Case Title: Ex parte The Cincinnati Insurance Company. PETITION FOR WRIT OF MANDAMUS: CIVIL (In re: Ray Peacock v. The Cincinnati Insurance Company)

Citation: 

Docket Number: 1081699

State: alabama

Court: Alabama Supreme Court

Date: 2010-06-11T00:00:00Z

Document:
REL: 06/11/2010
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, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2009-2010
_________________________
1081699
_________________________
Ex parte The Cincinnati Insurance Company
PETITION FOR WRIT OF MANDAMUS
(In re:  Ray Peacock
v.
The Cincinnati Insurance Company)
(Tallapoosa Circuit Court, CV-08-900022)
LYONS, Justice.
The Cincinnati Insurance Company ("Cincinnati"), the
defendant in a putative class action filed by Ray Peacock, has
1081699
2
filed a petition for a writ of mandamus requesting that this
Court direct the trial court to dismiss Peacock's claims
against Cincinnati because, Cincinnati argues, the trial court
lacked subject-matter jurisdiction and Peacock failed to
exhaust his administrative remedies.  We grant the petition
and issue the writ.
Factual Background and Procedural History
The Motor Vehicle Safety-Responsibility Act, § 32-7-1 et
seq., Ala. Code 1975, provides that motor-vehicle liability
insurance 
policies 
in 
Alabama 
must 
include
uninsured/underinsured-motorist ("UM") coverage, unless the
insured rejects such coverage.  See § 32-7-23(a), Ala. Code
1975.  In a practice commonly known as "stacking," insureds
who suffer a single loss may obtain benefits under multiple UM
coverages.  This Court has described the practice in a case
involving the stacking of UM coverage under multiple policies,
stating:
"In Alabama, if the insured's loss exceeds the
coverage 
limits 
of 
one 
policy 
providing 
for
underinsured-motorist benefits, then the insured can
stack other policies with underinsured-motorist
benefits to provide coverage to the full amount of
the damages required to compensate for the injury or
harm sustained. Canal Indem. Co. v. Burns, 682 So.
2d 399, 401 (Ala. 1996)(stating that 'the insured
1081699
3
may stack the coverages provided by other uninsured
motorist policies to cover up to the amount of
damages required to compensate for the actual injury
sustained'); State Farm Mut. Auto. Ins. Co. v. Fox,
541 So. 2d 1070, 1072 (Ala. 1989)(stating that
'where the loss exceeds the limits of one uninsured
motorist policy, the insured may stack other
uninsured motorist policies to cover up to the
actual damages sustained')." 
Smith v. State Farm Mut. Auto. Ins. Co., 952 So. 2d 342, 349-
50 (Ala. 2006).  
Section 32-7-23(c) limits the number of coverages that
may be stacked under a single policy.  That subsection
provides: "The recovery by an injured person under the
uninsured provisions of any one contract of automobile
insurance shall be limited to the primary coverage plus such
additional coverage as may be provided for additional
vehicles, but not to exceed two additional coverages within
such contract."  Accordingly, § 32-7-23(c) limits stacking so
that an injured insured may obtain benefits by stacking a
maximum of three UM coverages per policy.  See Smith, supra.
On April 8, 2008, Peacock sued Cincinnati in the
Tallapoosa Circuit Court, asserting claims both individually
and on behalf of a putative class.  Peacock alleged that,
because an insured may stack a maximum of three UM coverages
1081699
4
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."
Peacock asserted claims of breach of contract, fraudulent
misrepresentation, 
fraudulent 
suppression, 
and 
unjust
enrichment.  His complaint defines the potential class as
"[a]ll Alabama citizens and entities in the state of Alabama
who have paid to [Cincinnati] monies for additional UM
coverage on more than three (3) vehicles covered under a
multi-vehicle insurance policy issued by [Cincinnati]."
Peacock's complaint seeks damages, for himself and the
1081699
5
putative class, only in the form of "restitution or
disgorgement of monies paid for the [allegedly] unnecessary
and illusory UM coverage."  On the unjust-enrichment claim,
Peacock seeks the imposition of a constructive trust on the
same funds.  Peacock expressly abandons all other forms of
monetary damages.  He seeks a judgment declaring a) that "the
imposition and collection of additional UM premiums for
coverage ... is unnecessary, illusory, and provides no
additional benefit to the policy purchaser"; and b) that
Cincinnati's "receipt and retention of monies paid for such
illusory coverage ... is improper and [the moneys] should be
returned to policyholders."
On May 5, 2009, Cincinnati moved to dismiss Peacock's
action under Rule 12(b)(1), Ala. R. Civ. P., arguing that the
trial court lacked subject-matter jurisdiction over Peacock's
claims.  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
Peacock's claims were barred by the filed-rate doctrine.  With
1081699
6
its motion, Cincinnati submitted the deposition of Myra Frick,
a rate manager with the Department.  In her affidavit, Frick
stated, among other things, that the Department had approved
Cincinnati's rates and forms related to UM coverage.  Frick
explained that, by approving Cincinnati's rates and forms, the
Department had determined that the rates and forms were not
unreasonably high, inadequate, discriminatory, or misleading.
The parties thereafter engaged in discovery, and on July
23, 2009, Cincinnati moved the trial court to set its motion
to dismiss for a hearing.  Peacock objected, arguing that
Cincinnati had not responded to his discovery requests and,
therefore, that the matter was not ripe for a hearing.
Peacock also moved the trial court to compel Cincinnati to
respond to his discovery requests.  On July 29, 2009, the
trial court denied Cincinnati's request for a hearing.  
The parties deposed Frick on August 17, 2009.  On August
19, 2009, before the deposition transcript was prepared, the
trial court held a hearing on Peacock's motion to compel.  At
the hearing, Peacock argued that he was entitled to additional
discovery in order to respond to Cincinnati's motion to
dismiss and that Cincinnati had improperly avoided responding
1081699
7
to his discovery requests.  Cincinnati argued that the
discovery Peacock sought related to the merits of his action
and not to the question of subject-matter jurisdiction; that
discovery on the question was unnecessary because subject-
matter jurisdiction was purely a question of law; that the
trial court lacked jurisdiction to compel discovery; and that
the jurisdiction question should be resolved before further
discovery was taken.  During their arguments to the trial
court, Peacock and Cincinnati disagreed regarding the content
of Frick's then untranscribed deposition testimony.
On August 26, 2009, the trial court granted Peacock's
motion to compel and denied Cincinnati's motion to dismiss.
Peacock did not respond or submit evidence to the trial court
in opposition to Cincinnati's motion to dismiss before the
trial court ruled on it.  On September 3, 2009, Cincinnati
petitioned this Court for a writ of mandamus directing the
trial court to vacate its August 26, 2009, order and to grant
Cincinnati's motion to dismiss.
Standard of Review
"'Mandamus 
is 
a 
drastic 
and
extraordinary writ, to be issued only where
there is (1) a clear legal right in the
petitioner to the order sought; (2) an
1081699
8
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.'"
Ex parte Perfection Siding, Inc., 882 So. 2d 307, 309-10 (Ala.
2003) (quoting Ex parte Integon Corp., 672 So. 2d 497, 499
(Ala. 1995)). "The question of subject-matter jurisdiction is
reviewable by a petition for a writ of mandamus."  Ex parte
Liberty Nat'l Life Ins. Co., 888 So. 2d 478, 480 (Ala. 2003).
A denial of a motion to dismiss for failure to exhaust
administrative remedies is also reviewable by a petition for
a writ of mandamus.  See Ex parte Blue Cross & Blue Shield of
Alabama, 582 So. 2d 469, 472-73 (Ala. 1991)(dealing with a
claim of failure of an insured to exhaust administrative
remedies under the Alabama Insurance Code and stating:
"However, because the trial court did not make its judgment
final, and therefore appealable, Blue Cross's appeal in this
case (case 1900471) is due to be dismissed, but we will
address the issues presented in Blue Cross's petition for a
writ of mandamus or prohibition or both (case 1900470), which
is properly before this Court.").
Analysis
1081699
9
In its mandamus petition, Cincinnati argues that the
trial court lacks subject-matter jurisdiction over Peacock's
claims based on both the filed-rate doctrine and on Peacock's
failure 
to 
pursue 
administrative remedies through the
commissioner and the Department.  Cincinnati argues that its
motion to dismiss should have been granted based on the face
of the complaint and on the evidence Cincinnati presented with
its motion. 
In his answer to Cincinnati's petition, Peacock maintains
that the filed-rate doctrine does not apply to his claims and
that he was not required to pursue administrative remedies.
Peacock argues throughout his answer that he is not
challenging Cincinnati's rate calculations or its premiums for
UM 
coverage; 
instead, 
Peacock 
argues, 
he 
challenges
Cincinnati's "business practice" of requiring insureds who
desire multi-vehicle policies to accept UM coverage for either
all or none of the insureds' vehicles.
The current commissioner, Jim L. Ridling, has filed an
amicus curiae brief in which he states his position that
"claims like [Peacock's] must first be raised with the
affected insurer and then with the Commissioner according to
1081699
The question whether the coverage provided is indeed
1
illusory is not before us; we note the contention of the
insurers in amici curiae briefs that the ownership of more
than three vehicles increases the risk of a claim for UM
benefits 
for 
which 
the 
insureds 
are 
entitled 
to 
be
compensated. 
10
the 
statutory 
process 
the 
Legislature 
has 
devised."
Commissioner's brief, at 1.  Alternatively, Commissioner
Ridling agrees with Cincinnati that the filed-rate doctrine
applies to bar Peacock's claims.  Alfa Mutual Insurance
Company and the Property Casualty Insurers Association of
America have also filed amici curiae briefs supporting
Cincinnati's positions and addressing the merits of Peacock's
claims that Cincinnati's provision of UM coverage for more
than three vehicles is illusory.1
We must examine the circumstances under which the
Department and the commissioner have the exclusive authority
to consider Peacock's claims, thus depriving the trial court
of jurisdiction, and the circumstances under which Peacock
might have a remedy in proceedings before the Department or
before a judicial forum.   We view the allegations of
Peacock's complaint in light of the authority granted the
commissioner and the Department under the Alabama Insurance
Code, § 27-1-1 et seq., Ala. Code 1975 ("the Insurance Code").
1081699
11
I.
The Statutory Authority of the Commissioner
"Our inquiry is governed by settled principles
of statutory construction:
"'"The fundamental rule of
statutory construction is that
this Court is to ascertain and
effectuate the legislative intent
as expressed in the statute.
League of Women Voters v. Renfro,
292 Ala. 128, 290 So. 2d 167
(1974). In this ascertainment, we
must look to the entire Act
instead of isolated phrases or
clauses; Opinion of the Justices,
264 Ala. 176, 85 So. 2d 391
(1956)."
"'Darks Dairy, Inc. v. Alabama Dairy
Comm'n, 367 So. 2d 1378, 1380 (Ala. 1979)
(emphasis 
added). 
To 
discern 
the
legislative intent, the Court must first
look to the language of the statute. If,
giving the statutory language its plain and
ordinary meaning, we conclude that the
language is unambiguous, there is no room
for 
judicial 
construction. 
Ex 
parte
Waddail, 827 So. 2d 789, 794 (Ala. 2001).
If a literal construction would produce an
absurd and unjust result that is clearly
inconsistent with the purpose and policy of
the statute, such a construction is to be
avoided. Ex parte Meeks, 682 So. 2d 423
(Ala. 1996).'
"City of Bessemer v. McClain, 957 So. 2d 1061,
1074-75 (Ala. 2006)."
Bright v. Calhoun, 988 So. 2d 492, 497-98 (Ala. 2008).
Furthermore, this Court has stated that its "role is not to
1081699
12
displace the legislature by amending statutes to make them
express what we think the legislature should have done. Nor is
it this Court's role to assume the legislative prerogative to
correct defective legislation or amend statutes."  Siegelman
v. Chase Manhattan Bank (USA), Nat'l Ass'n, 575 So. 2d 1041,
1051 (Ala. 1991).
The Insurance Code grants the commissioner the authority
to enforce the statutes and regulations governing insurance
providers in Alabama.  See § 27-2-7, Ala. Code 1975.
Particularly, the commissioner, and under the commissioner's
authority, the Department, has the authority to regulate
insurance rates and forms.  See, e.g., §§ 27-2-7, 27-2-8, 27-
13-1 et seq., 27-14-8, and 27-14-9, Ala. Code 1975.
UM insurance is a form of casualty insurance and is,
therefore, governed by Chapter 13, Article 3, of the Insurance
Code.  See §§ 27-5-6(a)(1) and 27-13-61, Ala. Code 1975.  That
article requires insurers to "make rates that are not
unreasonably high or inadequate for the safety and soundness
of the insurer and which do not unfairly discriminate between
risks in this state ...."  § 27-13-65, Ala. Code 1975.
Insurers must submit all rates and rating plans to the
Department before using or applying any rates.  § 27-13-67,
1081699
13
Ala. Code 1975.  Section 27-13-68, Ala. Code 1975, grants the
commissioner the authority and responsibility to examine the
rates and the rating plans submitted to determine whether they
comply with § 27-13-65.  Under § 27-13-68, the commissioner
has the authority to order that noncompliant rating plans be
altered.  Additionally, § 27-13-68 grants the commissioner the
authority to determine whether rating plans that have been
previously approved "provide for, result in or produce rates
which are unreasonable or inadequate or which discriminate
unfairly between risks in this state" and to order insurers to
alter any rating plan the commissioner determines does so.
Once the commissioner approves a rate or rating plan, the
Insurance Code prohibits the insurer from deviating from that
plan.  See § 27-13-67 ("From and after the date of the filing
of such rating plans, every insurer shall charge and receive
rates fixed or determined in strict conformity therewith,
except as in this article otherwise expressly provided.");
§ 27-13-76 ("No insurer, or employee thereof, and no broker or
agent shall knowingly charge, demand or receive a premium for
any policy of insurance except in accordance with the
respective rating systems on file with, and approved by, the
commissioner.").  Insurers may alter rates and rate plans only
1081699
14
with the approval of the commissioner in accordance with
procedures established in § 27-13-76, Ala. Code 1975.
Furthermore, the Insurance Code prohibits insurers from
reducing premiums except in accordance with rating systems
approved by the commissioner.  § 27-12-14(a), Ala. Code 1975.
The Insurance Code also grants the commissioner authority
to regulate the insurance contract.  Particularly, § 12-14-8,
Ala. Code 1975, requires that all insurance policies,
application forms, contracts, printed riders, endorsement
forms, and forms of renewal certificates be approved by the
commissioner.  Section 27-14-9, Ala. Code 1975, authorizes the
commissioner to disapprove any such form if the form:
"(1) Is in any respect in violation of, or does
not comply with, [the Insurance Code];
"(2) Contains or incorporates by reference,
where such incorporation is otherwise permissible,
any inconsistent, ambiguous, or misleading clauses
or exceptions and conditions which deceptively
affect the risk purported to be assumed in the
general coverage of the contract;
"(3) Has any title, heading or other indication
of its provisions which is misleading;
"(4) Is printed, or otherwise reproduced, in
such manner as to render any provision of the form
substantially illegible; or
"(5) Contains provisions which are unfair, or
inequitable, or contrary to the public policy of
1081699
15
this state or which would, because such provisions
are 
unclear 
or 
deceptively 
worded, 
encourage
misrepresentation."
Additionally, § 32-7-23(a), the section of the Motor Vehicle
Safety-Responsibility Act requiring insurers to offer UM
coverage, requires that policy provisions relating to UM
coverage be approved by the commissioner.
Section 27-2-7(6) of the Insurance Code grants the
commissioner broad investigative authority.  That subsection
provides:
"The commissioner shall ... [c]onduct such
examinations 
and 
investigations 
of 
insurance
matters, 
in 
addition 
to 
examinations 
and
investigations expressly authorized, as he or she
may deem proper to determine whether any person has
violated any provision of this title or to secure
information useful in the lawful administration of
any such provision. ..."
Regarding 
rates, 
Chapter 
13, 
Article 
3, 
grants 
the
commissioner even greater authority to inquire into and to
examine the records and business practices of casualty
insurers.  Section 27-13-74, Ala. Code 1975, states:
"The commissioner may, whenever he deems it
expedient, but at least once in every five years,
make, or cause to be made, an examination of the
business, affairs and method of operation of each
rating organization doing business in this state and
a like examination of each insurer making its own
rates. ... The officers, managers, agents, and
employees of such rating organization or insurer
1081699
16
making its own rates shall exhibit all its books,
records, documents, or agreements governing its
method of operation, its rating systems and its
accounts for the purpose of such examination. The
commissioner, or his representative, may, for the
purpose 
of 
facilitating 
and 
furthering 
such
examination, examine, under oath, the officers,
managers, agents, and employees of such rating
organization or insurer making its own rates."
The legislature, therefore, has granted the commissioner the
authority not only to inquire into the rates applied and
premiums charged by casualty insurers, but also to inquire
into a casualty insurer's "business, affairs and method of
operation."  Id.
The Insurance Code also grants the commissioner the
authority to hold hearings and provides for judicial review of
the commissioner's decisions.  Generally, the Insurance Code
requires the commissioner to hold hearings upon written demand
of any person aggrieved by an act, a threatened act, or a
failure of the commissioner.  See § 27-2-28(b), Ala. Code
1975.  Once the commissioner has issued a decision, or if the
commissioner refuses to hold a hearing, the aggrieved party
may appeal to the Montgomery Circuit Court.  See § 27-2-32,
Ala. Code 1975.  
Specifically regarding rates, the Department may require
insurers to furnish "all pertinent information" regarding a
1081699
17
rate to persons affected by the rate.  See § 27-13-70, Ala.
Code 1975.  Section 27-13-71, Ala. Code 1975, requires
insurers to provide a means by which persons affected by a
rate "may be heard on a written application to reduce such
rate."  That section then states:
"If such rating organization or such insurer shall
refuse to reduce such rate, the person, or persons,
affected thereby may make a like application to the
commissioner within 30 days after receipt of notice
in writing that the application for reduction of
rate has been denied by such rating organization or
by such insurer. ... The commissioner shall fix a
time and place for hearing on such application, upon
not less than 10 days' notice by registered or
certified mail, for the applicant and such rating
organization or such insurer to be heard. The
commissioner shall make such order as he shall deem
just and lawful upon the evidence placed before him
at such hearing."
Section 27-13-81, Ala. Code 1975, then provides a means by
which the commissioner's decisions may be reviewed by the
Montgomery Circuit Court and then by the Court of Civil
Appeals.
II.
The Filed-Rate Doctrine
The filed-rate doctrine limits judicial review of rates
that have been approved by regulatory agencies.  Describing
the doctrine in a case involving an insurance rate approved by
the commissioner, this Court has stated: "The filed-rate
1081699
18
doctrine provides that once a filed rate is approved by the
appropriate governing regulatory agency, it is per se
reasonable and is unassailable in judicial proceedings."
Birmingham 
Hockey 
Club, 
Inc. 
v. 
National 
Council 
on
Compensation Ins., Inc., 827 So. 2d 73, 78 n.4 (Ala.
2002)(emphasis added).  The bar of the filed-rate doctrine
goes to the court's jurisdiction over the subject matter.  See
Birmingham Hockey Club, 827 So. 2d at 83 n.11 ("Because the
filed-rate doctrine prohibits collateral challenges to rates
properly approved by the insurance commissioner, any such
challenge raised in the courts is due to be dismissed."
(citing Allen v. State Farm Fire & Cas. Co., 59 F. Supp. 2d
1217, 1227-29 (S.D. Ala. 1999))).  Accordingly, when an
insured challenges the rates of an insurer that have been
approved 
by 
the 
commissioner, the filed-rate doctrine
precludes judicial review. 
We note that, with regard to the statutory procedure for
seeking a reduction in rates, § 27-13-71 provides a remedy for
reduction from the filed rate if circumstances warrant.
Therefore, proceedings under § 27-13-71 are distinguishable
from an impermissible attack on the rate as filed, and such
proceedings are not subject to the bar of the filed-rate
1081699
19
doctrine.  The extent to which § 27-13-71 requires exhaustion
of an administrative remedy is a separate question we address
below.
III.  Exhaustion of Administrative Remedies
When the insured asserts the entitlement to a reduction
from the filed rate, the Insurance Code provides an
administrative remedy, followed by judicial review commenced
by a petition for the writ of certiorari filed in the
Montgomery Circuit Court.  See §§ 27-13-71 and 27-13-81.
Based on the extensive statutory scheme established by the
legislature 
to 
regulate 
insurance, 
including 
the
administrative remedies provided in §§ 27-13-71 and 27-13-81,
the commissioner maintains that "insurance form and rate
approval are only cognizable in the first instance by the
Commissioner and the Department of Insurance, not the courts."
Commissioner's brief, at 16.  According to the commissioner,
therefore, the Insurance Code vests exclusive jurisdiction
over claims relating to insurance rates and forms in the
commissioner and the Department.  Cincinnati agrees.  
In enacting the Insurance Code, the legislature granted
the commissioner wide-ranging authority to regulate insurers.
More specifically, the legislature has delegated to the
1081699
20
commissioner and the Department its authority to regulate
insurance rates.  City of Birmingham v. Southern Bell Tel. &
Tel. Co., 234 Ala. 526, 530, 176 So. 301, 303 (1937) ("That
rate making is a legislative and not a judicial function is
well established." (emphasis added)).  The authority to
regulate rates is comprehensive.  Insurers are prohibited from
imposing rates other than those approved by the commissioner.
See §§ 27-13-67 and 27-13-76.  The commissioner also has the
authority to regulate insurance forms, including UM-policy
provisions.  See §§ 27-14-8, 27-14-9, and 32-7-23(a).  The
commissioner has the authority to investigate violations of
the Insurance Code, including violations relating to insurance
forms and rates.  See § 27-2-7(6).  Furthermore, Chapter 13,
Article 3, of the Insurance Code grants the commissioner broad
authority to examine the casualty insurers' business, affairs,
and methods of operation.  See § 27-13-74.
Peacock, citing Tindle v. State Farm General Insurance
Co., 826 So. 2d 144 (Ala. Civ. App. 2001)(Yates, P.J., and
Murdock, J., dissenting), contends that because § 27-13-71
provides that an insured "may" be heard by the insurer and
"may" apply to the commissioner for a rate reduction, insureds
are not required to seek administrative review before filing
1081699
Peacock phrases his argument in terms of § 27-13-32, Ala.
2
Code 1975; however, that section does not apply to UM
insurance.  We will address our discussion of this argument
instead to § 27-13-71, the comparable section dealing with
casualty insurance.
21
suit.   In Tindle, the Court of Civil Appeals considered
2
whether the trial court properly dismissed a putative class
action 
against 
an 
insurer 
challenging 
the 
insurer's
calculation of premiums with respect to home insurance.  The
Court of Civil Appeals agreed that the insured was required to
exhaust 
administrative 
remedies 
before 
seeking 
redress 
through
the courts.  Presiding Judge Yates and then Judge Murdock
dissented.  Presiding Judge Yates disagreed with the majority
based on her characterization of Tindle's claims.  Judge
Murdock disagreed with the majority's interpretation of § 27-
13-32, Ala. Code 1975, which provides for administrative
review, in the context of home insurance.  Judge Murdock
reasoned that, because that section states that persons
affected by a rate "may" apply to the commissioner for a
review of that rate, such review is not mandatory, and Tindle
was not required to exhaust administrative remedies before
seeking relief in the courts.  Peacock argues that this Court
should apply a similar reasoning in this case.
1081699
We note in fairness that Judge Murdock did not contend
3
in his dissenting opinion in Tindle that the legislature
should have used the word "shall" in order to support the
result reached by the majority in Tindle. 
22
Section 27-13-71 states that if, upon application by an
insured, an insurer refuses to reduce the insured's rate, the
insured "may make a like application to the commissioner
within 30 days."  (Emphasis added.)  Peacock contends the
legislature's use of the word "may," rather than the word
"shall," indicates that the insured has the option of pursuing
administrative remedies or pursuing remedies in court.  If,
however, the legislature had used the word "shall," § 27-13-71
would impose on an insured a statutory duty to pursue
administrative remedies upon every rejection of an application
for a rate reduction, even where the insured is satisfied with
the insurer's explanation of the denial or where the insured
lacks the means or is disinclined to pursue further action.
Such a construction would lead to an unreasonable result.   We
3
consider the more reasonable interpretation of "may" as used
here to be an expression of the legislature's intent that an
insured lodging a complaint was not required to pursue the
complaint further if it did not so desire and not the sanction
of alternative remedies independent of the Insurance Code.
1081699
23
Accordingly, the legislature's use of the word "may" need not
be read so broadly as Peacock contends and, in the context of
the entire Insurance Code and the legislative authority over
rate-making, discussed below, should not be so read.
 Viewing the Insurance Code as a whole, see Bright,
supra, as allowing a court, outside the appellate review
provided for in the Insurance Code, to determine, in
proceedings as to which the commissioner is not a party, that
a rate approved by the commissioner is unreasonably high would
allow that court to require insurers to apply rates
independently of the commissioner's involvement.  Such a
construction of § 27-13-71 would enable courts to interfere
with the regulatory power granted the commissioner by the
legislature under § 27-13-68.  Furthermore, it would enable
courts to require insurers in proceedings between an insurer
and an insured to apply unapproved rates and, therefore, to
engage in conduct prohibited by other sections of the
Insurance Code.  See  §§ 27-13-67 and 27-13-76.  However, as
this Court has stated in another context, "the matter of rate
making is legislative, and the courts have no right to sit as
a board of review to substitute their judgment for that of the
1081699
24
Legislature, or its agents in matters within the province of
either."  City of Birmingham, 234 Ala. at 531, 176 So. at 305.
The legislature has created a narrow exception to the
principle that rate-making is a legislative prerogative by the
procedures established in §§ 27-13-71 and 27-13-81.  Under §
27-13-71, an insured dissatisfied with a rate may apply to the
insurer for a rate reduction and then to the commissioner if
the insured does not receive a reduction from the insurer.
Under § 27-13-81, the insured may, thereafter, obtain judicial
review of the commissioner's decision first by means of a writ
of certiorari to the Montgomery Circuit Court and then by
means of an appeal to the Court of Civil Appeals.  Through
these procedures, the legislature has created a limited means
by which courts may review the commissioner's rate-making
decisions.  Sections 27-13-71 and 27-13-81 authorize judicial
review only in this context.  Peacock's construction of "may"
as that word is used in § 27-13-71 would sanction an unbridled
expansion of this narrow exception inconsistent with the
general rule that the judicial branch lacks authority to set
rates.  We decline to ascribe such intent to the legislature
based solely on the use of the word "may" in the context here
presented.  Consistent with the authority granted the
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25
commissioner by the legislature and the limited judicial
review of the commissioner's decisions, we conclude that the
insured must exhaust his or her administrative remedies before
the commissioner before turning to the courts for relief.
IV.
Peacock's Complaint
Peacock contends that his claims against Cincinnati do
not fall within the commissioner's administrative authority.
Specifically, Peacock argues that he does not challenge
Cincinnati's rates or rating systems but, instead, its
"business practice" of requiring insureds whose policy covers
more than three vehicles to choose UM coverage for either all
or none of their vehicles, even for, e.g., four, five, and six
vehicles.  To determine the nature of Peacock's claims and
whether those claims fall within the commissioner's exclusive
authority, we will consider the language of Peacock's
complaint.
The first sentence of Peacock's complaint states: "This
action challenges [Cincinnati's] systematic and ongoing
practice of improperly imposing and collecting premiums for
certain [UM] insurance coverage when issuing multi-vehicle
auto insurance policies in the State of Alabama."  (Emphasis
added.)  Peacock also alleges repeatedly that Cincinnati
1081699
26
"overcharg[es] for UM coverage" and "charg[es] more than is
necessary to provide maximum UM coverage under the contract."
(Emphasis added.)  Peacock contends that Cincinnati receives
"improper gains ... at the expense of insureds and premium
payors."  As noted above, Peacock seeks damages only in the
form of restitution of premiums paid for the allegedly
illusory UM coverage. 
Regarding the class allegations of the complaint, Peacock
defines his putative class as Alabama citizens who have "paid
to [Cincinnati] monies for additional UM coverage."  Peacock
states the first three class-wide common questions as:
"a.  Whether [Cincinnati] has engaged in a
widespread and systematic practice of imposing and
collecting 
premiums 
for 
certain 
unnecessary,
improper, and illusory UM coverage when issuing
multi-vehicle policies in Alabama;
"b.  Whether [Cincinnati] 
has 
breached 
contracts
with [Peacock] and class members by requiring and
collecting for additional UM coverage for which
there 
was 
no 
consideration 
flowing 
from
[Cincinnati], as the required additional coverage
was illusory and of no additional benefit;
"c. 
 
Whether 
[Cincinnati's] 
practice 
of
requiring 
(and 
collecting 
for) 
additional 
UM
coverage as described herein is improper."
(Emphasis added.)  
1081699
27
Peacock contends that he challenges Cincinnati's UM
practices as violating § 32-7-23.  However, the language of
Peacock's complaint, including the class allegations, shows a
direct challenge to the premiums and rates Cincinnati applies
to UM coverage pursuant to rates approved by the commissioner.
Specifically, by alleging that Cincinnati "overcharges" for UM
coverage, 
Peacock 
claims 
that 
Cincinnati's 
rates 
are
excessive--a 
matter 
squarely 
within 
the 
exclusive 
jurisdiction
of the commissioner.  See, e.g., §§ 27-13-65 and 27-13-68.
V.
The Filed-Rate Doctrine and Exhaustion of Administrative
Remedies Applied
Peacock 
in 
essence 
contends 
either 
a) 
that 
the
commissioner simply should not have approved Cincinnati's
forms and rating plans to the extent those forms and plans
permitted Cincinnati to charge and collect premiums for UM
coverage on vehicles in excess of three listed in a Cincinnati
policy or b) that Peacock and others are entitled to a premium
reduction (presumably with an accompanying refund of paid
premiums) for UM coverage on listed vehicles exceeding three
in a policy.  Under the first alternative, which deals with
the 
commissioner's 
approval, 
the 
filed-rate 
doctrine 
precludes
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28
judicial review, depriving the trial court of subject-matter
jurisdiction.  See Birmingham Hockey Club, supra.
Peacock contends that the filed-rate doctrine does not
apply to his claims based on this Court's statement in QCC,
Inc. v. Hall, 757 So. 2d 1115, 1118 (Ala. 2000), that the
filed-rate 
doctrine 
"holds 
consumers 
to 
a 
conclusive
presumption of knowledge of the contents of the tariff that
the utility with which the consumer does business has filed
with the appropriate regulatory agency."  Peacock contends
that Cincinnati's rates, approved by the commissioner, do not
provide sufficient notice of its practice of requiring
insureds to choose UM coverage as to all or none of their
vehicles.  Thus, Peacock reasons, the filed-rate doctrine does
not hold him to a conclusive knowledge of Cincinnati's
business practices.  To support this argument, Peacock relies
on the now transcribed deposition testimony of Department
employee Myra Frick.
As an initial matter, we note that although counsel for
the parties discussed Frick's deposition at the August 19,
2009, hearing, the transcript on which Peacock now relies was
not before the trial court when it ruled on Cincinnati's
motion to dismiss.  "[E]vidence not presented to the trial
1081699
Peacock has not raised any argument, either in the trial
4
court or in this Court, that Cincinnati is charging premiums
or applying rates in excess of those approved by the
commissioner.
29
court will not be considered in a mandamus proceeding."  Ex
parte Volvo Trucks North America, Inc., 954 So. 2d 583, 587
(Ala. 2006).
Additionally, Peacock's argument is misdirected.  The
filed-rate doctrine, as applied in this case, involves not a
presumption of knowledge on Peacock's part, but a limitation
on judicial review of rates approved by the commissioner.  See
Birmingham Hockey Club, supra.  It is undisputed that
Cincinnati's rates and policy forms were approved by the
commissioner.   Frick's affidavit, submitted to the trial
4
court by Cincinnati in support of its motion to dismiss, shows
that the commissioner approved forms showing that Cincinnati
applied rates and charged premiums for UM coverage as to all
vehicles under multi-vehicle policies.  As a result,
Cincinnati's UM rates are "per se reasonable and [are]
unassailable in judicial proceedings."  Birmingham Hockey
Club, 827 So. 2d at 78 n.4.
Regarding Peacock's second alternative contention, which
deals with premium reduction, the necessary predicate for
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30
judicial review is invocation of the remedy provided by § 27-
13-71. The administrative remedy has been exhausted only upon
an adverse determination and then, and only then, is the
aggrieved party entitled to access to the courts by petition
for a writ of certiorari filed in the Montgomery Circuit Court
pursuant to § 27-13-71.  
Peacock argues as an exception to the general rule of
exhaustion of administrative remedies that exhausting his
remedies before the commissioner and the Department would be
futile.  Citing Budget Inn of Daphne, Inc. v. City of Daphne,
789 So. 2d 154, 157 (Ala. 2000)("[W]e recognize certain
exceptions exist to the general rule of exhaustion of
administrative remedies:  'The doctrine does not apply when
(1) the question raised is one of interpretation of a statute,
(2) the action raises only questions of law and not matters
requiring administrative discretion or an administrative
finding of fact, (3) the exhaustion of administrative remedies
would be futile and/or the available remedy is inadequate, or
(4) where there is the threat of irreparable injury.'  Ex
parte Lake Forest Property Owners' Ass'n, 603 So. 2d 1045,
1046-47 (Ala. 1992).").  To support this argument, Peacock
again relies on the now transcribed deposition testimony of
1081699
We need not deal with the implications of cases observing
5
that exhaustion of administrative remedies does not implicate
subject-matter jurisdiction, see, e.g., Patterson v. Gladwin
Corp., 835 So. 2d 137, 142 (Ala. 2002); Budget Inn of Daphne,
31
Myra Frick.  Based on her testimony, Peacock contends that the
Department has already decided the issue his claims present.
As noted above, in a mandamus proceeding, this Court will
not consider evidence not presented to the trial court.  Volvo
Trucks, supra.  Additionally, we disagree with Peacock's
premise that review of his claims by the commissioner would be
futile.  Section 27-13-68 grants the commissioner the
authority 
to 
alter 
previously 
approved 
rates 
if 
the
commissioner determines that those rates are excessive.
Furthermore, § 27-13-71 grants insureds affected by an
approved rate a means of obtaining a rate reduction.  Even if,
as Peacock says, the Department has already decided the issue
of the reasonableness of Cincinnati's rates for UM coverage,
given the commissioner's statutory authority to permit a
reduction in approved rates, we cannot say that administrative
review is futile.
Under the facts before us, under either of Peacock's
alternative contentions the Tallapoosa Circuit Court exceeded
its discretion when it denied Cincinnati's motion to dismiss.5
1081699
789 So. 2d at 157, because we have recognized the propriety of
seeking relief by mandamus for the denial of a motion to
dismiss based on a failure to exhaust administrative remedies.
See Blue Cross, 582 So. 2d at 472-73.
We note that Peacock, in his answer, relies on an amended
6
complaint that was served after the entry of the trial court's
August 26, 2009, order and after Cincinnati filed its petition
for a writ of mandamus in this Court.  Accordingly, the
amended complaint is not before us for consideration, and, in
view of our issuance of the writ, we do not consider it.
Whether the amended complaint may be the subject of a separate
action is a matter not before us.
32
Conclusion
Based on the foregoing, we conclude that, alternatively,
the filed-rate doctrine requires dismissal, as does Peacock's
failure 
to 
exhaust 
administrative 
remedies 
with 
the
commissioner and the Department before seeking redress from
the courts.  Our decision precludes discussion of Cincinnati's
arguments regarding the trial court's granting of Peacock's
motion to compel discovery.  We grant Cincinnati's petition
for a writ of mandamus, and we direct the trial court to
vacate its August 26, 2009, order.   We further direct the
trial court to dismiss Peacock's action for failure to exhaust
administrative remedies.6
PETITION GRANTED; WRIT ISSUED.
1081699
33
Cobb, C.J., and Woodall, Stuart, Smith, Bolin, and Shaw,
JJ., concur.
Parker, J., recuses himself.