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Ragland v. State Farm Mutual Automobile Insurance Co.

Supreme Court of Alabama

May 19, 2017

Lamar Ragland
v.
State Farm Mutual Automobile Insurance Company

         Appeal from Etowah Circuit Court (CV-16-900523)

          BRYAN, Justice.

         Lamar Ragland appeals the dismissal of his bad-faith claim against State Farm Mutual Automobile Insurance Company. For the reasons set forth herein, we dismiss the appeal.

         Procedural History

         On July 21, 2016, Ragland filed a complaint in the Etowah Circuit Court ("the circuit court") seeking punitive damages from State Farm based on State Farm's alleged bad-faith failure to pay and related failure to subject his claim for underinsured-motorist ("UIM") benefits to a cognitive review. In his complaint, Ragland alleged that he had an automobile-liability policy with State Farm that included UIM benefits; that he had been injured in an automobile accident in January 2012 that was caused by Joshua Clayton Baker's negligence and wantonness; that he had incurred damages "in a determinable amount"; that Ragland had "settled his claim with [Baker], who paid close to policy limits"; that Baker was underinsured; that Ragland was entitled to UIM benefits from State Farm "in the same amount that [Ragland] would be entitled to from [Baker]"; that counsel for State Farm had admitted in a telephone conversation on July 21, 2014, that coverage existed; and that, after almost two years, State Farm had not paid any UIM benefits and had not offered a reasonable amount to settle the claim.

         On August 25, 2016, State Farm filed a motion to dismiss Ragland's complaint without prejudice, pursuant to Rule 12(b)(1) and 12(b)(6), Ala. R. Civ. P.; it further alleged that the complaint was due to be dismissed based on the doctrine of collateral estoppel. State Farm alleged that Ragland had filed a separate civil action in the circuit court on May 30, 2014, which was assigned case no. CV-2014-9000484 ("Ragland I"); that Ragland's complaint in Ragland I contained one count against State Farm seeking to recover UIM benefits from State Farm resulting from the January 2012 automobile accident involving Baker, an allegedly underinsured motorist; that Ragland sought an undetermined and unliquidated amount of damages in that action and a judgment against State Farm up to the limits of his policy with State Farm; that Ragland had filed an amended complaint in Ragland I on April 8, 2016, reasserting his claim for UIM benefits and had added a bad-faith claim against State Farm for refusing to pay the same UIM benefits that were at issue and were sought to be determined in that case; that State Farm had filed a motion to dismiss the amended complaint in Ragland I as "procedurally improper, or, in the alternative, to dismiss the amended complaint without prejudice for lack of subject-matter jurisdiction"; that the circuit court had dismissed the newly asserted bad-faith claim in the amended complaint in Ragland I without prejudice on May 4, 2016, leaving in place the original complaint; and that a trial in Ragland I on Ragland's claim for UIM benefits was still pending.

         State Farm argued that Ragland had refiled on July 21, 2016, as a separate action, the same bad-faith claim against State Farm the circuit court had dismissed on May 4, 2016, in Ragland I. State Farm argued that the complaint Ragland filed on July 21, 2016, was due to be dismissed for lack of subject-matter jurisdiction or, alternatively, for failure to state a claim upon which relief could be granted, because, it said, the bad-faith claim was premature in light of the fact that there had been no determination of liability on the part of the allegedly underinsured motorist. Thus, it argued, because there had been no determination that Ragland was legally entitled to UIM benefits from State Farm, Ragland could not maintain a bad-faith claim against State Farm. See generally LeFevre v. Westberry, 590 So.2d 154, 158 (Ala. 1991) ("'[T]here can be no breach of an uninsured motorist contract, and therefore no bad faith, until the insured proves that he is legally entitled to recover.'" (quoting Quick v. State Farm Mut. Auto. Ins. Co., 429 So.2d 1033, 1035 (Ala. 1983))).

         Ragland's complaint filed on July 21, 2016, which was assigned case number CV-2016-900523, was transferred to the same circuit judge to whom Ragland I had been assigned, and the two actions were consolidated. After conducting a hearing, the circuit court, on October 5, 2016, entered an order dismissing, without prejudice, Ragland's complaint filed in case no. CV-2016-900523 without citing its reasons for doing so. Ragland timely appealed. Ragland's claim for UIM benefits is still pending in the circuit court.

         On February 22, 2017, the clerk of the Supreme Court entered an order remanding this case to the circuit court for a determination as to whether an order pursuant to Rule 54(b), Ala. R. Civ. P., would be proper in light of this Court's decision in Hanner v. Metro Bank & Protective Life Insurance Co., 952 So.2d 1056, 1059 (Ala. 2006), which held that a judgment disposing of fewer than all aspects of a consolidated action is not final and appealable. On remand, the circuit court entered an order pursuant to Rule 54(b) certifying the October 5, 2016, order as a final judgment.

         Analysis

         State Farm moved this Court to dismiss Ragland's appeal as being from a nonfinal judgment. State Farm argued that the October 5, 2016, order dismissing Ragland's complaint without prejudice was not a final judgment that could support an appeal and, alternatively, that a Rule 54(b) certification of the order was improper.[1] Generally speaking, an order dismissing a claim without prejudice will not support an appeal. See Palughi v. Dow, 659 So.2d 112, 113 (Ala. 1995) (holding that an order dismissing a complaint without prejudice was not a final judgment that would support an appeal).[2] However, "exceptions" to that rule have been recognized. See, e.g., Hutchinson v. Miller, 962 So.2d 884 (Ala. Civ. App. 2007) (concluding that an action dismissed without prejudice based on the lack of subject-matter jurisdiction "conclusively determined the issues before the court" and was sufficient to support an appeal); and Double B Country Store, LLC v. Alabama Dep't of Transp., 171 So.3d 28, 30-31 n. 1 (Ala. Civ. App. 2015) (concluding that an order dismissing the plaintiff's action without prejudice based on the lack of subject-matter jurisdiction was sufficient to support an appeal because the trial court conclusively determined that it did not have power to entertain the plaintiff's action).

         In the present case, unlike in Hutchinson and Double B where the trial courts conclusively determined the issue of those courts' subject-matter jurisdiction to hear the plaintiffs' actions, the circuit court in the present case did not conclusively determine that Ragland could not bring his bad-faith claim in the circuit court. Indeed, both Ragland and State Farm agree that Ragland's bad-faith claim against State Farm may be brought in the circuit court -- the parties simply disagree on the proper time to bring that claim. However, we need not decide whether the circuit court's order dismissing Ragland's bad-faith claim without prejudice had the requisite elements of finality to support an appeal because, even if we assume that it did, we agree that the October 5, 2016, order was improperly certified as a final judgment pursuant to Rule 54(b).

         In Hanner v. Metro Bank & Protective Life Insurance Co., supra, this Court held that "a trial court must certify a judgment as final pursuant to Rule 54(b), Ala. R. Civ. P., before a judgment on fewer than all the claims in a consolidated action can be appealed." 952 So.2d at 1061. In the present case, Ragland's bad-faith claim was consolidated with Ragland's pending UIM claim, but the circuit court "disposed of, " at least for the time being, only Ragland's bad-faith claim. Thus, without an order certifying the October 5, 2016, order as final pursuant to Rule 54(b), Ragland's appeal would have been dismissed. Hanner, 952 So.2d at 1062. Consistent with the procedure discussed in Hanner, we remanded the case "'to the trial court for a determination as to whether it chooses to certify the order as final, pursuant to Rule 54(b), and, if it so chooses, to enter such an order and to supplement the record to reflect that ...


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