Case Title: Howton v. State Farm Mut. Ins. Co.

Citation: 507 So. 2d 448

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1987-03-13T00:00:00Z

Document:
507 So. 2d 448 (1987)
Charles HOWTON, et al.
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY.
85-605.

Supreme Court of Alabama.
March 13, 1987.
Rehearing Denied May 8, 1987.
Bill Thomason, Bessemer, for appellants.
Thomas A. Woodall of Rives & Peterson, Birmingham, for appellee.
PER CURIAM.
Charles Howton, Marlin E. Jordan, and Janet Jordan appeal from a summary judgment granted in favor of State Farm Mutual Automobile Insurance Company, and made final pursuant to Rule 54(b), A.R. Civ.P. We reverse and remand.
Howton and the Jordans sought damages from Patricia Ann Romanski for property damage and personal injuries allegedly sustained in a motor vehicle accident on December 8, 1984. The complaint also contained a claim against State Farm, the liability carrier for Romanski, because of its refusal to pay for the repair of plaintiffs' automobile pursuant to an alleged settlement agreement.
Plaintiffs' claim against State Farm is set forth in counts 4 and 6 of the complaint, substantially as follows:
The trial court's order granting State Farm's motion for summary judgment on a stipulation of facts and citing in its order the case of Strother v. Alabama Farm Bureau Mutual Casualty Co., 474 So. 2d 85 (Ala.1985), reads, in part, as follows:
The trial court's order, finding from the stipulated facts all the elements of an actionable breach of contract, coupled with absence of a factual defense to the claim based on the tort of outrage, is an obvious expression of its frustration in denying plaintiffs' relief. Yet, it felt duty-bound to grant the insurer's motion for summary judgment because of Strother. The trial court analyzed Strother to hold "that there are no circumstances whereby the insurance carrier negotiating with a third party on behalf of its insured can become directly liable, because of acts committed during the course of the negotiations with the person making a claim against its insured, to the claimant." While this language may dramatize Strother`s holding in its worst light, we cannot disagree with this analysis. Further, we understand the trial court's utter frustration in being forced to *450 reject elementary principles of contract and tort law, and then to deny plaintiffs' relief. Accordingly, we hasten to overrule Strother and thereby vindicate the soundness of the trial court's reasoning.
As authority for its holding, Strother cites four cases: Stewart v. State Farm Ins. Co., 454 So. 2d 513 (Ala.1984); Ivory v. Fitzpatrick, 445 So. 2d 262 (Ala.1984); Kennedy Electric Co. v. Moore-Handley, Inc., 437 So. 2d 76 (Ala.1983); and Maness v. Alabama Farm Bureau, Inc., 416 So. 2d 979 (Ala.1982). That portion of the holding in each of these cases relied upon in Strother affirms the fundamental and well-established general principle that an accident victim (a third party to a liability insurance contract) cannot maintain a direct action against the insurer for the alleged liability of the insured where the legal liability of the insured has not been determined by judgment. None of these cases stands for the proposition that a direct action against the insurer is barred where the insurer, acting independently of its insured, enters into a contract with, or commits a tort against, a third-party claimant.
In none of the cases cited and relied upon in Strother was the insurer, independent of its insured and its obligation to pay its insured's liability, alleged to have contracted directly with the third party or to have committed a tort directly against the third party. In each of the circumstances there involved, the general rule prohibiting a direct action against the insurer for the insured's alleged liability was correctly applied.
In Strother, however, the rule was misapplied, for there the third-party claimant alleged that the insurer, acting independently of its insured and directly with the third party, committed actionable fraud and the tort of outrage. To apply the general prohibition against a direct action under these circumstances is to permit the insurer to commit otherwise actionable wrongs with impunity. To be sure, a logical extension of the Strother holding would also render unenforceable contracts of release legitimately obtained from the third party by the insurer. Surely, contracts entered into between a third party and an insurer are mutually enforceable without regard to which of the parties committed the breach.
Furthermore, in two recent cases, this Court has effectively overruled Strother already, although the language in each case speaks in terms of distinguishing Strother. Crick v. Allstate Insurance Co., 499 So. 2d 1388 (Ala.1986), and Clardy v. Royal Insurance Co. of America, 495 So. 2d 58 (Ala.1986). In each case, the trial court, relying on Strother, granted the insurer's motion for summary judgment in a fact situation strikingly similar in all material aspects to those in Strother and in the instant case. This Court reversed in both Crick and Clardy, stating in Clardy the applicable principle in the following language:
We acknowledge that Crick and Clardy contain language that appears to restrict the third-party's recovery of damages in a direct action against the insurer to those damages not otherwise recoverable against the insured tort feasor. This restrictive language is explained by the fact that the plaintiff in each of those cases felt restrained to so fashion his claim as to avoid the harsh application of Strother. But, the restrictive language of Crick and Clardy notwithstanding, the holdings of those two cases make abundantly clear the proposition that the rule prohibiting direct actions against the insurer has no application where the insurer undertakes a new and independent obligation directly with a nonparty to the insurance contract in its efforts to negotiate a settlement of the third *451 party's claim. Indeed, an insurance carrier is no less liable under the law for the breach of its own contract obligations or for its own tortious conduct than is any other party.
Therefore, the trial court's plea for rectification is vindicated; Strother is expressly overruled; the judgment is reversed; and the cause is remanded.
REVERSED AND REMANDED.
MADDOX, JONES, ALMON, BEATTY and ADAMS, JJ., concur.
TORBERT, C.J., and HOUSTON and STEAGALL, JJ., dissent.
STEAGALL, Justice, (dissenting).
I respectfully dissent. This holding poses two novel questions: (1) Will the injured party be able to recover contract damages, presumably the cost of having the car repaired, from the insurer and tort damages, the diminution in value of the automobile, again presumably the cost of having the car repaired, from the insured tort-feasor? (2) Will the injured party be able to join his claims against the insured and the insurer, and, thereby, circumvent the direct action statute, Code 1975, § 27-23-2, and the general rule against injecting the issue of the existence of insurance into a tort action?
In my opinion, the Court may be turning a page that does not need to be turned. It seems to me that the aggrieved party who is without fault would have a greater opportunity to obtain speedy and inexpensive relief from the tort-feasor's insurer with Strother v. Alabama Farm Bureau Mutual Casualty Co., 474 So. 2d 85 (Ala.1985), as the law than if that case is overruled.
Crick v. Allstate Insurance Co., 499 So. 2d 1388 (Ala.1986), and Clardy v. Royal Insurance Co., 495 So. 2d 58 (Ala.1986), are easily distinguishable from Strother, supra. These cases merely hold that the tort-feasor's insurer may be held accountable for a wrong that has nothing to do with the insured and for which the insured is not liable.
I would affirm.
TORBERT, C.J., and HOUSTON, J., concur.