Case Title: Ex parte State Farm Mutual Automobile Insurance Company

Citation: 

Docket Number: SC-2023-0528

State: alabama

Court: Alabama Supreme Court

Date: 2024-04-05T00:00:00Z

Document:
Rel: April 5, 2024 
 
 
 
 
 
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern 
Reporter.  Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 
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SUPREME COURT OF ALABAMA 
 
OCTOBER TERM, 2023-2024 
_________________________ 
 
SC-2023-0528 
_________________________ 
 
Ex parte State Farm Mutual Automobile Insurance Company 
 
PETITION FOR WRIT OF MANDAMUS 
 
(In re: Melissa A. Keller and Caroline Keller 
 
v. 
 
Harvey Blanchard, Xavier Blanchard, and State Farm Mutual 
Automobile Insurance Company) 
 
(Shelby Circuit Court: CV-18-900016) 
 
BRYAN, Justice. 
 
 
State Farm Mutual Automobile Insurance Company ("State Farm") 
petitions this Court for a writ of mandamus directing the Shelby Circuit 
SC-2023-0528 
2 
 
Court to dismiss an underinsured-motorist claim asserted against it by 
its insured, Melissa A. Keller ("Keller").  State Farm argues that the 
claim was filed outside the applicable statute-of-limitations period.  We 
grant the petition and issue the writ. 
Background 
 
The accident made the basis of this case occurred on February 6, 
2016.  Keller was driving in Shelby County near the intersection of 
Caldwell Mill Road and Valleydale Road.  Her daughter, Caroline Keller, 
was a passenger in her vehicle.  Keller's complaint alleged that Xavier 
Blanchard was driving his vehicle near that intersection, ran a red light, 
and struck her vehicle.  She and her daughter suffered injuries as a 
result.  State Farm insured both vehicles. 
 
Keller filed a complaint in the trial court on January 8, 2018.  She 
sued individually and as next friend of her daughter, who was, at that 
time, a minor.  She named as defendants Xavier Blanchard and his 
father, Harvey Blanchard, who owned the vehicle Xavier had been 
driving.  The complaint listed various fictitiously named defendants, 
including the parties' insurers: 
"Defendant No. 4, whether singular or plural, is that entity or 
those entities who or which afforded any insurance coverage 
SC-2023-0528 
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to either the drivers or owners of the motor vehicles involved 
in the collision made the basis [of] this lawsuit as well as any 
entities who or which caused said collision." 
 
Though Keller's complaint identified the parties' insurers as defendants, 
it did not state any claim against them.  The only claims Keller made 
were against Xavier, alleging negligence and wantonness; against his 
father, alleging negligent or wanton entrustment; and against Xavier's 
employer, if he was employed, alleging negligent or wanton supervision 
or hiring.  Keller amended her complaint on February 6, 2018, but only 
to include allegations about Caroline's injuries.  
 
On January 26, 2023, Keller gave notice to the trial court that she 
had settled her claims with Xavier and Harvey Blanchard.  On January 
27, 2023, Keller and her daughter, who had since reached the age of 
majority, filed an "Amended Complaint for Underinsured Motorist 
Coverage" ("the new complaint").  For the first time, they named State 
Farm as a defendant and stated entirely new claims against it.  They 
made no attempt to substitute State Farm for "Defendant No. 4" 
described in the original complaint.  
The statement of facts in the new complaint asserted that the 
Blanchards had coverage of $50,000 per person and $100,000 per 
SC-2023-0528 
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accident.  It further asserted that the full limits of that coverage had been 
tendered in January 2023, that the plaintiffs' claims exceeded $50,000 
per person, that the plaintiffs had been inadequately compensated by the 
settlement, and that the Blanchards, therefore, were underinsured.  The 
new complaint asserted that Keller's own policy with State Farm 
included underinsured-motorist coverage and that she and her daughter 
were entitled to recovery under the policy.  
 
Count one of the new complaint was styled "Underinsured Motorist 
Coverage."  It alleged:  
"16. At the time of the crash, the Plaintiffs were covered 
under paid-up policies of auto insurance with State Farm.  
 
"17.  The claim against the tortfeasor was resolved in 
January 2023.  At that time, a cause of action arose against 
State Farm for underinsured motorist coverage under the 
State Farm policies referenced herein above.  
 
"18.  Defendant State Farm is liable under the policies of 
insurance for the injuries suffered by Plaintiffs due to the 
negligence and/or wantonness of Defendant Blanchard, an 
underinsured motorist. 
  
"19.  The Plaintiffs were struck by an underinsured motorist 
as that term is defined in the policies of insurance and by the 
Alabama appellate courts. 
  
"20.  The Plaintiff received a policy limits offer from the 
tortfeasor's insurer for $50,000 per Plaintiff in liability policy 
limits.  
SC-2023-0528 
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"21.  Because State Farm is the insurer for the tortfeasors 
and is also the insurer for the Plaintiffs, State Farm cannot 
front the money.  In other words, the Plaintiffs do not have to 
obtain consent to settle and a waiver of subrogation as 
typically required by Lambert v. State Farm[, 576 So. 2d 160 
(Ala. 1991)]." 
 
Count two of the new complaint was styled "Breach of Insurance 
Contract."  That count, however, did not state any claim against State 
Farm.  Rather, it said merely that the "Plaintiffs reserve the right to 
bring a breach of contract action against State Farm. …  The cause of 
action does not arise until after a verdict is rendered against the 
[underinsured-motorist] carrier."  The remainder of the new complaint is 
a general request for compensatory and punitive damages, interest, costs, 
and fees.  
State Farm moved to dismiss the new complaint as untimely, citing 
Ex parte Nationwide Insurance Co., 991 So. 2d 1287 (Ala. 2008).  It 
argued that the new complaint was filed more than six years after the 
date of the accident and thus past the applicable statute-of-limitations 
period for claims based on contract.  See § 6-2-34(9), Ala. Code 1975.  
Because Keller knew or should have known that State Farm was her own 
insurer, State Farm argued, her claims did not relate back to the filing of 
SC-2023-0528 
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the original complaint describing "Defendant No. 4" under Rules 9(h) and 
15(c), Ala. R. Civ. P. 
In response, Keller argued that her claim for underinsured-
motorist coverage did not accrue until the date she settled with the 
Blanchards.  Thus, she urged, her underinsured-motorist claim had no 
need to relate back to the original complaint.  
The parties engaged in additional briefing, ultimately agreeing 
that, under § 6-2-8(a), Ala. Code 1975, regarding the suspension of 
limitations periods for minors, Caroline Keller's claims were not barred 
by the six-year statute of limitations.  On June 12, 2023, the trial court 
denied State Farm's motion to dismiss, without making specific findings 
of fact or law.  State Farm thereafter petitioned this Court for a writ of 
mandamus directing the trial court to dismiss Keller's underinsured-
motorist claim against it.  We ordered an answer and briefs. 
Standard of Review 
"'"A writ of mandamus is an extraordinary 
remedy, and it 'will be issued only when there is: 
1) a clear legal right in the petitioner to the order 
sought; 2) an imperative duty upon the respondent 
to perform, accompanied by a refusal to do so; 3) 
the lack of another adequate remedy; and 4) 
properly invoked jurisdiction of the court.'"'   
 
SC-2023-0528 
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"Ex parte Monsanto Co., 862 So. 2d 595, 604 (Ala. 2003) 
(quoting Ex parte Butts, 775 So. 2d 173, 176 (Ala. 2000), 
quoting in turn Ex parte United Serv. Stations, Inc., 628 So. 
2d 501, 503 (Ala. 1993)).  A writ of mandamus is the proper 
means by which to seek review of a denial of a motion to 
dismiss filed by a party originally listed as a fictitiously 
named defendant 'when "the undisputed evidence shows that 
the plaintiff failed to act with due diligence in identifying the 
fictitiously named defendant as the party the plaintiff 
intended to sue."'  Ex parte Chemical Lime of Alabama, Inc., 
916 So. 2d 594, 596-97 (Ala. 2005) (quoting Ex parte Snow, 
764 So. 2d 531, 537 (Ala. 1999)); see also Ex parte 
Klemawesch, 549 So. 2d 62 (Ala. 1989) (issuing the writ of 
mandamus and directing the trial court to grant the 'motion 
to quash service or, in the alternative, to dismiss')." 
Ex parte Nationwide Ins. Co., 991 So. 2d at 1289-90. 
Analysis 
 
The only claim at issue is Keller's claim against State Farm styled 
"Underinsured Motorist Coverage."  The parties agree that it is a claim 
based in contract and thus is subject to a six-year statute-of-limitations 
period under § 6-2-34(9).  The determinative issue we must decide is 
when did that claim accrue and the limitations period begin to run.  State 
Farm says that the limitations period began to run on the date of the 
accident.  Keller says that the limitations period did not begin to run until 
she settled her claims against the Blanchards and the full extent of 
damages for underinsured-motorist coverage was known.  State Farm 
SC-2023-0528 
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reasons that the law on which Keller relies relates to claims of breach of 
contract and bad-faith failure to pay.  Such claims are distinct, State 
Farm says, from direct claims against an insurer for underinsured-
motorist coverage.  For such a direct claim, State Farm urges, accrual 
occurs on the date of the accident.  Keller maintains that there is no real 
distinction between a direct claim against an underinsured-motorist 
insurer and a claim of breach of contract against an insurer because, she 
says, they seek the same relief.  Both, she says, should not be tied to the 
date of the accident.  
 
Section 32-7-23(a), Ala. Code 1975, requires automobile insurers to 
offer coverage "for the protection of persons insured thereunder who are 
legally entitled to recover damages from owners or operators of 
uninsured motor vehicles because of bodily injury, sickness or disease, 
including death, resulting therefrom."  That statute defines "uninsured 
motor vehicle" to include "motor vehicles with respect to which … (4) the 
sum of the limits of liability under all bodily injury liability bonds and 
insurance policies available to an injured person after an accident is less 
than the damages which the injured person is legally entitled to recover."  
§ 32-7-23(b).  Thus, coverage under that statute includes coverage for 
SC-2023-0528 
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persons that are "legally entitled to recover damages" from the drivers of 
underinsured motor vehicles.  The statute, however, does not define the 
phrase "legally entitled to recover damages."  
 
By including that language, the statute does not require that a 
plaintiff obtain a judgment against the defendant driver before seeking 
recovery against the plaintiff's insurer under a policy providing 
uninsured/underinsured-motorist coverage.  See LeFevre v. Westberry, 
590 So. 2d 154, 160 (Ala. 1991)(citing State Farm Mut. Auto, Ins. Co. v. 
Griffin, 51 Ala. App. 426, 431, 286 So. 2d 302, 306 (Civ. 1973)).  Rather, 
"legally entitled to recover damages" means that "the insured must be 
able to establish fault on the part of the uninsured motorist, which gives 
rise to damages, and must be able to prove the extent of those damages."  
Griffin, 51 Ala. App. at 431, 286 So. 2d at 306.  See also Continental Nat'l 
Indem. Co. v. Fields, 926 So. 2d 1033, 1036 (Ala. 2005) (quoting Griffin).  
"In a direct action by the insured against the insurer, the insured has the 
burden of proving in this regard that the other motorist was uninsured, 
legally liable for damage to the insured, and the amount of this liability."  
Griffin, 51 Ala. App. at 431, 286 So. 2d at 306. 
SC-2023-0528 
10 
 
 
This Court has explained that, to protect the "right of the insurer 
to know of, and participate in, the suit," to protect the "right of the 
insured to litigate all aspects of his claim in a single suit," and to preserve 
"the liability phase of the trial from the introduction of … evidence of 
insurance," Lowe, v. Nationwide Ins. Co., 521 So. 2d 1309, 1309 (Ala. 
1988), the plaintiff has two options: 
"A plaintiff is allowed either to join as a party defendant his 
own liability insurer in a suit against the underinsured 
motorist or merely to give it notice of the filing of the action 
against the motorist and of the possibility of a claim under the 
underinsured motorist coverage at the conclusion of the trial.  
If the insurer is named as a party, it would have the right, 
within a reasonable time after service of process, to elect 
either to participate in the trial (in which case its identity and 
the reason for its being involved are proper information for 
the jury), or not to participate in the trial (in which case no 
mention of it or its potential involvement is permitted by the 
trial court).  Under either election, the insurer would be bound 
by the factfinder's decisions on the issues of liability and 
damages.  If the insurer is not joined but merely is given 
notice of the filing of the action, it can decide either to 
intervene or to stay out of the case.  The results of either 
choice parallel those set out above -- where the insurer is 
joined as a party defendant.  Whether the choice is timely 
made is left to the discretion of the trial court, to be judged 
according to the posture of the case.  In either event, the trial 
court could then fashion its judgment accordingly." 
 
Id. at 1310.  
SC-2023-0528 
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These options are consistent with the terms of State Farm's policy 
issued to Keller.  The policy provides coverage as required by § 32-7-23(a).  
Regarding the resolution of claims, it first provides for resolution by 
agreement between State Farm and the insured regarding the insured's 
entitlement 
to 
recover 
damages 
from 
the 
driver 
of 
the 
uninsured/underinsured motor vehicle and the amount of damages the 
insured is "legally entitled to recover."  Alternatively, the policy provides 
that the insured may file suit against State Farm and the driver of an 
uninsured/underinsured motor vehicle or give State Farm notice of any 
such suit against the driver and an opportunity to intervene. 
 
The fact that a suit may be brought directly by an insured against 
an insurer concurrently with a suit against the uninsured/underinsured-
motorist shows that, under Alabama law, the uninsured/underinsured 
motorist claim must accrue before any resolution or settlement of the 
insured's claims against the uninsured/underinsured motorist.  We 
therefore disagree with Keller's argument that there is no substantive 
distinction between claims of breach of contract or bad-faith failure to 
pay against an insurer and direct claims against providers of 
uninsured/underinsured-motorist coverage, such as those discussed in 
SC-2023-0528 
12 
 
Lowe, Continental, and Griffin, supra.  Breach-of-contract and bad-faith 
claims in fact are not ripe so long as genuine disputes exist as to the 
uninsured/underinsured motorist's liability.  See Pontius v. State Farm 
Mut. Auto. Ins. Co., 915 So. 2d 557, 564 (Ala. 2005); LeFevre, 590 So. 2d 
at 162.  Thus, it is correct to tie the accrual of those claims to an actual 
breach by the insurer.  To the contrary, direct uninsured/underinsured-
motorist claims may be brought while such disputes exist and, thus, must 
ripen or accrue at some earlier time.  
 
Keller cites several cases that, she urges, say that "a claim for 
[underinsured-motorist] benefits under an insurance contract accrues 
only after liability of the tortfeasor has been established."  Answer at 8.  
None of those cases, however, discuss the accrual of direct 
uninsured/underinsured-motorist claims or when the limitations period 
applicable to such claims is triggered, as Keller suggests.  See Travelers 
Home & Marine Ins. Co. v. Gray, 171 So. 3d 3 (Ala. 2014) (discussing 
instead whether default judgment against uninsured/underinsured 
motorist was binding on insurer); State Farm Mut. Auto. Ins. Co. v. 
Motley, 909 So. 2d 806 (Ala. 2005) (discussing setoff issues as matter of 
first impression); Bailey v. Progressive Specialty Ins. Co., 72 So. 3d 587 
SC-2023-0528 
13 
 
(Ala. 
2011) 
(discussing 
whether 
default 
judgment 
against 
uninsured/underinsured motorist was binding on insurer); Ex parte 
Barnett, 978 So. 2d 729 (Ala. 2007) (discussing law regarding 
uninsured/underinsured-motorist claims as it related to the collateral-
source rule); Quick v. State Farm Mut. Auto. Ins. Co., 429 So. 2d 1033 
(Ala. 1983) (discussing whether to extend tort of bad faith to 
uninsured/underinsured-motorist coverage); Howard v. Alabama Farm 
Bureau Mut. Cas. Ins. Co., 373 So. 2d 628 (Ala. 1979) (discussing the 
quantum of evidence that would be sufficient to withstand a motion for a 
directed verdict (now a motion for a judgment as a matter of law)).   
Those cases do discuss the general principle, stated in § 32-7-23(a) 
and explained in Griffin, supra, that the insured must establish the 
uninsured/underinsured motorist's liability as part of the direct claim for 
benefits.  But requiring this proof of liability as an element of a direct 
uninsured/underinsured-motorist claim against an insurer does not push 
the accrual of the claim to the date when such liability is established.  
Indeed, we have rejected such a requirement by refusing to make a 
judgment against the uninsured/underinsured motorist a prerequisite to 
bringing suit against the insurer.  See LeFevre, 590 So. 2d at 160; Griffin, 
SC-2023-0528 
14 
 
51 Ala. App. at 431, 286 So. 2d at 306.  To now say that the insured must 
not merely be able to prove liability on the part of the 
uninsured/underinsured motorist, but must actually establish liability by 
settlement or judgment before bringing a direct suit against the insurer 
would undermine the settled rules and procedures for direct 
uninsured/underinsured-motorist 
claims 
established 
in 
Lowe, 
Continental, Griffin, and other precedent. 
Keller cites Griffin, supra, and Ex parte Mason, 982 So. 2d 520 (Ala. 
2007), to support the proposition that the accrual date for a direct claim 
against an insurer on an uninsured/underinsured-motorist vehicle claim 
should not be tied to the date of the accident.  However, in Griffin, the 
Court of Civil Appeals simply said that the insured must be able to "prove 
the extent of … damages" in order to recover.  51 Ala. App. at 431, 286 
So. 2d at 306.  Similarly, this Court in Ex parte Mason held that the 
expiration of the limitations period applicable to the plaintiff/insured's 
tort claims against an uninsured/underinsured motorist was not 
available to the insurer as a defense to the plaintiff/insured's 
uninsured/underinsured-motorist claim, because the expiration of the 
limitations period is a procedural, not a substantive, defense.  982 So. 2d 
SC-2023-0528 
15 
 
at 521.  Uninsured/underinsured-motorist claims against an insurer are 
based in contract and are subject to a six-year statute of limitations, see 
§ 6-2-34(a), not the two-year statute of limitations applicable to tort 
claims, see § 6-2-38(l), Ala. Code 1975.  Neither opinion says that a direct 
uninsured/underinsured-motorist claim should not be tied to the date of 
the accident, as Keller suggests.  
In fact, this Court has calculated the limitations period for 
uninsured/underinsured-motorist claims using the date of the accident 
as the accrual date.  In Ex parte Nationwide Insurance Co., supra, on 
which State Farm relies, the accident made the basis of the claims 
occurred on September 1, 2000.  The plaintiff sued the defendant driver 
in August 2002 and included in the complaint claims against fictitiously 
named defendants who had provided uninsured/underinsured-motorist 
coverage.  Not until June 2007 did the plaintiff move to substitute her 
own insurer, Nationwide Insurance Company, for one of the fictitiously 
named defendants.  In discussing whether the plaintiff had failed to 
exercise the due diligence necessary for her claim to properly relate back 
to the original complaint, this Court presumed that the limitations period 
had already expired.  This Court said: "She did not amend her complaint 
SC-2023-0528 
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to substitute Nationwide for a fictitiously named defendant until June 
13, 2007, nine months after the six-year statutory limitations period had 
expired."  991 So. 2d at 1291.  Thus, this Court presumed that the claim 
had accrued on the date of the accident and that the limitations period 
had begun to run on that date. 
 
The accident in this case occurred on February 6, 2016.  Keller 
certainly had the right under this Court's decision in Lowe to join State 
Farm as a defendant in her suit against the Blanchards brought in 
January 2018.  Instead, she waited until January 27, 2023 -- nearly seven 
years after the date of the accident -- to state any claim against State 
Farm.  Keller urges us to disregard Ex parte Nationwide on the basis that 
it addressed only relation-back issues and is not of precedential value 
regarding the date of the accrual of the cause of action.  We disagree.  
This Court's opinion in Ex parte Nationwide, considered in 
conjunction with the discussions and procedures set forth in Lowe, 
Continental, and Griffin, make clear that the accrual date for a direct 
uninsured/underinsured-motorist claim against an insurer is the date of 
the accident.  Because Keller did not assert her direct claim for 
underinsured-motorist benefits against State Farm until more than six 
SC-2023-0528 
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years after the date of the accident, that claim is time-barred, and State 
Farm's motion to dismiss her direct claim should have been granted.  
Therefore, we grant the petition and issue the writ.  
In reaching the foregoing conclusions, we also clarify the extent of 
our holding as follows.  First, Keller has not argued that, as an 
alternative to her asserting a direct underinsured-motorist claim against 
State Farm, State Farm had adequate notice of this action under Lowe.  
Indeed, Keller has not discussed Lowe or the issue of notice at all in her 
answer, and there is no indication from the materials before this Court 
that the issue of notice under Lowe was raised in the trial court.  
Therefore, we do not consider that issue.   
Second, we note that State Farm has conceded that Keller's breach-
of-contract claim is not time-barred.  See Petition at 5 n.3.  However, 
State Farm appears to view the viability of Keller's breach-of-contract 
claim as "condition[al]" or dependent upon the viability of Keller's direct 
claim for underinsured-motorist benefits, which, we hold in this opinion, 
is time-barred.  See State Farm's reply brief at 6.  Whether the success of 
Keller's breach-of-contract claim depends upon the success of her direct 
SC-2023-0528 
18 
 
claim for underinsured-motorist benefits is an issue that is not before us.  
Therefore, we also do not consider that issue. 
 
PETITION GRANTED; WRIT ISSUED. 
 
Parker, C.J., and Shaw, Wise, Sellers, Mendheim, Stewart, 
Mitchell, and Cook, JJ., concur.