author: SHAW, Justice.

text:
    David G. BRONNER, as secretary-treasurer of the Public Education Employees' Health Insurance Plan, et al. v. James B. BURKS II et al.
    1150817
    Supreme Court of Alabama.
    December 22, 2017 Rehearing Denied August 24, 2018
    Laura G. Canary and Jared H. Morris, Retirement Systems of Alabama, Montgomery, for appellants.
    Joe R. Whatley, Jr., and Charlene P. Ford of Whatley Kallas, LLP, Birmingham; Joe Espy III and J. Flynn Mozingo of Melton, Espy & Williams, PC, Montgomery; and Randy Beard of Beard & Beard, Guntersville, for appellees.
   SHAW, Justice.

This is the second time this dispute related to benefits provided under the Public Education Employees' Health Insurance Plan ("PEEHIP") has come before this Court. See Ex parte Retirement Sys. of Alabama, 182 So.3d 527 (Ala. 2015) (" RSA I"). In the present case, the remaining defendants below, David G. Bronner, as secretary-treasurer of PEEHIP, and the current members of the PEEHIP Board, petitioned this Court, pursuant to Rule 5, Ala. R. App. P., for permission to appeal the trial court's denial of their motion seeking a summary judgment. For the reasons discussed below, we dismiss the appeal.

Facts and Procedural History

In RSA I, we set out the pertinent factual and procedural history as follows:

"PEEHIP, which is managed by the PEEHIP Board, provides group health-insurance benefits to public-education employees in Alabama. Each year, the PEEHIP Board submits 'to the Governor and to the Legislature the amount or amounts necessary to fund coverage for benefits authorized by this article for the following fiscal year for employees and for retired employees as a monthly premium per active member per month.' § 16-25A-8(b), Ala. Code 1975. That monthly premium is paid by employers for each of their active members ('the employer contribution'). See § 16-25A-8(a), Ala. Code 1975.
"In addition, '[e]ach employee and retired employee [is] entitled to have his or her spouse and dependent children, as defined by the rules and regulations of the [PEEHIP B]oard, included in the coverage provided upon agreeing to pay the employee's contribution of the health insurance premium for such dependents.' § 16-25A-8(e), Ala. Code 1975. Section 16-25A-1(8), Ala. Code 1975, provides, in pertinent part, that '[i]ndividual premiums may include adjustments and surcharges for ... family size including, but not limited to, a husband and wife both being covered by a health insurance plan as defined herein.' The employer contribution, as well as 'all premiums paid by employees and retired employees under the provisions of this section and any other premiums paid under the provisions of this article,' are deposited into PEEHIF [Public Education Employees Health Insurance Fund]. § 16-25A-8(f), Ala. Code 1975."

182 So.3d at 530.

According to the plaintiffs, before 2010, each public-education employee participating in PEEHIP "received" an "allotment" to use to obtain health-insurance coverage from PEEHIP. PEEHIP offered a "hospital plan" and a health-maintenance-organization ("HMO") plan, as well as four "optional" plans that provided supplemental health-care coverage. Public-education employees could use their allotments to select from these plans. A married couple, both of whom were public-education employees, would each have their own allotment to use. Additionally, these couples could "combine" their allotments and receive "family coverage," which would also cover their dependent children, without paying a premium for such coverage.

In 2010, the PEEHIP Board began implementing a new policy ("the 2010 policy"). According to the plaintiffs, under the 2010 policy, when two public-education employees were married to one another, each could still use his or her allotment to purchase individual coverage or optional, supplemental plans. However, if they had dependents and wanted family coverage, both allotments had to be "combined," and they now had to pay a premium for family coverage. The couple could not use one allotment to purchase family coverage and the other allotment to purchase optional, supplemental plans.

In May 2014, James B. Burks II, Eugenia Burks, Martin A. Hester, Jacqueline Hester, Thomas Highfield, Carol Ann Highfield, Jake Jackson, and Melinda Jackson, individually and on behalf of a class of similarly situated individuals who are all public-education employees and PEEHIP participants married to other public-education employees and PEEHIP participants and who have dependent children, sued Bronner and the individual members of the PEEHIP Board, among other defendants. In their complaint, the plaintiffs challenged the 2010 policy changes and alleged, among other things, that the 2010 policy treated them differently from other public-education employees and PEEHIP participants.

The alleged disparity, as far as this Court can tell from the complaint and other materials in the record, is this: When one spouse in a family is a public-education employee, and thus one allotment is available, that allotment may be used to purchase family coverage, and the family pays the family-coverage premium. When both spouses are public-education employees and wish to purchase family coverage, then both allotments must be used, and the family also pays the family-coverage premium. The couple cannot use one allotment toward the family coverage and use the other allotment to obtain an optional plan. Thus, one of the spouses, it is alleged, is effectively denied the use of an allotment when compared to other public-education employees: The insurance benefits the two married public-education employees receive with both allotments-family coverage-is the same as the insurance benefits a family with one public-education employee receives using one allotment. It also appears that the plaintiffs challenge the fact that, since the 2010 policy changes, they now have to pay premiums for family coverage when, under the prior policy, they could combine their allotments and pay no premiums.

The plaintiffs alleged that the 2010 policy

"violated Article V, § 138.03, Alabama Constitution of 1901, as well as the public-education plaintiffs' rights to equal protection, due process, and freedom of association under the Alabama Constitution, the United States Constitution, and 42 U.S.C. § 1983. The public-education plaintiffs also alleged that the [2010] policy violated Alabama public policy and their right to family integrity as protected by the Alabama Constitution. The public-education plaintiffs sought relief in the form of (1) a judgment declaring '[the PEEHIP defendants'] practice of denying an allotment for insurance benefits to educators who are married to another educator and who have dependent children to be unconstitutional, discriminatory and unlawful under both State and Federal law'; (2) an injunction preventing the PEEHIP defendants from 'denying an allotment for insurance benefits to educators whose spouse is also an educator in the public school system and who have dependent children'; (3) restitution of 'amounts ... unlawfully withheld and/or ... amounts [the public-education plaintiffs] have paid for insurance that they would not have paid absent [the PEEHIP defendants'] unlawful conduct' or other equitable relief; and (4) costs and attorney fees."

RSA I, 182 So.3d at 531 (footnote omitted).

In RSA I, we considered the propriety of the trial court's denial of the defendants' motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6), Ala. R. Civ. P., on the ground of, among other things, the doctrine of State immunity. Noting that the plaintiffs had voluntarily agreed to dismiss some of their claims and further concluding that other claims were barred by State immunity, we granted the petition as to all claims and parties except for the "plaintiffs' claims for injunctive relief, pursuant to § 1983, against the members of the PEEHIP Board and Bronner, in his capacity as secretary-treasurer of PEEHIP." RSA I, 182 So.3d at 530.

Following this Court's decision in RSA I, proceedings resumed in the trial court on the plaintiffs' remaining federal claims against the PEEHIP Board and Bronner (hereinafter referred to collectively as "the defendants") seeking injunctive relief. The defendants filed a motion requesting a summary judgment as to those claims on various grounds. Specifically, the motion contended that PEEHIP participants did not actually receive an allotment of PEEHIP funds in any particular dollar amount; the employer contribution is actually paid by the employer to the Public Education Employees Health Insurance Fund ("PEEHIF"). The defendants argued that PEEHIP participants instead received insurance coverage. Additionally, the defendants argued that the plaintiffs were unable to establish an equal-protection violation because, they argued, the plaintiffs could not show that they were treated differently from other similarly situated individuals because, after the 2010 policy changes, the plaintiffs now pay the same premiums as other PEEHIP participants for similar coverage. Finally, the defendants asserted that, even assuming that the plaintiffs' equal-protection rights were implicated, the 2010 policy changes nonetheless "pass constitutional muster" under the " 'rational basis test.' "

As to the plaintiffs' claims regarding a denial of due process, the defendants contended, among other things, that "the rates of monthly premiums that PEEHIP participants must pay" did not create a property interest that would be protected by due-process rights. In addition, their actions "easily passed the applicable rational basis test" related to a due-process analysis. Finally, the defendants argued that the plaintiffs' allegations did not establish a violation of freedom-of-association rights guaranteed by the First Amendment.

In their opposition to the summary-judgment motion, the plaintiffs argued that the defendants had failed to address their claims. Specifically, although the defendants focused on whether the plaintiffs paid the same premiums as did other participants, that consideration, the plaintiffs said, was irrelevant. Instead, the plaintiffs claimed that they were challenging the loss of the use of an allotment by public-education employees married to public-education employees who desire family coverage. Further, the plaintiffs submitted, among other things, certain PEEHIP publications they maintained demonstrated that, before the 2010 policy changes, they received allotments-referred to in the documents as "allocations"-but that, after the changes, one spouse was denied the use of an allocation/allotment if the couple purchased family coverage to cover dependents. The plaintiffs argued that the defendants' "documents clearly establish that each [public-education employee] earns an 'allocation' for the purchase of insurance" that was being denied to them "for the sole reason that the [public-education employee] has chosen to marry another [public-education employee] and to have children." The plaintiffs alleged that, as a result of the 2010 policy changes, they had been "denied benefits they would have received had they been treated the same" as other PEEHIP participants.

Following subsequent related filings by the parties and a hearing, the trial court denied the defendants' summary-judgment motion. The defendants filed a "motion for reconsideration," arguing that the only remaining issue was a legal question and seeking permission to take an interlocutory appeal pursuant to Rule 5, Ala. R. App. P. The trial court denied the defendants' request to "reconsider" but granted them permission to appeal based on its conclusion that "[a]n immediate appeal from said Order would materially advance the ultimate termination of the litigation." The defendants then filed a petition for permission to appeal in this Court, which we granted.

Discussion

"This Court has stated the following with regard to permissive appeals:

" 'In the petition for a permissive appeal, the party seeking to appeal must include a certification by the trial court that the interlocutory order involves a controlling question of law, and the trial court must include in the certification a statement of the controlling question of law. Rule 5(a), Ala. R. App. P. In conducting our de novo review of the question presented on a permissive appeal, "this Court will not expand its review ... beyond the question of law stated by the trial court. Any such expansion would usurp the responsibility entrusted to the trial court by Rule 5(a)." BE & K, Inc. v. Baker, 875 So.2d 1185, 1189 (Ala. 2003)....'
" Alabama Powersport Auction, LLC v. Wiese, 143 So.3d 713, 716 (Ala. 2013)."

Northstar Anesthesia of Alabama, LLC v. Noble, 215 So.3d 1044, 1047 (Ala. 2016).

Here, the trial court certified the following controlling question of law:

"Whether given the undisputed facts the Defendants violated Plaintiffs' constitutional rights under the Equal Protection Clause, the Due Process Clause, or the First Amendment, by requiring Plaintiffs to pay the same health insurance premiums as other PEEHIP participants and by not 'allotting' a specific amount of PEEHIP funds to each PEEHIP participant individually?"

The question, viewed in the context of the arguments below, addresses in two ways the constitutionality of the 2010 policy when public-education employees married to public-education employees opt for family coverage: (1) the constitutionality of the requirement that the plaintiffs pay a premium for that coverage, and (2) the constitutionality of the failure to allot one spouse a "specific amount of PEEHIP funds."

A. Constitutionality of the premiums

First, the plaintiffs claim that the certified question, by stating the issue in terms of whether the plaintiffs' rights were violated by requiring the payment of the "same" premium, misstates the issue. Specifically, as detailed above, the plaintiffs argued in the trial court that they were not challenging the premiums but, instead, the denial of an allotment. At the hearing on the motion for a summary judgment, counsel for the plaintiffs stated:

"[Counsel for the defendants] says the issue is, do plaintiffs have a federal constitutional right to pay lower premiums for health insurance benefits than other PEEHIP participants? That's not the issue. That's not what we say. That is not what we have said in our complaint. That is not what we said in the Motion to Dismiss. That's not what we said in our brief that we filed here.
"What we have said, Judge, is that public employees, public teachers, earn sometimes it is referred to allotments and sometimes it is referred to allocations, that they were receiving allocations that they had earned before the PEEHIP board decided to take that away from them and to set up different classes of individuals and treat them differently and to take their property right without due process. That's what we have said from the beginning."

Further, in their brief on appeal, the plaintiffs state:

"The controlling question in this litigation is not the amount of premiums Plaintiffs are charged for family coverage or whether Plaintiffs' pay the same amount of premiums paid by other educators. To be absolutely clear, this case does not in any way involve the amount of premiums charged or paid.5"_____________
"5 To Plaintiffs' knowledge, the PEEHIP Board has not manipulated the premium rates in a constitutionally impermissible manner-only Plaintiffs' right to utilize their earned insurance allocation."

Appellees brief, at 11-12.

It is true that in their complaint in this case, as discussed above, the plaintiffs appeared to challenge the fact that, before the 2010 policy changes, they had no "out-of-pocket costs for health insurance" and now, after the changes, they have to pay a family-coverage premium. However, given the statements by the plaintiffs in the trial court and on appeal, it appears that, either by waiver or abandonment, they no longer wish to pursue such a claim. Although the bulk of the defendants' arguments on appeal address the constitutionality of the premiums, we see no need to address it now, because this portion of the question certified by the trial court no longer addresses a controlling question of law in this case.

B. Constitutionality of the denial of an allotment

In discussing the second issue in the certified question, we must address the parties' arguments as to the nature of the "allocation" or "allotment" in this case. The defendants argue that the plaintiffs are not actually entitled to any sort of allotment of a specific dollar amount to purchase insurance coverage and, because of this, the plaintiffs' constitutional claims must fail. Specifically, the legislature sets the amount of the employer contribution that the public-education employers must pay for each employee. See § 16-25A-8(b), Ala. Code 1975 (providing that the legislature sets the employer-contribution rate after the PEEHIP Board certifies to the governor and the legislature the amount necessary to fund coverage). The employer contribution is not actually given to PEEHIP participants for them to use to purchase insurance; instead, it is paid to PEEHIF. § 16-25A-8(f), Ala. Code 1975. According to the defendants, the employer contribution must be paid regardless of what health-insurance option a public-education employee selects, even if the employee does not enroll in PEEHIP at all. This, the defendants contend, illustrates that no dollar amount is allotted for public-education employees to use to purchase insurance.

However, the plaintiffs produced documents issued by PEEHIP-certain issues of the PEEHIP Advisor newsletter and copies of the PEEHIP Member Handbook for various years-that show that PEEHIP insurance-availability options were explained to PEEHIP participants in terms of "allocations" or "state allocations." As late as 2014, the PEEHIP Member Handbook indicated that PEEHIP participants "earned" allocations and that those "state allocation[s] will pay in full" optional coverage plans, or that a PEEHIP participant could "apply the state allocation" for other coverage plans. Further, the plaintiffs note that the August 2010 PEEHIP Advisor newsletter stated that, after the 2010 policy changes, public-education employees married to other public-education employees must use both "allocations" if purchasing family coverage, and that one of the allocations they earned could not be used for optional plans. Finally, the 2015-2016 PEEHIP Member Handbook-issued after this action was filed-omits mention of allocations completely. It describes employees as now earning months of "coverage," and the section of the handbook previously discussing "allocations" now refers to "employer contributions."

The defendants, on the other hand, explain that the allocations or allotments were not the actual "employer contribution" being given to public-education employees for their use; that money was always paid to the PEEHIF no matter what a public-education employee elected to do. Instead, according to the defendants, the term "allocations" simply described "eligibility for coverage." By law, the defendants say, PEEHIP participants did not receive the money, a fact they say is confirmed by the statute, and, they say, any statement implying the contrary in the PEEHIP handbooks or newsletters would not trump the statute.

We agree with the defendants that the allocations or allotments did not represent a sum of money PEEHIP participants were entitled to receive to purchase insurance-all funds are instead paid by public-education employers to PEEHIF. Rather, the "allocations" simply represented a public-education employee's monthly eligibility for insurance coverage. Nevertheless, this does not end the analysis. It appears from the materials before us that public-education employees "earned" or were "eligible" for monthly coverage and could use that benefit, at their option, to select certain coverage alternatives. Whether described as allotments, allocations, or units of monthly eligibility, each public-education employee accrues a monthly insurance benefit. Each public-education employee may use this benefit to purchase family coverage. But, as the plaintiffs allege and the materials before the Court confirm, when two PEEHIP participants are married to each other, they may not use one of their accrued benefits to purchase family coverage-they must use both. When compared to individual PEEHIP participants-where only one accrued monthly benefit can be used to purchase family coverage-one spouse is effectively denied the monthly insurance benefit that accrued. In such a case, it does not matter that the money represented by the employer contribution is paid to PEEHIF-one spouse is denied the benefit of the coverage he or she earned. It is true that, ultimately, the premium paid for the family coverage is the same. Nevertheless, the benefits provided are different-the couple is treated as though they receive only one monthly eligibility benefit instead of two.

The defendants' arguments on appeal do not address the constitutionality of the purported denial of this monthly coverage benefit. Instead, the defendants focus on whether the plaintiffs were entitled to an allocation of specific funds. It is true that, both in the trial court and on appeal, the plaintiffs at times refer to the allocations as something granting them a specific dollar amount to use to purchase insurance, which, as discussed above, the defendants have shown is not the case. However, the plaintiffs also challenge the denial or loss of the benefit provided to one of the spouses. This, we believe, is the controlling question of law in this case, and it is not addressed by either the certified question or in the defendants' brief.

When a trial court fails to correctly identify the controlling question of law, a Rule 5 permissive appeal is due to be dismissed. BE & K, Inc. v. Baker, 875 So.2d 1185, 1189 (Ala. 2003). See also Continental Cas. Co. v. Pinkston, 941 So.2d 926 (Ala. 2006) (dismissing a Rule 5 permissive appeal where the trial court's order and appellant's brief were based on an incorrect assumption and did not address the controlling issue). After thoroughly reviewing the record and the arguments presented by the parties, we conclude that the permission to appeal under Rule 5, Ala. R. App. P., was improvidently granted, and we dismiss the appeal. See Hughes Beverage Co. v. Hughes, 861 So.2d 1087, 1088 (Ala. 2003).

APPEAL DISMISSED.

Stuart, C.J., and Parker, Wise, Bryan, and Sellers, JJ., concur.

Murdock, J., concurs in the result.

Bolin, J., dissents.

Main, J., recuses himself.

      As discussed below, this Court in RSA I ordered the dismissal of several of the original defendants in the underlying action.

      In accordance with the allegations in the complaint, this policy is referred to in RSA I as "the 2009 policy." 182 So.3d at 530-31. Subsequent pleadings filed after RSA I revealed that the policy changes were implemented in 2010.

      As to this point, the complaint states: "[R]ather than having no out-of-pocket costs for health insurance, the couple has to contribute [a family-coverage premium] each month for health insurance."

      Specifically, after the 2010 policy changes, all PEEHIP participants pay a $15 premium for individual coverage and a $117 premium for family coverage. PEEHIP participants who are married to another PEEHIP participant also each have to pay the $15 monthly premium for individual coverage as well as the $117 premium for family coverage if they wish to cover dependents. Thus, according to the defendants, the plaintiffs are now paying the same premium for family coverage as individual public-education employees.

      The defendants maintained that the "Plaintiffs' claims are subject to rational basis review because they do not involve a suspect classification or a fundamental right."

      It appears that, although the plaintiffs used the term "allotment" in their complaint, the PEEHIP documents use the term "allocation" to refer to the same item. The terms are used interchangeably in the record and the briefs.

      In their opposition, the plaintiffs did not challenge the defendants' arguments regarding their freedom-of-association claim. Further, they advance no argument regarding it on appeal. We thus conclude that the plaintiffs have abandoned this claim.

      It appears that the term "allocation" was used because, before 1983 and the creation of PEEHIP, public-education employees were actually allocated a sum of money to use to purchase insurance coverage on their own.


source: Caselaw Access Project

author: PARKER, Justice. SELLERS, Justice (dissenting).

license: Public Domain

text:
    Barbara LANE, as Administrator of the Estate of Ora Sullins, deceased v. MAIN AND ASSOCIATES, INC., d/b/a Southern Springs Healthcare Facility
    1161041
    Supreme Court of Alabama.
    June 8, 2018 Rehearing Denied August 24, 2018
    Justin C. Owen, Dennis E. Goldasich, Jr., and Joshua M. Vick of Goldasich & Associates, LLC, Birmingham, for appellant.
    Christina D. Crow of Jinks Crow & Dickson, P.C., Union Springs; and Thomas A. Kendrick and Holly S. Bell of Norman, Wood, Kendrick & Turner, Birmingham, for appellee.
   PARKER, Justice.

AFFIRMED. NO OPINION.

See Rule 53(a)(1) and (a)(2)(E), Ala. R. App. P.

Bolin, J., concurs.

Shaw and Mendheim, JJ., concur specially.

Stuart, C.J., and Bryan and Sellers, JJ., dissent.

Main and Wise, JJ., recuse themselves.

SHAW, Justice (concurring specially).

I concur to affirm the summary judgment in this case that, for purposes of this writing, essentially held that the underlying action was untimely filed. The background of this case is provided in Justice Sellers's dissenting opinion, and I see no need to repeat it here.

The dispositive issue to me is whether the defendant, Main and Associates, Inc., d/b/a Southern Springs Healthcare Facility ("Main and Associates"), was properly and timely served with process. The chief executive officer and part owner of Main and Associates is also a part owner of Main Drug Store, a pharmacy. It appears from the record that these are two distinct businesses that are not affiliated and do not operate as alter egos and that they are both located in Union Springs.

Barbara Lane, as administrator of the estate of Ora Sullins, deceased, attempted to commence a wrongful-death action against Main and Associates but apparently served the complaint on another business. When she discovered Main and Associates' identity, she attempted service of process by a certified letter addressed and mailed to Main and Associates' registered agent at Main and Associates' street address. For some inexplicable reason, the letter was not delivered to that address but was instead placed in Main Drug Store's post-office box. That letter was received and signed for by Dorothy Surles, an employee of Main Drug Store.

Surles received the letter after the statute of limitations for Lane's wrongful-death action had expired, but it is alleged that she received it within the 120-day period provided in Rule 15(c)(3), Ala. R. Civ. P. Main and Associates apparently received the letter from the drug store after the 120-day period had expired. For Lane's action to be considered timely, Lane was required to show that Surles's receipt of the letter imputed service to Main and Associates. The pertinent legal issue is whether Surles was an "agent" for Main and Associates as contemplated by Rule 4(i)(2)(C), Ala. R. Civ. P. That rule states:

"Service by certified mail shall be deemed complete and the time for answering shall run from the date of delivery to the named addressee or the addressee's agent as evidenced by signature on the return receipt. Within the meaning of this subdivision, 'agent' means a person or entity specifically authorized by the addressee to receive the addressee's mail and to deliver that mail to the addressee."

(Emphasis added.)

According to the testimony in the record, Surles was an 18-year employee of Main Drug Store. She routinely picked up mail from the drug store's post-office box, but she was not the only employee who did so. Occasionally certified mail is in the box and she signs for it. She then takes the mail back to the drug store and leaves it with the pharmacist. She has never been tasked with picking up mail for Main and Associates; she does not know Main and Associates' post-office-box number and does not have a key for its post-office box. She had never been to Main and Associates' physical location. She has never been asked to pick up mail for Main and Associates, and she has never been authorized to do so. She did not recall signing for the certified letter at issue or ever before signing for Main and Associates' mail. Apparently, she had done so at least once before-in 2015 she signed for a summons in a different civil action against Main and Associates. She did not remember doing so.

In its motion for a summary judgment, Main and Associates contended that it was untimely served with process. Lane was required to present substantial evidence to defeat that motion. "Substantial evidence" is "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assur. Co. of Florida, 547 So.2d 870, 871 (Ala. 1989). Here, Lane was required to provide substantial evidence that Surles was, under Rule 4(i)(2)(C), "specifically authorized by" Main and Associates to receive its mail.

I do not believe that such substantial evidence was produced in this case. Here, Surles was picking up mail for the drug store at which she worked; she had not been tasked, and had never been tasked, with picking up mail for Main and Associates. At best, the two times she received mail for Main and Associates in her past 18 years of employment-in 2015 and in the instant case-appear inadvertent. From these two isolated incidents, in which her picking up Main and Associates' mail was not requested, authorized, or intended, I do not believe that a trier of fact could reasonably infer that Surles was "specifically authorized by" Main and Associates to pick up its mail. To hold otherwise would greatly expand the meaning of the term "agent" in Rule 4(i)(2)(C) to someone other than one who is "specifically authorized."

The result in this case is unfortunate but, for all that appears, required. Lane, by addressing the letter to Main and Associates' registered agent, did what was required by the face of the rules relating to service of process. However, an intervening act-the post office's failure to deliver the letter to the correct address-prevented timely service of process.

Mendheim, J., concurs.

SELLERS, Justice (dissenting).

Barbara Lane, as administrator of the estate of Ora Sullins, deceased, appeals from a summary judgment entered in favor of Main and Associates, Inc., d/b/a Southern Springs Healthcare Facility ("Main and Associates"). For the following reasons, I respectfully dissent from this Court's decision affirming, without an opinion, the summary judgment in favor of Main and Associates.

Lane filed a wrongful-death action under § 6-5-410, Ala. Code 1975, against several defendants, one of which was Main and Associates. Lane did not name Main and Associates as a defendant in her original action. However, she filed an amended complaint substituting Main and Associates as a defendant after the applicable statute of limitations in § 6-5-410(d), Ala. Code 1975, had expired. The circuit court entered a summary judgment in favor of Main and Associates, holding that Lane's amended complaint did not relate back under Rule 15(c), Ala. R. Civ. P., to the date she originally filed her wrongful-death action and that the action as to Main and Associates was, thus, barred by the two-year limitations period set forth in § 6-5-410(d). The controlling issue addressed by the circuit court was whether Main and Associates had been properly served with the amended complaint within the limitations period because the return receipt for the certified mail was signed by someone other than the registered agent for Main and Associates. Lane had requested that the clerk of the circuit court serve the amended complaint by certified mail to Main and Associates' registered agent on file with the Secretary of State's office:

"[Main and Associates]
"C/o Michael O. Emfinger
"103 Beaumont Drive
"Union Springs, AL 36089"

Although the certified mail was addressed to Main and Associates at its registered office as reflected by the Secretary of State's office, the mail was apparently delivered to a post-office box belonging to Main Drug Store. Although Main and Associates and Main Drug Store are separate entities, Benjamin Gordon Main is part owner of Main Drug Store and part owner and chief executive officer of Main and Associates. The return receipt for the certified mail indicates that the mail was signed for and accepted by Dorothy Surles, an 18-year employee of Main Drug Store.

Rule 4(i)(2)(C), Ala. R. Civ. P., provides, in pertinent part:

"Service by certified mail shall be deemed complete and the time for answering shall run from the date of delivery to the named addressee or the addressee's agent as evidenced by signature on the return receipt. Within the meaning of this subdivision, 'agent' means a person or entity specifically authorized by the addressee to receive the addressee's mail and to deliver that mail to the addressee. Such agent's authority shall be conclusively established when the addressee acknowledges actual receipt of the summons and complaint or the court determines that the evidence proves the addressee did actually receive the summons and complaint in time to avoid a default."

(Emphasis added.) Both Surles and Benjamin Gordon Main testified in their depositions that Surles had never been authorized to pick up mail or to receive legal documents for Main and Associates. However, it was undisputed that Surles had on at least one previous occasion signed for and accepted certified mail addressed to Main and Associates. Further, Surles had never been disciplined or instructed not to accept certified mail on behalf of Main and Associates. Main candidly testified in his deposition that Main and Associates routinely received certified mail and that in this case, although he received the certified mail containing the amended complaint at some unspecified time, he merely threw the mail in the trash unopened because it was addressed to Michael D. Emfinger, who had been dead for approximately nine years. In fact, Main stated that it was his habit to throw away all mail received by Main and Associates that was addressed to Emfinger. Main further testified in his deposition that, although he had instructed the chief operating officer of Main and Associates to update the company's "records" with the Secretary of State, he nonetheless could not state who had been designated as the registered agent for service of process. Pursuant to § 10A-1-5.31, Ala. Code 1975, every corporation doing business in Alabama must maintain with the Alabama Secretary of State a registered agent and a registered address for service of process. In the event a corporation fails to maintain a registered agent as required by statute, § 10A-1-5.35, Ala. Code 1975, provides that

"the entity may be served with process as provided by the Alabama Rules of Civil Procedure and may be served with any other notice or demand required or permitted by law to be served on the entity in a manner similar to the procedure provided by the Alabama Rules of Civil Procedure for the service of process."

Rule 4(c)(6), Ala. R. Civ. P., provides that a corporation may be served "by serving an officer, a partner (other than a limited partner), a managing or general agent, or any agent authorized by appointment or by law to receive service of process." The record is clear that, even though the registered agent in this case had been dead for several years, he was still publicly listed as Main and Associates' agent for service of process. It is further undisputed that Surles had on at least one previous occasion signed for and accepted certified mail on behalf of Main and Associates. For these reasons, I conclude that a genuine issue of material fact exists as to whether Surles's acceptance of the certified mail containing the amended complaint was effective. A reasonable person, reviewing the evidence in a light most favorable to Lane, could conclude that the death of the corporation's registered agent, coupled with Surles's actions of signing and accepting certified mail on the corporation's behalf, accomplished service as contemplated by the Alabama Rules of Civil Procedure. Accordingly, I would reverse the summary judgment in favor of Main and Associates.

      Numerous arguments were presented on appeal; I will address the one Justice Sellers identifies in his dissent.

      There were other defendants in this case; they are not material to this appeal.


author: PER CURIAM.

text:
    JoAnn DAILEY v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY
    2161069
    Court of Civil Appeals of Alabama.
    August 24, 2018
    On Application For Rehearing
   PER CURIAM.

JoAnn Dailey ("the claimant") seeks rehearing of this court's affirmance of a summary judgment entered by the St. Clair Circuit Court on her claims against her uninsured-motorist ("UM") insurance carrier, State Farm Mutual Automobile Insurance Company ("the insurer"), in which she had asserted that, while operating an automobile, she had been injured in an incident in which an unknown and unidentified person operating a second automobile had operated the second automobile so as to force the claimant's automobile off a public road and to strike a stationary object. The insurer's summary-judgment motion was supported by the claimant's responses to the insurer's request for admissions; an incident report prepared by a representative of the St. Clair County Sheriff's Department on September 18, 2009, referencing September 8, 2009, as the date of the incident made the basis of the claimant's action; and a copy of an insurance policy certified by the insurer's custodian of records. The insurer asserted in its motion that the claimant had not satisfied the provision in the policy that required reporting of accidents to police within 24 hours thereof and that, under this court's holding in Alabama Farm Bureau Mutual Casualty Insurance Co. v. Cain, 421 So.2d 1281 (Ala. Civ. App. 1982), she was not entitled to UM benefits as a matter of law. The claimant moved to strike the incident report and the certified copy of the policy and contended that Cain was not consistent with Walker v. GuideOne Specialty Mutual Insurance Co., 834 So.2d 769 (Ala. 2002). The circuit court, after a hearing, entered a summary judgment adopting the insurer's position and referring to portions of the exhibits adduced by the insurer (i.e., implicitly denying the motion to strike). On June 22, 2018, this court issued a no-opinion order affirming that judgment.

The claimant has filed an application for a rehearing, asserting, among other things, that this court erred in affirming the circuit court's implicit denial of her motion to strike, which challenged the insurer's filing of the incident report and the certified copy of the insurance policy. However, to the extent that the claimant has argued that the incident report supplied by the insurer was not "certified or otherwise authenticated," we note that the claimant admitted the pertinent facts contained in that report: that the incident made the basis of her claim had occurred on September 8, 2009, between 2:00 and 2:30 p.m., at the intersection of St. Clair County Roads 26 and 22; that the claimant's automobile did not come into contact with another vehicle, nor any sign, tree, fence, or other stationary object on the side of the road; that police, ambulance services, or paramedic services were not called to the scene of the incident; and that the claimant made an incident report to Officer Joey Brown of the St. Clair County Sheriff's Office on September 18, 2009. Thus, any error on the part of the circuit court in failing to strike the incident report on the grounds stated by the claimant was necessarily harmless and did not prejudice the claimant. See Rule 45, Ala. R. App. P., and Johnson v. First Acceptance Ins. Co., 227 So.3d 77, 82-83 (Ala. Civ. App. 2017) (any error in failing to strike statements in affidavit as hearsay and outside affiant's personal knowledge was harmless when other evidence submitted in connection with summary-judgment motion revealed that affiant had affirmed accuracy of those statements during deposition testimony).

As to the insurance policy, Karen Hodge, an underwriter employed by the insurer, submitted a notarized statement labeled "Certified Policy Record" that stated, in pertinent part:

"I, the undersigned, do hereby confirm that I am custodian of the records pertaining to issuance of policies by [the insurer].
"I certify that the attached documents represent a true and accurate record of the terms and conditions of Policy Number 31 7553-E01-01E including any endorsements, if applicable, for the policy term(s) May 12, 2009 [sic-- the attached declarations page states that the effective date is May 1, 2009] to November 1, 2009 and insuring [the claimant and her husband] based on available records.
"This policy was in effect on the loss date of September 08, 2009."

Although the claimant contends that the foregoing statements do not satisfy the requirements of Rule 56(e), Ala. R. Civ. P., requiring that affidavits submitted in connection with a summary-judgment motion "be made on personal knowledge, ... set forth such facts as would be admissible in evidence, and ... show affirmatively that the affiant is competent to testify to the matters stated therein," we rejected a similar argument in Coleman v. BAC Servicing, 104 So.3d 195 (Ala. Civ. App. 2012). In Coleman, which involved a mortgagor's attack on the propriety of a mortgagee bank's foreclosure of the pertinent mortgage, we concluded that the provisions of Rule 56(c) had been satisfied by an affiant's statements that, in her occupational position, she had had " 'direct access to the books and records of [the bank] regarding the account which form[ed] the basis of th[e] action,' " had " 'personal knowledge of the facts set forth in [her affidavit],' " had " 'reviewed [the] relevant business books and records,' " which had been " 'made in the ordinary course of the [bank's] business' " and which related " 'to [the mortgagor's loan] ... at the time of the transaction, occurrence or event referred to therein or ... within a reasonable time thereafter,' " and that those books and records had been " 'kept under [her] care, supervision, and/or control.' " 104 So.3d at 201. Further, this court held in Coleman that "a document is deemed to be 'sworn' if it is authenticated by the affiant and attached as an exhibit to the affidavit," 104 So.3d at 202, and the affidavit of the insurer's custodian of records in this case satisfied that standard.

To the extent that the claimant has asserted that the policy and certification are hearsay or are not authenticated, we note that Rule 803(6), Ala. R. Evid., provides that "record[s] ... of ... events ... made ... by ... a person with knowledge, if kept in the course of a regularly conducted business activity [pursuant to] the regular practice of that business activity," are not excluded by the hearsay rule if testified to by the custodian, whereas authentication may occur under Rule 901(a), Ala. R. Evid., if evidence is adduced "sufficient to support a finding that the matter in question is what its proponent claims." The custodian in this case testified that she was "custodian of the records pertaining to issuance of policies," indicating regular conduct of business on the part of the insurer to issue insurance policies, and that the insurer issued the attached policy of insurance to the claimant and her husband applicable to occurrences between May 12, 2009, and November 1, 2009. Further, the exhibit to the certification contains a number of documents containing typical insurance-policy provisions and bearing the insurer's distinctive trademarks and expressly states that "[t]his policy is issued by State Farm Mutual Automobile Insurance Company." We thus agree that Royal Insurance Co. of America v. Crowne Investments, Inc., 903 So.2d 802 (Ala. 2004), is authority for the proposition that the certified policy had "distinctive characteristics" that "constitute[d] a prima facie showing that the policy offered ... is likely authentic," which is "all that is required under Rule 901(a), Ala. R. Evid." 903 So.2d at 809.

The claimant further challenges this court's affirmance of the summary judgment based upon our decision in Cain. Although the insurer's policy and declarations provide for UM bodily-injury coverage, described in the policy as "UNINSURED MOTOR VEHICLE COVERAGE," in the amount of $25,000 per person and $50,000 per accident, the insurer's policy further provides, under Paragraph 6 of a section entitled "INSURED'S DUTIES," that

"[a] person making claim under:
"....
"B. Uninsured Motor Vehicle Coverage must report an accident, involving a motor vehicle whose owner and driver remain unknown, to the police within 24 hours and to us within 30 days."

In Cain, this court considered the propriety of a judgment on a jury's verdict awarding damages on a claim for unpaid UM insurance benefits arising from an incident in which the plaintiff insured driver had claimed that the automobile that she had been operating had been forced off a public road by the strength of headlights engaged by two motor vehicles approaching the plaintiff's automobile, causing injuries to the plaintiff. 421 So.2d at 1282. Although the investigating police officer took a statement from the plaintiff at the scene of the occurrence, the plaintiff told the officer that she had "run off the road" without mentioning the involvement of any other motor vehicle. Id. The insurance policy issued by the defendant contained a provision defining " 'Hit-and-Run Automobile' " as a motor vehicle that caused bodily injury to an insured " 'provided: (1) there cannot be ascertained the identity of either the operator or the owner of [the vehicle, and] (2) the Insured or someone on his behalf shall have reported the accident within 24 hours to a police, peace or judicial officer or to the Commissioner of Public Safety.' " 421 So.2d at 1283. We held that the judgment was due to be reversed based on the following reasoning that is pertinent to the present case:

"The clear and unambiguous language defining 'hit-and-run' provides that compliance with the definitional requirements is a condition precedent to coverage for 'hit-and-run' accidents. In the absence of statutory provisions to the contrary, insurance companies have the same right as individuals to limit their liability or impose conditions upon coverage so long as such conditions are not inconsistent with public policy. Alabama Farm Bureau Mutual Casualty Insurance Company v. Goodman, 279 Ala. 538, 188 So.2d 268 (1966). Conditions precedent to an action on a policy requiring notice of an accident have been continually held valid and enforceable by the courts of this state. Almeida v. State Farm Mutual Insurance Company, 53 Ala. App. 175, 298 So.2d 260 ( [Civ. App.] 1974). In Alabama Farm Bureau Insurance Company v. Cook, 388 So.2d 1001 (Ala. Civ. App. 1980) [,] we held that failure of an insured to comply with the 'Notice of Legal Action' provisions of a policy released the insurance company from liability on the uninsured motorist provisions. In Alabama Farm Bureau Mutual Casualty Insurance Co. v. Teague, 269 Ala. 53, 110 So.2d 290 (1959), our supreme court held that if the policy of ... insurance provides that notice of a loss must be in writing, the requirement is binding upon the insured, and notice must be in writing in the absence of waiver or estoppel.
"We can find no precedent in this state on the enforceability of the precise conditions in the 'hit-and-run' provisions of the policy before us. There is, however, considerable authority as to necessity of compliance with identical conditions in other states. A. Widiss, A Guide to Uninsured Motorist Coverage, §§ 4.7, 4.8 (Supp. 1980). We are unable, however, to distinguish any difference in the application of the 'hit-and-run' conditions and those conditions previously held enforceable by the courts of this state....
"The policy required as a condition to coverage that [the insured driver] or her legal representative report the accident to the police or other official within twenty-four hours. The record shows that [the insured driver] did talk to the investigating officer. There is no evidence, however, that she or anyone else informed the officer of any contributing circumstances including the possible involvement of other vehicles.
"... [The insured driver] put forward no proof to support a theory of waiver or estoppel on the part of [the defendant] as to the conditions precedent in the policy. See Freeman v. Alabama Farm Bureau Mutual Casualty Insurance Company, 395 So.2d 1014 (Ala. Civ. App. 1980), cert. denied, 395 So.2d 1017 (Ala. 1981).
"Proof of compliance with the conditions precedent to coverage under the uninsured motorist provisions was necessary to recovery on the policy. In the record before us, proof of non-compliance is uncontroverted. There being no evidence to support a necessary element of [the insured driver]'s claim, the trial court erred in submitting the case to the jury. This case is due to be reversed and remanded for the trial court to enter judgment in favor of [the defendant]."

421 So.2d at 1283-84.

Similarly, in this case, the insurer included a provision in its policy requiring, as a condition of recovery of UM insurance benefits, that a "report [of] an accident[ ] involving a motor vehicle whose owner and driver remain unknown" be made "to the police within 24 hours," which parallels the "hit-and-run" reporting provisions upheld as a valid defense to the defendant's liability in Cain. By statute, as the circuit court's judgment observed, drivers of automobiles involved in "an accident resulting in injury to ... any person shall immediately by the quickest means of communication give notice of such accident to ... the office of the county sheriff or to the state highway patrol" if the accident occurs outside municipal limits, Ala. Code 1975, § 32-10-5(a), and violations of that duty are punishable as felonies under Ala. Code 1975, § 32-10-6. Thus, far from being "inconsistent with public policy," Cain, 421 So.2d at 1283, the policy requirement upon which the insurer relied as a defense to liability as to the claimant's UM insurance claim is wholly congruent with the legislatively declared public policy favoring immediate reporting to state or local policing authorities of accidents involving bodily injury.

The claimant has no response to Cain apart from asserting that policy exclusions more restrictive than permitted by law are void. She draws an analogy to the holding of our supreme court in Walker, in which a coverage condition requiring " 'competent evidence other than the testimony of a person making [a] claim under [UM] or similar coverage' " as to accidents in which " 'there is no physical contact with the hit-and-run vehicle,' " 834 So.2d at 770, was held void as contrary to law because, in that court's view, the provision "raise[d] the burden of proof for [the plaintiff in Walker ] and others similarly situated to a burden higher than the evidentiary burden required by law in Alabama" and amounted to an attempt "to alter Alabama law by contract." 834 So.2d at 773.

Unlike the situation in Cain-- a case that our supreme court distinguished (but, notably, did not overrule) in Walker-- a close reading of Walker reveals that the policy provision at issue in that case was not struck down simply because it did not parrot the UM statute but, instead, because the provision imposed an extra-statutory hurdle, in the form of a heightened corroborative-evidence requirement, that contravened the insured's right to coverage upon a showing by substantial evidence to a fact-finder of legal entitlement to recover damages against an uninsured motorist. As Justice Houston correctly noted in his special writing in Walker, "[n]othing in Alabama law [made the insured's] testimony incompetent; for an insurer to attempt to do so and to thereby deprive [the insured] of a claim under her uninsured-motorist coverage is in derogation of § 32-7-23[, Ala. Code 1975,] and is void as against public policy." 834 So.2d at 775 (Houston, J., concurring in the result). Recent federal authority applying Alabama law has treated Cain as good law on the specific issue of the validity of a contractual duty to report an accident within 24 hours to police in order to recover UM benefits as to an occurrence involving a claimed phantom vehicle. Raymond v. GEICO Cas. Co., No. 2:16-cv-01292-MHH, 2018 WL 1900551 (N.D. Ala. April 20, 2018) (not published in F. Supp. 3d).

In this case, the incident made the basis of the claimant's action against the insurer occurred on September 8, 2009, but no report to the local sheriff was made of that incident until September 18, 2009, in contravention of both the 24-hour reporting requirement of the pertinent insurance policy and the statutory requirement that an accident involving bodily injury be reported "immediately by the quickest means of communication." § 32-10-5(a). The insurer demonstrated that, as a matter of law, it was entitled to prevail on the claimant's action against it seeking UM benefits.

The claimant's application for a rehearing is, therefore, due to be overruled. In light of our decision, the insurer's motion to dismiss that application on the basis that the claimant's brief in support of the application is identical to that filed on original submission is denied as moot.

MOTION TO DISMISS APPLICATION FOR REHEARING DENIED; APPLICATION OVERRULED.

Thompson, P.J., and Moore and Donaldson, JJ., concur.

Pittman, J., concurs specially, which Thomas, J., joins.

PITTMAN, Judge, concurring specially.

I concur in the opinion to overrule the application for a rehearing, but I write separately to address counsel's assertions in that application, most notably his insistence that this court's June 22, 2018, no-opinion order of affirmance is "a mere conclusion, devoid of illumination or instruction" and that "the parties in the present matter are due more, and should be given more, than a mere conclusion."

Rule 53(a), Ala. R. App. P., among other things, authorizes this court to affirm a summary judgment without an opinion when "an opinion in the case would serve no significant precedential purpose" and "[the] judgment is supported by the record." Rule 53(a)(1) and (a)(2)(E). Although Rule 53 does not require an appellate court to set forth its basis for so ruling (apart from subsection (b), which mandates only that Rule 53(a)(1) and the applicable subsection of Rule 53(a)(2) be specified), this court, as has been appropriate and as a courtesy to litigants and the judiciary, has routinely included a short statement of additional authorities upon which this court has relied in affirming the pertinent judgment. That practice was followed in this court's order of affirmance in this case, and clearly indicated to the parties and counsel the court's view that Alabama Farm Bureau Mutual Casualty Insurance Co. v. Cain, 421 So.2d 1281 (Ala. Civ. App. 1982), and not Walker v. GuideOne Specialty Mutual Insurance Co., 834 So.2d 769 (Ala. 2002), was controlling. Counsel's insistence that the parties in this case were "due more" than an order of affirmance thus ignores both the text of Rule 53 and the additional authorities provided by this court.

Rule 53 has been in effect for more than a quarter of a century, striking a balance between the parallel duties of appellate judges under the Alabama Canons of Judicial Ethics to be faithful to the law and to dispose promptly of the business of the court. See Canon 3A, Alabama Canons of Jud. Ethics; see also Order of the Supreme Court Adopting Appellate Court Time Standards dated April 10, 1995 (espousing 290-day period for intermediate appellate courts to resolve majority of cases). Unlike the United States Supreme Court, which grants plenary review in approximately 80 cases out of the approximately 7,000 to 8,000 cases brought before the Court each year, this court is not afforded discretion to decline to decide the great majority of cases brought before it; further, and contrary to the earnest beliefs of counsel, not every case presented to this court is res integra warranting a published opinion. Rule 53 recognizes both of those truths, and although I agree with the reasoning set forth in the opinion to overrule the application, I believe that Rule 53 was properly applied in this case upon its original submission.

Thomas, J., concurs.

      The court's June 22, 2018, order of affirmance in this case was issued within the 290-day time standard adopted by our supreme court.

      On the date this court's opinion on rehearing was issued, this information could be found at https://www.supremecourt.gov/about/justicecaseload.aspx. A copy of this information can be found in this court's file on this appeal.


author: PITTMAN, Judge.

text:
    William R. HIGGS v. Marilyn E. HIGGS
    2170122 2170123
    Court of Civil Appeals of Alabama.
    August 24, 2018
    Carson I. Nicolson of Stone Crosby, P.C., Daphne, for appellant.
    Thomas H. Nolan, Jr., Mobile; and Joshua B. Boone, Mobile, for appellee.
   PITTMAN, Judge.

These appeals concern the correctness of a judgment of the Mobile Circuit Court, which was entered in modification and enforcement proceedings directed to a divorce judgment entered in 1991; in these appeals, William R. Higgs ("the former husband") seeks review of those aspects of the judgment that reduced the former husband's periodic-alimony obligation from $5,000 to $3,000 per month instead of terminating that obligation and that awarded Marilyn E. Higgs ("the former wife") a lump-sum arrearage judgment that included $28,000 in unpaid alimony for the months between the initiation of the modification action and the entry of the judgment. We reverse and remand.

The record reveals that the parties were divorced in 1991 after a 17-year marriage. The divorce judgment provided, among other things, that the former husband was to pay the former wife $150,000 as alimony in gross and $5,000 per month as periodic alimony and was to maintain a $500,000 life-insurance policy on his life for the benefit of the former wife so long as he was required to pay periodic alimony. In July 2016, approximately 25 years later, the former husband brought an action seeking the termination of his obligations to pay periodic alimony and to maintain a life-insurance policy ("the modification action"), alleging that "there has been a material change in the circumstances which exist[ ] between the parties," that the former husband had "had to retire from being a heart surgeon in September of 2013" but had worked since that time as a wound-care physician, that the former husband's income had decreased, that the former husband's income was soon to again decrease because "he [was] unable to continue working such extensive hours and such a physically demanding practice," that the former wife had received approximately $1.371 million in alimony since the entry of the divorce judgment, and that the former wife had "not seen the need to become employed" since the entry of the divorce judgment. The former wife, in her answer to the former husband's modification petition, admitted the existence of the judgment provisions at issue, but she denied the existence of a material change in circumstances and denied that the former husband was entitled to relief. The former wife also brought a separate action asserting that the former husband was in contempt of the divorce judgment ("the contempt action") because, she said, he had failed to supply proof of having acquired the life-insurance policy required therein and had failed to pay periodic alimony as required; the former husband answered that petition, admitting that he had not paid periodic alimony, but averred that he was no longer capable of working and earning his former income.

In November 2016, the former wife filed a motion in the modification action requesting that the former husband be directed, pendente lite, to pay periodic alimony in accordance with the terms of the divorce judgment pending the trial scheduled in May 2017; she averred that she had "relied on the alimony as her sole source of income for over twenty years" and that it would not be possible "for her to meet her monthly obligations and provide for her needs until" the trial. The former husband filed a response in opposition to the former wife's motion, again stating that he no longer had the capability of paying additional alimony to the former wife and alleging that the former wife "ha[d] amassed a significant estate which include[d] cash savings and stocks valued at over $400,000," that the former wife had no debt except for mortgage indebtedness, and that she was receiving $1,800 per month in Social Security benefits. The trial court, after a hearing, entered a pendente lite order in the modification action on November 15, 2016, requiring the former husband to immediately pay alimony as ordered pending trial but observing that "[t]he [c]ourt w[ould] consider retroactive decrease back to the date the former wife was served" with process.

On April 28, 2017, the Friday immediately preceding the trial of the modification action and the contempt action on Monday, May 1, 2017, the former wife filed a motion in limine in both actions in which she requested that the trial court "prevent[ ] the introduction of any evidence on the issue of [her] alleged decreased need" for periodic alimony, contending that the former husband's petition in the modification action had not specified decreased need as a basis for seeking relief and that "[t]o allow [him] to question [the former wife] on any potential issues relating to her ongoing need for periodic alimony, including any assets she has acquired ...[,] would be prejudicial to her." On May 1, 2017, just over an hour before the trial, the former husband filed objections to the motion in limine, asserting that he had pleaded the existence of a material change in circumstances and had sufficiently placed in issue the financial condition of the former wife; he requested, in the alternative, that he be allowed to amend his petition in the modification action to specify the former wife's financial condition and lack of need for alimony as additional bases for relief. At the outset of trial, the trial court heard oral arguments from counsel for the parties regarding whether the former wife's motion in limine should be granted or denied and whether leave should be allowed to the former husband to amend his modification petition. The trial court granted the motion in limine and denied leave to amend, noting on the record that the divorce judgment had been entered by a different trial judge, indicating that fault and the length of the marriage could have played a role in the original periodic-alimony award, and opining that the former wife's assets were not material to the former husband's right to relief; the trial court also denied an oral motion to continue made by the former husband immediately thereafter. Later, during cross-examination of the former wife at trial, the trial court sustained objections from her counsel to questions asking her how much money she placed in savings each month, the amount of money she had been spending, and how she had been able to meet her expenses.

After the trial had concluded, the trial court entered a judgment on May 3, 2017. That judgment noted that the court had granted the former wife's motion in limine and had denied the former husband's motions to amend or for a continuance; in the judgment, the trial court set aside the life-insurance-policy requirement, awarded the former wife $42,400 representing the undisputed amount of the former husband's alimony arrearage through June 2016, reduced the periodic-alimony obligation to $3,000 per month, and directed that the former husband pay $28,000 to the former wife as unpaid alimony for the period beginning in July 2016.

Pursuant to Rule 59(e), Ala. R. Civ. P., the former wife filed a timely postjudgment motion to alter the judgment so as to consolidate the two monetary awards. The former husband also filed a timely postjudgment motion pursuant to Rule 59, Ala. R. Civ. P., averring that the trial court had erred in granting the motion in limine, in denying his requests for an amendment of his pleading and for a continuance, and in not terminating his periodic-alimony obligation as of July 2016. Citing, among other authorities, Rule 15(b), Ala. R. Civ. P., the former husband asserted, among other things, that although a termination-of-alimony proceeding should involve examination of the circumstances of the paying spouse, "that should not keep the parties from presenting relevant evidence which would contribute to a full airing of the facts and circumstances of the matter." Although the former wife's motion to alter was not ruled upon within 90 days of its filing, and was thus deemed denied by operation of law, see Rule 59.1, Ala. R. Civ. P., the trial court timely noted the parties' express consent to extend the 90-day period set forth in that rule for ruling on the former husband's pending postjudgment motion, see Parsons v. Aaron, 849 So.2d 932, 936 (Ala. 2002), and the trial court thereafter entered an order denying the former husband's motion.

The former husband, through new counsel, filed separate notices of appeal from the judgment entered in the modification action and the contempt action; those two appeals were consolidated by this court. In his brief on appeal, the former husband contends, among other things, that the trial court erred in preventing him from presenting evidence at trial of the former wife's financial condition.

As we have noted in our summary of the procedural history of the actions involved in these appeals, the parties had skirmished in November 2016, at the pendente lite stage, regarding the former wife's need for continued alimony payments. The former husband specifically averred at that time that the former wife had acquired a separate estate of upwards of six figures, yet the former wife filed a motion on the working day immediately preceding the trial to prevent the former husband from adducing evidence of her needs, claiming that allowing questioning of her as to her needs would be "prejudicial." The trial court does not appear to have agreed with the former wife's argument regarding prejudice, however:

"I guess one of my concerns is I don't know that [the former wife's financial condition is] that big a deal and the reason is I don't know, since I didn't try this case, you know, fault matters, and I don't know if there was fault in this case. And you know, that she has [$]350,000 or access to another [$]125,000 might not be that different than what she had at the time of the divorce because I know she got [$]150,000 alimony in gross and I don't know what the other stuff is worth 26 years ago.
"....
"...[J]ust dealing with the marital assets, I don't think it's going to matter what she might have inherited at that amount of money given the picture. I will consider his income.
"I'm going to grant the motion in limine. I'm going to deny your ability to amend your pleadings today and let me just hear what his financial situation is now, okay. All right.
"....
"... It's like I say, I will consider the length of the marriage. We are going to have to get into, you know, fault since I don't know why, I mean, this is the problem with -- you know, really it's good that a judge is on the bench for a long time because usually they've tried these cases but --
"....
"... But I don't have any idea of what the fault was in this case and that matters. And I am going to deny the continuance unless it's by agreement on the day of trial.
"[Counsel for the former wife declines.]
"... Okay. All right. We will begin the case in just a second."

It is well settled that "[a] provision in a judgment which grants periodic alimony may be modified when there has been a material change in the circumstances of either or both of the parties." Murphy v. Murphy, 470 So.2d 1297, 1299 (Ala. Civ. App. 1985). We enumerated in Murphy"[s]ome of the factors, facts and circumstances that a trial court may consider in periodic alimony modification cases," 470 So.2d at 1299, including

"the remarriage of the paying spouse, Lloyd v. Lloyd, 52 Ala. App. 374, 292 So.2d 668 (1974) ; the receiving spouse's employment since the divorce, May v. May, 441 So.2d 945 (Ala. Civ. App. 1983) ; the financial status and needs of the receiving spouse, Parrish v. Parrish, 365 So.2d 1237 (Ala. Civ. App. 1979) ; whether the receiving spouse is presently capable of self-support, Lloyd v. Lloyd, supra ; the ability of the paying spouse to respond to the former spouse's financial needs, Matthews v. Matthews, 404 So.2d 692 (Ala. Civ. App. 1981) ; whether there are dependent children, Parrish v. Parrish, supra ; whether alimony was originally agreed upon, Roberts v. Roberts, 395 So.2d 1035 (Ala. Civ. App. 1981) ; whether there has been a material change in the financial situation of either, or both, of the parties, Shirley v. Shirley, 397 So.2d 156 (Ala. Civ. App. 1981) ; the health, age and education of the parties, the earning ability of the parties and their probable future prospects, the duration of the marriage, the conduct of the parties with particular reference to the cause of the divorce, Block v. Block, 281 Ala. 214, 201 So.2d 51 (1967) ; the length of time separating the initial alimony award and the modification hearing, Roberts v. Roberts, supra ; and any other material and relevant circumstances as disclosed by the evidence in a particular case."

470 So.2d at 1299-1300. Particularly salient to the modification inquiry are two principal factors that this court has singled out in subsequent cases: " 'In determining whether there has been a material change in circumstances, the trial court must consider the financial needs of the payee spouse and the financial ability of the payor spouse to respond to those needs.' " Henning v. Henning, 26 So.3d 450, 455 (Ala. Civ. App. 2009) (quoting Taylor v. Taylor, 640 So.2d 971, 973 (Ala. Civ. App. 1994) ) (emphasis added). So interrelated are those two factors that we have held that a petition for an upward modification of periodic alimony should be denied, notwithstanding proof of an increase in a payor's income, when there is no proof of any increase in the payee's needs. See Capone v. Capone, 58 So.3d 1258, 1262 (Ala. Civ. App. 2010) ; accord Johnson v. Johnson, 215 So.3d 1123, 1132 (Ala. Civ. App. 2016).

In this case, the former husband averred in his petition in the modification action that there had been a material change in circumstances that, he contended, warranted the termination of his alimony obligation. Although the former husband set forth in that pleading certain factors regarding his own "financial ability" that the trial court could properly consider in assessing whether to modify his alimony obligation, the former husband made clear in his response to the former wife's motion for pendente lite relief that he was by no means conceding the former wife's "financial needs" for continued alimony payments. Nevertheless, the trial court, in granting the former wife's motion in limine, denying the former husband's motion to amend, and sustaining objections to questions posed by trial counsel for the former husband regarding the former wife's financial circumstances, effectively foreclosed any inquiry into whether the former wife should continue to receive any amount of periodic alimony. Just as the failure to demonstrate a change in needs will defeat a recipient's request for an upward alimony modification, see Capone, supra, the absence of any evidence in the record of a change in the former wife's needs, which resulted directly from the trial court's evidentiary rulings conforming to its granting of the former wife's motion in limine, effectively foreclosed the very relief sought by the former husband.

Knowing that the absence of evidence of the former wife's needs would prejudice the former husband's stance in the modification action, counsel for the former husband sought leave to make a trial-day amendment to his pleading to specifically assert a change in the former wife's financial status; however, neither the requested amendment nor a requested continuance of the trial were granted. In contrast to Rule 15(a), Ala. R. Civ. P., cited by the former wife, the last four sentences of Rule 15(b) specifically address amendments of pleadings to conform to evidence sought to be presented at trial in situations when, as here, a party such as the former wife objects to the trial court's reception of evidence as being outside the pleadings:

"If evidence is objected to at the trial on the ground that it is not within the issues made by the pleadings, the court may allow the pleadings to be amended and shall do so freely when the presentation of the merits of the action will be subserved thereby and the objecting party fails to satisfy the court that the admission of such evidence would prejudice the party in maintaining the party's action or defense upon the merits. The court may grant a continuance to enable the objecting party to meet such evidence. An amendment shall not be refused ... solely because it adds a claim or defense, changes a claim or defense, or works a complete change in parties. The Court is to be liberal in granting permission to amend when justice so requires."

The Committee Comments on the rule provide further guidance to the bench and bar:

"[W]here evidence is introduced or an issue raised with the express consent of the other party, or without objection from him, the pleadings 'shall' be deemed amended to conform to such evidence. If the other party does object, but fails to persuade the court that he will be prejudiced in maintaining his claim or defense, the court must then grant leave to amend the pleadings to allow the evidence or the issue. If the objecting party can show prejudice, the court may grant him a continuance to meet the evidence and again should allow amendment of the pleadings. The only time that refusal to allow amendment can be justified is where the amendment and the evidence will not assist in reaching the merits of the action."

Rule 15, Ala. R. Civ. P., Committee Comments on 1973 Adoption (emphasis added). In this case, the trial court took none of the steps prescribed: it did not require anything more from the former wife than a naked claim of "prejudice" and delay, it did not allow a continuance of the modification action to permit the proposed amendment to the extent that an amendment was necessary, and it necessarily and erroneously concluded that evidence of the former wife's financial status would not assist in reaching the merits of the modification action.

Based upon the foregoing facts and authorities, we must conclude that the trial court acted outside the scope of its discretion in barring the former husband from adducing evidence of the former wife's financial status and that that error prejudiced the former husband's claim that his alimony obligation should be terminated rather than simply reduced. Because that error affected the judgment in the contempt action as well, we reverse the judgments of the trial court in both the modification action and the contempt action and remand the cases for further proceedings consistent with this opinion. Our reversal as to the procedural right of the former husband to present evidence of the former wife's financial status for the trial court's consideration should not be deemed indicative of the opinion of the court regarding the merits of the former husband's claim that he is entitled to a judgment in his favor on the merits. See Aramini v. Aramini, 220 So.3d 322, 329-30 (Ala. Civ. App. 2016) (noting that trial court is not bound to modify alimony even if a change in circumstances is shown and affirming judgment reducing, but not terminating, payor's alimony obligation despite decrease in payor's income because evidence demonstrated recipient's continuing need for alimony).

2170122-REVERSED AND REMANDED.

2170123-REVERSED AND REMANDED.

Thompson, P.J., and Thomas and Donaldson, JJ., concur.

Moore, J., concurs in the result, without writing.

      To the extent that the former husband, for the first time on appeal, equates the trial court's denial of leave to present that evidence as amounting to a denial of procedural due process, we must agree with the former wife that that constitutional contention is barred because it was not raised in the trial court. Saulsberry v. Wilcox Cty. Bd. of Educ., 641 So.2d 283, 285 (Ala. Civ. App. 1993) ("We will not consider on appeal constitutional issues that were not considered by the trial court.").

      Contrary to the former husband's contention on appeal, Murphy supports the trial court's view that the conduct of the parties with respect to their divorce is a pertinent consideration with respect to whether their divorce judgment should be modified as to periodic alimony.

      Although this court's reversal is based upon the trial court's denial of the former husband's motion to amend, we would briefly note that, because the trial court's ruling on the former wife's motion in limine, which sought an unconditional bar to economic-condition evidence pertaining to her, was absolute rather than preliminary, no offer of proof was necessary in order to preserve that ruling for review. See Phelps v. Dempsey, 656 So.2d 377, 381 n.1 (Ala. 1995) (distinguishing between "prohibitive-preliminary" and "prohibitive-absolute" motions in limine); see also Rule 103(a)(2), Ala. R. Evid. (indicating that an offer of proof as to excluded evidence is unnecessary when "the substance of the evidence was ... apparent from the context within which questions were asked").

      " '[N]either long delay nor the fact that a proposed amendment is motivated by an afterthought of counsel as to the best theory upon which to proceed, by themselves, suffice as reasons for denying leave to amend.' " National Distillers & Chem. Corp. v. American Laubscher Corp., 338 So.2d 1269, 1274 (Ala. 1976) (quoting Green v. Wolf Corp., 50 F.R.D. 220, 223 (S.D.N.Y. 1970) ).


author: THOMPSON, Presiding Judge.

text:
    RELIABLE AUTOMOTIVE CENTER v. Lawrence JACKSON
    2170366
    Court of Civil Appeals of Alabama.
    August 24, 2018
    Caleb W. Ballew of Martinson & Beason, P.C., Huntsville, for appellant.
    David W. Holt of Bradley Arant Boult Cummings LLP, Huntsville, for appellee.
   THOMPSON, Presiding Judge.

On May 24, 2017, Lawrence Jackson filed in the Madison Circuit Court ("the trial court") a complaint against Reliable Automotive Center ("Reliable") in which he sought damages on claims of fraud, fraudulent inducement, conversion, money had and received, and breach of contract. Jackson alleged that he had paid Reliable to repair his van, that Reliable had failed to do so for approximately one year, and that Reliable still had possession of the van. In his complaint, Jackson also sought an order requiring Reliable to return the van to him.

On July 5, 2017, Jackson moved the trial court for a default judgment. The trial court entered a default on July 5, 2017, and it scheduled a hearing on the issue of damages for July 31, 2017. The record indicates that Bobby Petty, an owner of Reliable, appeared at that hearing but that the trial court did not allow him to participate because, as a non-lawyer, he could not represent Reliable. On July 31, 2017, the trial court entered a default judgment against Reliable and awarded Jackson compensatory damages, punitive damages, and an attorney fee; the damages award totaled $35,552, plus costs.

On August 29, 2017, Reliable filed a motion to set aside the default judgment or, in the alternative, to alter, amend, or vacate the judgment. In support of that part of the motion filed pursuant to Rule 55(c), Ala. R. Civ. P., seeking to set aside the default judgment, Reliable attached the affidavits of Bobby Petty and Glenn Gothard, who identified themselves as "a mechanic with Reliable Automotive" and as an "independent contractor mechanic." Reliable addressed each of the factors a trial court must consider in determining whether to set aside a default judgment as set forth in Kirtland v. Fort Morgan Authority Sewer Service, Inc., 524 So.2d 600, 603 (Ala. 1988). The affidavits it submitted in support of that motion presented evidence on each of the three Kirtland factors.

The trial court scheduled a hearing on Reliable's August 29, 2017, motion, but it later postponed that hearing on the motion of Jackson's attorney. The trial court did not rule on Reliable's motion, and that motion was deemed denied by operation of law on November 27, 2017, pursuant to Rule 59.1, Ala. R. Civ. P. Reliable timely appealed.

Reliable argues on appeal that the trial court erred in allowing its motion to set aside the default judgment to be denied by operation of law. Under Rule 55(c), Ala. R. Civ. P., a trial court may "set aside a judgment by default on the motion of a party filed not later than thirty (30) days after the entry of the judgment." Generally, a trial court has discretion in determining whether to set aside a default judgment.

Tucker v. Nixon, 215 So.3d 1102, 1104 (Ala. Civ. App. 2016) (citing Brantley v. Glover, 84 So.3d 77, 80-81 (Ala. Civ. App. 2011) ). In their briefs on appeal, both parties address whether Reliable's arguments in its Rule 55(c) motion pertaining to the three Kirtland factors, and the evidence it submitted in support of its motion, were sufficient to warrant setting aside the default judgment.

However, in this case, the trial court allowed Reliable's Rule 55(c) motion to be denied by operation of law, and it did not rule on the merits of that motion.

" 'Typically, this Court reviews a trial court's decision granting or denying a motion to set aside a default judgment to determine whether the trial court, in so deciding, exceeded its discretion. Kirtland v. Fort Morgan Auth. Sewer Serv., Inc., 524 So.2d 600, 603 (Ala. 1988). However, this Court has previously determined that the judgment that results from a trial court's failure to rule on a motion subject to denial by operation of law under Rule 59.1 is not automatically entitled to the same deference that is afforded a judgment arrived at after due deliberation. Edgar v. State, 646 So.2d 683, 686-87 (Ala. 1994) ; and Perdue v. Gates, 403 So.2d 165 (Ala. 1981).... [B]ecause the trial court took no valid action indicating that the decision to deny Jeffery's motion was the product of due deliberation, we review Jeffery's motion to set aside the default judgment de novo, applying the analysis mandated by Kirtland.
" ' "Under Kirtland, the trial court must first presume that cases should be decided on the merits whenever it is practicable to do so. This presumption exists because the right to have a trial on the merits ordinarily outweighs the need for judicial economy. Second, the trial court must apply a three-factor analysis in determining whether to set aside a default judgment: it must consider '1) whether the defendant has a meritorious defense; 2) whether the plaintiff will be unfairly prejudiced if the default judgment is set aside; and 3) whether the default judgment was a result of the defendant's own culpable conduct.' Kirtland, 524 So.2d at 605." ' "

Hilyer v. Fortier, 176 So.3d 809, 812-13 (Ala. 2015) (quoting Steele v. Federal Nat'l Mortg. Ass'n, 69 So.3d 89, 91 (Ala. 2010), quoting in turn Sampson v. Cansler, 726 So.2d 632, 633 (Ala. 1998) ).

As noted in Hilyer v. Fortier, supra, if a movant has argued and presented evidence on each of the three Kirtland factors, a denial by operation of law of a Rule 55(c) motion is generally reversible, because, in such a case, there is no indication that the trial court has properly considered the three Kirtland factors in allowing the motion to be denied. See also Brantley v. Glover, supra ; and D.B. v. D.G., 141 So.3d 1066, 1072 (Ala. Civ. App. 2013) ("Because the mother met the initial burden by providing sufficient facts and arguments to apply the Kirtland factors and because the record does not indicate that the juvenile court considered the motion by applying a Kirtland analysis, we reverse the juvenile court's denial by operation of law of the mother's motion to set aside the default judgment ....").

The record indicates that Jackson is a quadriplegic and that he took his van to Reliable for repairs. Jackson submitted into evidence a receipt showing that he paid Reliable $1,232.03 in September 2016, but, he stated, the work he paid for was not completed. Jackson stated that, at the time of the July 31, 2017, hearing, his van was still on the premises of Reliable. Jackson alleged in his complaint that he had repeatedly contacted Reliable concerning the repairs but that Reliable had stopped responding to his inquiries.

In its Rule 55(c) motion, Reliable alleged and presented evidence in support of its contention that it had a meritorious defense, that is, that Gothard, who is an independent contractor, and not Reliable, agreed to perform the repairs on Jackson's van. Reliable argued that Jackson would not be prejudiced by setting aside the judgment and having the matter considered on the merits. Also, Reliable argued that its failure to timely respond did not constitute culpable conduct; it presented evidence indicating that its registered agent, upon whom the compliant was served, had not informed Reliable's owners of the complaint.

We conclude that Reliable's August 29, 2017, Rule 55(c) motion contained sufficient arguments and was supported by evidence sufficient to require the trial court's consideration of the three Kirtland factors. Von Alvensleben v. Dubuisson, 267 So. 3d 877, ---- (Ala. Civ. App. 2018) ; D.B. v. D.G., supra. Accordingly, the trial court's denial by operation of law of the Rule 55(c) motion was error, and we reverse the denial by operation of law of Reliable's motion to set aside the default judgment and remand the cause with instructions for the trial court to consider the Kirtland factors in determining whether to set aside its July 31, 2017, default judgment. Hilyer v. Fortier, 176 So.3d at 820-21; Von Alvensleben v. Dubuisson, supra ; D.B. v. D.G., 141 So.3d at 1072. In reaching its holding in Hilyer v. Fortier, supra, our supreme court quoted with approval the following language from D.B. v. D.G., 141 So.3d at 1072-73 :

" ' "[O]ur mandate in this case 'is not to be construed to mean that the trial court must set aside the default judgment, [but] only that the trial court must apply the Kirtland factors in deciding whether to set aside the default judgment.' " Richardson v. Integrity Bible Church, Inc., 897 So.2d 345, 349 (Ala. Civ. App. 2004), quoting White v. Westmoreland, 680 So.2d 348, 349 (Ala. Civ. App. 1996).' "

176 So.3d at 821.

Given this court's reversal of the denial by operation of law of the motion to set aside the default judgment, we pretermit discussion of the other issues raised in Reliable's appellate brief.

REVERSED AND REMANDED WITH INSTRUCTIONS.

Pittman, Thomas, Moore, and Donaldson, JJ., concur.

      As an alternative to relief under Rule 55(c), Reliable sought to alter, amend, or vacate the damages awards in the default judgment.