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Alabama Mutual Insurance Corp. v. City of Fairfield

Supreme Court of Alabama

December 19, 2014

Alabama Mutual Insurance Corporation
v.
City of Fairfield et al

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Editorial Note:

This Opinion is subject to formal revision before publication in the advanced sheet of the Southern Reporter.

Appeal from Lamar Circuit Court. (CV-10-1).

ORDER VACATED; APPEAL DISMISSED.

MAIN, Justice. Stuart, Bolin, Parker, Murdock, Shaw, Wise, and Bryan, JJ., concur. Moore, C.J., dissents.

OPINION

Page 356

On Return to Remand

MAIN, Justice.

This is the second time this matter has been before this Court. In Alabama Mutual Insurance Corp. v. City of Vernon, [Ms. 1110738, October 11, 2013] 178 So.3d 350, (Ala. 2013), Alabama Mutual Insurance Corporation (" AMIC" ) appealed from the trial court's order certifying a class in the action filed by the City of Vernon (" Vernon" ) and a class of similarly situated entities that had purchased uninsured-motorist/underinsured-motorist coverage (" UM/UIM coverage" ) from AMIC.[1] Vernon was the original class representative; its claims were straightforward. Vernon claimed that, in 2005, AMIC " 'revis[ed] its Alabama Uninsured Motorist Coverage Form to exclude employees from collecting both Workers Compensation, which would be the employees' sole remedy, and Uninsured Motorist benefits when they were involved in an automobile accident.'" Alabama Mut. Ins. Corp., (quoting the trial court's class-certification order). AMIC's revision of its UM/UIM coverage form, Vernon argued, " 'rendered Vernon's UM/UIM coverage illusory[2] and breached AMIC's contract to provide UM/UIM insurance'" because, according to Vernon, " 'it contracted for UM/UIM insurance and paid premiums for UM/UIM coverage but received no actual UM/UIM coverage because AMIC excluded the only individuals who had a realistic possibility to collect UM/UIM benefits -- municipal employees and volunteers.'" (quoting the trial court's class-certification order).

As noted, Vernon was the original class representative; however, after AMIC filed its notice of appeal from the trial court's class-certification order, Vernon settled its claims against AMIC and withdrew as the class representative. Because there was no longer a representative to " fairly and adequately protect the interests of the class," Rule 23(a), Ala. R. Civ. P., this Court remanded the cause to the trial court, allowing 120 days for a new class representative to be substituted for Vernon. Alabama Mut. Ins. Corp.. On remand, the trial court timely entered an order substituting the City of Fairfield (" Fairfield" ) for Vernon as the class representative.

This Court allowed the parties to submit supplemental briefs on return to remand. Upon review of the parties' arguments in those briefs, it has become clear to this Court that there exists a fatal jurisdictional defect in this case. Specifically, the trial court is without subject-matter jurisdiction over this dispute; initial jurisdiction over this dispute properly lies with the Alabama Department of Insurance and its commissioner. As explained more fully below, we must vacate the trial court's judgment certifying the class and dismiss this appeal for lack of subject-matter jurisdiction.

This Court's decision in Ex parte Cincinnati Insurance Co., 51 So.3d 298 (Ala. 2010), is highly instructive and on point

Page 357

with the matter now before us. In Ex parte Cincinnati Insurance Co., Ray Peacock filed a putative class action against Cincinnati Insurance Company (" Cincinnati" ), alleging:

" [B]ecause an insured may stack a maximum of three UM coverages per loss, both by statute and by the terms of Cincinnati's standard policy forms, UM coverage for more than three vehicles under a multi-vehicle policy -- e.g., UM coverage for four, five, or six vehicles -- is 'unnecessary, illusory, and provides no benefit to the purchaser of the policy.' Peacock alleged that Cincinnati 'engages in a wide-spread and ongoing practice of imposing premiums for additional UM coverages on additional vehicles (i.e., beyond three (3)) when issuing multi-vehicle policies in Alabama, despite the fact that an insured could never utilize the additional UM coverages.' (Emphasis in original.) 'Thus,' Peacock alleged, Cincinnati 'overcharges for UM coverage it knows it will never have to provide.'"

51 So.3d at 300-01. Peacock's complaint sought damages for himself and the putative class in the form of " 'restitution or disgorgement of monies paid for the [allegedly] unnecessary and illusory UM coverage.'" Id. at 301 (quoting complaint).

Cincinnati moved to dismiss Peacock's action for lack of subject-matter jurisdiction. Specifically, Cincinnati argued

" that the Commissioner of Insurance ('the commissioner') and the Alabama Department of Insurance ('the Department') have broad authority over the matters made the subject of Peacock's complaint; that Peacock had failed to exhaust his administrative remedies; and that ...

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