author: MURDOCK, Judge. YATES, Presiding Judge,

text:
    Margaret D. WOLFE v. ALFA MUTUAL INSURANCE COMPANY; Amanda Clark v. Alfa Mutual Insurance Company.
    2020066 and 2020109.
    Court of Civil Appeals of Alabama.
    Nov. 21, 2003.

      Mark C. Wolfe and J. Knox Boteler III of Moore & Wolfe, P.C., Mobile, for appellants.
    Thomas M. Galloway, Jr., of Galloway, Smith, Wettermark & Everest, LLP, Mobile, for appellee.
   MURDOCK, Judge.

Margaret D. Wolfe appeals from a summary judgment entered by the Mobile Circuit Court against her and in favor of Alfa Mutual Insurance Company (“Alfa”) on Wolfe’s complaint against Alfa alleging breach of contract and seeking declaratory relief; Wolfe contended that Alfa had improperly required her to repay $2,866.90 in medical-payment benefits on the ground of subrogation, contrary to the contract of insurance she maintained with Alfa.

Amanda Clark appeals from a summary judgment entered by the Mobile Circuit Court against her and in favor of Alfa in Alfa’s declaratory-judgment action seeking a declaration that, due to subrogation, Clark owed Alfa $2,000 in medical-payment benefits it had paid to Clark for medical bills she had incurred as a result of a motor-vehicle accident.

The two cases were consolidated at the trial-court level for purposes of discovery only. Because the issues raised on appeal and the appellee in both cases are identical, this court has consolidated the two cases, ex mero motu.

Wolfe’s Case History

Wolfe was involved in a motor-vehicle accident on March 15, 2000, in which In-man Ellis drove his vehicle into the back of the vehicle in which Wolfe was the passenger and her husband was the driver. Wolfe suffered physical injuries from the accident and received treatment for those injuries from several doctors, completing her treatment at the end of July 2000. At that time, Wolfe submitted a claim seeking medical-payment benefits under her automobile insurance policy maintained by Alfa, and Alfa paid Wolfe $2,866.90 in medical-payment benefits. Wolfe also submitted a bodily injury claim to Ellis’s liability insurance carrier, Liberty Mutual Insurance Company (“Liberty Mutual”). Wolfe settled with Liberty Mutual for the sum of $9,150. Wolfe did not feel that the settlement with Liberty Mutual fully compensated her for her injuries. During the pendency of her third-party liability claim, Wolfe used the medical-payment benefits that had been provided to her under the Alfa policy. Following the settlement with Liberty Mutual, Alfa threatened to file suit against Wolfe to obtain reimbursement for the medical-payment benefits spent by Wolfe; on April 24, 2001, Wolfe paid Alfa $2,866.90 for its claimed subrogation interest.

On May 8, 2001, Wolfe filed a complaint in the Mobile Circuit Court seeking declaratory relief and alleging a breach-of-contract claim against Alfa. Specifically, Wolfe asserted that Alfa should have applied the made-whole doctrine and the common-fund doctrine to its medical-payments subrogation claim. Wolfe asserted that Alfa’s failure to apply those doctrines constituted a breach of the insurance contract between Wolfe and Alfa. On June 12, 2002, Wolfe filed a motion for a summary judgment and documents in support of the motion. Alfa filed its response to Wolfe’s motion and a countermotion for a summary judgment on August 13, 2002. The trial court denied Wolfe’s motion for a summary judgment on August 21, 2002; it entered an order on September 16, 2002, granting Alfa’s motion for a summary judgment. Wolfe appeals.

Clark’s Case History

Clark was involved in a motor-vehicle accident on April 24, 2000, in which Ellen Geary drove her vehicle into the back of Clark’s vehicle. Clark suffered physical injuries from the accident and received treatment for those injuries from several doctors, completing her treatment in August 2000. At that time, Clark submitted claims for medical-payment benefits under her automobile insurance policy maintained by Alfa, and Alfa paid Clark $2,000 in medical-payment benefits. Clark also submitted a bodily injury claim to Geary’s liability insurance carrier, USAA. Clark settled with USAA for the sum of $8,871. Clark did not feel that the settlement with USAA fully compensated her for her injuries. Alfa notified USAA of its subrogation claim for the medical-payment benefits it had paid to Clark, and USAA made $2,000 of the settlement proceeds payable to Clark and Alfa. Therefore, Clark actually received $6,871 of the negotiated settlement proceeds.

On January 26, 2001, Alfa filed a declaratory-judgment action in the Mobile Circuit Court seeking a declaration that Clark owed Alfa the $2,000 in medical-payment benefits it had paid to Clark because of its subrogation claim based on the insurance contract between Clark and Alfa. On February 21, 2001, Clark filed an answer and asserted two counterclaims against Alfa. First, Clark sought a declaration that the Alfa policy in question failed to exclude the applicability of the made-whole doctrine and that, therefore, the doctrine should apply to Alfa’s claimed right to subrogation. Second, Clark asserted a breach-of-contract claim against Alfa alleging that, because the policy in question failed to specifically exclude the made-whole doctrine and the common-fund doctrine, the policy was ambiguous as to those issues and, therefore, that Alfa had breached the contract by asserting its subrogation interest against Clark’s settlement recovery. Alfa filed a motion for a summary judgment on May 22, 2002; Clark filed a response in opposition to Alfa’s motion for a summary judgment and her own counter-motion for a summary judgment on June 17, 2002. The trial court entered an order on July 16, 2002, granting Alfa’s motion for a summary judgment, concluding that Alfa was entitled to be reimbursed by Clark from her settlement with USAA for the $2,000 in medical-payment benefits Alfa had paid to Clark. Clark appeals.

Discussion

Both cases on appeal present two issues for our review. The first issue is whether the so-called “made-whole doctrine” applies to Alfa’s right to reimbursement under the insurance policies Alfa provided to Clark and Wolfe.

“Subrogation is an equitable doctrine intended to prevent the insured from recovering twice for a single injury and to reimburse the insurer for payments it made that should, in fairness, be borne by another. When the insured recovers the full amount of his damages from a third-party tort-feasor, the insurer is entitled to reimbursement of payments made on the policy. However, courts have generally held that no right of sub-rogation exists until the insured has recovered an amount in excess of his or her loss.”

International Underwriters/Brokers, Inc. v. Liao, 548 So.2d 163, 164 (Ala.1989) (citations omitted). The made-whole doctrine is “the general rule that a subrogee is not entitled to recover, absent full recovery by the insured (i.e., unless the damages recovered plus the insurance proceeds exceed the insured’s loss).... ” Liao, 548 So.2d at 165. Both Clark and Wolfe contend that the settlements they entered into with the insurance carriers of the tortfeasors in their respective cases did not make them whole and that, therefore, under the made-whole doctrine, Alfa is not entitled to reimbursement of the medical-payment benefits it provided to the insureds.

The subrogation language of the insurance policies at issue in these cases is identical and provides:

“If [Alfa] make[s] a payment under Parts B, C-2, D, E, F and G of this policy [] and the person to or for whom payment was made has a right to recover damages from another, [Alfa] shall be subrogated to that right. That person shall do whatever is necessary to enable [Alfa] to exercise [its] rights and shall do nothing after loss or bodily injury to prejudice them.
“If [Alfa] make[s] a payment under this policy and the person to or for whom payment is made recovers damages from another, that person shall hold in trust for [Alfa] the proceeds of the recovery and shall reimburse [Alfa] to the extent of [its] payment, costs and fees.”

Alfa contends that the made-whole doctrine does not apply in these cases because, it argues, the insurance policies modified the general rule that an insurer has no right of subrogation “until the insured has recovered an amount in excess of his or her loss.” Liao, 548 So.2d at 164.

In Powell v. Blue Cross & Blue Shield of Alabama, 581 So.2d 772 (Ala.1990), our Supreme Court held that the made-whole doctrine applied in all cases where the insurer has paid claims of its insured. However, the Court overruled Powell in Ex parte State Farm Fire & Casualty Co., 764 So.2d 543 (Ala.2000), electing to return to the rule as stated in Liao. In Liao, the Court stated that “the better reasoned rule, one followed in a number of jurisdictions, is that equitable principles apply to all instances of subro-gation except when the contract expressly provides otherwise.” 548 So.2d at 165 (emphasis added). In other words, the made-whole doctrine will apply in all sub-rogation cases unless the contract “expressly provides” that it does not apply. See, e.g., Allstate Ins. Co. v. Hugh Cole Builder, Inc., 772 So.2d 1145, 1146-47 (Ala.2000). Alfa contends that the above-quoted language of the insurance policies in question expressly modifies the established equitable principles of subrogation such that the made-whole doctrine is not applicable to Clark’s and Wolfe’s cases.

Exactly what our Supreme Court meant when it stated in Liao that a contract must “expressly provide” that the made-whole doctrine will not apply has not been addressed previously by the courts in Alabama. Clark and Wolfe contend that Liao means that a contract must specifically and explicitly state that the made-whole doctrine does not apply. Alfa contends that a contract can expressly change the established equitable scheme without using “magic words” specifically disclaiming the made-whole doctrine. Language in Liao itself indicates that Alfa is correct. Elsewhere in Liao the Court stated that the insurance contract must “contain specific provisions regarding [the insurer’s] subro-gation rights that [are] contrary to established equitable principles.” 548 So.2d at 166 (emphasis added). Obviously, a provision can espouse a scheme “contrary to established equitable principles” without mentioning the made-whole doctrine explicitly.

Therefore, our starting point in ascertaining whether Alfa has “expressly provide[d]” that the insured must reimburse Alfa even if the insured has not been made whole is the language of the contracts themselves. The first of the two paragraphs at issue in the insurance contracts states that if Alfa makes a payment to its insured, and if that insured “has a right to recover damages from another, [Alfa] shall be subrogated to that right.” It seems clear that this paragraph simply states the fact that Alfa holds a general right of subrogation when the insured has a right to recover damages from a third party. Cases from other jurisdictions have also considered such language to be “general” subrogation language, not sufficient to modify the applicability of the made-whole doctrine. See, e.g., Lyon v. Hartford Acc. & Indem. Co., 25 Utah 2d 311, 480 P.2d 739 (1971), overruled on other grounds by Beck v. Farmers Ins. Exch., 701 P.2d 795 (Utah 1985); and Sapiano v. Williamsburg Nat’l Ins. Co., 28 Cal. App.4th 533, 535-36, 33 Cal.Rptr.2d 659, 660 (1994).

The second paragraph at issue, on the other hand, seems to state something different than the established equitable principle of subrogation. It states that “[i]f [Alfa] make[s] a payment under this policy and [the insured] recovers damages from another, [the insured] shall hold in trust for [Alfa] the proceeds of the recovery and shall reimburse [Alfa] to the extent of [Alfa’s] payment, costs and fees.” This sentence consists of two principal clauses. The first lays a predicate, describing the condition which, if present, will trigger the insured’s obligation under the second clause. The latter part of the first clause conditions the insured’s obligation to reimburse Alfa simply on whether the insured “recovers damages.” The damages referenced are not limited to those that may correspond to what Alfa has already paid (e.g., medical expenses) or that otherwise compensate the insured in a manner or to a degree not accomplished by Alfa’s payment. Likewise, the second clause of the sentence requires the insured to hold in trust “the proceeds” of the recovery from the third party — not part of the proceeds and not only those proceeds that correspond to the same losses (e.g., medical expenses) for which payments were specifically made by Alfa — i.e., the entire proceeds. Neither clause contains any qualification of the insurer’s rights or the insured’s obligation based on whether the insured has been made whole. The parties could have included such a qualification, but, instead, the only qualification that is included in this provision is that the reimbursement is to be made “to the extent of [Alfa’s] payment, costs and fees.” We must conclude, therefore, that the trial court did not err in holding that this provision requires the insured to reimburse Alfa without regard to whether the insured has been made whole.

Other jurisdictions agree that language essentially identical to the language in the second paragraph at issue in these insurance contracts specifically abrogates the made-whole doctrine. In Westfield Insurance Co. v. Rowe ex rel. Estate of Gallant, 631 N.W.2d 175 (S.D.2001), the insurance contract’s subrogation provisions provided:

“ ‘If we make a payment under this policy and:
“ ‘a. The person to or for whom payment was made has a right to recover damages from another, we shall be subrogated to that right....
“ ‘b. The person to or for whom payment is made recovers damages from another, that person shall: (1) hold in trust for us the proceeds of the recovery and (2) reimburse us to the extent of our payment.’ ”

631 N.W.2d at 180 (emphasis added). The South Dakota Supreme Court held that such language overrode any application of the made-whole doctrine. Similarly, in Risner v. Erie Insurance Co., 91 Ohio App.3d 695, 633 N.E.2d 588 (1993), the language in the insurance contract stated:

“ To the extent of payment under this policy, we will have the right to recover from anyone else held legally responsible. Anyone we protect will sign papers and do whatever is required to transfer this right to us and do nothing to harm this right. Anyone receiving the benefit of a payment under this policy will hold in trust for us the proceeds of any recovery of damages from another, and reimburse us to the extent of our payment.’ ”

91 Ohio App.3d at 700, 633 N.E.2d at 591 (first emphasis added; second emphasis original; some emphasis omitted). The Ohio Court of Appeals held that

“[t]his language is specific and unequivocal. It requires reimbursement, to the extent of any payment by [the insurer], from the proceeds of any recovery from a third person. In other words, it grants to [the insurer] the unqualified right of subrogation to the entire amount paid to [the insured] under their contract of insurance.”

Id. Consequently, the Ohio Court of Appeals ruled that the contract expressly overrode the made-whole doctrine.

We acknowledge that other jurisdictions have reached the opposite conclusion when considering language in an insurance contract that is nearly identical to the language at issue in this case, finding such language to be inadequate to disclaim the made-whole doctrine. See, e.g., Wine v. Globe American Cas. Co., 917 S.W.2d 558, 564 (Ky.1996); Continental Western Ins. Co. v. Swarbzendruber, 253 Neb. 365, 371, 570 N.W.2d 708, 712 (1997). However, we believe the better reasoned conclu sion to be the one reached in Westfield Ins. Co. and Risner. Applying the plain and literal meaning of the words employed, see IMED Corp. v. Systems Engineering Associates Corp., 602 So.2d 344 (Ala.1992), the language in question espouses a scheme contrary to the made-whole doctrine. Liao, 548 So.2d at 166. To rule otherwise would be to disregard the written agreement of the parties. See, e.g., Martin v. Dillow, 93 Ohio App.3d 108, 110, 637 N.E.2d 961, 962 (1994) (stating, in another case involving nearly identical contract language: “[T]he case at bar presents no reason to apply equitable principles because the relationship between the parties was established and defined by contract. While it may not seem fair that the insured cannot apply insurance money to her total accident-related losses, ‘[c]ases of contractual interpretation should not be decided on the basis of what is “just” or equitable.’ ” (quoting Ervin v. Garner, 25 Ohio St.2d 231, 239, 267 N.E.2d 769, 774 (1971))); Capitol Indem. Corp. v. Strike Zone, 269 Ill.App.3d 594, 596, 646 N.E.2d 310, 312, 206 Ill.Dec. 943, 945 (1995) (noting that “[t]he parties here were free to negotiate the terms of the contract of insurance, including the subrogation provision with its consequent effect.... We decline to upset the settled expectations of the parties as reflected in the policy of insurance by overlaying inapplicable equitable principles which contravene the contract terms and forge a new agreement between the parties”). As one respected treatise on insurance law has stated:

“[Ujnlike the rule when subrogation is claimed on an equity basis, where ... the terms of the insured’s ... insurance policy ... [are] clear and unambiguous in requiring the insured to hold in trust for the insurer proceeds of any recovery obtained by the insured against a third-party wrongdoer and to reimburse the insurer to the extent of its payment to the insured, the contract language giving the insurer a right of subrogation ha[s] to be enforced even though the insured’s loss, including his or her costs of collection, exceed[ ] the combined benefits of his or her tort award and insurance benefit.... ”

16 Lee R. Russ & Thomas F. Segalla, Couch on Insurance § 223:147 (3d ed.2003) (citing Martin v. Dillow, supra).

On the basis of the foregoing analysis and authorities, we conclude that the language in the insurance policies at issue was sufficient to change the established equitable principles of subrogation and that the summary judgments are due to be affirmed as to this issue.

Both Clark and Wolfe argue secondly that the trial courts erred in failing to apply the so-called “common-fund doctrine” to Alfa’s claimed right of subrogation. In Liao, our Supreme Court explained the concept and purpose of the common-fund doctrine as follows:

“The general rule in Alabama is that attorney fees can be awarded only when ‘authorized by statute, when provided in a contract, or by special equity, such as in a proceeding where the efforts of an attorney created a fund out of which fees may be paid.’ Shelby County Commission v. Smith, 372 So.2d 1092 (Ala.1979). This equitable type of attorney fee has been allowed in cases involving what this Court has categorized as a ‘common fund.’ In Kimbrough v. Dickinson, 251 Ala. 677, 684, 39 So.2d 241 (1949), this Court discussed the theory behind ‘the common fund doctrine’ as follows:
“ ‘The rule[] rests upon the ground that where one litigant has borne the burden of expense of the litigation that has inured to the benefit of others as well as himself, those who have shared in the benefits should contribute to the expense.’ ”

548 So.2d at 166.

“The common-fund doctrine in insurance-subrogation cases is based on the equitable notion that, because an insurer is entitled to share, to the extent of its subrogation interest, in any recovery its insured achieves against a tortfeasor, the insurer should bear a proportionate share of the burden of achieving that recovery — including a pro rata share of the insured’s attorney fee.”

Government Employees Ins. Co. v. Capulli, 859 So.2d 1115, 1119 (Ala.Civ.App.2002).

In Capulli, this court observed that in every case in which it had applied the common-fund doctrine to insurance-subro-gation cases, the court “held that the insurer-subrogee was obligated to pay a pro rata share of its insured’s attorney fee because the efforts of the insured’s attorney had created a fund from which the insurer directly benefitted.” Capulli, 859 So.2d at 1120. Alfa concedes in its brief in Clark’s appeal that it will owe an attorney fee to Clark’s attorney if Clark pays the $2,000 to Alfa because of her attorney’s efforts in obtaining the settlement from which Alfa will benefit. It is clear that an attorney fee is also owed by Alfa to Wolfe’s attorney. Accordingly, we reverse the summary judgments in favor of Alfa and against Clark and Wolfe insofar as those judgments fail to reduce Alfa’s recovery by an amount equal to Alfa’s pro rata share of the attorney fees incurred by Clark and Wolfe in achieving the third-party recoveries at issue. The cases are remanded for the trial courts to issue new judgments consistent with this opinion.

2020066 — AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

2020109 — AFFIRMED IN PART; REVERSED IN PART; AND REMANDED.

CRAWLEY, THOMPSON, and PITTMAN, JJ., concur.

YATES, P.J., concurs in the result, with writing.

YATES, Presiding Judge,

concurring in the result.

I agree with the result reached by the majority that the subrogation provision in the insurance contracts between the insureds and Afa abrogates the made-whole doctrine, permitting Afa to be subrogated for claims it paid to its insureds even though the insureds have not been fully compensated for their personal injuries. However, I do not believe, as the majority does, that the parties were free to negotiate the subrogation provision with its consequent effect. As the Eighth Circuit Court of Appeals stated in American Service Mutual Insurance Co. v. Bottum, 371 F.2d 6, 12 (8th Cir.1967), “Insurance contracts are prime examples of ‘contracts of adhesion’ where the customer is required to ‘adhere’ to the standard contract form. Insurers, due to their greater bargaining position, should not be allowed to use this as a wholesale method for controlling applicable law.”

I also agree with the application of the common-fund doctrine in the present case requiring Afa to pay its share of the attorney fees incurred by the insureds in achieving an award from the tortfeasors. In this instance, the common-fund doctrine will lessen the harsh effects of subrogation where the insured has incurred the expense of counsel and court costs but has not been fully compensated for his or her personal injury.

      . Part B of the policy provides for medical-payment benefits.


source: Caselaw Access Project

author: PITTMAN, Judge.

license: Public Domain

text:
    James Michael LOGAN v. Ruth ROGERS.
    2020612.
    Court of Civil Appeals of Alabama.
    Nov. 21, 2003.

      Thomas O. Bear, Magnolia Springs, for appellant.
    Oliver J. Latour, Jr., Foley, for appellee.
   PITTMAN, Judge.

James Michael Logan (“the former husband”) appeals from a judgment of the Baldwin Circuit Court modifying a judgment of divorce. In a judgment entered on July 22, 1998, divorcing the former husband from Ruth Rogers (“the former wife”), the former wife was awarded “the Monroe Canvas business and all equipment and property associated therewith” (“the business”). At the time of the divorce, the former husband was unemployed and was receiving over $90,000 annually in disability payments.

In March 2001, the former wife filed a petition to modify the divorce judgment, asserting that there had been a material change in circumstances and that the former husband should be held in contempt of court. The former wife’s petition alleged that the former husband had failed to comply with that portion of the divorce judgment instructing him to return to her all the assets of the business. Moreover, she contended, the former husband had improperly used proprietary information of the business to unfairly compete with the business and had failed to pay his share of a joint debt. The former wife alleged that in 1991 the parties borrowed funds to purchase the business for $112,000 and that, at the time of the divorce, the outstanding balance on that joint debt had been $54,420.78. The former husband filed a response in May 2001, in which he disputed that there had been a material change in circumstances and contended that the divorce judgment did not require him to make any payments on any jointly held debts. The former husband also filed a counterclaim requesting that the trial court require the former wife to be solely responsible for the joint debt.

The trial court conducted a hearing on February 26, 2002, receiving testimony and other evidence from the parties. During that hearing, the former wife testified that the business’s gross sales had dropped from approximately $180,000 to less than $17,000 annually. She also testified that because the business’s income had dropped so dramatically, she had been unable to make the annual $12,000 payment on the business loan. The former wife testified that as a result of her failure to make the last annual payment, the previous owners of the business had brought an action to collect the rest of the purchase price of the business and had received a judgment against both the former husband and the former wife in the amount of $54,420.78, plus interest. The former husband testified that his competing company had not depleted the income of the business and that, under the terms of the original divorce judgment, he was not liable to pay anything toward the joint debt.

After the parties had testified, the judge questioned the parties’ attorneys regarding previous proceedings between the parties. First, the trial court was informed that an earlier modification judgment entered in January 2000 had dealt only with child-support arrearages, medical payments for the children, and the allocation of certain disputed items of personal property. Apparently, during that earlier modification hearing, the former husband had been instructed to bring an action in the “civil division” of the Baldwin Circuit Court to resolve the outstanding issues concerning the business. Once the parties’ competing claims concerning the business had been filed in the civil division of the Baldwin Circuit Court, that court entered a judgment in May 2001 denying all claims and stating that because “the court feels that the proper forum for relief is domestic court, this court will adopt any remedy issued by the domestic court.”

Based on the information provided regarding the previous proceedings, the trial court concluded that it should review the issues concerning the business in light of the former wife’s petition to modify the divorce judgment and the former husband’s counterclaim requesting that the trial court make the former wife solely responsible for the $54,420.78 joint debt and hold him harmless on that debt. The trial court entered a judgment regarding those issues on December 11, 2002. In its judgment, the trial court determined that a material change in circumstances had occurred since the parties’ divorce. The trial court concluded that that material change had been caused by (1) the former husband’s failure to turn over all the assets of the business to the former wife as ordered in the divorce judgment; (2) the former husband’s improper use of the customer list, art work, and suppliers of the business to start a competing business; and (3) the former husband’s failure to pay a joint debt of the marriage. Moreover, the trial court concluded that the former husband’s interference with the business had caused the gross sales of the business to drop from $130,000 per year to approximately $15,000 per year; that the former wife’s anticipated monthly income of $1,300 from the business had become negligible; and that the former husband’s failure to pay a joint debt had caused a judgment to be entered against both parties in the amount of $60,755.96 ($54,420.78, plus interest).

Based on those determinations, the trial court held the former husband in contempt of court for having failed to follow the instructions contained in the divorce judgment. The trial court ordered the former husband to pay $45,895.57 and any subsequent interest or fees assessed under the judgment on the joint debt. Moreover, the trial court stated that “[a]ll amounts due are in the nature of additional spousal support and maintenance. Unless the [former wife] agrees, the [former husband] cannot bankrupt this debt.” The trial court also ordered the former husband to pay an additional $500 per month in periodic alimony, bringing the former husband’s total monthly periodic-alimony obligation to $2,850. Again, the trial court characterized the new periodic-alimony award as “additional spousal support and maintenance” and instructed the former husband that he could, not seek bankruptcy protection as to that obligation without the consent of the former wife. The trial court also ordered the former husband to pay court costs and $750 toward the former wife’s attorney fees.

The former husband filed a post-judgment motion on January 7, 2003; he filed an “amended motion” on February 18, 2003. The former wife filed a response on February 24, 2003. Following a hearing on the former husband’s postjudgment motion, as amended, the trial court denied the motion on February 25, 2003. The former husband appealed, alleging that the trial court had abused its discretion in (1) making its findings of facts, (2) addressing issues that were previously litigated, and (3) purporting to limit the former husband’s access to bankruptcy court.

When a trial court bases its decision on ore tenus evidence, its judgment is presumed correct and will not be reversed on appeal, absent a finding of a plain and palpable abuse of discretion. See Sealy v. D’Amico, 789 So.2d 863 (Ala.Civ.App. 2000); Kennedy v. Kennedy, 743 So.2d 487 (Ala.Civ.App.1999). “The division of marital property and the assessment of responsibility for marital debts are within the sound discretion of the trial court.” Silvey v. Silvey, 634 So.2d 138, 140 (Ala.Civ.App.1993). The determination whether a party is in contempt of court rests entirely within the sound discretion of the trial court, and, “ ‘absent an abuse of that discretion or unless the judgment of the trial court is unsupported by the evidence so as to be plainly and palpably wrong, this court will affirm.’ ” Gordon v. Gordon, 804 So.2d 241, 243 (Ala.Civ.App.2001) (quoting Stack v. Stack, 646 So.2d 51, 56 (Ala.Civ.App.1994)). However, when a question is purely an issue of law, the ore tenus rule does not apply and appellate review is de novo. Keevan v. Keevan, 796 So.2d 379, 381 (Ala.Civ.App.2001).

In this case, the trial court’s findings of fact are amply supported by the former wife’s testimony and the transcribed testimony of the January 2000 modification hearing. Apparently, the trial judge determined that the former husband’s testimony in this action that he had not interfered with the former wife’s business differed substantially from his earlier testimony in the January 2000 modification hearing. As the fact-finder, the trial court could properly rely on the former wife’s evidence indicating that the business had lost most of its value because of the former husband’s appropriation of the business’s art work, client list, and inventory suppliers. This court has often stated that the ore tenus presumption of correctness is based on the trial court’s unique position to observe the witnesses and to evaluate their demeanor and credibility. See Robinson v. Robinson, 795 So.2d 729 (Ala.Civ. App.2001). Furthermore, this court is not allowed to reweigh the evidence or to substitute its judgment for that of the trial court. See Ex parte Bryowsky, 676 So.2d 1322 (Ala.1996). We conclude that, because substantial evidence supports the trial court’s findings of fact, the former husband’s first issue does not present reversible error.

The former husband next argues that the issues of his alleged interference with the former wife’s business and his failure to pay the marital debt had already been adjudicated in previous court proceedings. The former husband correctly lists the elements of the doctrine of res judicata and the requirements of collateral estoppel. The flaw in the former husband’s argument is that the record clearly indicates that no previous binding adjudication as to those issues ever occurred in the earlier proceedings. Although the former husband argues that the modification hearing in January 2000 involved those two issues, the record only contains a January 2000 judgment addressing child-support arrearages, responsibility for medical payments for the children, and the allocation of certain disputed items of personal property. In the transcript of that January 2000 modification hearing, the trial judge suggested that the former husband should institute an action in the civil division of the Baldwin Circuit Court to resolve the parties’ contentions regarding the business. After the parties’ claims were asserted in the civil division of the Baldwin Circuit Court, the presiding trial judge denied those claims in May 2001, stating that, because “the court feels that the proper forum for relief is domestic court, this court will adopt any remedy issued by the domestic court.” Regardless of the former husband’s arguments, nothing in the record supports his contention that the issues made the subject of this appeal were ever conclusively resolved before being addressed in the December 2002 judgment so as to give rise to a bar of litigation of the parties’ claims regarding the business in this case.

During the February 2002 modification hearing, the trial court noted that in the divorce judgment, the previous trial judge had not addressed the disposition of the joint marital debt obtained in order that the parties could purchase the business. When a divorce judgment does not state which party will be responsible for debts associated with the marriage, “if the parties were jointly liable for debts during the marriage they would still be jointly liable for them after the divorce.” Miller v. Miller, 391 So.2d 119, 120 (Ala.Civ.App.1980); see also Hammock v. Hammock, 867 So.2d 355 (Ala.Civ.App.2003) (Pittman, J., concurring specially).

In Hammock, this court reviewed a situation where the former husband sought a judgment finding the former wife in contempt for failure to make mortgage payments on a mobile home awarded to her in the divorce judgment. We concluded that the trial court could not hold the wife in contempt for failure to pay a joint debt not allocated in the divorce judgment and that the trial court erred in attempting to modify the property division three years after the entry of the divorce judgment. In this case, because the parties’ divorce judgment was silent on the issue of the parties’ future responsibilities with respect to the joint debt that was incurred by purchasing the business and although the wife took possession of the business subject to that debt, the parties’ personal obligations after the divorce with respect to that debt remained the same as they had been before the divorce.

Just as in Hammock, the parties in this case are jointly and severally liable to the former owners of the business for the debt incurred to purchase the business. Moreover, “ ‘[a] court cannot modify property provisions [in divorce judgments], except to correct clerical errors, after 30 days from the final judgment.’ ” Keevan v. Keevan, 796 So.2d at 381 (quoting Hamilton v. Hamilton, 647 So.2d 756, 759 (Ala.Civ.App.1994)). In this case, the trial court lost jurisdiction to modify its property division 30 days after issuing the divorce judgment in July 1998; therefore, it could not amend the property provisions of that judgment in 2002 to allocate payment of the marital debt between the parties. We reverse that portion of the judgment purporting to divide the obligation for the marital debt between the parties.

The fact that the trial court lost jurisdiction to allocate responsibility for the payment of the marital debt 30 days after the divorce judgment was rendered does not mean, however, that the former wife has no remedy. As the special concurrence in Hammock notes:

“ ‘Joint makers of notes, bills, bonds, or contracts for the payment of money are bound severally and jointly to the payee, transferee, or holder, jointly and severally, for the full amount due; but as between themselves, each is principal to the extent of his share of the joint and several debt and surety to the extent of the shares of the other makers.’
“(Emphasis added [in Hammock ].) That statute enables a comaker of a note who has paid more than his or her share of the debt evidenced by the note to bring a contribution action against a comaker who has not paid his or her share.”

Hammock, 867 So.2d at 360-61 (Pittman, J., concurring specially) (quoting § 8-3-1, Ala.Code 1975). To the extent that the former husband may have failed or refused to pay his share of the joint debt, and to the extent that the former wife may pay or have paid more than her share of that debt, the former wife may yet be entitled to relief under § 8-3-1, Ala.Code 1975.

The former husband also argues that the trial court’s judgment improperly limited his right of access to bankruptcy protection. Because we must reverse the trial court’s judgment attempting to allocate a marital debt several years after the entry of a final judgment of divorce and remand the cause for further proceedings, we will briefly address the former husband’s final argument. In its modification of the divorce judgment, the trial court characterized the division of responsibility for payment of the marital debt and the increase in periodic alimony as being “in the nature of additional spousal support and maintenance.” The trial court then stated “[ujnless the [former wife] agrees, the [former husband] cannot bankrupt this debt.”

“ ‘As a general rule, court ordered alimony, maintenance, and support are excepted from discharge in bankruptcy.’ Hudson v. Hudson, 634 So.2d 579, 580 (Ala.Civ.App.1994); Ex parte Henderson, 574 So.2d 830, 831 (Ala.Civ.App.1990). This exception evolves from the need of the debtor to support his or her dependents and yet obtain a fresh start in financial matters. Id.; In re Haney, 33 B.R. 6 (Bankr.N.D.Ala.1983). It is well established that support obligations are not dischargeable in bankruptcy, but divisions of property not in the nature of support are dischargeable. Pressnell v. Pressnell, 519 So.2d 536, 537 (Ala.Civ.App.1987).”

Laminack v. Laminack, 675 So.2d 479, 481 (Ala.Civ.App.1996); see also Smith v. Smith, 741 So.2d 420 (Ala.Civ.App.1999). The fact that periodic-alimony payments are not, under federal law, dischargeable in bankruptcy makes the trial court’s language calling the payment of a portion of the marital debt “spousal support” suspect. As we stated in Anderson v. Anderson, 686 So.2d 320, 324 (Ala.Civ.App.1996), “labels provided in a judgment are not controlling on the question of the true nature of the obligation.” 686 So.2d at 324 (citing In re Hughes, 16 B.R. 90 (Bankr.N.D.Ala.1981)). The trial court appears to have referred to the former husband’s obligations as to the marital debt as being payments “in the nature of additional spousal support and maintenance” so as to prevent the former husband from seeking a discharge in bankruptcy as to that debt. While we regard that language as ineffective surplusage rather than prejudicial error, the trial court cannot, in any event, properly re-characterize the husband’s obligation in an effort to circumvent federal bankruptcy law. Because we are reversing the allocation of the marital debt and remanding for further proceedings, the trial court should delete all references to the former husband’s ability to seek bankruptcy relief from its judgment on remand.

The trial court’s judgment is reversed insofar as it allocated responsibility for payment of the business-related marital debt; in all other respects, the judgment is affirmed. The cause is remanded for the trial court to enter a judgment consistent with this opinion.

AFFIRMED IN PART; REVERSED IN PART; AND REMANDED WITH INSTRUCTIONS.

CRAWLEY, J., concurs.

YATES, P.J., and THOMPSON and MURDOCK, JJ., concur in the result, without writing.

      . Both parties testified that the purchase agreement required the buyers to make an annual $12,000 payment to the sellers until the balance owed was paid.

      . Although the former husband appeals from the entire judgment, the trial court's finding of contempt relates only to the former husband’s failure to return all of the business assets to the former wife; that finding is not implicated by the issues concerning payment of the marital debt and access to bankruptcy.


author: BASCHAB, Judge.

text:
    STATE of Alabama v. Ricky Bernard TRUSSELL.
    CR-02-0273.
    Court of Criminal Appeals of Alabama.
    April 25, 2003.
    Rehearing Denied June 13, 2003.
    Certiorari Denied Nov. 7, 2003 Alabama Supreme Court 1021655.
    William H. Pryor, Jr., atty. gen., and Stephanie N. Morman, asst. atty. gen., for appellant.
    Robert T. Ray, Fort Payne, for appellee.
   BASCHAB, Judge.

On April 3, 2000, Ricky Bernard Trus-sell pled guilty to trafficking in marijuana. On June 26, 2000, the trial court sentenced him to serve a term of ten years in prison. It also enhanced his sentence by five years because he had possession of a firearm during the commission of the offense. See § 13A-12-231(13), Ala.Code 1975. We affirmed his conviction in an unpublished memorandum and issued a certificate of judgment on April 10, 2001. See Trussell v. State, 821 So.2d 1033 (Ala.Crim.App.2001) (table). On June 21, 2002, Trussell filed a Rule 32 petition, challenging his conviction. Citing § 15-18-8(a)(1), Ala. Code 1975, as amended effective May 25, 2000, and this court’s decision in Soles v. State, 820 So.2d 163 (Ala.Crim.App.2001), he argued that the circuit court should reconsider his sentence because the trial court had mistakenly believed that it could not split the five-year mandatory term of imprisonment pursuant to § 13A-12-231(l)b., Ala.Code 1975, and the five-year enhancement pursuant to § 13A-12-231(13), Ala.Code 1975. After the State responded, the circuit court conducted an evidentiary hearing and granted the petition. It then split Trussell’s sentence and ordered him to serve thirty months in prison followed by five years on probation. This appeal followed.

The State argues that the circuit court did not have jurisdiction to modify Trus-sell’s sentence because he filed his Rule 32 petition more than 30 days after he had been sentenced. It also contends that Trussell’s claim was precluded. We agree.

Initially, we note that “an allegedly illegal sentence may be challenged at any time, because if the sentence is illegal, the sentence exceeds the jurisdiction of the trial court and is void.” Rogers v. State, 728 So.2d 690, 691 (Ala.Crim.App.1998). However, Trussell’s sentence was not illegal. See §§ 13A-12-231(12), 13A-12-231(13), and 13A-5-6(a)(1), Ala.Code 1975. We further note that, pursuant to Rule 24, Ala. R.Crim. P., a defendant may request, and the trial court may order, a modifica tion of his sentence only within 30 days after sentencing. See Ex parte Hitt, 778 So.2d 159 (Ala.2000). However, because Trussed filed his request for modification more than 30 days after he was sentenced, his request was not timely.

For the above-stated reasons, the circuit court did not have jurisdiction to modify Trussell’s sentence. In fact, Trus-sell’s claim that the circuit court should reconsider his sentence was precluded because he could have raised it at trial and on appeal, but did not. See Rule 32.2(a)(3) and (5), Ala. R.Crim. P. Accordingly, we reverse the circuit court’s judgment granting Trussell’s petition and modifying Trus-sell’s sentence and remand this case for the circuit court to reinstate Trussell’s original sentence.

REVERSED AND REMANDED.

McMILLAN, PM., and COBB, SHAW, and WISE, JJ., concur.