Title: Travelers Indemnity Company of Connecticut v. Miller

State: alabama

Issuer: Alabama Supreme Court

Document:

REL:12/02/2011
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, 2011-2012
____________________
1100619
____________________
The Travelers Indemnity Company of Connecticut
v.
James Miller, as the personal representative of the estate
of Willie A. Miller, deceased
Appeal from Franklin Circuit Court
(CV-08-900004)
BOLIN, Justice.
The 
Travelers 
Indemnity 
Company 
of 
Connecticut
(hereinafter "Travelers") appeals from a $251,913.91 judgment
1100619
Miller died on October 19, 2010. While this appeal was
1
pending, the personal representative of Miller's estate filed
in the trial court a motion for substitution of plaintiff; he
later filed a motion to substitute with this Court. His
personal representative is substituted as the plaintiff
pursuant to Rule 43, Ala. R. App. P. 
2
against it and in favor of Willie A. Miller.  We reverse and
1
remand.
Smith House Movers, Inc. ("Smith"), was hired as a
subcontractor for a corporation that was constructing a new
bypass highway in Red Bay; Smith was hired to move houses
located in the path of the roadwork to be performed.  Smith
had to have a certificate of insurance to perform the work,
and 
it 
obtained 
a 
commercial general-liability policy
(hereinafter "CGL policy") and an automobile policy from
Travelers, both of which were effective from December 30,
2004, to December 30, 2005. 
 
On September 15, 2005, Miller entered into a contract
with Smith to purchase one of the houses and to move it from
Red Bay to Vina.  The contract provided that Smith was to move
the house, pour a foundation, and place the house on the new
foundation in Vina.  Miller paid Smith $37,500 for the house
and those services.  The house was to be moved by the
Thanksgiving holiday 2005.  Sometime in November, Smith cut
1100619
The testimony conflicted as to the dates Smith attempted
2
to move Miller's house.
The judgment 
awarded 
accrued 
postjudgment 
interest 
at 
the
3
rate of 12% per annum.  See Ala. Code 1975, § 8-8-10.
3
the house into two pieces and delivered the first piece to
Vina.   However, the foundation was improperly poured and did
2
not fit, and the house had been damaged in the move.
Eventually, Miller had to hire another company to complete
moving the house and to repair the damage.   
On January 23, 2006, Miller sued Smith, alleging breach
of contract, negligence, and wantonness.  On February 7, 2006,
Smith was served with notice of the complaint.  Smith did not
answer or appear.  On March 9, 2006, Miller applied for an
entry of default against Smith.  On March 13, 2006, the
circuit court entered a default judgment against Smith in the
amount of $152,500 plus court costs.   Dave Pizur & Associates
3
("Pizur") was listed as the agent on Smith's CGL policy and
automobile policy with Travelers, and on May 19, 2006,
Miller's counsel attempted to contact Travelers through Pizur
by sending Pizur a letter and a copy of the certificate of
judgment against Smith.  On June 8, 2006, counsel sent Pizur
another letter requesting payment of the judgment.  The letter
1100619
Smith filed for bankruptcy protection on July 12, 2006.
4
4
indicated that counsel had received telephone calls and a fax
from Pizur.  On June 13, 2006, and again on June 14, 2006,
Pizur forwarded counsel's correspondence and a "quick fax" to
Travelers that set out a brief statement of the claim.  On
July 7, 2006, not having heard from Pizur or Travelers,
Miller's counsel sent Pizur another letter.  On July 10, 2006,
Pizur referred counsel to Kay Stovall, an employee with
Travelers.  On October 17, 2006, Travelers notified Smith and
Smith's bankruptcy attorney  that it was denying coverage of
4
the claim based on lack of notice because, Travelers stated,
it had not received notice of the claim until "July 14, 2006,"
and that attempts to contact Smith had been to no avail.
Travelers also denied the claim on the ground that neither the
CGL policy nor the automobile policy covered Miller's claim.
Travelers did not inform Miller or his counsel that it was
denying the claim.  
On January 22, 2007, the bankruptcy court lifted its stay
and allowed Miller to collect the default judgment it had
obtained against Smith only to the extent of any insurance
coverage that might be available.  On October 17, 2007,
1100619
5
Travelers sent Smith and its bankruptcy attorney a letter
again denying coverage for the claim.
On January 21, 2008, Miller sued Travelers pursuant to §
27-23-2, Ala. Code 1975, which provides a judgment creditor
with a right of a "direct action" against the judgment
debtor's (Smith's) insurer.  Miller sought to apply the
proceeds of Smith's CGL policy and automobile policy issued by
Travelers to the default judgment Miller had obtained against
Smith.  Travelers answered and asserted, among other things,
that the conditions precedent under the policies had not been
met.  On  July 9, 2009, Travelers filed a summary-judgment
motion on the ground that because the notice conditions of the
CGL and automobile policies had been breached, neither policy
provided coverage for Miller's claims.  The trial court denied
the motion.   On March 4, 2010, Travelers filed a second
motion for a summary judgment, arguing that the CGL and
automobile policies did not provide coverage based on the
terms in the policies, including certain exclusions.   The
trial court denied the motion.  On May 14, 2010, the trial
court conducted a bench trial.  On  September 17, 2010, the
court entered a judgment in favor of Miller.  On October 13,
1100619
6
2010, Travelers filed a motion to alter, amend, or vacate the
judgment, which was denied by operation of law.  Travelers
timely filed its notice of appeal.  
Issues
Travelers argues that the trial court erred in denying
its July 9, 2009, motion for summary judgment based on late
notice of the claim. Travelers also argues that the trial
court erred in denying its summary-judgment motion filed on
March 4, 2010, regarding policy coverage of the claim.
Travelers goes on to argue that, if the summary-judgment
standard of review is not applicable, then the trial court's
final judgment in favor of Miller should be reversed on the
grounds that late notice bars recovery; that there was no
"occurrence" or "accident" as those terms are defined in the
policies; and that certain exclusions in the policies bar
recovery.  Last, Travelers argues that postjudgment interest
was improperly applied.
Law and Analysis
We disagree with Travelers' argument that this Court
should address the trial court's denial of its summary-
judgment motions.  "[W]e do not review a trial court's denial
1100619
"Ordinarily, any issue as to the denial of [a] summary
5
judgment motion would be moot, because the sufficiency of the
evidence at trial would be the significant question on
appeal."  Superskate, Inc. v. Nolen, 641 So. 2d 231, 233 (Ala.
1994).  In Superskate, this Court stated that such a review
would occur only in a rare case.  Furthermore, Travelers does
not cite Superskate, nor does it argue that this case would be
such a rare case.  
7
of a summary-judgment motion following a trial on the merits.
See Grayson v. Hanson, 843 So. 2d 146 (Ala. 2002); Superskate,
Inc. v. Nolen, 641 So. 2d 231, 233 (Ala. 1994); see also Lind
v. United Parcel Service, Inc., 254 F.3d 1281, 1283-84 (11th
Cir. 2001)."  Mitchell v. Folmar & Assocs., LLP, 854 So. 2d
1115, 1116 (Ala. 2003).   
5
The principal legal issue presented in this appeal is
whether, under the evidence presented, the trial court could
properly conclude that Travelers was bound to provide coverage
to Smith with respect to the occurrences described in Miller's
complaint.  Because there were questions of fact regarding
notice and coverage, the trial court received testimony in
both oral and written form before entering its final judgment.
Therefore, the ore tenus standard of review applies: "Where
evidence on an issue is presented both orally and by
deposition, the ore tenus rule affords the trial court's
finding a presumption of correctness."  Hall v. Mazzone, 486
1100619
8
So. 2d 408, 410 (Ala. 1986). "Under that standard, a trial
court's findings of fact based on oral testimony and a
judgment based on those findings are given a presumption of
correctness."  Beavers v. County of Walker, 645 So. 2d 1365,
1372 (Ala. 1994).  However, "that standard's presumption of
correctness has no application to a trial court's conclusions
on questions of law."  Id.
We now turn to whether the notice provided to Travelers
of Miller's claims against Smith was timely.  The CGL policy
provided that Smith must notify Travelers "as soon as
practicable of an 'occurrence' or an offense which may result
in a claim."  The CGL policy also provided that Smith had to
"immediately record the specifics of the suit" and to notify
Travelers "as soon as practicable" if a claim or an action was
filed against it.  The automobile policy provided that Smith
provide Travelers with "prompt notice of the 'accident' or
'loss.'"   The automobile policy also provided that Smith was
to "immediately send" Travelers copies of any suit filed
against it.  On September 15, 2005, Miller entered into a
contract with Smith to move a house, which Smith attempted in
November 2005.   On January 23, 2006, Miller sued Smith,
1100619
9
alleging breach of contract, negligence, and wantonness.  On
February 7, 2006,  Smith was served with notice of the
complaint.  Smith did not answer or appear.  On March 9, 2006,
Miller applied for an entry of default against Smith.  On
March 13, 2006, the circuit court entered a default judgment
against Smith.  The trial court found that Travelers received
notice of that judgment on June 13, 2006.  Eventually, Miller
brought a direct action against Travelers  under § 27-23-2,
seeking the insurance proceeds.
"[T]he failure of an insured to comply within a
reasonable time with such conditions precedent in an insurance
policy requiring the insureds to give notice of an accident or
occurrence releases the insurer from obligations imposed by
the insurance contract."  Reeves v. State Farm Fire & Cas.
Co., 539 So. 2d 252, 254 (Ala. 1989).  The term "as soon as
practicable" has been interpreted "to mean that 'notice must
be given within a reasonable time in view of the facts and
circumstances of the case.'" Haston v. Transamerica Ins.
Servs., 662 So. 2d 1138, 1141 (Ala. 1995)(quoting Pharr v.
Continental Cas. Co., 429 So. 2d 1018, 1019 (Ala. 1983)).
"Prompt" notice has also been interpreted to mean that such
1100619
10
notice must be given within a reasonable time in view of all
the facts and circumstances.  St. Paul Fire & Marine Ins. Co.
v. Elliott, 545 So. 2d 760 (Ala. 1989).  Only two factors are
to be considered in determining the reasonableness of a delay
in giving notice to the insurer: the length of the delay and
the reasons for the delay.  United States Fid. & Guar. Co. v.
Baldwin County Home Builders Ass'n, 770 So. 2d 72, 75 (Ala.
2000).  Whether notice of the occurrence or claim was given to
the 
insurer 
within 
a 
reasonable 
time 
rests 
on 
the
reasonableness of the delay.  Id.  Prejudice to the insurer
from any such delay in providing notice is not a factor.  Id.
In this case notice was provided by an injured party; the
insured has never given notice to insurer.  We note that
Travelers does not dispute that written notice by an injured
party instead of its insured could  satisfy the notice
requirements of the policies.  Instead, the issue raised by
Travelers is whether such notice was timely.  The Court of
Civil Appeals has stated:
"Safeway Insurance Co. [of Alabama v. Thompson,
688 
So. 
2d 
271 
(Ala. 
Civ. 
App. 
1996),] 
by
recognizing an injured party's right of direct
action against an insurer when the injured party
has, himself, given notice of the underlying lawsuit
to the insurer, even when the insured has failed to
1100619
11
do so, arguably is consistent with those cases
explaining that the injured party stands in the same
position as the insured as of the time of the
accident or injury at issue. See, e.g., State Farm
Mut. Auto. Ins. Co. v. McClendon, 269 Ala. 456, 458-
59, 114 So. 2d 153, 155 (1959)(decided under the
predecessor to Alabama's direct-action statute, §
27-23-2, Ala. Code 1975, and explaining that the
injured 
party's 
rights under the tortfeasor's
insurance policy are derivative and that the injured
party 'stands in the same position the insured would
occupy if he had paid the judgment' and sued the
insurer himself); Fleming v. Pan American Fire &
Cas. Co., 495 F.2d 535, 541 (5th Cir. 1974) (decided
under the predecessor to § 27-23-2 and holding that
'the right of the judgment creditor relates back to
the time when his right of action arose'); compare
George v. Employers' Liability Assurance Corp., 219
Ala. 307, 310, 122 So. 175, 177 (1929) (decided
under predecessor to § 27-23-2 and holding that an
injured party has a vested interest 'in the nature
of an hypothecation of the amount,' if any, due by
an insurer to an insured, so that the provisions of
an insurance policy imposing an obligation to
testify and otherwise cooperate in the defense of
the lawsuit were effective against the injured
party)."
Alfa Ins. Co. v. Templeton, 919 So. 2d 300, 305 n. 3 (Ala.
Civ. App. 2005).
In Nationwide Mutual Fire Insurance Co. v. Estate of
Files, 10 So. 3d 533 (Ala. 2008), we addressed the timeliness
of notice when the insured had not given notice to the
insurer.  The injured party was involved in an altercation
with the insured on May 1, 2001.  The insured had a
1100619
12
homeowner's policy that included personal-liability coverage.
The insurer was notified of the altercation on October 1,
2001, when it was contacted by the injured party's attorney.
Subsequently, the insurer sought to secure the insured's
cooperation, but it was unable to obtain any information from
him.  On March 29, 2002, the insurer advised the insured that
it would not defend or indemnify him, in part because he had
failed to give it notice of the underlying occurrence "as soon
as practicable" as required under the policy.   The injured
party sued the insured, but the insured never answered or
appeared.  On February 20, 2004, the trial court entered a
default judgment against the insured.  When the injured party
sought to garnish the insured's wages, the insured filed for
bankruptcy protection.  The bankruptcy court allowed the
injured party to seek to collect the judgment against the
insured only to the extent of any available insurance
proceeds.  Subsequently, the injured party sued the insurer,
pursuant to § 27-23-2, seeking to apply the liability coverage
in the insured's homeowner's policy to satisfy the judgment.
"It is undisputed that the [insurance] policy
required [the insured] to notify [the insurer] of
the altercation with [the injured party] 'as soon as
practicable.'  This Court addressed identical policy
1100619
13
language in United States Fidelity & Guaranty Co. v.
Baldwin County Home Builders Ass'n, Inc., 770 So. 2d
72, 75 (Ala. 2000):
"'If an "occurrence" takes place, ...
the policy requires that the insured give
USF&G notice "as soon as practicable." This
Court has held:
"'"The requirement of notice
'as soon as practicable' means
that the insured must give notice
'within a reasonable time under
all 
the 
circumstances.' 
See
American Liberty Insurance Co. v.
Soules, 288 Ala. 163, 258 So. 2d
872 
(1972). 
In 
making 
this
determination, the only factors
to be considered are the length
of the delay in giving notice and
the reasons therefor.  Absence of
prejudice to the insurer from the
delay is not a factor to be
considered. 
Southern 
Guaranty
Insurance Co. v. Thomas, 334 So.
2d 879 (Ala. 1976)."
"'[United States Fidelity & Guar. Co. v.]
Bonitz Insulation Co., 424 So. 2d [569,]
572 [(Ala. 1982)].  In Thomas, cited by
this Court in Bonitz Insulation, this Court
stated:
"'"Where facts are disputed
or where conflicting inferences
may reasonably be drawn from the
evidence, the question of the
reasonableness of a delay in
giving notice is a question ...
for 
the 
[trier 
of 
fact].
Provident Life & Accident Ins.
Co. v. Heidelberg, 228 Ala. 682,
1100619
14
154 So. 809 (1934). Conflicting
inferences 
concerning 
the
reasonableness of a delay may
sometimes be drawn where the
insured 
offers 
evidence 
of
mitigating circumstances.
"'"'However, where
an 
insured 
fails 
to
show 
a 
reasonable
excuse or the existence
of circumstances which
w o u l d 
justify 
a
protracted delay, the
Court 
should 
as 
a
matter of law hold that
there has been a breach
of the condition as to
notice ....'
"'"Zurich 
General 
Accident 
&
Liability Insurance Co. v. Harbil
Restaurant, Inc., 7 A.D.2d 433,
435, 184 N.Y.S.2d 51, 53 (1959)."
"'Thomas, 334 So. 2d 879, 882-83.  Thus,
the determination of the fundamental issue,
whether notice of the occurrence or claim
was 
given 
to 
the 
insurer 
within 
a
reasonable 
time, 
rests 
on 
the
reasonableness 
of 
the 
delay.... 
If
conflicting inferences can be drawn from
the 
evidence, 
the 
question 
of
reasonableness is submitted to the trier of
fact. If the facts are undisputed, however,
and the insured does not show justification
for the protracted delay, the court may
find the delay unreasonable as a matter of
law. Thomas, 334 So. 2d at 883; Bonitz
Insulation, 424 So. 2d at 572-73.'
"....
1100619
15
"The facts of this case are somewhat unusual,
because it is undisputed that [the insured] has
never notified [the insurer] of his altercation with
[the injured party].  Thus, it could be argued that
his failure to give notice is a continuing violation
of the notice condition of his policy.  However, as
previously stated, [the insurer] learned of the
incident five months after it occurred.  A few days
later, [the insurer] sent a letter to [the insured]
advising him that it had been contacted by [the
injured party's] attorney.  For the purposes of our
review, we will assume, without deciding, that [the
insurer's] actual notice of the occurrence excused
[the insured] from any continuing duty to provide
the notice required of him by the policy.
"A 
five-month 
delay 
in 
giving 
notice 
is
sufficiently protracted as to require the insured to
offer evidence of a reasonable excuse for the delay.
See Phoenix Assurance Co. v. Harry Harless Co., 303
F. Supp. 867 (N.D. Ala.), aff'd, 414 F.2d 794 (5th
Cir. 1969) (four-month delay); Pharr v. Continental
Cas. Co., 429 So. 2d 1018 (Ala. 1983) (eight-month
delay); Southern Guar. Ins. Co. v. Thomas, 334 So.
2d 879 (Ala. 1976) (six-month delay). [The insured]
did not testify at trial; thus, there is no evidence
of any excuse or justification for his failure to
provide the requisite notice as soon as practicable.
In his brief, [the injured party] makes no attempt
to justify [the insured's] failure."
10 So. 3d at 535-36.  The Court held that the insured had
failed to comply with the notice requirement of his insurance
policy and reversed the trial court's judgment for the injured
party and rendered a judgment for the insurer.
Miller (like the injured party in Files) does not offer
any reasons for Smith's delay in notifying Travelers of
1100619
16
Miller's claims against it.  Instead, Miller argues that his
notice 
to 
Travelers 
was 
reasonable 
under 
Haston 
v.
Transamerica Insurance Services, supra.  
In Haston, the Hastons (the injured parties) sued Smith
Brothers, Inc. (the insured), in October 1989, and Smith
Brothers did not answer the complaint.  In September 1990, a
default judgment was entered against Smith Brothers.  After
obtaining the default judgment, the Hastons filed a direct
action in October 1992 against an agent of Transamerica and
later added Transamerica as Smith Brothers' insurance provider
under § 27-23-1.  Transamerica moved for summary judgment,
which the trial court granted.  
On appeal, this Court noted that pursuant to a claim
asserted under §§  27-23-1 and -2, Ala. Code 1975, seeking to
apply the proceeds of an insurance contract to satisfy a
judgment, the injured party acquires a vested interest
(secondary) in the nature of a hypothecation of the insured's
rights under the policy and that once the injured party has
recovered a judgment the injured party may compel the insurer
to pay the judgment.  However, the injured party can bring an
action only after he or she has recovered a judgment and only
1100619
17
if the insured was covered under the terms of the policy.  The
Court also noted that the injured party's vested interest was
subject to the terms of the policy imposing obligations on the
insured, and, therefore, defenses to liability available to
the insurer in an action brought by the insured would also be
available to the insurer in an action brought by an injured
party under §§  27-23-1 and -2.
The Haston Court went on to explain:
"Transamerica argues that notice of the claim
brought by the Hastons against Smith Brothers is an
unmet precondition for any insurance proceeds to be
reached in this case. Resolution of the notice
issue, however, must begin with the question of the
sufficiency of the Hastons' service of the summons
and the complaint on Smith Brothers.  While there
may be an issue of fact as to whether service was
properly effected, the resolution of that issue is
not material to our holding, because we conclude
below that the controlling issue here may be
resolved as a matter of law. On appeal, the Hastons
argue positions that seem fatally inconsistent: On
one hand, the Hastons point out that the validity of
the default judgment is not at issue, thereby
implying that it is valid and that there was proper
service; on the other, the Hastons argue that the
lack of notice from Smith Brothers to Transamerica
is excused because Smith Brothers was unaware of the
Hastons' action, thereby implying that the default
judgment might have been invalid because of improper
service. There are two possible legal theories upon
which the Hastons may reach the proceeds of the
Smith Brothers-Transamerica insurance policy in this
case. The first assumes that service on Smith
1100619
18
Brothers was valid, and the second that it was
invalid.
"First, if service on Smith Brothers was proper
and, for whatever reason, including an expectation
of imminent insolvency, Smith Brothers neither
defended 
the 
Hastons' 
action 
nor 
notified
Transamerica of the action, the default judgment
would be proper, but the issue would arise as to
whether, given the mandate and spirit of §§ 27-23-1
and -2, the plaintiff should be left without a
remedy because the insured, insolvent and arguably
indifferent, failed to give the insurer notice of
the action.  That issue would not need to be
resolved here, though, because upon receiving a
default judgment, the Hastons would acquire a
hypothecated interest in any applicable insurance
proceeds, and it would be incumbent upon them at
that point to provide prompt notice to Transamerica
of the default judgment and of their claim to the
proceeds.  From the insurance company's perspective,
such notice would allow it to challenge the default
on any applicable ground and to defend an action, if
necessary, while the events and the memories of
potential witnesses were as fresh as possible. Thus,
this theory turns on the reasonableness of notice
provided by the Hastons to Transamerica of their
claim to insurance proceeds arising under the Smith
Brothers policy.
"Second, if service on Smith Brothers was
improper, then the default judgment was also
improper and Smith Brothers would be excused from
failing to notify Transamerica of the Hastons'
action.  The Hastons might also be able to argue
this excuse as a means to assert a claim to the
insurance proceeds, but again the timeliness of the
Hastons' notice to Transamerica of their claim would
be critical. Prompt notice would allow Transamerica
to move to have the default judgment set aside on
grounds of improper service and to proceed to a
trial, if necessary, while the events and the
1100619
19
memories of the potential witnesses were as fresh as
possible. Thus, this theory also turns on the
reasonableness of notice provided by the Hastons to
Transamerica of their claim to insurance proceeds
arising under the Smith Brothers policy.
"We find that the term 'prompt' notice, as used
in the contract of insurance between Transamerica
and Smith Brothers, is synonymous with notice terms
such as 'immediately' and 'as soon as practicable,'
which have been held to mean that 'notice must be
given within a reasonable time in view of the facts
and 
circumstances 
of 
the 
case.' 
 
Pharr 
v.
Continental Casualty Co., 429 So. 2d 1018, 1019
(Ala. 1983). '[U]nder Alabama law there are only two
factors 
to 
be 
considered 
in 
determining 
the
reasonableness of a delay in giving notice to an
insurer: the length of the delay and the reasons for
the delay.'  Southern Guar. Ins. Co. v. Thomas, 334
So. 2d 879, 883 (Ala. 1976).  If there are disputed
facts or conflicting inferences that may reasonably
be drawn from the evidence, 'the question of the
reasonableness of a delay in giving notice is a
question of fact for the jury.'  Id. at 882.  But if
there is no reasonable excuse offered for a delay in
giving notice, the issue may be decided as a matter
of law. Id. at 882-83.  Here, it is the injured
party, by way of a judgment against the insured,
that claims a hypothecated interest in proceeds from
a policy instead of the insured claiming coverage
benefits 
against 
the 
insurer. 
 
Under 
the
circumstances of this case, however, we do not find
the distinction meaningful, and we hold that these
propositions apply to the Hastons.
"The length of the delay between the Hastons'
default judgment and their motion to reach and apply
insurance proceeds was over two years.  The Hastons
have offered no excuse for the delay, reasonable or
otherwise. Therefore, we must conclude that the
delay was unreasonable as a matter of law. See
Pharr, supra (holding that an eight-month delay
1100619
20
without excuse was unreasonable as a matter of law);
Southern Guaranty, supra (holding that a six-month
delay without a showing of a reasonable excuse was
unreasonable as a matter of law); Correll v.
Fireman's Fund Ins. Cos., 529 So. 2d 1006, 1009
(Ala. 1988) (affirming the trial court's judgment
where there was a one-year delay and 'insufficient
reasons for that delay')."
662 So. 2d at 1140-41 (footnote omitted).  The Court in Haston
affirmed the trial court's judgment.  In Haston, the Court
recognized that the policy between Transamerica and Smith
Brothers required prompt notice of any occurrence under the
policy.  The Court went on to address the Hastons' alternative
arguments regarding whether Smith Brothers was properly
served.  The Court recognized that, if Smith Brothers were
properly served and did not appear, the plaintiff/injured
party could be left without a remedy because the insured,
insolvent and arguably indifferent, failed to give the insurer
notice of the action.  However, the Court did not resolve that
issue because it concluded that, upon receiving a default
judgment, the Hastons, as the injured paries, would acquire a
hypothecated interest in any applicable insurance proceeds,
and it would be incumbent upon them at that point to provide
prompt notice to Transamerica of the default judgment and of
their claim to the proceeds.   In short, what the Haston Court
1100619
21
did was to conclude that the injured party's duty to protect
his hypothecated interest by seeing that timely notice of the
lawsuit is given to the insured's insurer was independent of
the contractual duties of the insured in providing notice, in
that notice from the injured party after a default judgment
was entered, if timely, would satisfy the notice requirement.
The Haston Court went on to address the Hastons' alternative
argument that Smith Brothers was not properly served and,
therefore, that Smith Brothers would have an excuse for not
timely notifying Transamerica of the Hastons' action.  The
Court recognized that the Hastons could argue Smith Brothers'
improper service as an excuse to assert their claim against
the insurance proceeds.  However, the Court went on to hold
that the timeliness of the Hastons' notice to Transamerica
would 
be 
critical 
because 
timely 
notice 
would 
allow
Transamerica to move to set aside the default judgment.  The
Court again recognized that the policy between Transamerica
and Smith Brothers required prompt notice and that under
Alabama law there are only two factors to be considered in
determining the reasonableness of a delay in giving notice:
the length of the delay and the reasons for the delay.  The
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Court went on to apply those two factors to the Hastons' delay
in notifying Transmerica of their default judgment. With
regard to the factors determining delay, the Court expressly
found no meaningful distinction between an injured party's
claiming, by way of a judgment against the insured, a
hypothecated interest in proceeds from a policy and an
insured's claiming coverage benefits against the insurer, but
it found that the injured party's delay was at issue in that
case.  Ultimately, the Court concluded that the length of
delay between the Hastons' default judgment and their attempt
to reach and to apply the insurance proceeds was over two
years and that that delay was unacceptable.  
It is clear that there is a conflict between Files and
Haston.  We note that Haston has been cited only for general
propositions of law and has never been relied by upon by state
courts for the proposition that an injured party's duty to
protect his hypothecated interest by seeing that timely notice
of the lawsuit is given to an insured's insurer was
independent of the contractual duties of the insured.
Although we have not been asked to overrule Haston and it is
this Court's practice not to address issues not presented on
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appeal, Haston is an aberration; none of this Court's
decisions subsequent to Haston have relied on it to provide an
injured party an independent right to provide notice to an
insurer after a default judgment is entered against the
insurer's insured. Accordingly, we overrule Haston to the
extent that it purports to give a right to an injured party
who gives notice after a default judgment has been entered, a
right the insured would not have had nor have been successful
in pursuing.   
Both the CGL policy and the automobile policy had
provisions for giving Travelers timely notice of an occurrence
and timely notice of any legal action filed based on the
occurrence.  The purposes behind these two types of notice is
well settled:  An insurer must have timely notice of an event
or occurrence in order to form an intelligent estimate of its
rights and liabilities under the policy, to afford it an
opportunity to investigate, to allow it to participate in the
litigation, and to prevent fraud.  Pan American Fire & Cas.
Co. v.  DeKalb-Cherokee Counties Gas Dist., 289 Ala. 206, 266
So. 2d 763 (1972).  The purpose of a notice-of-lawsuit
provision in an insurance policy is to give the insurer the
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opportunity to control litigation on which its contractual
liability hinges.  North River Ins. Co. v. Overton, 59 So. 3d
1 (Ala. 2010).  
In the present case, Smith did not provide Travelers with
notice of the occurrence nor did Smith forward copies of the
complaint filed against it by Miller to Travelers.  Miller did
not offer any excuses for Smith's delay in notifying –-
actually its failure to notify -- Travelers.  Miller's notice
to Travelers after the default judgment was entered was
untimely.  We note that it appears that Miller's counsel knew
of Smith's certificate of insurance, which Smith was required
to have, as early as when counsel served Smith.  However,
Travelers was not notified of the action until after a default
judgment had been entered.  Travelers never had the
opportunity to control the litigation because a judgment had
been entered before Travelers had knowledge of the lawsuit.
Under our decision in Files, Miller is barred from recovering
under the policies.  Accordingly, we reverse the judgment of
the trial court and remand the case for proceedings consistent
with this opinion.  We pretermit discussion of the remaining
arguments made by Travelers.  
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REVERSED AND REMANDED.
Woodall, Stuart, Parker, Murdock, Shaw, Main, and Wise,
JJ., concur.
Malone, C.J., recuses himself.