The Home Indemnity Company, Plaintiff-appellant, Cross-appellee, v. Ball-co Contractors, Inc., Defendant-appellee, Cross-appellant, 819 F.2d 1053 (11th Cir. 1987)

Home Indemnity sued Ball-Co for additional premiums due on four insurance policies, a workmen's compensation policy and a general liability policy issued in 1979 and renewals of these policies issued in 1980. The complaint contained two counts, a claim for breach of contract for unpaid premiums and a claim on a stated account for the same unpaid premiums. The district court treated these counts as one cause of action and held that the original workmen's compensation policy was barred by Alabama's three-year statute of limitations for actions on open accounts. Ala.Code Sec. 6-2-37, 645 F. Supp. 25 (S.D. Ala. 1986).

We express no opinion on whether the district court was correct in holding that Home Indemnity's action on Ball-Co's account for the original workmen's compensation policy was an action on an open account, but we hold that the district court erred in failing to consider Home Indemnity's breach of contract claim as a separate cause of action.

Alabama has a six-year statute of limitations for breach of contract actions. Ala.Code Sec. 6-2-34(4). Under Alabama law an insurance contract is governed by the same general rules as other contracts. An insurer, therefore, can bring a breach of contract action against its insured for unpaid premiums. See Auto-Owners Ins. Co. v. Culpepper, 426 So. 2d 435, 438 (Ala.Civ.App.1983); Southern Guaranty Ins. Co. v. Rhodes, 243 So. 2d 717 (Ala.Civ.App.1971).

The original workmen's compensation policy provided that Home Indemnity would determine the final premium owed on the policy after an evaluation of Ball-Co's business at the end of the policy period.¹  Either party had a cause of action for breach of contract if the other party failed to comply with this provision. Such a breach of contract action is different from a suit on an open account. "A suit on account is an action in assumpsit and must be founded upon a contract, express or implied." Marsala v. Gulf Shores Building Supply, Inc., 367 So. 2d 479, 481 (Ala.Civ.App.1979). For example, where a party has charged his purchases from a local grocer, an action by the grocer against the purchaser for the amount of the purchases is an action on an open account.² 

Home Indemnity's open account claim against Ball-Co was a claim for the fair value of the insurance services that it had provided to Ball-Co during the policy period. Its breach of contract claim, though also relating to Ball-Co's failure to pay the additional premium, was based on Ball-Co's breach of the premium provision of the insurance policy. The district court therefore erred in dismissing Home Indemnity's claim relating to the original workmen's compensation policy, because the claim was not barred by the three-year statute of limitations for actions on open accounts but was instead governed by the longer statute of limitations for breach of contract actions.³ 

The district court did not err in rejecting Ball-Co's assertion of the equitable defenses of laches and estoppel regarding the three policies other than the original workmen's compensation policy. We therefore affirm the district court's judgment as to these three policies and reverse the dismissal of Home Indemnity's claim regarding the original workmen's compensation policy and remand this claim for consideration on the merits.

AFFIRMED in part, REVERSED in part, and REMANDED.