Opinion ID: 70442
Heading Depth: 3
Heading Rank: 3

Heading: The Conflict

Text: 27 Federal admiralty law neither authorizes nor forecloses a third party's right to directly sue an insurance company. Steelmet, Inc. v. Caribe Towing Corp., 779 F.2d 1485, 1487 (11th Cir.1986), modifying 747 F.2d 689 (1984). A state may, however, create a direct action against a maritime insurer, at least where the state action is not in conflict with any feature of substantive admiralty law or any remedy peculiar to admiralty jurisdiction. Steelmet, 779 F.2d at 1487; see Wilburn Boat Co. v. Fireman's Fund Ins. Co., 348 U.S. 310, 320-21, 75 S.Ct. 368, 374, 99 L.Ed. 337 (1955) (in the absence of a controlling federal admiralty principle, state law can be applied in an admiralty case). The conflict in the present case lies not with federal admiralty law, but with whether the English bankruptcy statutes or the Alabama direct action statutes apply. 28 We recognize that characterizing direct action statutes as either procedural or substantive is problematic, particularly in the context of admiralty jurisdiction. 13 See State Trading Corp. of India v. Assuranceforeningen Skuld, 921 F.2d 409, 414-15 (2d Cir.1990). However, in order to promote orderly administration of justice and the integrity of courts' local rules, some laws are deemed procedural and not subject to choice of law rules. Id. at 416; see also Restatement (Second) of Conflict of Laws Sec. 122 cmt. a (1971) (discussing a state's right to apply its own procedural law). Therefore, [b]efore engaging in choice of law analysis, we first address [the] argument that [Alabama's] direct action statute is procedural and therefore not subject to choice of law rules. State Trading, 921 F.2d at 414. 29 In Morewitz I, we described direct action statutes as remedial in character, rather than substantive. 896 F.2d at 499 (quotations omitted); see also id. at 501 (Tjoflat, J., concurring) (distinguishing that rather than mandating a direct action provision in every insurance contract, the English bankruptcy statute itself provided the right of action). We also noted that: 30 Although it seems clear that English law would govern in construing the existence and amount of defendant's liability under the marine insurance contract, it is not as clear, when the suit is being brought in Alabama, that English procedural law would apply. The cases we have reviewed, although not addressing the choice of law issue directly, indicate that the forum state's law may be the applicable law for purposes of applying any direct action statute. See e.g., Maryland Casualty Co. v. Cushing, 347 U.S. 409, 74 S.Ct. 608, 98 L.Ed. 806 (1954); Steelmet, Inc. v. Caribe Towing Corp., 779 F.2d 1485 (11th Cir.1986), modifying 747 F.2d 689 (1984). 31 896 F.2d at 499 n. 5 (additional citations omitted). 32 Moreover, in Macey v. Crum, 249 Ala. 249, 30 So.2d 666 (1947), the Supreme Court of Alabama held that its direct action statute merely enables the person suffering the initial damages, out of which grows the loss to the insured, to acquire a lien against the loss and the right to damages or indemnity arising under the policy, and to enforce it in his own name. Id. 30 So.2d at 668 (quotation omitted); see also Fleming v. Pan American Fire & Cas. Co. 495 F.2d 535, 539 (5th Cir.1974) 14 (stating that Alabama's direct action statutes applied in a diversity case without regard to whether the insurance contract was made in Alabama or whether the named parties to the contract of insurance were residents or nonresidents of Alabama); but see State Trading, 921 F.2d at 416 (concluding that the application of Connecticut's direct action statute would be inappropriate under the circumstances). 33 In summary, the Alabama direct action statutes mandate a direct action provision into every insurance contract and create a method of executing upon the proceeds of the insurance policy. Accordingly, we look to Alabama law in determining the manner in which this suit by Morewitz, the judgment creditor, against West of England, the judgment debtor's insurer, should proceed.