Title: Vulcan Materials Company v. Alabama Insurance Guaranty Association et al.
Citation: N/A
Docket Number: 1060506
State: Alabama
Issuer: Alabama Supreme Court
Date: August 3, 2007

REL: 08/03/07
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
SPECIAL TERM, 2007
____________________
1060506
____________________
Vulcan Materials Company
v.
Alabama Insurance Guaranty Association et al.
Appeal from Jefferson Circuit Court 
(CV-06-4646)
SEE, Justice.
Facts and Procedural History
At one time, Vulcan Materials Company manufactured and
sold perchloroethylene (sometimes referred to as "perc"), a
chemical used in the dry-cleaning process.  In 1998, two
municipal entities in California, the City of Modesto and the
1060506
2
City of Modesto Redevelopment Agency, filed separate actions
against Vulcan in state court in San Francisco, California,
alleging 
that 
Vulcan 
was 
responsible 
for 
groundwater
contamination and other property damage in over 50 locations
around Modesto, California, caused by perchloroethylene.
Those actions were consolidated and are referred to as the
"Modesto litigation."
In January 2005, while the Modesto litigation was
progressing, 
Transport 
Insurance 
Company 
("Transport"), 
one 
of
the companies that provides Vulcan's insurance, brought an
insurance-coverage declaratory-judgment action against Vulcan
in state court in Los Angeles, California.  Transport sought
a judgment declaring that it had no duty to defend or
indemnify Vulcan regarding the Modesto litigation.  In
response to the California state court's request for
information 
in 
Transport's 
declaratory-judgment 
action, 
Vulcan
represented the following:
"It is likely that resolution of this insurance
coverage case will require detailed knowledge of the
underlying Modesto [litigation].  In fact, this
insurance case may require factual investigations
involving 
expert 
testimony 
about 
numerous
environmental contamination locations."
1060506
3
Vulcan also indicated that Transport's action "involves or is
likely to involve ... coordination with [the Modesto
litigation]."  
The Modesto litigation was divided into different phases.
The first phase, covering just a few of the "more than fifty"
allegedly contaminated sites, went to trial.  In June 2006,
the jury awarded compensatory damages totaling over $3 million
against Vulcan and other defendants and awarded punitive
damages of $100 million against Vulcan.  The court later
remitted this punitive-damages award to $7,254,115.  The later
phases of the Modesto litigation remain pending.
Soon after the verdict was entered in the first phase of
the Modesto litigation, two more of Vulcan's insurers, First
State Insurance Company ("First State") and Nutmeg Insurance
Company 
("Nutmeg"), 
filed 
a 
second 
insurance-coverage
declaratory-judgment action ("the First State action").  They,
too, sought a judgment declaring whether they had a duty to
defend or indemnify Vulcan in the Modesto litigation. 
On August 10, 2006, Vulcan brought a third insurance-
coverage action relating to the Modesto litigation.  Vulcan
brought this action in state court in Alabama, the state in
1060506
4
which Vulcan has its principal place of business.  With one
exception, the insurance companies named by Vulcan in its
Alabama action all had been named previously as parties to the
First State action pending in California.  The one exception
is the Alabama Insurance Guaranty Association ("AIGA").  AIGA
is a "nonprofit unincorporated legal entity" created "to
provide a mechanism for the payment of covered claims under
certain insurance policies, to avoid excessive delay in
payments and to avoid financial loss to claimants or
policyholders because of the insolvency of an insurer ...." §§
27-42-6 and 27-42-2, Ala. Code 1975.  Under Alabama law, AIGA
is deemed to be Vulcan's insurer under policies issued by
insolvent insurers.  Other than AIGA's role in assisting
Vulcan in the event of the insolvency of any of its insurance
companies, AIGA has no role in the Modesto litigation.  
The same claims are at issue in both the First State
action in California and this declaratory-judgment action
brought by Vulcan in Alabama.  In its Alabama insurance-
coverage action, Vulcan seeks a declaratory judgment with
respect to the Modesto litigation, but also with respect to an
action pending in the Virgin Islands and concerning a site
1060506
5
there that is allegedly contaminated by perchloroethylene
("the Virgin Islands litigation").  Vulcan also seeks in this
Alabama 
action 
declaratory 
relief 
with 
respect 
to
"[a]dditional claims similar to those asserted against Vulcan
in the Modesto Litigation and the Virgin Islands Litigation"
that "may continue to be asserted against Vulcan in the
future."  First State and Nutmeg have amended their complaint
in the First State action in California to encompass claims
against Vulcan involving perchloroethylene "from sites [not
only] in the city of Modesto, California, [but also in] the
Virgin Islands, and other similar claims and lawsuits related
to other sites that have been asserted or may in the future be
asserted against Vulcan."
The day after Vulcan filed its Alabama action, it moved
to stay or dismiss the First State action pending in
California, on the ground of forum non conveniens.  The
California court denied Vulcan's motion.  As the trial court
below noted, "Vulcan did not appeal the California court's
ruling, and the time for filing an appeal has expired." 
On October 2, 2006, defendants First State, Nutmeg,
American Home Assurance Company, Granite State Insurance
1060506
6
Company, Lexington Insurance Company, and National Union Fire
Insurance Company of Pittsburgh, Pa., jointly moved the trial
court in Alabama to dismiss Vulcan's complaint on the basis of
forum non conveniens under Ala. Code 1975, § 6-5-430, or,
alternatively, to stay the case.  The Alabama trial court
dismissed the case as to all defendants on the ground of forum
non conveniens.  
Vulcan now appeals the Alabama trial court's decision,
arguing that the requirements for dismissal were not met and
that the principles of comity do not provide a basis upon
which this action should be stayed.
Issue
The issue is whether the trial court erred in granting
the defendants' motion to dismiss the case on the ground of
forum non conveniens.
Standard of Review
"The prevailing question of whether a case should be
entertained or dismissed 'depends largely upon the facts of
the particular case and is in the sound discretion of the
trial judge.'" Ex parte Auto-Owners Ins. Co., 548 So. 2d 1029,
1032 (Ala. 1989) (quoting Restatement (Second) of Conflict of
1060506
7
Laws § 84 at 251 (1971)).  "Whether to dismiss an action based
on the doctrine of forum non conveniens is within the sound
discretion of the trial court, and its ruling on that issue
will not be reversed absent an abuse of that discretion." Ex
parte United Bhd. of Carpenters & Joiners of America, AFL-CIO,
688 So. 2d 246, 249 (Ala. 1997) (citing Ex parte Preston Hood
Chevrolet, Inc., 638 So. 2d 842 (Ala. 1994)).
Analysis
Section 6-5-430, Ala. Code 1975, provides:
"Whenever, either by common law or the statutes
of another state or of the United States, a claim,
either upon contract or in tort has arisen outside
this state against any person or corporation, such
claim may be enforceable in the courts of this state
in any county in which jurisdiction of the defendant
can be legally obtained in the same manner in which
jurisdiction could have been obtained if the claim
had arisen in this state; provided, however, the
courts of this state shall apply the doctrine of
forum non conveniens in determining whether to
accept or decline to take jurisdiction of an action
based upon such claim originating outside this
state; and provided further that, if upon motion of
any defendant it is shown that there exists a more
appropriate forum outside this state, taking into
account the location where the acts giving rise to
the action occurred, the convenience of the parties
and witnesses, and the interests of justice, the
court must dismiss the action without prejudice.
..."
1060506
8
Under this statute, the trial court "shall apply the doctrine
of forum non conveniens" in determining whether to decline or
to take jurisdiction of an action that has arisen outside the
state so long as the movants demonstrate that the following
three conditions are met: (1) the claim upon which the present
action is based originated outside Alabama; (2) there is an
alternative forum for this claim outside Alabama; and (3) the
factors considered in determining the applicability of the
doctrine of forum non conveniens weigh in favor of dismissing
the action.
I. Origination of Vulcan's Cause of Action
A cause of action arises where the "'defendant's wrongful
act was done.'"  Ex parte Fields, 432 So. 2d 1290 (Ala. 1983)
(quoting 92 C.J.S. Venue § 80, p. 776).  In the present case,
the trial court determined that the "alleged wrongful acts ...
are the insurance defendants' alleged failure to defend and
indemnify Vulcan in regards to the perc-related litigation
primarily in California and also in other jurisdictions
outside of Alabama."  We do not disagree with the trial
court's conclusion that Vulcan's claims in this action arose
1060506
In Ford, Paul Kilgore, a Macon County resident,
1
contracted with Carl Hubbard Chevrolet, Inc., a Delaware
corporation with its principal place of business in Lee
County, Alabama, to purchase an automobile.  Kilgore had
previously 
leased 
an 
automobile 
from 
a dealership 
in 
Maryland.
Hubbard agreed to accept the equity built up in the Maryland
automobile.  The dispute between the parties was over the
amount of equity, and Kilgore sued, alleging conversion,
fraud, and breach of contract.
9
out of the insurers' alleged failure to defend and indemnify
Vulcan in the perc-related litigation. 
"The determination of the situs of the claim -– either
inside or outside the State of Alabama –- is a factual
determination left to the sound discretion of the trial
court." Ex parte Ford Motor Credit Co., 561 So. 2d 244, 246
(Ala. Civ. App. 1990).    Vulcan argues that the claim upon
1
which the present action is based actually originated within
Alabama.  Vulcan points out that Alabama is where Vulcan
purchased the insurance policies, where Vulcan paid the
premiums on the insurance policies, where "the agent or broker
through whom the policies were purchased was located," and
where Vulcan tendered its claims for coverage.  
Vulcan cites Ex parte Employers Insurance of Wausau, 590
So. 2d 888 (Ala. 1991), as support for its contention that
Vulcan's claims in this case arose in Alabama.  In Wasau, a
1060506
10
lawsuit was pending in California regarding insurance coverage
of claims against a corporation.  Shareholders of the
corporation brought an action in an Alabama state court
seeking a declaration of coverage.  This Court held that the
trial court did not err in denying the insurance companies'
motion for a dismissal on the basis of forum non conveniens.
Wasau, however, is distinguishable from the present case
because in Wasau the coverage claims of the corporation in
California and of the corporation's shareholders in Alabama
were "independent" and "altogether separate" from each other.
590 So. 2d at 892-93.  In the present case, the insurance-
coverage action brought by Vulcan in Alabama involves nearly
identical parties and covers issues identical to the First
State action pending in California.
The act giving rise to Vulcan's declaratory-judgment
action against the various insurance companies is not the
initiation of the contractual relationship between Vulcan and
its insurers, which occurred in Alabama; instead, it is the
alleged breach of that contractual relationship -- the
insurance companies' refusal to defend and indemnify Vulcan
from "claims asserting property damage allegedly caused [by
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11
perc]."  There is no dispute that the various perc-related
litigation arose outside Alabama, and that litigation is the
very litigation over which Vulcan is bringing this action
against the companies that insure it. Stickland v. Trion
Group, Inc., 463 F. Supp. 2d 921, 925 (E.D. Wis. 2006) ("[A]
breach of contract occurs where the contract is to be
performed.").  In Ex parte Kia Motors America, Inc., 881 So.
2d 396 (Ala. 2003), Marilyn Jeffreys was killed in an
automobile accident that occurred in Jackson County, Florida.
Jeffreys's estate sued Kia Motors America, Inc., Emerald Auto
Sales, Inc., and others (collectively "Emerald"), in Houston
County, Alabama, asserting a product-liability claim, breach
of warranty, and negligence.  Emerald moved to dismiss the
action on the basis of forum non conveniens.  The trial court
denied the motion, and Emerald petitioned this Court for the
writ of mandamus.  We granted Emerald's petition, holding that
the doctrine of forum non conveniens applied in that case
because "the breach-of-warranty claim in the present action is
a claim of 'damages for injury to the person in the case of
consumer goods,' the cause of action for which occurred in
Florida.  The claim, then accrued in Florida.  Accordingly, we
1060506
The author of this opinion dissented in Kia Motors on the
2
ground that 
although 
a 
breach-of-warranty 
claim 
relating 
to 
an
automobile accrues when the breach occurs, it arises where the
manufacturer actually warranted that the automobile was fit
for its intended purpose.  Thus, the dissent reasoned, "[t]he
act giving rise to the breach-of-warranty claim against
Emerald was Emerald's delivery of an allegedly defective car
at its dealership in Houston County, not the accident in
Florida.  Therefore, [the dissent concluded,] the breach-of-
warranty claim against Emerald arose in Houston County, even
if it did not accrue, for purposes of the statute of
limitations, until the date of the Florida accident." Kia
Motors, 881 So. 2d at 402-03 (See, J., dissenting). 
 
The author's dissent in Kia Motors is not inconsistent
with the Court's reliance here on that opinion for the
proposition that a breach-of-contract claim arises where the
contract was breached.  In the case before us, we are dealing
not with a breach-of-warranty claim with respect to a
defective product, as was the case in Kia Motors, but with a
breach-of-contract claim arising out of the insurance
companies' failure to defend Vulcan.  Stanfield v. DeStefano,
300 So. 2d 712, 713 (Fla. Dist. Ct. App. 1974) ("In the case
of an action for breach of warranty, the issue [of venue] is
controlled not by the place where the contract ... was entered
into, but rather where the breach took place -- that is, where
(and when) the goods in alleged breach of the warranty were
delivered.").  On the other hand, in a breach-of-contract
claim 
alleging 
failure 
to 
perform 
contractual 
obligations 
that
12
[find] it is a 'claim [that] has arisen outside this state.'"
881 So. 2d at 401 (quoting Ala. Code 1975, § 6-5-430).  Thus,
under the law of Alabama, a breach-of-contract claim, like the
claim between Vulcan and its insurance companies, arises where
the contract was breached, rather than where the contract was
entered into.    We conclude that the trial court did not err
2
1060506
arise, the breach is the failure to perform those obligations.
Alpha Claude Neon Corp. v. Pennsylvania Distilling Co., 325
Pa. 140, 142, 188 A. 825, 826 (1936) (a cause of action
"'arises when that is not done which should have been done'").
13
in determining that the defendants satisfied the first element
of forum non conveniens as set forth in § 6-5-430, Ala. Code
1975.
II. Availability of Alternative Forum for this Action
Section 6-5-430 also requires the existence of an
alternative forum for the case before the case can be
dismissed on the ground of forum non conveniens.  The
defendants appear to have satisfied this element as well.
There is currently pending in California a declaratory-
judgment action –- the First State action –- involving the
same insurance-coverage issues concerning the same perc-
related property damage in the same locations as those
insurance-coverage issues presented in this case.  Moreover,
the same parties are involved in both actions, with only one
exception.  As noted earlier, AIGA, a named defendant in the
insurance-coverage action brought by Vulcan in Alabama, is not
a party to the First State action currently pending in
California.  Vulcan contends that AIGA could not be sued in
California 
because 
California 
does 
not 
have 
personal
1060506
14
jurisdiction over AIGA; thus, Vulcan claims, the second
condition for the application of the doctrine of forum non
conveniens is not met because there is no alternative forum
for Vulcan's action against AIGA.
We disagree.  AIGA is a "nonprofit unincorporated legal
entity" created "to provide a mechanism for the payment of
covered claims under certain insurance policies, to avoid
excessive delay in payments and to avoid financial loss to
claimants or policyholders because of the insolvency of an
insurer ...." §§ 27-42-6 and 27-42-2, Ala. Code 1975.  AIGA
has no connection to Vulcan or to the actions pending against
Vulcan except to the extent that AIGA is "deemed the insurer
under policies issued by certain insolvent insurers" of
Vulcan.  Even assuming that Vulcan is entitled to sue AIGA,
and that AIGA may be sued only in Alabama, AIGA need not be
sued at this time or in this action.  We agree with the trial
court that the "addition of the AIGA in this case is
immaterial" and that California is an adequate alternative
forum for this action.  Thus, we cannot agree that the trial
court exceeded its discretion by finding that the second
1060506
15
condition for a dismissal based on forum non conveniens was
met.
III. Forum Non Conveniens Factors
In addition to the factors enumerated in § 6-5-430,
including "the location where the acts giving rise to the
action occurred," "the convenience of the parties and
witnesses," and "the interests of justice," the court should
also "'consider the location of the evidence and any other
relevant matter in order to assess the degree of actual
difficulty and hardship that will result to the defendant in
litigating the case in the forum chosen by the plaintiff.'"
Ex parte General Nutrition Corp., 855 So. 2d 475, 479 (Ala.
2003) (quoting Ex parte Preston Hood Chevrolet, Inc., 638 So.
2d at 845).  Also relevant is 
"the relative ease of access to sources of proof,
the location of the evidence, the availability of
compulsory process for the attendance of unwilling
witnesses, the cost of obtaining the attendance of
willing witnesses, the possibility of a view of the
premises, if a view would be appropriate to the
action, and any other matter in order to assess the
degree of actual difficulty and hardship that would
result to the defendant in litigating the case in
the forum chosen by the plaintiff."  
Ex parte Ben-Acadia, Ltd., 566 So. 2d 486, 488 (Ala. 1990). 
1060506
16
In applying these factors, the trial court noted  that
"[t]he catalyst of the pending coverage actions is the Modesto
Litigation 
involving 
alleged 
contamination 
of 
approximately 
50
sites in California. ...  Up until August 10, 2006 when Vulcan
filed its complaint in this Court, virtually all material
facts in this coverage action occurred in California."  On the
other hand, no perchloroethylene litigation has been commenced
in Alabama.  In fact, no perchloroethylene contamination has
been identified in Alabama.  Thus, we agree with the trial
court that the acts giving rise to Vulcan's claims in this
insurance-coverage action occurred outside Alabama.  
California also appears to be a more convenient forum
with respect to the evidence at issue in the insurance-
coverage dispute.  Vulcan itself admitted as much when it
stated:
"It is likely that resolution of this insurance
coverage case will require detailed knowledge of the
underlying Modesto [litigation].  In fact, this
insurance case may require factual investigations
involving 
expert 
testimony 
about 
numerous
environmental contamination locations."
Vulcan indicated that Transport's insurance-coverage action
"involves or is likely to involve ... coordination with [the
Modesto 
litigation]." 
 
The 
witnesses 
and 
sites 
of
1060506
17
contamination located in California will also play an
important role in determining the obligations of the insurance
companies.  Whether the various policies apply to the
perchloroethylene 
litigation 
will 
depend 
on 
how 
the
contamination occurred, why it occurred, and when it occurred
–- all questions the answers to which will depend on evidence
gathered largely from the allegedly contaminated sites in
California and elsewhere.
We reiterate that insurance-coverage actions involving
substantially the same parties, regarding the same policies,
and concerning the same underlying litigation are currently
pending in California.  By affirming the trial court's order
granting the defendants' motion for a dismissal based on forum
non conveniens, we are furthering the interests of justice by
avoiding a duplicative action in Alabama.  Permitting this
case to go forward in Alabama, while a case identical in all
material 
respects 
is 
pending 
in 
California, 
would
unnecessarily and unjustifiably burden the parties and the
respective judicial systems.
Conclusion
1060506
18
Based on the foregoing, we affirm the trial court's order
of dismissal.
AFFIRMED.
Cobb, C.J., and Woodall, Smith, and Parker, JJ., concur.