Ex parte Larry Webber. , 157 So. 3d 887 ( 2014 )

REL: 06/27/2014
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2013-2014
____________________
1121443
____________________
Ex parte Larry Webber
PETITION FOR WRIT OF MANDAMUS
(In re: Donald Sherrod et al.
v.
Larry Webber)
(Pickens Circuit Court, CV-13-900026)
MURDOCK, Justice.
Larry Webber petitions this Court for a writ of mandamus
directing the Pickens Circuit Court to vacate its August 19,
2013, order denying Webber's motion to dismiss an action filed
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against him by Donald Sherrod, Helen Sherrod, and State Farm
Fire and Casualty Company ("State Farm"). We grant the
petition.
I. Facts and Procedural History
In June 2011, the Sherrods hired Webber to paint the
interior of their house. The Sherrods and State Farm allege
that Webber and his employees did not cover objects in the
house before painting and that overspraying damaged the walls,
floors, countertops, fixtures, appliances, and a number of
items of personal property in the house.
On July 12, 2011, Donald Sherrod sued Webber in the
small-claims court in Pickens County ("the small-claims-court
action"). It is undisputed that Sherrod's wife Helen was not
a party to the small-claims-court action. The complaint
alleged that Webber owed Sherrod $3,000 because the
"[p]ainting on the inside of my home was not completed [and
the] overspray paint all over the inside of the house" had
caused damage.
Following a bench trial, the district court -- the
small-claims court -- entered an order on November 8, 2011,
which recounted that the complaint alleged that "the painting
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on the inside of [the Sherrods'] home was not completed, and
that [Webber] oversprayed paint such that the inside of the
house and other items were damaged and had to be cleaned."
The district court concluded that Donald Sherrod "is entitled
to recover from [Webber] for the damage caused to his home due
to overspraying of paint in the amount of $3,000, plus cost in
the amount of $136.09."
Webber paid the judgment amount of $3,136.09 on
November 21, 2011, and the district court entered an order
acknowledging satisfaction of the judgment on November 28,
2011. 1
1
The Sherrods and State Farm note in their brief that
copies of the complaint in the small-claims-court action, the
notation that Webber paid the judgment, and the order
acknowledging satisfaction of the judgment that are attached
to Webber's mandamus petition were not attached to Webber's
motion to dismiss the underlying action. Thus, those items
were not before the circuit court. "On mandamus review, this
Court has consistently stated that we will not consider
materials that have not been before the trial court."
Ex parte East Alabama Med. Ctr., 109 So. 3d 1114, 1118 n.1
(Ala. 2012). Webber did attach to his motion to dismiss a
copy of the district court's order entering a judgment in
favor of Donald Sherrod for $3,136.09. That order
substantially set out the allegations in the complaint in the
small-claims-court action. Moreover, in his motion to
dismiss, Webber stated that he had paid the judgment rendered
in the small-claims-court action. In their brief to this
Court, the Sherrods and State Farm admit that "[t]he small
claims judgment was satisfied, but Webber presented nothing to
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In an affidavit filed in the present action, Helen
Sherrod stated in part that "[m]y husband sued Larry Webber in
Small Claims Court. I was not a party to this Small Claims
Court case. After my husband sued Mr. Webber, we made a claim
with our homeowner's insurance company, State Farm Fire &
Casualty Company." In their response to Webber's motion to
dismiss this action, the Sherrods and State Farm stated that,
"[i]n December 2011, after investigating the Sherrods' claim,
State Farm paid $41,996.19 to the Sherrods." In her
affidavit, Helen Sherrod stated that State Farm's payment was
"for the damage[] to the flooring, walls and interior of the
home. State Farm did not pay us for the damage[] to any of
the personal property because the damage[] to the personal
property [was] not covered by our policy." 2
the trial court to indicate when or how it was satisfied."
Sherrods and State Farm's brief, p. 2. The Sherrods and State
Farm do not dispute the authenticity or veracity of the
documents submitted to this Court, nor do they contend that
the exclusion of those documents from our consideration would
affect our disposition of this petition. They merely object
that three of those documents were not submitted to the
circuit court in the present action. They are correct, but
the supplemental documents only confirm information that was
provided to the circuit court.
2
A copy of the insurance contract between the Sherrods and
State Farm was not included in the materials submitted for our
review.
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On March 25, 2013, the Sherrods and State Farm filed an
action in the Pickens Circuit Court against Webber ("the
circuit-court action"). The complaint in the circuit-court
action stated:
"1. Plaintiffs, Helen Sherrod and Donald Sherrod,
hired [Webber] to perform certain painting work on
their residence in Pickensville, Alabama.
"2. On or about June 25, 2011, the residence of
Helen and Donald Sherrod, and their contents and
other personal property located in such residence,
[were] damaged extensively due to paint
overspraying, negligence, and/or poor workmanship
committed by [Webber].
"3. As a proximate consequence of [Webber's] said
conduct, the residence, real property and personal
property of plaintiffs, Helen Sherrod and Donald
Sherrod, [were] rendered damaged and greatly
depreciated in value.
"4. Plaintiff, State Farm Fire and Casualty Company,
is subrogated in part to the rights of Helen Sherrod
and Donald Sherrod against [Webber] on account of
the matters set forth above.
"WHEREFORE, [the Sherrods and State Farm] demand
judgment in their favor and against [Webber] as
follows: in favor of the plaintiffs, Helen Sherrod
and Donald Sherrod, and against [Webber] in the
amount of $35,000.00 plus interest, and in favor of
plaintiff, State [Farm], and against [Webber] in the
amount of $41,996.19, plus interest, plus the costs
accruing in this action."
On May 24, 2013, Webber filed a motion to dismiss the
complaint, asserting that the action was barred by the
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doctrine of res judicata and the prohibition against double
recovery. On June 14, 2013, the Sherrods filed a response to
the motion to dismiss in which they argued that Helen Sherrod
owned an undivided one-half interest in the personal property
in the Sherrods' residence, that she was not a party to the
small-claims-court action, and that she did not recover
anything herself in that action. On June 21, 2013, the
Sherrods and State Farm filed a second response to the motion
to dismiss in which they argued that Helen Sherrod and State
Farm were not parties to the small-claims-court action, that
there was not "substantial identity of the parties" between
the two actions, and that the small-claims court was not a
court of competent jurisdiction, for purposes of res judicata.
On June 25, 2013, Webber filed a reply to the the Sherrods and
State Farm's response to his motion to dismiss. In that
reply, Webber noted that, as a subrogee, State Farm "steps
into the shoes of its subrogor and that [a] subrogee only gets
those rights that its subrogor has." On June 27, 2013, the
Sherrods and State Farm filed a "Supplemental Response" to the
motion to dismiss in which they argued that Webber's motion
was procedurally flawed because, they said, he should have
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raised the defenses of res judicata and double recovery in a
motion for a summary judgment rather than in a motion to
dismiss.
On August 19, 2013, the circuit court entered an order
denying the motion to dismiss without explaining its reasons.
This petition followed.
II. Standard of Review
In Lloyd Noland Foundation, Inc. v. HealthSouth Corp.,
979 So. 2d 784, 792 (Ala. 2007), we observed:
"Although HealthSouth's motion addressing its
defenses of res judicata and collateral estoppel was
actually framed as a 'motion to dismiss,' the motion
should have been treated as one seeking a summary
judgment because the face of the complaint did not
reference the prior litigation .... Furthermore, the
trial court clearly considered matters outside the
pleadings in making its determination, thus
converting the Rule 12(b)(6) motion to dismiss into
a Rule 56, Ala. R. Civ. P., summary-judgment
motion."
In this case, the complaint did not acknowledge the
existence and nature of the judgment that resulted from the
small-claims-court action. Instead, Webber submitted a copy
of that judgment with his motion to dismiss. The circuit
court was due to consider that attachment, thus effectively
converting Webber's motion to dismiss to a motion for a
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summary judgment. See, e.g., Graveman v. Wind Drift Owners'
Ass'n, Inc., 607 So. 2d 199, 202 (Ala. 1992) (stating that
conversion of a motion to dismiss to a motion for a summary
judgment "is proper where, as here, the parties, in support
of, or in opposition to, the motion, file matters outside the
pleadings and these matters are not excluded by the court").
A petition for a writ of mandamus is an appropriate
method by which to seek this Court's review of the denial of
a motion to dismiss or for a summary judgment predicated on
the doctrine of res judicata. Ex parte LCS Inc., 12 So. 3d
55, 56 (Ala. 2008) (citing Ex parte Sears, Roebuck & Co., 895
So. 2d 265 (Ala. 2004)). See also Ex parte Jefferson Cnty.,
656 So. 2d 382 (Ala. 1995).
"The standard governing our review of an issue
presented in a petition for the writ of mandamus is
well established:
"'[M]andamus is a drastic and extraordinary
writ to be issued only where there is (1)
a clear legal right in the petitioner to
the order sought; (2) an imperative duty
upon the respondent to perform, accompanied
by a refusal to do so; (3) the lack of
another adequate remedy; and (4) properly
invoked jurisdiction of the court.'"
Ex parte Cupps, 782 So. 2d 772, 774-75 (Ala. 2000) (quoting
Ex parte Edgar, 543 So. 2d 682, 684 (Ala. 1989)).
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Our standard of review for a ruling on a motion for a
summary judgment is as follows:
"We review the trial court's grant or denial of
a summary-judgment motion de novo, and we use the
same standard used by the trial court to determine
whether the evidence presented to the trial court
presents a genuine issue of material fact. Bockman
v. WCH, L.L.C., 943 So. 2d 789 (Ala. 2006). Once the
summary-judgment movant shows there is no genuine
issue of material fact, the nonmovant must then
present substantial evidence creating a genuine
issue of material fact. Id. 'We review the evidence
in a light most favorable to the nonmovant.' 943 So.
2d at 795. We review questions of law de novo. Davis
v. Hanson Aggregates Southeast, Inc., 952 So. 2d 330(Ala. 2006)."
Smith v. State Farm Mut. Auto. Ins. Co., 952 So. 2d 342, 346
(Ala. 2006).
III. Analysis
Webber's primary argument is that the circuit-court
action is barred by the doctrine of res judicata.
"The elements of res judicata are '"(1) a prior
judgment on the merits, (2) rendered by a court of
competent jurisdiction, (3) with substantial
identity of the parties, and (4) with the same cause
of action presented in both actions."' Chapman
Nursing Home, Inc. v. McDonald, 985 So. 2d 914, 919
(Ala. 2007) (quoting Equity Res. Mgmt., Inc. v.
Vinson, 723 So. 2d 634, 636 (Ala. 1998))."
Greene v. Jefferson Cnty. Comm'n, 13 So. 3d 901, 910 (Ala.
2008) (emphasis added). "'If those four elements are present,
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then any claim that was, or that could have been, adjudicated
in the prior action is barred from further litigation.'"
Ex parte LCS Inc., 12 So. 3d at 57-58 (quoting Equity Res.
Mgmt., Inc. v. Vinson, 723 So. 2d 634, 636 (Ala. 1998)).
"'"Res judicata is a broad,
judicially developed doctrine,
which rests upon the ground that
public policy, and the interest
of the litigants alike, mandate
that there be an end to
litigation; that those who have
contested an issue shall be bound
by the ruling of the court; and
that issues once tried shall be
considered forever settled
between those same parties and
their privies."'"
12 So. 3d at 57 (quoting Lee L. Saad Constr. Co. v. DPF
Architects, P.C., 851 So. 2d 507, 516-17 (Ala. 2002), quoting
in turn Hughes v. Martin, 533 So. 2d 188, 190 (Ala. 1988)
(emphasis added)).
Webber's argument is straightforward. Webber notes that
Donald Sherrod filed the small-claims-court action against him
as a result of damage to property inside the Sherrods' house
allegedly caused by "overspraying" of paint by Webber while he
was painting the interior of the Sherrods' house. Donald
Sherrod won a judgment against Webber in that action, and
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Webber paid the judgment. Almost two years later, Donald
Sherrod, his wife Helen, and their homeowners' insurance
company, State Farm, filed the circuit-court action against
Webber, alleging that property inside the Sherrods' house was
damaged as a result of Webber's "overspraying" paint inside
the house. Webber argues that the same cause of action is
presented in both actions, that there was a prior judgment on
the merits by a court of competent jurisdiction, and that the
second action was filed by the same party (Donald Sherrod) and
parties with substantially the same identity (Helen Sherrod
and State Farm).
The Sherrods and State Farm do not dispute that there was
a prior judgment on the merits and that the two actions
involve the same cause of action. They also make no attempt
to contend that Donald Sherrod is not the same party who
initiated the small-claims-court action. Instead, they raise
two arguments to explain why the doctrine of res judicata
should not apply to the circuit-court action: First, they
contend that the small-claims court was not a court of
competent jurisdiction as to the claims brought in the
circuit-court action; second, they argue that neither Helen
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Sherrod nor State Farm were in privity with Donald Sherrod and
thus that there is not a substantial identity of parties
between the two actions.
A. Jurisdiction of the Small-Claims Court
Specifically, with regard to their first argument, the
Sherrods and State Farm note that, in order for an action to
be barred by the doctrine of res judicata, "'it must, among
other things, ... involve a question that could have been
litigated in the former cause or proceeding.'" Lee L. Saad
Constr. Co., 851 So. 2d at 517 (quoting Stephenson v. Bird,
168 Ala. 363, 366, 53 So. 92, 93 (1910)). The Sherrods and
State Farm argue that their claims in the circuit-court action
could not have been brought in the small-claims court because
the damages claimed by the Sherrods and by State Farm in the
circuit-court action exceed the $3,000 jurisdictional limit
for the small-claims court. See § 12-12-31(a), Ala. Code
1975. 3
3
Section 12-12-31(a), Ala. Code 1975 , provides:
"The district court shall exercise exclusive
jurisdiction over all civil actions in which the
matter in controversy, exclusive of interest and
costs, does not exceed three thousand dollars
($3,000). These actions shall be placed on a small
claims docket by each district court and shall be
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The Sherrods and State Farm's argument is misguided. A
jurisdictional limitation on damages does not affect the res
judicata effect of a judgment. "A court of competent
jurisdiction is a court with jurisdiction over the subject
matter. If a court lacks jurisdiction over a claim, then that
claim would not qualify as one that 'might have been tried' by
that court." Lloyd Noland Found., Inc., 979 So. 2d at 795(emphasis added). "'A difference in the element of damages is
not grounds for distinguishing two causes of action for res
judicata purposes.'" Chiepalich v. Coale, 36 So. 3d 1, 4
(Ala. 2009) (quoting Robinson v. Holley, 549 So. 2d 1, 2 (Ala.
1989)).
It is undisputed that the district court had jurisdiction
over Donald Sherrod's claim based on property damage caused by
overspraying of paint. The Sherrods presumably knew the
approximate amount of damage Webber had caused soon after
Webber completed the job, yet Donald Sherrod elected to file
his claim in the small-claims court, a court with limited
jurisdiction as to damages. The fact that almost two years
processed according to uniform rules of simplified
civil procedure as may be promulgated by the Supreme
Court."
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after filing that action the Sherrods decided to seek a
damages amount that exceeds the jurisdictional amount of
small-claims court for the same act does not remove the
preclusive effect of the previous judgment.
The argument posited by the Sherrods and State Farm would
have us approve of a form of "claim-splitting" between
different forums. Donald Sherrod sought and received the
maximum amount available in the small-claims court. Now the
Sherrods and State Farm seek further damages on the same
claim. A comment to § 24 of Restatement (Second) of
Judgments 4 well explains why this is not permissible:
4
Restatement (Second) of Judgments § 24 (1982) provides:
"(1) When a valid and final judgment rendered in an
action extinguishes the plaintiff's claim pursuant
to the rules of merger or bar (see §§ 18, 19), the
claim extinguished includes all rights of the
plaintiff to remedies against the defendant with
respect to all or any part of the transaction, or
series of connected transactions, out of which the
action arose.
"(2) What factual grouping constitutes a
'transaction', and what groupings constitute a
'series', are to be determined pragmatically, giving
weight to such considerations as whether the facts
are related in time, space, origin, or motivation,
whether they form a convenient trial unit, and
whether their treatment as a unit conforms to the
parties' expectations or business understanding or
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"The rule stated in this Section as to splitting a
claim is applicable although the first action is
brought in a court which has no jurisdiction to give
a judgment for more than a designated amount. When
the plaintiff brings an action in such a court and
recovers judgment for the maximum amount which the
court can award, he is precluded from thereafter
maintaining an action for the balance of his claim.
... It is assumed here that a court was available to
the plaintiff in the same system of courts -- say a
court of general jurisdiction in the same state --
where he could have sued for the entire amount. ...
The plaintiff, having voluntarily brought his action
in a court which can grant him only limited relief,
cannot insist upon maintaining another action on the
claim."
Restatement (Second) of Judgments § 24 cmt. g (1982). In
short, the jurisdictional limitation of the small-claims court
as to damages did not affect that court's "competent
jurisdiction" over the claim for res judicata purposes.
B. Virtual Representation of Helen Sherrod by Donald Sherrod
in the Small-Claims-Court Action
A question remains as to whether the small-claims-court
action and the circuit-court action share a "substantial
usage."
This Court has stated that Alabama follows "a test that
in certain respects is similar to, but which is not the same
as, the 'same transaction' test, which is found in Restatement
(Second) of Judgments and which is applied in the federal
courts." Equity Res. Mgmt., Inc., 723 So. 2d at 638. Because
the Sherrods and State Farm concede that the two actions
involve the same cause of action, the difference between the
two tests is irrelevant to the observation made above.
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identity of parties." As mentioned above, there is no dispute
in this regard with respect to Donald Sherrod; consequently,
res judicata bars his participation in the circuit-court
action. The Sherrods and State Farm maintain, however, that
neither Helen Sherrod nor State Farm can be closely identified
with Donald Sherrod for res judicata purposes.
Webber argues that Helen Sherrod shares an identity of
interest in the subject matter of the litigation with Donald
Sherrod because she is his wife, because she is a joint owner
of the property that allegedly was damaged, and because she
and her husband jointly hired Webber to perform the services
that damaged their jointly owned property. (We further note
that there is no dispute that Helen was aware of Donald's
previous action against Webber.) Under these circumstances,
there is sufficient identity of interest in the subject matter
of the litigation that Helen is bound by the results of her
husband's previous litigation.
The Sherrods and State Farm argue that as a co-owner of
the property, Helen Sherrod is entitled to a one-half share of
the damages awarded. Because she was not a party to the
small-claims-court action, the Sherrods and State Farm contend
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that Helen Sherrod can maintain a separate action to recover
the damages she incurred individually as a result of Webber's
actions. For support, the Sherrods and State Farm cite
McClurkin v. Ziebach & Webb Timber Co., 666 So. 2d 520, 522
(Ala. Civ. App. 1995), in which the Court of Civil Appeals
observed that, "[i]n the case of Abbot v. Braswell, 289 Ala.
90, 265 So. 2d 871 (1972), the Supreme Court held that where
property is owned by joint tenants, one of them alone can
maintain an action for damage[] to the property suffered
individually by that tenant."
McClurkin merely stands for the proposition that one of
two joint tenants may bring an action based on damage to
jointly owned real property suffered by that tenant without,
in all cases, having to join the other tenant as a
coplaintiff. There was no issue in McClurkin as to whether a
judgment in such an action would serve as a res judicata bar
to some future action by the prevailing party or someone with
whom the prevailing party shared a substantial identity of
interest.
This Court has explained:
"Our caselaw requires that 'there is a
substantial identity of parties in the two actions.'
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Ex parte Ford Motor Credit Co., 772 So. 2d 437, 440
(Ala. 2000). Substantial identity requires that the
'"parties be identical, sometimes referred to as the
mutuality of estoppel requirement."' Stewart v.
Brinley, 902 So. 2d 1, 10 (Ala. 2004) (quoting
McMillian v. Johnson, 878 F. Supp. 1473, 1520 (M.D.
Ala. 1995)). '"An exception is made to this
requirement for parties in privity with a party to
the prior action."' Stewart, 902 So. 2d at 10(quoting McMillian, 878 F. Supp. at 1520) (emphasis
omitted). A party is deemed to be in privity with a
party to a prior action when there is '"'an identity
of interest in the subject matter of litigation.'"'
Stewart, 902 So. 2d at 11 (quoting Hughes v. Martin,
533 So. 2d 188, 191 (Ala. 1988), quoting in turn
Issue Preclusion in Alabama, 32 Ala. L. Rev. 500,
521 (1981)).
"....
"This Court has stated: '"'"A person may be
bound by a judgment even though not a party to a
suit if one of the parties to the suit is so closely
aligned with his interests as to be his virtual
representative."'"' Gonzalez, LLC v. DiVincenti, 844
So. 2d 1196, 1203 (Ala. 2002) (quoting Green v.
Wedowee Hosp., 584 So. 2d 1309, 1315 ([Ala.] 1991),
quoting other cases)."
Greene, 13 So. 3d at 912 (emphasis added).
In Owen v. Miller, 414 So. 2d 889 (Ala. 1981), this Court
stated:
"A non-party who has an interest sufficiently close
to the matter litigated and who had an adequate
opportunity to litigate the issue in the prior
proceeding, may be bound by the earlier judgment.
Hudson v. Wright, 164 Ala. 298, 51 So. 389 (1909);
Moody v. Moody, 339 So. 2d 1030 (Ala. Civ. App.),
cert. denied, 339 So. 2d 1035 (Ala. 1976). See
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Parklane Hosiery Co. v. Shore, 439 U.S. 322, 99
S.Ct. 645, 58 L.Ed.2d 552 (1978); Blonder-Tongue
Laboratories, Inc. v. University of Illinois
Foundation, 402 U.S. 313, 91 S.Ct. 1434, 28 L.Ed.2d
788 (1971). This Court held in Mitchell v. Austin,
266 Ala. 128, 94 So. 2d 391 (1957), that persons
with mutual or successive interests in the same
property may be bound by the results of a prior
adjudication."
414 So. 2d at 891 (emphasis added).
Similarly, in Mosley v. Builders South, Inc., 41 So. 3d
806 (Ala. Civ. App. 2010), the Court of Civil Appeals held
that a corporation that had been solely owned by a divorcing
wife and husband at the time of their divorce was bound by the
divorce judgment, despite the fact that the corporation had
not been made a party to the divorce action, because the
corporation was "a nonparty who had an interest sufficiently
close to the matter litigated and who had an adequate
opportunity to litigate the issue in the [divorce action]."
41 So. 3d at 812. See also Simmons v. Simmons, 99 So. 3d 316,
321 (Ala. Civ. App. 2011) (concluding that, even if a
daughter, an alleged joint owner of a house with her mother,
had not been joined as a party to an action between her mother
and the mother's husband concerning ownership of the house,
the daughter would have been bound by the judgment in the
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action "[b]ecause [the daughter] had actual notice of [the
husband and wife's] action and an adequate opportunity to
litigate the validity of her claim to own the house jointly
with [her mother] as a joint tenant with right of
survivorship"). We also note that federal courts have held
that "[a]lthough a familial relationship need not, in and of
itself, confer privity status, it does constitute an important
factor when assessing the preclusive effects of a prior
adjudication." Jaffree v. Wallace, 837 F.2d 1461, 1467 (11th
Cir. 1988). See also Mesa Petroleum Co. v. Coniglio, 787 F.2d
1484, 1489–90 (11th Cir. 1986) (plaintiff-wife was precluded
from litigating claims her husband previously had litigated);
Cotton v. Federal Land Bank of Columbia, 676 F.2d 1368,
1369–71 (11th Cir. 1982) (plaintiff-husband was precluded from
litigating claims his wife previously had litigated); Seamon
v. Bell Tel. Co. of Pa., 576 F. Supp. 1458, 1460–61 (W.D. Pa.
1983) (plaintiff-husband was precluded from litigating claims
his wife previously had litigated), aff'd, 740 F.2d 958 (3d
Cir. 1984).
In sum, as to Helen Sherrod, all the elements of res
judicata, including the necessary substantial identity of
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parties, are present in this case. Accordingly, Helen Sherrod
is barred from filing the circuit-court action.
C. State Farm's Status
Having concluded that both Donald and Helen Sherrod are
barred by the doctrine of res judicata from filing the
circuit-court action, we are left with the question whether
State Farm also is barred by the doctrine of res judicata.
As Webber correctly observes, "[u]nder the equitable
doctrine of subrogation, 'a subrogee steps into the shoes of
its subrogor and that subrogee only gets those rights that its
subrogor has. The subrogee can have no greater rights.'"
Trott v. Brinks, Inc., 972 So. 2d 81, 87 (Ala. 2007) (quoting
Star Freight, Inc. v. Sheffield, 587 So. 2d 946, 958 n.5 (Ala.
1991)). Because State Farm's rights as a subrogee extend only
as far as the rights of the Sherrods, State Farm also must be
barred from filing the circuit-court action.
"'[O]ur courts have adopted the rule that
an insurance company's right to subrogation
is lost as against a wrongdoer who, without
notice of the insurer's rights, settled
with and was released from liability by the
insured. A statement found at 46 C.J.S.
Insurance § 1209 at 155 (1946) expresses
both that rule and the natural converse
thereof.
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"'"When a wrongdoer chargeable
with notice of insurer's rights
as subrogee of the insured makes
a settlement with insured to
which insurer is not a party, the
settlement will be regarded as
having been made subject to the
rights of the insurer, and
without destruction thereof; but
a general release by insured to a
third person without notice or
knowledge of the insurance
company's rights is a bar to the
company's claim to
subrogation."'"
Commercial Union Ins. Co. v. Blue Cross & Blue Shield of
Alabama, 540 So. 2d 1368, 1370 (Ala. 1989) (quoting Miller v.
Auto–Owners Ins. Co., 392 So. 2d 1201, 1203 (Ala. Civ. App.
1981)).5
One legal treatise succinctly summarized the principle at
issue this way:
5
The Sherrods and State Farm asserted in their
supplemental response to the motion to dismiss that Webber
should be estopped from raising the defense of res judicata
because, "[a]t the time [the small-claims-court] case was
tried, [Webber] and [his] attorney knew that the Sherrods'
total damages greatly exceeded the court's jurisdictional
limits. The proper procedure would have been to request that
the case be transferred to circuit court for final
disposition." The Sherrods and State Farm failed to offer any
evidence as to Webber's knowledge, and they failed to offer
any authority indicating why it would have been Webber's
responsibility to insist that the claim against him was too
small. We find this argument to be without merit.
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"Under equitable subrogation principles, a
subrogee has no greater rights than the subrogor;
thus, the subrogee is entitled to only those
remedies to which the subrogor is entitled, and no
greater remedies. No new cause of action is created,
because the claim of the subrogee is derivative of
the claim of the subrogor, and only changes the
ownership of the claim. Thus, if a subrogor is
barred by res judicata from maintaining claims or
lacks standing, the subrogee is equally barred."
83 C.J.S. Subrogation § 88 (2010) (footnotes omitted). See
also 73 Am. Jur. 2d Subrogation § 71 (2012).
Unfortunately for State Farm, it simply cannot avoid the
fact that, because its claim is based solely on its rights as
a subrogee, it "'steps into the shoes of [the Sherrods] and
[State Farm] only gets those rights that [the Sherrods]
ha[ve].'" Trott, 972 So. 2d at 87 (quoting Star Freight,
Inc., 587 So. 2d at 958 n.5). As we explained in Part III.B
of this opinion, the Sherrods are precluded by the doctrine of
res judicata from bringing the circuit-court action against
Webber. Therefore, State Farm is likewise barred from
participation in the circuit-court action.
IV. Conclusion
We conclude based on the foregoing that the doctrine of
res judicata bars the Sherrods and State Farm from bringing
the circuit-court action. Accordingly, the circuit court
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should have granted Webber's motion for a summary judgment on
all the claims against him. Because of our disposition of
this case on the ground of res judicata, we need not address
Webber's double-recovery argument. We grant the petition for
a writ of mandamus and direct the Pickens Circuit Court to
vacate its August 19, 2013, order and to enter a summary
judgment in favor of Webber as to all claims.
PETITION GRANTED; WRIT ISSUED.
Stuart, Bolin, Parker, Shaw, Main, Wise, and Bryan, JJ.,
concur.
Moore, C.J., dissents.
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