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“What A Difference A Year Makes: Civil Decisions With An Impact Upon Trial Practice”, 2004 Alabama State Bar Convention

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“What A Difference A Year Makes: Civil Decisions With An Impact Upon Trial Practice”, 2004 Alabama State Bar Convention




For the 2004 Alabama State Bar Convention


The Alabama Supreme Court rendered a number of significant decisions during the past 12 months that have and will have an impact upon civil trial practice. Some of those decisions contained important constructions of statutes; others contained important diversions along the path of the common law.

All of the decisions discussed below were those of the Alabama Supreme Court. Only Supreme Court case numbers and dates of release are provided. (Hint: Use the case number as a “search term” to find the decision on AlaLinc, Lexis or Westlaw.)

No Reliance In A Big-Money Case

In Hunt Petroleum Company v. State of Alabama, 1011762 (April 30, 2004), the breach of contract damages of $3.4 million for shortfalls in oil and gas royalty payments by Hunt to the State were allowed to stand. However, the court reversed the jury’s finding that was Hunt guilty of fraud – and also set aside an award of $20 million in punitive damages – because, the court held, there was insufficient evidence to show that the State of Alabama relied on the alleged misrepresentations that Hunt made concerning the proper amount of those royalty payments due under lease agreements. The alleged misrepresentations in this case were the written monthly royalty reports that Hunt submitted to the State. In reaching its result, the Hunt decision said: “[E]ven if we were to accept the State’s argument that it ‘assumed’ that the monthly royalty reports generated by Hunt were correct, that assumption does not constitute legal reliance.” Furthermore, the court stated, the State “has failed to present any evidence [ . . . ] indicating that the State would have done anything other than ‘adopt the same course’ had the monthly reports generated by Hunt actually comported with the State’s interpretation of the lease agreement.” “Without reliance,” the court concluded, “there can be no fraud.”

Punitive Damages “Cap” Statute Applied With Vigor

The Legislature enacted a new and improved punitive damages “cap” statute in 1999, which repealed and replaced Ala. Code § 6-11-21. Readers will recall that the $250,000 cap contained in the “old” section 6-11-21 was found to be unconstitutional in Henderson v. Alabama Power Co., 627 So. 2d 878 (Ala. 1999). After Henderson was released, the legislature enacted a “new” section 6-11-21, which provides a cap in most cases of three times the compensatory damages award or $1.5 million, whichever is greater. (If the defendant is a “small business” with a net worth of $2 million or less, the dollar cap is $50,000.)

In Shiv-Ram, Inc. v. McCaleb, 1012112 (Dec. 30, 2003), the court affirmed a judgment consisting of $176,572 in compensatory damages and $500,000 in punitive damages that was entered in favor of a guest of a hotel who sustained a cut on her leg from a bed frame. The court rejected the defendant’s argument that Henderson should be overruled and the $250,000 cap in the “old” section 6-11-21 should be reinstated and applied. The court reiterated the rule of statutory construction that, when a statute is amended or revised, the “old” statute impliedly is repealed to the extent it conflicts with the “new” statute. Also, the court held, the legislature presumably knew what it was doing when it passed a “new” section 6-11-21 that did not impose any cap upon actions filed during the 61 days between the enactment and its effective date. The court pointed out that, even if it did overrule Henderson, the “old” section 6-11-21 would not be revived.

In Alfa Life Ins. Co. v. Jackson, 1001854 & 1002002 (May 7, 2004), the court again refused the defendant’s invitation to overrule Henderson, pointing out in this case that even if it did, the “pattern and practice” evidence in this case would have implicated an exception to the cap in the “old” section 6-11-21. But aside from the court’s refusal to overrule Henderson, the plaintiffs in Alfa v. Jackson had little reason for glee. This case arose out of the plaintiffs’ purchases of life insurance policies they were told would be “paid up in 15 years,” but were not. The jury awarded $500,000 in compensatory damages and $5 million in punitive damages. The trial court remitted the punitive damages to $1.5 million in order to meet the three-to-one ratio prescribed by section 6-11-21. The Supreme Court held that the trial court properly had denied Alfa’s motion for judgment as a matter of law; however, the Supreme Court found that the plaintiffs’ actual loss was only $2,340 and that the plaintiffs’ mental anguish was worth no more than $97,660. Based upon the reduced compensatory damages of $100,000, the Supreme Court remitted the punitive damages to $300,000, in order to satisfy the three-to-one ratio of section 6-11-21. As a final balm, the Supreme Court did note that Alfa’s conduct was “highly reprehensible.”

The decision in Mobile Infirmary Medical Center v. Hodgen, 1011932 (Oct. 31, 2003), dealt with the sticky issue of “unknown” compensatory damages in a case where an unlicensed nurse administered a dose of digoxin at five times the amount prescribed by the doctor. The plaintiff suffered profound and permanent injuries due to severe oxygen deprivation caused by the overdose. The jury returned a verdict of $2.25 million in punitive damages only in favor of the patient and $0 for the patient’s wife on her consortium claim. The Infirmary took no issue with the verdict before the trial ended, but later filed post-judgment motions, which the trial judge denied. On appeal, the Infirmary argued that there could be no award of punitive damages in the absence of an award of compensatory damages. The patient argued that his evidence showed he sustained $1.6 million in compensatory damages, based on the expenses. The Supreme Court found that, because the Infirmary’s lawyer had “vouched for” the verdict, it would not be fair to allow the Infirmary to attack it as being improper on appeal. However, the Supreme Court could not agree with the trial court’s conclusion that the amount of the medical expenses was the amount of the patient’s compensatory damages. The Supreme Court also announced a new rule that will apply in all future cases such as this, where the evidence of collateral-source payments is considered by the jury: A special interrogatory will be propounded so that the jury can state the amount of compensatory damages it would have awarded, but did not award due to the collateral-source payments. The Supreme Court concluded that, because of the Infirmary’s verdict-vouching and the announcement of the new rule, the punitive damages award would be remitted to $1.5 million, “the amount appropriate under § 6-11-21(d).”

In State Farm Mut. Auto. Ins. Co. v. Freeman, 1021594 (Mar. 12, 2004), the court found that there was no evidence to support a finding consistent with Ala. Code § 6-11-27(a) that would allow an award of punitive damages against an insurer for the conduct of its agent. Section 6-11-27(a) limits the punitive-damages liability of a principal for the conduct of its agent to certain, described circumstances. The State Farm v. Freeman decision allowed a compensatory damages judgment of $15,325 to stand, but reversed the award of punitive damages that the trial court had reduced from $200,000 to $76,627.

Williford v. Emerton, 1020616 (Mar. 26, 2004), which arose out of the lease-purchase of a mobile home, sent a case back to the trial court for further proceedings. The trial court, in a one-paragraph post-judgment order, had denied the defendants’ motion for remittitur of a judgment that included both compensatory and punitive damages and totaled $383,000. The Supreme Court reiterated that Hammond v. Green Oil requires the trial court to provide a written statement of its reasons for denying review of a punitive damages award.

Medical Malpractice

Several decisions dealing with medical malpractice actions “probably” will have a lasting impact. In Taylor v. Smith, 1011673 (Mar. 12, 2004), Mrs. Taylor was injured in a car wreck when a car driven by Ennis, a patient of a drug treatment center, crossed the center line. The evidence showed that Ennis, who was a “daily” user of marijuana and benzodiazepines and lived 90 miles from the treatment center, was receiving methadone on a daily basis at the treatment center and had received 85 grams of methadone less than an hour and a half before the collision. Mr. and Mrs. Taylor sued Dr. Smith, the physician who operated the treatment center, and the trial court granted summary judgment on the basis that Dr. Smith owed no duty to non-patient third parties. The Supreme Court reversed, noting that Dr. Smith did not contend that the possibility that Ennis would be involved in a collision after leaving the center was unforeseeable. Rather, Dr. Smith contended that the Medical Liability Act precluded any liability to anyone with whom the doctor did not have a doctor-patient relationship. The court rejected the “syllogism” that a health care provider is absolutely immune from liability to anyone but his patient and found that “it does not follow that, because a non patient may not sue under the Act, such a suit is barred by the Act.” The decision reached the result that this type of action “does not trigger the provisions of the Act [or] the special protections afforded health-care providers under the Act. The decision also said: “Applicable here is the well-established rule that ‘every person owes every other person a duty imposed by law to be careful not to hurt him.'” After finding that a number of other jurisdictions have imposed duties specifically on physicians for the benefit of non-patient members of the driving public, the court determined that Alabama would impose similar duties upon the directors of methadone clinics.

In Chapman v. Smith, 1011863 (May 7, 2004), which arose over injuries suffered after the defendant anesthesiologist, Dr. Chapman, administered a cervical epidural injection, the patient proffered the expert testimony of Dr. Grover – who was board certified in anesthesiology. Dr. Chapman argued that Dr. Grover’s testimony should not be allowed, because Dr. Grover “was not board-certified in anesthesiology in the year preceding” the patient’s injury. The trial court initially agreed with Dr. Chapman, disallowed Dr. Grover’s testimony and granted a JML for Dr. Chapman. The trial court later set aside that order and set the case for a new trial; Dr. Chapman appealed. The Supreme Court affirmed the trial court’s ruling, finding that Ala. Code § 6-5-548 does not require that a proffered expert be board-certified during the year preceding the alleged breach, only that the expert practiced in the same specialty during the year preceding the breach.

Walls v. Alpharma USPD, Inc., 1010645 (Mar. 5, 2004), answered a certified question from a federal trial court that posed the issue of whether a pharmacist owes a duty to warn of foreseeable injuries from the use of a prescribed medication. In this case, the patient used a prescribed medication while pregnant that allegedly caused multiple medical conditions in her later-born daughter. The Supreme Court held that the “learned intermediary doctrine” forecloses the existence of any duty upon a pharmacist who fills a prescription, “valid and regular on its face,” to warn the physician’s patient, the pharmacist’s customer, or any other ultimate consumer of the risks or potential side effects of the prescribed medication, “except insofar as the prescription orders, or an applicable statute or regulation expressly requires, that an instruction or warning be included on the label of the dispensed medication or be otherwise delivered.”

In Ex parte Sawyer, 1020888 (May 7, 2004), the court held that a suit against an employee of the State Mental Health Department for injuries sustained by a resident at one of the Department’s facilities is not controlled by the Alabama Medical Liability Act, because the Department’s facility was not a “health care provider” covered by the Act. The court noted that, had the legislature intended for the Department’s facility to be included within that definition, “it easily could have done so,” but did not.

Legal Malpractice

In Dennis v. Northcutt, 1021266 (Feb. 13, 2004), the plaintiff had retained attorney Northcutt to represent him in a legal-malpractice action against another law firm for failing to properly represent him in an employment-discrimination action. On September 9, 1999, Northcutt moved to withdraw and the trial court granted Northcutt’s motion on February 17, 2000. Dennis proceeded pro se before the trial court dismissed the first legal-malpractice case on December 7, 2000. Dennis filed the second legal-malpractice case, against Northcutt, on February 14, 2002. The trial court entered summary judgment in Northcutt’s favor on the basis that Dennis’s action necessarily implicated allegedly negligent acts of Northcutt that occurred before September 9, 1999, and it therefore was filed past the two-year statute of limitations. The Supreme Court reversed, finding that Northcutt’s argument “fails to recognize the exception in [Ala. Code] § 6-5-574(a)” that allows a legal-malpractice action to be commenced within six months from the date the cause of action was discovered. The Supreme Court held that, because Dennis did not become aware that he had a possible claim against Northcutt until November 2001, when Dennis received a response to a complaint he had filed with the State Bar, his suit against Northcutt was timely filed within the six-months’ time allowed by the “discovery” exception in the statute.

Valentine v. Watters, 1020986 (April 16, 2004), also reversed a summary judgment entered in a legal-malpractice action. Valentine claimed that she went to see Watters about a possible breast implant claim and she hired him because he represented to her that he was very familiar with such claims because he had represented others with similar claims. Watters assured Valentine that he had filed the necessary paperwork for her to participate in a class-action suit. Later, Watters admitted to Valentine that he had not filed the necessary paperwork. Valentine went to see another lawyer who actually had represented a number of breast-implant claimants and he filed papers in the class-action for Valentine, but as a “late registrant.” Valentine sued Watters for legal malpractice, alleging that she would receive far fewer benefits as a result of being a “late registrant.” Valentine found an attorney who was willing to opine as an expert witness against Watters, but the expert later declined to testify. The trial court entered summary judgment on the basis that Valentine could not proffer the expert testimony required by the Legal Services Liability Act. The Supreme Court reversed, finding that although the Act controlled Valentine’s claims against Watters, section 6-5-580 – like its counterpart in the Medical Liability Act – does not expressly provide that the plaintiff must present expert testimony in support of a legal-malpractice claim. Specifically, the Supreme Court found, section 6-5-580 requires expert testimony where the contention is that the attorney deviated from the standard of care. Adopting the “common knowledge” exception to the expert-testimony requirement that other jurisdictions have applied, the Supreme Court ruled that “[w]hether Valentine could have prevailed in the [class action] litigation is a question which is within the understanding of a jury; therefore, Valentine need not present expert testimony on this issue.” In particular, the Supreme Court found: “Failure to timely file an action is a matter within the common knowledge of the average layperson.”

Uninsured-Motorist Coverage Available For Injured Workers

The Supreme Court rejected a line of rulings made by the Alabama Court of Civil Appeals that had barred recovery of uninsured-motorist (“UM”) benefits for employees who had received or filed for workers’ compensation benefits on account of the same collision for which UM benefits were sought.

In Watts v. Sentry Insurance, 1020885 (Sept. 5, 2003), Watts was driving a vehicle owned by his employer, Johnson Controls, when a trailer being towed by Rupe, an employee of Dwight’s Lawn & Garden Equipment, came loose from the towing vehicle and crossed the highway, striking the vehicle Watts was driving and injuring him. Watts received workers’ compensation benefits from Johnson Controls. Watts sued Rupe and Dwight’s for causing the collision and he also sued Sentry Insurance, which provided UM coverage under a policy issued to Johnson Controls. Watts did not sue Johnson Controls. The trial court entered summary judgment in favor of Sentry, on the basis that Sentry enjoyed immunity from UM claims due to the exclusive-remedy provisions of the Alabama Workers’ Compensation Act. The Supreme Court reversed, finding that “[t]he Alabama Workers’ Compensation Act [ . . . ] specifically provides that an injured employee who is receiving workers’ compensation benefits can file an action against a third party [ . . . ] whose negligence or wantonness proximately caused the injuries for which the employee is receiving workers’ compensation benefits. § 25-5-11. Rupe was a third party against whom Watts could bring an action pursuant to § 25-5-11. Sentry was contractually obligated to pay Watts, its own insured, those damages, if any, over and above the damages Rupe’s own liability insurance carrier would pay for Rupe’s alleged negligence or wantonness in causing Watts’s injuries. Until a trier of facts ascertains Watts’s damages, if any, whether Rupe was in fact an underinsured motorist is unknown. That, however, does not entitle Sentry to a summary judgment. The mere fact that the trier of fact may find against a plaintiff on the issues of liability or damages in an action does not entitle the defendant to a summary judgment. Sentry is not being sued because of negligence or wantonness on the part of Watts’ employer or any entity protected from such action by § 25-5-53. Nothing in the Alabama Code or Alabama caselaw shelters Sentry from its liability for underinsured-motorist coverage under the facts of this case.”

In the later decision of Frazier v. St. Paul Insurance Company, 1020505 (Oct. 10, 2003), the Supreme Court extended its ruling in Watts v. Sentry to hold that an employee may recover UM benefits as well as workers’ compensation benefits, even if the same insurer provides the coverage for both types of benefits. The Frazier decision relied upon Ex parte Carlton, 1001781 (April 11, 2003), in which “this Court rejected the rationales of both [Court of Civil Appeals] cases now relied upon by St. Paul. Thus, neither Auto-Owners, supra, nor State Farm, supra, supports St. Paul’s argument.” In reaching its result, the Frazier court found: “[T]he legislative intent behind the exclusive-remedy provision of the Workers’ Compensation Act was to provide a measure of protection to both employers and employees by providing complete immunity to employers and limited immunity to certain other entities and individuals so closely affiliated with that employment relationship as to be an essential aspect of the workers’ compensation scheme in exchanged for a guarantee of compensation to an injured employee. This language makes clear that the exclusivity-of-remedy provision found in the Workers’ Compensation Act does not apply to the world at large.”

“Additionally,” the court said, “St. Paul, in its role as the automobile insurance carrier for [Frazier’s employer], is not one of those entities or individuals to whom the exclusive-remedy provision of the Workers’ Compensation Act was intended to apply.”

More recently, in Johnson v. Coregis Insurance Company, 1020983 (Mar. 19, 2004), the plaintiff, Johnson, was injured in a collision while transporting juvenile offenders in the course of his employment with the Cullman County Commission. Johnson collected workers’ compensation benefits from the commission and he later sued the other driver and the commission’s UM carrier, Coregis. The trial court entered summary judgment on the basis of the misguided rulings of the Court of Civil Appeals. The Supreme Court reversed, on the authority of Ex parte Carlton, Frazier v. St. Paul and Watts v. Sentry. “Assuming that Johnson is covered by his employer’s [UM] policy,” the Supreme Court said, “we see nothing in the [Workers’ Compensation] Act that would bar Johnson from recovering those insurance benefits to which he may be entitled.”

Mental Health Records Not Discoverable

In Ex parte Western Mental Health Center, 1011990 & 1021481 (Dec. 30, 2003), two separate Jefferson County circuit judges ordered the Western Mental Health Center to produce to civil defendants in two separate cases its records pertaining to civil plaintiffs who had made claims that included mental anguish. One of the cases arose out of an assault and battery at a restaurant and one arose out of a car wreck. The Supreme Court granted the mental health center’s petitions for writs of mandamus in both cases and directed both trial judges to vacate their orders. The Supreme Court said: “We hold that by merely alleging mental anguish and emotional distress the plaintiffs in these cases have not waived the psychotherapist-patient privilege conferred by § 34-26-2, Ala. Code 1975.” The court further noted that there are only five recognized exceptions to psychotherapist-patient privilege: (1) where, in a child custody matter, the mental state of one of the parents is at issue and a necessary consideration; (2) where a criminal defendant raises the defense of insanity; (3) communications relevant in proceedings to hospitalize a patient for mental illness; (4) communications made during a court-ordered mental examination of a party or witness; and (5) communications concerning a breach of duty arising out of the psychotherapist-patient relationship.

AEMLD Does Not “Subsumer” All Claims Against A Manufacturer

Two cases arising out of claims against different tobacco-company defendants provided the Court with the occasion to hold that bringing a claim against a manufacturer under the Alabama Extended Manufacturers Liability Doctrine (“AEMLD”) does not automatically foreclose any common-law claims or any claim for breach of an implied warranty of merchantability.

In Spain v. Brown & Williamson Tobacco Corp., 1000143 (June 30, 2003), the Court was presented with a set of certified questions from the Eleventh Circuit Court of Appeals. Among those several questions, the Eleventh Circuit asked if it had correctly concluded “that the negligence and wantonness claims merge into an AEMLD claim.”

A majority of the Supreme Court answered that the negligence and wantonness claims did not merge into an AEMLD claim. The opinion said that “the Eleventh Circuit asks us to validate its assumption that the AEMLD subsumes preexisting remedies at common law. We noted in Keck v. Dryvit Systems, Inc., 830 So. 2d 1 (Ala. 2002), that the AEMLD, announced in Casrell v. Altec Industries, Inc., 335 So. 2d 128 (Ala. 1976), is ‘a judicially created accommodation of Alabama law to the doctrine of strict liability for damage or injuries caused by allegedly defective products.’ 830 So. 2d at 5. We cannot deduce from this Court’s announcement of the AEMLD in Casrell that the common law was thereby abrogated by negative inference. As we said in Keck, ‘Judicial decision-making should not be seen as the opportunity to legislate and, to the extent Casrell stands as an example of judicial legislation, it is time for this Court to defer to the Legislature for further expansion of the sweep of its holding.’ 830 So. 2d at 8.” The Spain majority further explained that, “a claim alleging breach of an implied warranty of merchantability is separate and distinct from an AEMLD claim and is viable to redress an injury caused by an unreasonably dangerous product.”

In a second opinion released that same day, Tillman v. R.J. Reynolds Tobacco Co., 1001644 (June 30, 2003), the Court answered in the affirmative the Eleventh Circuit’s question that asked whether there is any potential cause of action under any theory against any retail defendants including those that employ pharmacists who sell cigarettes for claims brought under the AEMLD, or premised on negligence, wantonness, or civil conspiracy under Alabama law. The Tillman court said: “Alabama remains a common-law state, and therefore common-law tort actions ‘so far as [they are] not inconsistent with the Constitution, laws and institutions of this state . . . Shall continue in force, except as from time to time . . . may be altered or repealed by the Legislature.’ § 1-3-1, Ala. Code 1975. We will not presume to so define the boundaries of the judicially created AEMLD so that it subsumes the common-law tort actions of negligence and wantonness against the retailer defendants.” (underlining in original) The per curiam opinion in Tillman specifically recognized that “some federal district courts in Alabama have expressly held” that a plaintiff’s negligence and wantonness claims “merge with her AEMLD claim.” The Eleventh Circuit’s questions in Spain reflect that it was leaning toward adopting the view of some federal trial court judges, who had embraced the “subsume” argument regularly advanced by defendants in recent years.

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