Alabama Ins. Guar. Ass'n v. SOUTHERN ALLOY CORPORATION

Citations: 782 So. 2d 203; 2000 Ala. LEXIS 345; 2000 WL 1137354Docket: 1981942

Court: Supreme Court of Alabama; August 11, 2000; Alabama; State Supreme Court

Combined Opinion SummaryCombined Opinion Original

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On February 3, 1992, Charles R. Moats sustained a back injury while working for Southern Alloy Corporation, which subsequently paid him monthly salary until his employment was terminated in November 1994 after six months of absence. Southern Alloy was insured by Employers Casualty Company (ECC), which later became insolvent. The Alabama Insurance Guaranty Association (AIGA) was required to cover certain unpaid claims for ECC under the Alabama Insurance Guaranty Association Act. In December 1994, AIGA initiated a declaratory-judgment action against Southern Alloy and Moats, asserting it was not liable for Moats's workers' compensation payments because the statutory limitations period had expired. The trial court ruled in favor of Moats, determining his claim was covered and AIGA was obligated to pay. AIGA's appeal was affirmed by the Court of Civil Appeals, and a certiorari review was denied by the Supreme Court of Alabama.

In August 1997, Southern Alloy sought to compel AIGA to reimburse it for the workers' compensation payments made to Moats, but the trial court denied jurisdiction over the matter. Subsequently, in May 1998, Southern Alloy filed another declaratory-judgment action to seek reimbursement from AIGA, with Moats intervening as a plaintiff. In March 1999, a settlement was reached between Moats and AIGA, which included a lump sum payment and weekly compensation, while preserving Southern Alloy's claim for reimbursement from AIGA. Both AIGA and Southern Alloy filed motions for summary judgment, and in July 1999, the trial court concluded that AIGA could be liable for reimbursing Southern Alloy for its past indemnity payments, rejecting AIGA's defense based on procedural grounds.

Res judicata does not prevent the current action. The court previously found Moats permanently and totally disabled due to a workplace injury in February 1992 and ordered AIGA to make weekly payments of $327.25 starting October 1998 for the duration of his total disability. The trial court granted Southern Alloy a summary judgment for $110,800 in reimbursement from AIGA, which then appealed. The appeal raised three issues: 1) whether the contract between ECC and Southern Alloy allowed for reimbursement; 2) whether Southern Alloy's reimbursement claim should have been a counterclaim in the initial declaratory-judgment action; and 3) whether the second declaratory-judgment action is barred by res judicata. The court reversed and remanded on the counterclaim issue, stating that Southern Alloy's reimbursement claim should have been filed as a counterclaim per Rule 13(a) of the Alabama Rules of Civil Procedure, which mandates that any claim arising from the same transaction as the opposing party’s claim must be included in the original action. The court emphasized that the claims had a logical relationship, representing the same core of operative facts, and thus failing to assert this compulsory counterclaim barred it from being raised in a subsequent action. The trial court's summary judgment was deemed improper, leading to the reversal and remand for further proceedings.