e d r i v e n b y K.C.T. t h a t was i n v o l v e d i n a s i n g l e - v e h i c l e motor v e h i c l e a c c i d e n t i n Hoover, Alabama. A t t h e time o f t h e s u b j e c t a c c i d e n t , t h e v e h i c l e o c c u p i e d b y D.V.G. a n d d r i v e n by K.C.T. was i n s u r e d u n d e r a p o l i c y o f i n s u r a n c e i s s u e d by [ N a t i o n w i d e ] . This Nationwide p o l i c y provided f o r personal i n j u r y l i a b i l i t y coverage. A t the t i m e o f t h e s u b j e c t a c c i d e n t , D.V.G. a l s o possessed uninsured/underinsured m o t o r i s t coverage under a p o l i c y o f i n s u r a n c e i s s u e d by [ S t a t e Farm]. " S t a n B r o b s t o n , a c t i n g as a t t o r n e y f o r D.V.G., who was a m i n o r a t t h e time of the subject c o l l i s i o n , made i n s u r a n c e c l a i m s f o r p e r s o n a l i n j u r y a g a i n s t K.C.T., who s u b m i t t e d t h e c l a i m u n d e r t h e Nationwide liability policy and f o r u n i n s u r e d / u n d e r i n s u r e d m o t o r i s t c o v e r a g e u n d e r t h e S t a t e Farm policy, but d i d not f i l e suit. On o r a b o u t A u g u s t 5, 2 0 1 1 , a l e t t e r was w r i t t e n t o R a l p h D. G a i n e s , I I I [ a t t o r n e y f o r N a t i o n w i d e ] , and f o r w a r d e d t o Stan Brobston, as c o u n s e l f o r D.V.G., c o n f i r m i n g t h a t N a t i o n w i d e was t e n d e r i n g i t s b o d i l y i n j u r y l i a b i l i t y limits o f $50,000.00 t o D.V.G. On o r a b o u t September 7, 2011, S t a t e Farm informed Stan Brobston, as c o u n s e l f o r D.V.G., t h a t i t was tendering i t s available uninsured/underinsured m o t o r i s t l i m i t s o f $50,000.00 t o D.V.G. The o f f e r s made b y N a t i o n w i d e a n d S t a t e Farm, w h i c h t o t a l e d $ 1 0 0 , 0 0 0 , were a c c e p t e d b y S t a n B r o b s t o n as t h e a t t o r n e y f o r D.V.G. I t was t h e u n d e r s t a n d i n g o f a l l p a r t i e s t h a t t h e s e t t l e m e n t n e e d e d t o be s u b m i t t e d 3 1111486 to the Circuit approval. Court of Jefferson County f o r "On o r a b o u t S e p t e m b e r 15, 2011, D.V.G. p a s s e d away a s t h e r e s u l t o f i n j u r i e s s u s t a i n e d i n an u n r e l a t e d m o t o r v e h i c l e a c c i d e n t t h a t o c c u r r e d on that date. The p a r t i e s a g r e e t h a t D.V.G.'s d e a t h was n o t r e l a t e d t o t h e a l l e g e d i n j u r i e s s u s t a i n e d i n t h e s u b j e c t a c c i d e n t on M a r c h 16, 2 0 1 1 . As o f t h e d a t e o f h e r d e a t h , t h e r e h a d b e e n no c o m p l a i n t f i l e d by o r on b e h a l f o f D.V.G., a s s e r t i n g c l a i m s f o r p e r s o n a l i n j u r y o f UM/UIM b e n e f i t s a g a i n s t K.C.T. a n d / o r S t a t e Farm i n r e l a t i o n t o t h e a u t o m o b i l e a c c i d e n t o c c u r r i n g on M a r c h 16, 2 0 1 1 . No p r o ami h e a r i n g was e v e r h e l d , a n d a c o u r t n e v e r a p p r o v e d the s e t t l e m e n t . " 1 II. The the r e l e v a n t f a c t s i n t h i s case are undisputed. issues before us i n v o l v e o n l y undisputed facts, Auto. Co. v . M o t l e y , Ins. ( c i t i n g A l f a Mut. our review (Ala. the a p p l i c a t i o n of law t o i s de n o v o . " State Farm Mut. 909 So. 2 d 806, 810 ( A l a . 2005) I n s . Co. v . S m a l l , 829 So. 2d 743, 2002); and A l l s t a t e "Because I n s . Co. v . S k e l t o n , 745 ( A l a . 675 So. 2 d 377, 379 1996)). ^There was a p p a r e n t l y some a r g u m e n t i n t h e f e d e r a l district court as t o w h e t h e r t h e o f f e r and acceptance c o m m u n i c a t e d b e t w e e n a t t o r n e y s was s u f f i c i e n t t o e s t a b l i s h a s e t t l e m e n t agreement. However, t h e q u e s t i o n a s c e r t i f i e d assumes t h e e x i s t e n c e o f a s e t t l e m e n t a g r e e m e n t , a n d , f o r p u r p o s e s o f t h i s o p i n i o n , we do l i k e w i s e . 4 1111486 III. "Under t h e A l a b a m a s u r v i v a l s t a t u t e , § 6-5-462, Ala. Code 1975, an u n f i l e d c l a i m s o u n d i n g i n t o r t w i l l not survive the death of the person with the c l a i m , M a l c o l m v . K i n g , 686 So. 2d 231 ( A l a . 1 9 9 6 ) ; G e o r g i a C a s . & S u r . Co. v. W h i t e , 582 So. 2d 487 (Ala. 1991) . A c l a i m on a c o n t r a c t , on t h e o t h e r hand, s u r v i v e s i n f a v o r o f a d e c e d e n t ' s personal r e p r e s e n t a t i v e , r e g a r d l e s s o f whether t h e decedent had f i l e d an a c t i o n b e f o r e h i s d e a t h , M c C u l l e y v . S o u t h T r u s t Bank o f B a l d w i n C o u n t y , 575 So. 2d 1106 ( A l a . 1 9 9 1 ) ; B e n e f i e l d v. A q u a s l i d e 'N' D i v e C o r p . , 406 So. 2d 873 ( A l a . 1 9 8 1 ) . " B r o o k s v. H i l l , undisputed that 717 So. 2d 759, 763 ( A l a . 1998) . any p o t e n t i a l tort claims e x t i n g u i s h e d when s h e d i e d ; t h e i s s u e b e f o r e held any contractual enforceable claims Thus, i t i s D.V.G. h e l d us i s w h e t h e r s h e a t her death that by t h e a d m i n i s t r a t r i x o f h e r e s t a t e , B a r b a r a W a l k e r Wood. were a r e now h e r mother Wood a r g u e s t h a t t h e s e t t l e m e n t agreed t o b y D.V.G.'s a t t o r n e y S t a n B r o b s t o n a n d N a t i o n w i d e a n d S t a t e Farm is a valid contract that Wood can now N a t i o n w i d e a n d S t a t e Farm a r g u e t h a t t h e s e t t l e m e n t was an e x e c u t o r y binding until contract that would enforce. agreement n o t be c o m p l e t e a n d i t was a p p r o v e d b y t h e J e f f e r s o n C i r c u i t f o l l o w i n g a p r o ami h e a r i n g . even i f t h e s e t t l e m e n t Court A l t e r n a t i v e l y , they argue t h a t , a g r e e m e n t was a b i n d i n g a n d e n f o r c e a b l e c o n t r a c t , t h e p r o ami h e a r i n g was a c o n d i t i o n p r e c e d e n t t o t h e 5 1111486 p e r f o r m a n c e o f t h e c o n t r a c t a n d t h a t h e a r i n g i s now i m p o s s i b l e as a r e s u l t o f t h e d e a t h o f D.V.G.; c o n s e q u e n t l y , they argue, t h e i r duty t o p e r f o r m under t h e c o n t r a c t i s d i s c h a r g e d . Based on t h e s t i p u l a t e d f a c t s , i t i s apparent c o n t r a c t d i d e x i s t a t t h e t i m e o f D.V.G.'s d e a t h . and State Farm have argued c o n t r a c t and cannot e n t e r her p o t e n t i a l claims; As this Court that contracts, except a minor lacks however, t h i s infants "'[i]t are not l i a b l e avoided of his or settled by t h e on a n y o f o r e x e c u t e d , may or r a t i f i e d at the e l e c t i o n of the i n f a n t . ' " Homes, L.L.C. v . M c D o n a l d , their With the exception, a l l other c o n t r a c t s o f i n f a n t s , whether executory be capacity to argument i s i n c o m p l e t e . i s well for necessaries. a Nationwide i n t o a binding settlement has s t a t e d , authorities that that H&S 823 So. 2d 627, 630 ( A l a . 2001) ( q u o t i n g H a r r i s v . R a u g h t o n , 37 A l a . App. 648, 649, 73 So. 2d 921, 922 (1954) (emphasis a d d e d ) ) . 337 So. 2d 355, 361 contracts entered (Ala. C i v . App. 1976) ( s t a t i n g i n t o by minors a r e "not o n l y " and "not t o t a l l y i n e f f e c t u a l , if later repudiated"). agreed to, a See a l s o D a v i s v . T u r n e r , contract void, but voidable [but] m e r e l y unenforceable Thus, a t t h e t i m e t h e s e t t l e m e n t was formed 6 that that was binding was upon 1111486 Nationwide See a n d S t a t e Farm b u t v o i d a b l e a t D.V.G.'s a l s o W h i t e v. A l l i e d 802, was "bound n o t t o r e v o k e to the court 1075, 1080 or attempt hearing); (9th C i r . n o t bound by but other t o withdraw (settlement was party i t s offer" 573 F.2d voidable at a p p r o v e d b y t h e c o u r t ) ; a n d Danes v. Underwriters, N.E.2d 902, 906 (1974) settlement Dacanay v . Mendoza, 1978) e l e c t i o n o f minor u n t i l Automobile (minor c o u r t a p p r o v a l was o b t a i n e d , prior 2 Mut. I n s . Co., 29 K a n . App. 2d 797, 31 P.3d 328, 332 (2001) agreement u n t i l election. I n c . , 159 I n d . App. 505, 5 1 1 , 307 (settlement of minor's c l a i m not v o i d ab i n i t i o b u t v o i d a b l e u n t i l court approval i s obtained). ^ N a t i o n w i d e a n d S t a t e Farm c i t e T e n n e s s e e C o a l , I r o n & R.R. v. H a y e s , 97 A l a . 2 0 1 , 210, 12 So. 98, 103 ( 1 8 9 2 ) , f o r t h e p r o p o s i t i o n t h a t a s e t t l e m e n t a g r e e m e n t e n t e r e d i n t o on b e h a l f of a minor i s i n v a l i d u n t i l i t r e c e i v e s court approval. ("[The n e x t f r i e n d ' s ] mere c o n s e n t i s n u g a t o r y . I t i s as i f i t were n o t a n d h a d n e v e r b e e n . " ) . However, i t i s a p p a r e n t t h a t t h e C o u r t was s p e a k i n g o n l y o f t h e n e x t f r i e n d ' s a b i l i t y to b i n d t h e minor, n o t t h e other p a r t y . See 97 A l a . a t 209, 12 So. a t 103 ("[The n e x t f r i e n d ] c a n n o t r e l e a s e t h e c a u s e o f a c t i o n , n o r compromise i t , n o r s u b m i t i t t o an a r b i t r a t i o n t h e r e s u l t o f w h i c h w i l l b i n d t h e i n f a n t . " (emphasis a d d e d ) ) . M o r e o v e r , we n o t e t h a t i n t h i s c a s e i t i s u n c l e a r w h e t h e r Wood was i n v o l v e d i n n e g o t i a t i n g o r a p p r o v i n g t h e s e t t l e m e n t . No a c t i o n h a d b e e n i n i t i a t e d b y Wood on D.V.G.'s b e h a l f a t t h e time o f t h e s e t t l e m e n t , and t h e s t i p u l a t e d f a c t s b e f o r e us i n d i c a t e only that Brobston negotiated the settlement " a c t i n g as a t t o r n e y f o r D.V.G." 7 1111486 Nationwide and State settlement take the the nullifies them from the their argue contemplated performance. the h e a r i n g agreed-upon h e a r i n g was required to settlement o b l i g a t i o n s under e i t h e r b e c a u s e t h e c o n t r a c t was the nevertheless a h e a r i n g t h a t a l l p a r t i e s a g r e e was place releases that h e l d t o a l l o w a c o u r t to approve f a c t t h a t no h e a r i n g was Farm that settlement mutually executory or because a c o n d i t i o n precedent to D.V.G.'s d e a t h court approval i s now then i f D.V.G. c a n n o t e x e c u t e they are o b l i g a t i o n s of paying her o b l i g a t i o n settlement, and, precedent, their l i k e w i s e excused her the from to perform and under So. Dictionary event, 1025 n. defines other than 5 ( A l a . 2010) the settlement See (noting that "Black's 'condition precedent' a l a p s e of time, 8 as the a condition o f A l a b a m a , L.L.C. v. H L J C o n s t r u c t o r s , I n c . , 3d 1020, to fulfilling a g r e e m e n t does n o t a r i s e u n t i l t h a t a c t i s a c c o m p l i s h e d . L e m o i n e Co. of State sums a g r e e d upon i n i f o b t a i n i n g c o u r t a p p r o v a l was duty that i m p o s s i b l e because o b t a i n c o u r t a p p r o v a l of the s e t t l e m e n t , Nationwide their their E i t h e r a r g u m e n t i s p r e m i s e d on t h e t h e o r y and Farm a r g u e , and '[a]n t h a t must e x i s t act or 62 Law or occur 1111486 before a duty to perform Law D i c t i o n a r y 312 something promised a r i s e s . ' ( 8 t h ed. 2004)."). However, a l t h o u g h N a t i o n w i d e ' s are based on nevertheless sound principles ultimately fail and S t a t e Farm's a r g u m e n t s of because contract they u n s u p p o r t e d p r e m i s e t h a t D.V.G.'s d e a t h for approval. are law, based they on the makes i t i m p o s s i b l e f o r t h e s e t t l e m e n t a g r e e m e n t t o be s u b m i t t e d C i r c u i t Court Black's to the J e f f e r s o n As Wood a r g u e s i n h e r brief: "[Nationwide and S t a t e Farm] h e r e t a k e the p o s i t i o n t h a t [D.V.G.'s] d e a t h p r i o r t o a p r o ami h e a r i n g makes, f o r t u i t o u s l y f o r them, s u c h a h e a r i n g impossible. However, no c i t a t i o n i s g i v e n f o r s u c h a p r o p o s i t i o n . A l l of the evidence necessary f o r a t r i a l c o u r t t o make a p r o ami d e t e r m i n a t i o n a b i d e s . A h e a r i n g t o a p p r o v e t h e a g r e e m e n t c o u l d y e t be h e l d b u t f o r t h e r e f u s a l on t h e p a r t o f [ N a t i o n w i d e and S t a t e Farm] i n t h e i n s t a n t c a s e . " Wood's b r i e f , pp. Farm c o u n t e r 620, 625 In t h e i r b r i e f s , Nationwide and t h a t t h e y have c i t e d Mayo v. A n d r e s s , 373 State So. 2d ( A l a . 1 9 7 9 ) , f o r t h e p r o p o s i t i o n t h a t D.V.G.'s d e a t h makes a p r o supports 6-7. ami hearing impossible; however, that citation o n l y the g e n e r a l p r o p o s i t i o n t h a t "the promisor perform unless the performance i s rendered o f God, by t h e law, o r by the other p a r t y . " c o n c u r r i n g s p e c i a l l y ) . Mayo i n no way 9 i m p o s s i b l e by (Torbert, must act C.J., i n d i c a t e s t h a t i t would 1111486 be i m p o s s i b l e f o r a t r i a l agreeing to settle interest, though c o u r t t o r u l e on w h e t h e r a c o n t r a c t a m i n o r ' s c l a i m s was i n t h e m i n o r ' s t h e minor i s now d e c e a s e d . best For a l l that appears, the evidence r e q u i r e d f o r such a h e a r i n g i n t h i s case is even still not. available, though t h e now d e c e a s e d minor i s I t i s e s t a b l i s h e d law t h a t a decedent's c o n t r a c t claims 3 s u r v i v e h i s or her death, settlement election, agreement was a n d , b e c a u s e we have h e l d t h a t t h e a contract we c a n t h i n k o f no r e a s o n voidable why a t r i a l at D.V.G.'s court could I n d e e d , Wood h a s a s s e r t e d t h a t t h e o n l y r e a s o n a h e a r i n g has n o t b e e n h e l d i s b e c a u s e N a t i o n w i d e a n d S t a t e Farm r e f u s e to take p a r t . As t h e K a n s a s C o u r t o f A p p e a l s h e l d i n a s i m i l a r case, such a r e f u s a l i s improper: 3 "The ' f r i e n d l y ' h e a r i n g i n t e n d e d t o o b t a i n c o u r t a p p r o v a l o f t h e s e t t l e m e n t a g r e e m e n t q u a l i f i e d as a c o n d i t i o n p r e c e d e n t f o r t h e s e t t l e m e n t agreement. [The i n s u r e r ] u n d e r t o o k t o a r r a n g e t h e h e a r i n g a n d t h e n r e f u s e d t o go f o r w a r d w i t h i t . This i t could n o t do. "'"The r u l e i s c l e a r a n d w e l l s e t t l e d , and f o u n d e d i n a b s o l u t e j u s t i c e , t h a t a party to a contract cannot prevent performance by another and d e r i v e any b e n e f i t , o r escape any l i a b i l i t y , from h i s own failure t o perform a necessary condition. [ C i t a t i o n s omitted.] And t h i s is the universal rule. [Citations o m i t t e d . ] " ' [ W a l l e r i u s v. H a r e , ] 194 K a n . [408,] 412, 399 P.2d 543 [ ( 1 9 6 5 ) ] . " W h i t e , 29 K a n . App. 2d a t 803, 31 P.3d a t 332. 10 1111486 n o t make a d e t e r m i n a t i o n o f t h e f a i r n e s s o f t h a t c o n t r a c t e v e n after the minor's death. For these reasons, we a n s w e r t h e c e r t i f i e d question i n the a f f i r m a t i v e . IV. Under A l a b a m a l a w , an i n s u r a n c e company i s bound t o a s e t t l e m e n t a g r e e m e n t n e g o t i a t e d on b e h a l f o f an i n j u r e d m i n o r , even i f t h a t minor d i e s b e f o r e hearing that a l l parties the scheduling agreed was a p p r o v a l o f t h e s e t t l e m e n t agreement. p a r t i e s ' understanding, of the court necessary to obtain In accordance w i t h the such a h e a r i n g i s s t i l l r e q u i r e d , and t h e m i n o r ' s d e a t h does n o t r e n d e r t h a t h e a r i n g i m p o s s i b l e . We thus answer i n t h e a f f i r m a t i v e t h e q u e s t i o n c e r t i f i e d t o t h i s Court. QUESTION ANSWERED. Moore, C . J . , a n d B o l i n , Bryan, P a r k e r , Murdock, Main, Wise, and J J . , concur. 11
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