Title: Alabama Ins. Guar. Ass'n v. SOUTHERN ALLOY CORPORATION

State: alabama

Issuer: Alabama Supreme Court

Document:

782 So. 2d 203 (2000)
ALABAMA INSURANCE GUARANTY ASSOCIATION
v.
SOUTHERN ALLOY CORPORATION.
1981942.

Supreme Court of Alabama.
August 11, 2000.
Rehearing Denied October 27, 2000.
Bennett L. Pugh, Joseph H. Driver, and W. Bradford Kittrell of Carr, Allison, Pugh, Howard, Oliver & Sisson, Birmingham, for appellant.
Barry D. Vaughn and J. Bradley Proctor of Proctor & Vaughn, Sylacauga, for appellee.
BROWN, Justice.
On February 3, 1992, Charles R. Moats suffered an on-the-job injury to his back while employed by Southern Alloy Corporation ("Southern Alloy"). For the rest of 1992, Southern Alloy paid Moats's monthly salary of $4,010, and beginning in 1993 it paid Moats $4,130 per month. Southern Alloy continued to pay Moats's salary until November 1994, when the company terminated his employment on the ground that he had missed six consecutive months of work.
At the time of Moats's injury, Southern Alloy was insured for workers' compensation claims by Employers Casualty *204 Company ("ECC").[1] ECC later became insolvent, and, pursuant to the Alabama Insurance Guaranty Association Act, §§ 27-42-1 to 20, Ala.Code 1975, the Alabama Insurance Guaranty Association ("AIGA") was required to pay certain unpaid claims on behalf of ECC.
In December 1994, AIGA filed a declaratory-judgment action against Southern Alloy and Moats in the Jefferson Circuit Court, seeking a judgment declaring that AIGA was not responsible for workers' compensation payments to Moats. Specifically, AIGA argued that the statutory limitations period applicable to Moats's workers' compensation claim had run; thus, it argued, the claim was not "covered" under the Alabama Insurance Guaranty Association Act. The trial court found that Southern Alloy had paid Moats in recognition of a workers' compensation obligation, and it entered a judgment holding that "Mr. Moats'[s] claim [was] a covered claim and Alabama Insurance Guaranty Association [was] obligated to provide coverage for such claim."
AIGA appealed that judgment to the Court of Civil Appeals. That court affirmed, without opinion, on March 7, 1997. Alabama Ins. Guaranty Ass'n v. Moats (No. 2951344), 705 So. 2d 889 (Ala.Civ.App.1997)(table). On July 25, 1997, this Court denied AIGA's petition for certiorari review. Ex parte Alabama Ins. Guaranty Ass'n (No. 1961216), 712 So. 2d 1126 (Ala.1997)(table). In August 1997, Southern Alloy filed a motion asking the trial court to order AIGA to pay it the workers' compensation benefits it had paid to Moats. The trial court denied the motion, concluding that it did not have jurisdiction to decide the matter.
In May 1998, Southern Alloy filed a declaratory-judgment action against AIGA in the Talladega Circuit Court, seeking a judgment declaring that AIGA must reimburse Southern Alloy for "moneys paid, together with interest thereon, and all future moneys paid to Charles Moats as a result of his total and permanent disability." Moats intervened as a plaintiff. In March 1999, Moats and AIGA settled and agreed that AIGA would pay Moats a lump sum of $6,217.75, attorney fees of $30,172.25, and compensation at the rate of $327.25 per week. The parties also agreed to the following release:
(C. 211.) AIGA and Southern Alloy filed motions for summary judgment. In July 1999, the trial court found:
The trial court granted Southern Alloy's motion for summary judgment, denied AIGA's motion, and rendered a judgment in favor of Southern Alloy in the amount of $110,800 as reimbursement. AIGA appealed.
The issues raised on appeal are: 1) whether the contract between ECC and Southern Alloy permitted reimbursement for payments Southern Alloy made to Moats; 2) whether Southern Alloy's claim for reimbursement from AIGA for the payments Southern Alloy made to Moats is barred on the basis that it should have been brought as a counterclaim in the initial declaratory-judgment action; and 3) whether the second declaratory-judgment action for reimbursement is barred by the doctrine of res judicata. Because we reverse and remand on the compulsory-counterclaim issue, we pretermit discussion of the remaining issues.
Our review of a summary judgment is de novo. Hobson v. American Cast Iron Pipe Co., 690 So. 2d 341, 344 (Ala. 1997).
Southern Alloy's claim for reimbursement from AIGA for payments it made to Moats should have been asserted as a counterclaim in the initial declaratory-judgment action. Rule 13(a), Ala.R.Civ.P., states:
This Court has said:
Brooks v. Peoples Nat'l Bank of Huntsville, 414 So. 2d 917, 920 (Ala.1982). In Brooks, we stated the test for compulsory counterclaims:
Brooks, 414 So. 2d  at 919.
In the instant case, the first and second declaratory-judgment actions arose out of the same aggregate core of operative facts. The amount Southern Alloy paid Moats, the reason for the payments, the insurance policy with ECC, the Alabama Insurance Guaranty Association Act, and the Workers' Compensation Act served as a basis for both claims. Thus, the logical-relationship test was met, and Southern Alloy's claim for reimbursement was a compulsory counterclaim.
"[F]ailure to assert a compulsory counterclaim bars the assertion of that claim in another action." Brooks, 414 So. 2d  at 920; Ala.R.Civ.P. 13, Committee Comments. Therefore, the trial court improperly entered the summary judgment in favor of Southern Alloy. Accordingly, that judgment is reversed, and the case is remanded for an order or proceedings in the circuit court consistent with this opinion.
REVERSED AND REMANDED.
MADDOX, HOUSTON, SEE, LYONS, JOHNSTONE, and ENGLAND, JJ., concur.
HOOPER, C.J., and COOK, J., dissent.
[1]  In the record, this company is also sometimes referred to as Employers Insurance Company of Alabama.