Nationwide Retirement Solutions, Inc. v. PEBCO,Inc. ( 2014 )

REL:08/29/2014
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SUPREME COURT OF ALABAMA
SPECIAL TERM, 2014
____________________
1120806
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Nationwide Retirement Solutions, Inc.
v.
PEBCO, Inc.
Appeal from Jefferson Circuit Court
(CV-07-4052)
On Application for Rehearing
MOORE, Chief Justice.
PEBCO, Inc., has filed an application for rehearing,
asking us to review this Court's opinion of March 28, 2014, in
1120806
which we reversed an award of approximately $1.1 million to
PEBCO as indemnification for attorney fees and expenses PEBCO
incurred in defending a class action. The class action
resulted from PEBCO's receipt of "sponsorship payments," not
disclosed to regulators, for appointing Nationwide Retirement
Solutions, Inc. ("NRS"), to manage the Alabama Public
Employees Deferred Compensation Plan ("the Plan"). The class-
action plaintiffs claimed that these payments reduced the rate
of return on the Plan, thus injuring them financially. NRS,
Nationwide Life Insurance Company, and PEBCO settled with the
plaintiffs for $16 million, which amount was largely funded by
NRS. In the settlement PEBCO was allowed to retain $12 million
in sponsorship payments. The trial court severed a cross-claim
by PEBCO requesting indemnification for its expenses incurred
in defending the class action. The trial court awarded PEBCO
indemnification from NRS, and we reversed its judgment.
Analysis
An application for rehearing "must state with
particularity the points of law or the facts the applicant
believes the court overlooked or misapprehended." Rule 40(b),
Ala. R. App. P. A party cannot raise an issue on rehearing
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that was not raised in the brief the appellant originally
submitted to the Court. See SouthTrust Bank v. Copeland One,
L.L.C., 886 So. 2d 38, 43 (Ala. 2003) (opinion on application
for rehearing) ("Matters not argued in an appellant's brief on
original submission cannot be raised for the first time on
application for rehearing."). Therefore, only arguments that
both were raised in the original brief submitted to the Court
and were "overlooked or misapprehended" by the Court may be
presented in an application for rehearing.
In our opinion on original submission we stated:
"Alabama does not permit a party to be indemnified
for defending against claims premised on its own
allegedly wrongful actions. In Jack Smith
Enterprises v. Northside Packing Co., 569 So. 2d 745
(Ala. Civ. App. 1990), the Court of Civil Appeals
noted that 'there is considerable authority holding
that an indemnitee is precluded from recovering
attorney fees where the indemnitee has been required
to defend accusations which encompass his own
separate wrongful acts.' 569 So. 2d at 746. The
Court of Civil Appeals then concluded that
'indemnification, including attorney fees, is
allowed where one is defending claims predicated
solely upon another defendant's negligence; however,
where one is defending for his own benefit, an award
of attorney fees will not be allowed.' 569 So. 2d at
746. This Court subsequently adopted that reasoning.
Stone Bldg. Co. v. Star Elec. Contractors, Inc., 796
So. 2d 1076, 1092 (Ala. 2000).
"The class-action claims unquestionably
encompassed PEBCO's own allegedly wrongful acts.
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PEBCO defended those acts for its own benefit.
Therefore, it may not now seek indemnification for
its costs of defense in the class action."
Nationwide Retirement Solutions, Inc. v. PEBCO, Inc., [Ms.
1120806, March 28, 2014] ___ So. 3d ___, ___ (Ala. 2014)
(footnote omitted).
PEBCO argues on rehearing, as it did in its original
brief, that we should adopt the reasoning of Delaware and
Nevada1 that a showing of actual, as opposed to alleged,
wrongdoing by the indemnitee should be required to deny
indemnification. That position, however, is not the law of
this State. Our opinion on original submission discussed this
question and resolved it on the basis of Alabama precedent.
Thus, the issue was not overlooked or misapprehended.
Rehearing is not an opportunity to revisit matters already
fully addressed and decided on original submission. SouthTrust
Bank, supra. Otherwise, a rehearing would be equivalent to
hearing the appeal again.
In any event, if we were inclined to revisit that
precedent, this case would not be an appropriate vehicle to do
1
Pike Creek Chiropractic v. Robinson, 637 A.2d 418 (Del.
1994); Piedmont Equip. Co. v. Eberhard Mfg. Co., 99 Nev. 523,
665 P.2d 256 (1983).
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so. The claims against PEBCO in the class action were not
trivial or pro forma but arose directly out of PEBCO's
solicitation of special payments from NRS and its deliberate
concealment of those payments from the State Personnel Board
by setting them out in a separate agreement known only to NRS
and PEBCO. Were PEBCO an obviously innocent party swept into
a lawsuit arising solely from NRS's wrongdoing, it might have
an arguable case for indemnification of its expenses in
litigating that lawsuit. But that is not the case.
PEBCO's central argument on rehearing is that it was
innocent of wrongdoing because it had no inkling that the
sponsorship payments would reduce the participants' rate of
return on their contributions to the Plan. Although PEBCO made
this point in the fact section of its original brief to refute
factual statements in NRS's brief, PEBCO did not mention or
rely on this assertion in the argument section of its brief to
demonstrate that NRS had not used its "best efforts" to ensure
that the Plan met the legal requirements for such plans.2
2
See Birmingham News Co. v. Horn, 901 So. 2d 27, 79 (Ala.
2004) (opinion on application for rehearing) (noting that a
statement in the fact section of the brief "would have
operative effect as an argument advanced in the brief only to
the extent that it was properly brought forward to the
argument section").
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PEBCO's only assertion in its original brief about the
inadequacy of NRS's advice was that NRS "has never advised
ASEA [the Alabama State Employees Association] or PEBCO of any
potential exposure related to maintaining the terms of the
Administrative Services Agreement in a confidential fashion."
Because PEBCO itself wanted that agreement to be confidential,
we did not, on original submission, consider this argument
persuasive as a ground for holding that NRS had not used its
"best efforts."
PEBCO now argues for the first time on rehearing that NRS
alternatively failed to use its "best efforts" because it
concealed from PEBCO the fact that the sponsorship payments
would reduce Plan assets. Just as an appellant may not raise
an argument for the first time in a reply brief, Giambrone v.
Douglas, 874 So. 2d 1046, 1057 (Ala. 2003), neither may it
make a new argument on rehearing. We cannot be held in error
for overlooking or misapprehending points of law or facts that
were not argued on original submission. See Birmingham News
Co. v. Horn, 901 So. 2d 27, 79 (Ala. 2004) (noting that if an
"argument was never presented on original submission, we will
not consider it on rehearing"). Additionally, any attempt by
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PEBCO to fasten blame for the class action on NRS is belied by
the settlement agreement itself, in which both NRS and PEBCO
stipulated that neither was admitting to any wrongdoing.
Conclusion
Because PEBCO's application for rehearing (1) repeats
arguments offered on original submission and addressed in our
opinion on original submission or (2) makes arguments for the
first time on rehearing, it presents no ground for
reconsidering our original judgment.
APPLICATION OVERRULED.
Stuart, Bolin, Parker, Murdock, and Wise, JJ., concur.
Shaw, J., concurs in the result.
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