Alabama Municipal Insurance Corporation v. Willie Allen ( 2014 )

REL: 9/26/2014
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
SPECIAL TERM, 2014
____________________
1121006
____________________
Alabama Municipal Insurance Corporation
v.
Willie Allen
Appeal from Madison Circuit Court
(CV-08-901036)
____________________
1121014
____________________
Alabama Municipal Insurance Corporation
v.
Amber Holmes
Appeal from Madison Circuit Court
(CV-09-901297)
____________________
1121038
____________________
City of Madison
v.
Amber Holmes
Appeal from Madison Circuit Court
(CV-09-901297)
___________________
1121039
____________________
City of Madison
v.
Willie Allen
Appeal from Madison Circuit Court
(CV-08-901036)
PER CURIAM.
The issue in these four appeals is whether the $100,000
statutory cap of § 11-47-190, Ala. Code 1975, applies when a
peace officer, acting outside his employment, is sued in the
officer's individual capacity.
2
1121006; 1121014; 1121038; 1121039
Facts and Procedural History
On January 6, 2008, Amber Holmes and Willie Allen were
injured in an automobile accident when the car they were in
was struck by a police patrol car driven by Richard Alan
Beard. At the time of the accident, Beard, who was employed
by the City of Madison Police Department as a patrol officer,
was on his way to work and was late for his shift. The City of
Madison ("the City") allows its police officers to drive their
patrol cars to their homes, to work, and to gym facilities
(the City pays officers for the time they spend exercising).
Beard was traveling 103 miles per hour in a 45-mile-per-hour
zone at the time of the accident. A drug test performed on
Beard after the accident indicated the presence of marijuana
in his system.
The City had an automobile-insurance policy with Alabama
Municipal Insurance Corporation ("AMIC"). The patrol car
assigned to Beard was included in the policy. The policy
provides:
"1. Who is an Insured
"The following are 'insureds':
"a. You for any covered 'auto'.
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1121006; 1121014; 1121038; 1121039
"b. Anyone else while using with your permission
a covered 'auto' you own, hire or borrow ...."
On October 28, 2008, Allen sued Beard individually,
alleging negligence and wantonness. Allen sued State Farm
Mutual Insurance Company ("State Farm"), seeking
uninsured/underinsured-motorist benefits because the car
driven by Allen and owned by Holmes was insured by State Farm.
Allen also sued his car insurer, Government Employee Insurance
Corporation, seeking uninsured/underinsured-motorist benefits.
On November 30, 2009, Holmes sued Beard individually, alleging
negligence and wantonness.1 Holmes also sued her insurer,
State Farm, seeking uninsured/underinsured-motorist benefits.2
On December 30, 2009, State Farm filed a cross-claim
against Beard and purported o file a cross-claim against the
City seeking reimbursement and subrogation for medical
benefits paid to Allen. On November 22, 2010, the City filed
a motion to dismiss the cross-claim, asserting that it was not
named in the complaint and that, therefore, no cross-claim
1
Neither Allen's nor Holmes's complaint alleged that Beard
was acting in the line of duty at the time of the accident.
2
These proceedings were stayed while criminal charges
against Beard were pursued. Subsequently, the stay was
lifted.
4
1121006; 1121014; 1121038; 1121039
could be filed against it. On January 14, 2011, the trial
court granted the City's motion to dismiss the cross-claim.
On September 20, 2011, Beard filed a motion for a partial
summary judgment (on the issue of damages in both actions,
arguing that the $100,000 damages cap of § 11-47-190, Ala.
Code 1975, and § 11-93-2, Ala. Code 1975, read in conjunction
with the indemnification provisions of § 11-47-24, Ala. Code
1975, applied because he was on duty when the accident
occurred. On November 7, 2011, the trial court consolidated
the actions for trial. The trial court denied Beard's
summary-judgment motion seeking to apply the damages cap.
Beard filed a renewed motion for a partial summary judgment
before trial, again arguing that the $100,000 damages cap
applied in both Allen's and Holmes's actions against him. The
trial court denied the renewed motion for a partial summary
judgment.
Following ore tenus proceedings, the trial court, on
September 25, 2012, entered a judgment in favor of Allen and
against Beard in the amount of $700,000 and a separate
judgment in favor of Holmes and against Beard in the amount of
$1,100,000. In both orders, the trial court stated:
5
1121006; 1121014; 1121038; 1121039
"Ala. Code 1975, Section 11-93-2, limits the
recovery of damages against a governmental entity to
$100,000.00 for bodily injury for one person in any
single occurrence. However, under the language of
the statute and the facts of this case, the
limitation on recovery does not apply to this
judgment against the individual defendant, Richard
Alan Beard."
On November 6, 2012, the City and AMIC filed a joint
motion to intervene in the consolidated action. In their
motion, the City and AMIC argued that both the City and AMIC
were the real parties in interest relating to the collection
of the judgment because Beard was employed by the City and, at
the time of the accident, was driving a car issued to him by
the City and insured by AMIC. AMIC admitted that Beard was an
insured under its policy with the City. That same day, the
City filed a motion to deposit $100,000 with the court to
satisfy the judgment entered in favor of Allen and $100,000 to
satisfy the judgment entered in favor of Holmes.
Specifically, the City stated:
"The Final Judgment entered against Defendant
Beard was based on his negligence while acting
within the scope of his duties and operating a motor
vehicle as a police officer for the City of Madison.
Thus, pursuant to § 11-47-24, [Ala. Code 1975,] the
City of Madison is required to indemnify Defendant
Beard for the judgment entered against him based
upon his negligence while operating a motor vehicle
engaged in the course of his employment. However,
6
1121006; 1121014; 1121038; 1121039
pursuant to § 11-47-190, [Ala. Code 1975,] when
indemnifying an employee for a judgment entered
against him pursuant to § 11-47-24, the City cannot
be required to pay an amount in excess of $100,000
per injured person. See Ala. Code [1975,] § 11-47-
190; Benson v. City of Birmingham, 659 So. 2d 82
(Ala. 1995). Therefore, the cap in § 11-47-190
applies, and the City of Madison can only be
required to pay up to $ 100,000 of the final
judgment entered against Defendant Beard.
"Furthermore, the cap on damages in § 11-47-190
applies to the judgment entered against Defendant
Beard. As previously stated, § 11-47-190 provides,
'no recovery may be had under any judgment or
combination of judgments, whether direct or by way
of indemnity under Section 11-47-24, or otherwise,
arising out of a single occurrence against a
municipality, and/or any officer or officers, or
employee or employees, or agents thereof, in excess
of a total of $100,000.' Ala. Code [1975,] § 11-47-
190. As the Alabama Supreme Court explained in
Benson v. City of Birmingham, '[t]he need to
preserve the public coffers does not disappear
simply because the plaintiff has proceeded against
a negligent employee of the municipality rather
than, or in addition to, proceeding directly against
the municipality.' 659 So. 2d at 86. The legislature
affirmed this principle when it passed § 11-47-190,
capping damages against municipalities as well as
the officers, employees, and agents of
municipalities. See id. at 87. Defendant Beard was
acting as a City of Madison police officer at the
time of the incident made the basis of this cause of
action. Therefore, the $100,000 cap contained in §
11-47-190 applies to the Final Judgment entered
against Defendant Beard.
"On October 25, 2012 the City tendered the sum
of $100,000.00 payable to Willie Allen to satisfy
this judgment. Counsel for Allen rejected this
payment and refused the tender. Attached hereto,
7
1121006; 1121014; 1121038; 1121039
labeled as Exhibit A hereof and made a part hereof
by reference, is a copy of the hand-delivered letter
with attached check.
"Therefore, the City of Madison wishes to
deposit with this Court the sum of $100,000.00 in
damages as full and final satisfaction of this
judgment.
"Pursuant to Rule 67 of the Alabama Rules of
Civil Procedure, the City of Madison, Alabama,
requests that this Court enter an order authorizing
the deposit into the Registry of the Court, the sum
of $100,000.00, and that such sum be deposited by
the Clerk into an interest bearing account with the
Court's authorized banking institution at the rate
of interest prevailing on the date of the deposit.
The City of Madison further requests that the money
not be released to the Plaintiff, except upon full
and final satisfaction of this judgment."
Both Allen and Holmes objected to the joint motion to
intervene. On November 8, 2012, AMIC filed motions for a
declaratory judgment in both actions, arguing that the City
was required to provide Beard with defense counsel under § 11-
47-24 and to indemnify him for any judgment rendered against
him. AMIC further argued that the judgment collected by Allen
or Holmes against Beard is limited to $100,000 under § 11-47-
190.
On December 26, 2012, the trial court granted the joint
motion to intervene but denied the City's motion to deposit
money to satisfy the judgments. On December 27, 2012, Allen
8
1121006; 1121014; 1121038; 1121039
filed a response to AMIC's declaratory-judgment motion and
asserted additional defenses, including res judicata,
collateral estoppel, statute of limitations, failing to issue
a "reservation of rights," and Beard's failure to appeal the
trial court's order on the application of the $100,000 cap.
Allen also filed a counterclaim pursuant to §§ 27-23-1 and
27-23-2, Ala. Code 1975, seeking to apply AMIC's insurance
policy to satisfy the judgment. On January 13, 2013, Holmes
filed a response to AMIC's motion for a declaratory judgment
and asserted the same additional defenses asserted by Allen,
along with an argument that § 11-93-2, § 11-47-24, and § 11-
47-190 do not apply to a suit against a governmental employee
in his individual capacity. Holmes also asserted a direct-
action counterclaim against AMIC pursuant to §§ 27-23-1 and
27-23-2.
On January 28, 2013, the City filed a motion "to alter,
amend, or vacate" the trial court's order denying its motion
to deposit money to satisfy the judgments. On February 1,
2013, Beard filed a motion to substitute the City as the real
party in interest.
9
1121006; 1121014; 1121038; 1121039
On March 19, 2013, Allen filed a summary-judgment motion,
arguing that Beard was sued in his individual capacity, that
the City was never sued, that Beard failed to appeal the trial
court's findings that he was not engaged in the performance of
his duties or engaged in work for the City at the time of the
accident, and that, therefore, the municipal-damages cap did
not apply. Allen further argued that because the $100,000
municipal-damages cap did not apply, AMIC as the insurer for
the vehicle operated by Beard was obligated to pay the entire
judgment. On March 26, 2013, Holmes filed a summary-judgment
motion, also arguing that the statutory cap of § 11-47-190
does not apply to an action against a government employee who
is sued in his individual capacity.
On April 12, 2013, the trial court held a hearing on all
pending motions. On April 24, 2013, the trial court entered
an order denying the City's motion to alter, amend, or vacate
its judgment of December 26, 2012, in which the trial court
had denied the City's motion to deposit funds. The trial court
also denied Beard's motion for substitution and entered a
summary judgment in favor of Allen and Holmes and against
AMIC. The City and AMIC appealed separately.
10
1121006; 1121014; 1121038; 1121039
Discussion
The dispositive issue in this case is whether the
$100,000 statutory cap of § 11-47-190 applies when a municipal
peace officer, acting outside his employment with the
municipality, is sued in his individually capacity.
The City argues in case no. 1121038 and case no. 1121039
that the trial court erred in not allowing it to deposit
$100,000 to satisfy the judgment in favor of Allen and
$100,000 to satisfy the judgment in favor of Holmes because
the second sentence of § 11-47-190 uses the phrase "no
recovery of any judgment." The City argues that this phrase
includes a judgment obtained against a municipal peace officer
who has been sued in his individual capacity. The City
further argues that § 11-47-24 requires the City to indemnify
its employees for their negligent actions, regardless of
whether the employee is sued in his or her official capacity
or individual capacity. The City argues that, under § 11-47-
24, it is the real party in interest, because it is obligated
to defend and indemnify its employees. Lastly, the City
argues that the trial court should have allowed it to deposit
money to satisfy the judgments because the City's liability is
11
1121006; 1121014; 1121038; 1121039
limited under the statutory cap, and, even if the cap is not
applicable, the City should have been allowed to deposit the
money to stop the accrual of interest on the final judgment.
AMIC argues in case no. 1121006 and case no. 1121014 that
§ 11-47-190 applies to "any judgment" against a municipal
employee. AMIC argues that § 11-47-190 has no field of
operation if it applies only to claims against municipal
employees sued in their official capacity or as a result of
acts occurring within the line of their duty. AMIC further
argues that the historical context of the amendment to § 11-
47-190 and Benson v. City of Birmingham, 659 So. 2d 82, 87
(Ala. 1995), indicate that § 11-47-190 applies to reduce the
collection of "any judgment." AMIC contends that neither
Allen nor Holmes specifically stated that Beard was being sued
in his individual capacity. AMIC argues that Holmes and Allen
do not have standing to challenge the City's indemnification
of Beard under § 11-47-24. Lastly, AMIC argues that § 11-47-
190 is a collections cap and serves to limit the amount Holmes
and Allen can collect against AMIC as the City's insurer.
Section 11-93-2 provides a $100,000 cap for recovery
against "a governmental entity," which, as defined in § 11-93-
12
1121006; 1121014; 1121038; 1121039
1(1), Ala. Code 1975, includes both municipalities and
counties. Under § 11-47-24(a), municipal corporations are
required to indemnify their employees under certain
situations:
"Whenever any employee of a municipal corporation of
the State of Alabama shall be sued for damages
arising out of the performance of his official
duties, and while operating a motor vehicle or
equipment engaged in the course of his employment,
such government agency shall be authorized and
required to provide defense counsel for such
employees in such suit and to indemnify him from any
judgment rendered against him in such suit. In no
event shall a municipal corporation of the state be
required to provide defense and indemnity for
employees who may be sued for damages arising out of
actions which were either intentional or willful or
wanton."
Section 11-47-190 provides:
"No city or town shall be liable for damages for
injury done to or wrong suffered by any person or
corporation, unless such injury or wrong was done or
suffered through the neglect, carelessness, or
unskillfulness of some agent, officer, or employee
of the municipality engaged in work therefor and
while acting in the line of his or her duty, or
unless the said injury or wrong was done or suffered
through the neglect or carelessness or failure to
remedy some defect in the streets, alleys, public
ways, or buildings after the same had been called to
the attention of the council or other governing body
or after the same had existed for such an
unreasonable length of time as to raise a
presumption of knowledge of such defect on the part
of the council or other governing body and whenever
the city or town shall be made liable for damages by
13
1121006; 1121014; 1121038; 1121039
reason of the unauthorized or wrongful acts or
negligence, carelessness, or unskillfulness of any
person or corporation, then such person or
corporation shall be liable to an action on the same
account by the party so injured. However, no
recovery may be had under any judgment or
combination of judgments, whether direct or by way
of indemnity under Section 11-47-24, or otherwise,
arising out of a single occurrence, against a
municipality, and/or any officer or officers, or
employee or employees, or agents thereof, in excess
of a total $100,000 per injured person up to a
maximum of $300,000 per single occurrence, the
limits set out in the provisions of Section 11-93-2
notwithstanding."
Both the City and AMIC cite Suttles v. Roy, 75 So. 3d 90
(Ala. 2010). In Suttles, a pedestrian sued the City of
Homewood and one of its police officers, who was driving a
motorcycle that struck her. The police officer was sued in
both his official and individual capacities. Homewood and the
officer argued that the officer was immune from suit in his
individual capacity because, they argued, he was acting within
the line and scope of his employment. This Court noted that
a sheriff and municipal peace officers are protected from
suits seeking damages from them in their individual capacity
by two different forms of immunity: Sheriffs are protected by
State immunity under Ala. Const. 1901, art. I, § 14, and
municipal peace officers are protected by State-agent immunity
14
1121006; 1121014; 1121038; 1121039
under the principles set out in Ex parte Cranman, 792 So. 2d
392 (Ala. 2000). We noted that it appeared that the trial
court had not yet addressed whether the facts would support a
finding that the officer was entitled to State-agent immunity.
In Suttles, Homewood and the officer argued that if the
pedestrian could sue the officer in his individual capacity,
then the recoverable damages against the officer were capped
at $100,000 under § 11-47-190. This Court stated that,
although the statutory cap on recovery against "a governmental
entity" set forth in § 11-93-2 applied to a suit against a
municipal employee in his official capacity, it did not apply
to a suit against a municipal employee who is sued in his
individual capacity. With regard to § 11-47-190, this Court
noted:
"[The officer] and Homewood also state in the
'summary of argument' and the 'conclusion' portions
of their brief that the plain language of § 11-47-
190 provides that no recovery may be had against an
employee of a municipality in excess of $100,000,
regardless of whether the employee is sued in his
individual or official capacity. No explanation or
elaboration on this argument is found in the initial
brief, and no authority is cited supporting their
interpretation of the Code section. Therefore, we
decline to address this issue."
15
1121006; 1121014; 1121038; 1121039
75 So. 3d at 99 n.5. Additionally, when this Court overruled
the officer and Homewood's application for rehearing, Justice
Shaw concurred specially, stating:
"In the third issue in their brief on rehearing,
Homewood and [the officer] contend that, if [the
pedestrian] is able to assert individual-capacity
claims against [the officer], then any damages award
must be capped at $100,000 by Ala. Code 1975, §
11–47–190. As noted in the opinion on original
submission, we have refused to address this issue
based on the lack of argument regarding it in
Homewood and [the officer's] initial brief. Because
we do not address this issue, it must wait to be
resolved on another day."
75 So. 2d at 104 (emphasis added).
While the appeals in the present case were pending, the
issue whether claims against a municipal employee sued in his
individual capacity are subject to the statutory cap of § 11-
47-190 when those claims fall within the "willful and wanton"
exceptions to the doctrine of State-agent immunity under Ex
parte Cranman, 792 So. 2d 392 (Ala. 2000), was before this
Court in Morrow v. Caldwell, [Ms. 1111359, March 14, 2014]
So. 3d (Ala. 2014). This Court stated in Morrow:
"The first sentence of § 11-47-190 recognizes
the principle that municipalities are generally
immune from suit ('No city or town shall be liable
for damages ....') and then provides an exception
for actions seeking damages for the negligent acts
of the agents or employees of municipalities
16
1121006; 1121014; 1121038; 1121039
('unless such injury or wrong was done or suffered
through the neglect, carelessness, or unskillfulness
of some agent, officer, or employee'). There is no
exception in the statute allowing an action against
a municipality for the wanton or willful conduct of
its agents or employees. Cremeens v. City of
Montgomery, 779 So. 2d 1190, 1201 (Ala. 2000)('A
municipality cannot be held liable for the
intentional torts of its employees. See Ala. Code
1975, § 11-47-190 ....'); Town of Loxley v. Coleman,
720 So. 2d 907, 909 (Ala. 1998) ('This Court has
construed § 11–47–190 to exclude liability for
wanton misconduct.').
"Further, this Court has interpreted the first
sentence of § 11-47-190 as serving
"'to limit municipality liability to two
distinct classes. In the first
classification, the municipality may be
liable, under the doctrine of respondeat
superior, for injuries resulting from the
wrongful conduct of its agents or officers
in the line of duty. In the second
classification, the municipality may be
liable for injuries resulting from its
failure to remedy conditions created or
allowed to exist on the streets, alleys,
public ways, etc., by 'a person or
corporation not related in service to the
municipality.' Isbell v. City of
Huntsville, 295 Ala. 380, 330 So. 2d 607,
609 (1976); City of Birmingham v. Carle,
191 Ala. 539, 542, 68 So. 22, 23 (1915).
The municipality must have actual or
constructive notice of the condition. If
the claim is predicated under the second
classification, then the third party shall
also be liable. Isbell, supra, 330 So. 2d
at 609, Carle, 191 Ala. at 541-42, 68 So.
at 23.'
17
1121006; 1121014; 1121038; 1121039
"Ellison v. Town of Brookside, 481 So. 2d 890, 891-
92 (Ala. 1985).
"The second sentence of § 11-47-190, which
provides a cap on any recovery on a judgment
resulting therefrom, begins with the word 'however.'
The use of the sentence adverb (or conjunctive
adverb)3 'however' indicates that the second sentence
modifies the preceding sentence. Thus, it sets a
limit on the 'recovery' stemming from a 'judgment'
or 'judgments' that result from the liability
allowed by the exception contained in the first
sentence. So, while the first sentence provides
that a municipality may be liable for the negligent
acts of its agents or employees, the second
sentence, by starting with the word 'however,'
limits the 'recovery' from any such resulting
'judgment.' In other words, the 'recovery' that is
capped to $100,000 by the second sentence is the
recovery for any liability in a negligence action
allowed by the first sentence. Thus, when the
second sentence of § 11-47-190 is read in light of
the first sentence, it is clear that the second
sentence is meant to be a limitation on the amount
of damages a person or corporation may recover from
a municipality in those limited situations in which
the municipality may be held liable.
"Morrow advances a different reading of the
second sentence of § 11-47-190. Specifically, he
points to the language that 'no recovery may be had
under any judgment ... against ... any ... employee
... in excess of' $100,000 and contends that this
provides a blanket cap on any damages awarded
against any municipal agent or employee in any
action. In other words, he would interpret the
second sentence as limiting recovery from actions
that are different from the actions allowed by the
first sentence, including recovery in actions
alleging wanton or willful conduct against municipal
employees in their individual capacity. This
reading of § 11-47-190 improperly disconnects the
18
1121006; 1121014; 1121038; 1121039
second sentence from the context of the entire
section and fails to acknowledge the conjunctive
adverb 'however' that links the second sentence to,
and causes it to modify, the first sentence.
"Further, it is clear that the reference to
judgments against 'any officer or officers, or
employee or employees, or agents' in the second
sentence is made because of the need to be clear
that municipal liability is limited to $100,000 even
where that liability is a function of an action
against one of those persons in their official
capacity or of the special statutory indemnity
imposed on a municipality by 11-47-24, Ala. Code
1975. As to the former, in Smitherman v. Marshall
County Commission, 746 So. 2d 1001, 1007 (Ala.
1999), this Court held that 'claims against county
commissioners and employees in their official
capacity are, as a matter of law, claims against the
county and subject to the $100,000 cap contained in
§ 11-93-2[, Ala. Code 1975, capping damages against
governmental entities at $100,000].' Similarly,
claims that are brought against municipal employees
in their official capacity are also, as a matter of
law, claims against the municipality.
"By the same token, because of the need to be
clear that municipal liability is limited to
$100,000 even where that liability is a function of
an action against a municipal employee in his or her
official capacity or of the special statutory
indemnity imposed on the city by 11-47-24, the
second sentence of § 11-47-190 specifically
addresses 'judgments ... by way of indemnity under
Section 11-47-24' that arise from judgments against
'any officer or officers, or employee or employees,
or agents' of a municipality.
"Section 11-47-24, Ala. Code 1975, provides:
"'(a) Whenever any employee of a
municipal corporation of the State of
19
1121006; 1121014; 1121038; 1121039
Alabama shall be sued for damages arising
out of the performance of his official
duties, and while operating a motor vehicle
or equipment engaged in the course of his
employment, such government agency shall be
authorized and required to provide defense
counsel for such employees in such suit and
to indemnify him from any judgment rendered
against him in such suit. In no event shall
a municipal corporation of the state be
required to provide defense and indemnity
for employees who may be sued for damages
arising out of actions which were either
intentional or willful or wanton.
"'(b) All municipal corporations of
the State of Alabama are hereby authorized
to contract at governmental expense for
policies of liability insurance to protect
employees in the course of their
employment.'
"As this Court noted in Benson v. City of
Birmingham, 649 So. 2d 82, 87 (Ala. 1995), by
amending § 11-47-190 in 1994 to add the second
sentence, the legislature clarified the fact that
the limitation on recovery against a municipality
also limits the amount for which a municipality may
indemnify a negligent employee.
"Finally, no language in § 11-47-190 suggests
that it is intended to apply to claims against
municipal employees who are sued in their individual
capacities. Rather, when the statute is read as a
whole, it is clear that the limitation on recovery
in the second sentence of § 11-47-190 is intended to
protect the public coffers of the municipality, not
to protect municipal employees from claims asserted
against them in their individual capacity.4
20
1121006; 1121014; 1121038; 1121039
"3A sentence or conjunctive adverb 'is a word
that modifies a whole previous statement. Frederick
Crews, The Random House Handbook 403 (6th ed. 1992).
"4Under § 11–47–24(a), the City would not be
required to indemnify Morrow for any judgment
against him that was based on damage resulting from
his intentional, willful, or wanton conduct."
Morrow, So. 3d at .
In the present case, the City's and AMIC's arguments that
the second sentence of § 11-47-190, which provides that no
recovery from a municipality may be had under "any judgment,"
whether direct or by way of indemnification under § 11-24-74,
includes "judgments" against an employee, ignore the placement
of the second sentence as a limitation on the "recovery"
stemming from the "judgments" that result from the liability
allowed by the first sentence in § 11-47-190. The first
sentence provides that a municipality may be liable for the
negligent acts of its agents or employees. The second
sentence, by starting with the word "however," limits the
"recovery" from any "judgment" resulting from that liability.
In other words, the "recovery" that is capped to $100,000 by
the second sentence is a recovery against a municipality in a
negligence action, as contemplated by the first sentence (as
well as a recovery against a municipality in an indemnity
21
1121006; 1121014; 1121038; 1121039
action, as also referenced in the second sentence). The City
and AMIC would interpret the second sentence as limiting
recovery from actions that are different from the actions
allowed by the first sentence, including actions against a
municipal employee in his or her individual capacity where
that employee was acting outside the line of his or her duty.
This reading disconnects the second sentence from the first.
It also ignores the language in the second sentence referring
to indemnification under § 11-47-24, which provides that an
employee's actions must "aris[e] out of the performance of his
official duties" in order for the municipality to have
liability when an employee is sued individually, and it
conflicts with Morrow.
The City argues that § 11-47-24 requires it to indemnify
its employees for their negligent actions, regardless of
whether the employee is sued in his or her individual or
official capacity. The City ignores the language in § 11-47-
24 that such conduct has to "aris[e] out of the performance of
his official duties" and "while the employee is engaged in the
course of his employment" with the municipality. Although
obligated under § 11-47-24 to defend and indemnify its
22
1121006; 1121014; 1121038; 1121039
employees when they are sued in their individual capacity,
that obligation arises only in reference to alleged misconduct
occurring in the performance of official duties.
The City argues that it is the "real party in interest"
under Rule 17, Ala. R. Civ. P., and § 11-47-24 because it is
obligated to defend and indemnify its employees. Rule 17
requires that "[e]very action shall be prosecuted in the name
of the real party in interest." (Emphasis added.) This Court
has stated that "'the real party in interest principle is a
means to identify the person who possesses the right sought to
be enforced.'" State v. Property at 2018 Rainbow Drive, 740
So. 2d 1025, 1027 (Ala. 1999)(quoting Dennis v. Magic City
Dodge, Inc., 524 So. 2d 616, 618 (Ala. 1988)). However, the
City would not supplant Beard as the real party in interest.
The fact remains that Allen and Holmes have sued Beard,
individually, and he is personally liable to them under the
judgments that have been entered. Even if the City had an
obligation under § 11-47-24 to indemnify Beard (which it does
not because his acts were found by the trial court in un-
appealed judgments to be outside the scope of his employment),
the City intervened, arguing that it was "the real party in
23
1121006; 1121014; 1121038; 1121039
interest relating to the collection of the judgment[s]"
because it had a duty to indemnify Beard, and it argued that
the judgments were limited to $100,000. Rule 17 applies to
ensure that an action is being "prosecuted" by the proper
plaintiff, and it serves to protect a defendant against a
subsequent action by the party actually entitled to relief.
The City has not cited any authority to support applying Rule
17 to an intervenor seeking to satisfy the judgments against
a defendant.
Lastly, the City argues that the trial court erred in not
allowing it to deposit $200,000 to satisfy both Allen's and
Holmes's judgments because § 11-47-24 requires it to indemnify
its employees. As discussed above, § 11-47-24 does not
require a municipality to indemnify those employees who are
acting outside the performance of official duties. In
conjunction with its argument regarding depositing the money
with the court, the City argues that it should have been
allowed to deposit the money in order to stop the accrual of
interest on any amount owed under the judgments. However, the
City did not raise this argument in the trial court. The
City's arguments at the trial court level were limited to
24
1121006; 1121014; 1121038; 1121039
depositing $200,000 to satisfy both judgments. It is well
settled that this Court will not reverse a trial court's
judgment based on arguments not presented to the trial court.
Lloyd Noland Hosp. v. Durham, 906 So. 2d 157 (Ala. 2005).
AMIC argues that § 11-47-190 has no field of operation if
it applies only to cases brought against a municipal employee
in his official capacity or for acts occurring within the line
of his duty. AMIC argues that, because § 11-93-2 (capping
damages at $100,000) is a cap on damages against a
governmental entity (which must necessarily be paid out of
public coffers), § 11-47-190 must also cover individual-
capacity claims against municipal employees (which would
otherwise be paid out of the employee's individual assets), or
there would be no distinction between the damages cap in § 11-
93-2 and the cap in § 11-47-190 because both would place a cap
on damages against municipal employees only in their official
capacity. In short, AMIC is arguing that § 11-93-2 and § 11-
47-190 would cover the same claims unless § 11-47-190 did not
also pertain to claims against municipal employees sued in
their individual capacity. However, AMIC ignores the language
25
1121006; 1121014; 1121038; 1121039
in § 11-47-190 that the City's obligation to indemnify an
employee is limited.
We agree that municipal liability is limited to $100,000
even where that liability is a function of an action against
a municipal employee in his or her official capacity or of the
special statutory indemnity imposed on the municipality by §
11–47–24. The second sentence of § 11–47–190 specifically
addresses judgments by way of indemnity under § 11–47–24 that
arise from judgments against any officer or officers, or
employee or employees, or any agent or agents of the
municipality. When § 11-47-190 is read as a whole, it is
clear that the limitation on recovery in the second sentence
is intended to protect the public coffers of the municipality,
not to protect municipal employees from claims asserted
against them in their individual capacity.
Next, AMIC argues that the historical context of the 1994
amendment to § 11-47-190 and Benson v. City of Birmingham, 659
So. 2d 82, indicates that § 11-47-190 applies to reduce the
collection of "any judgment." First, we note that Benson
involved a judgment where the peace officer was acting within
the line of his duty for the purposes of imposing liability on
26
1121006; 1121014; 1121038; 1121039
the municipality under the doctrine of respondeat superior.
The present case involves actions arising outside the
employee's line of duty. Second, as already discussed, in
Morrow and Suttles we explained why the language used in § 11-
47-190 is not applicable to "any" judgment.
AMIC argues that Beard was not actually sued in his
"individual capacity" because neither Allen's nor Holmes's
complaints contain the phrase "individual capacity." Both
complaints allege facts indicating that Beard was acting
outside his employment as a police officer when the accident
occurred. The language of the complaint as a whole is
determinative of whether a municipal employee is being sued in
his or her individual or official capacity. Ex parte Alabama
Dep't of Mental Health, 837 So. 2d 808, 811-12 (Ala. 2002).
AMIC argues that Allen and Holmes do not have standing to
challenge the City's indemnification of Beard under § 11-47-24
because, it says, there is no authority expressly prohibiting
the City from indemnifying Beard. The question before us is
not whether there is any statute that prohibits a municipality
from voluntarily indemnifying an employee in Beard's position,
and we decline to address that issue. The question before us
27
1121006; 1121014; 1121038; 1121039
is whether there is a statute that obligates the City to do
so. For the reasons discussed above, we conclude that there
is not.
Lastly, AMIC argues that § 11-47-190 is a collection cap
and limits the amount Allen and Holmes can collect against
AMIC as the City's insurer. In support of this argument AMIC
cites St. Paul Fire & Marine Insurance Co. v. Nowlin, 542 So.
2d 1190 (Ala. 1988). In Nowlin, the plaintiff recovered a
$500,000 malpractice verdict against the Druid City Hospital
Board. The trial court, relying on § 11-93-2, reduced the
verdict to $100,000. This Court reinstated the verdict.
After remand, the trial court reinstated the original verdict
and entered a judgment thereon. The plaintiff, pursuant to §
27-23-2, obtained a writ of garnishment to collect $400,000
(the hospital board's insurer had paid the $100,000 reduced
verdict). The insurer and the hospital board objected to the
garnishment on the ground that, because § 11-93-2 limited the
hospital board's liability to $100,000, the insurer's
liability was also limited to $100,000. The trial court
ordered the garnishment to issue. This Court reversed the
trial court's judgment and held that § 11-93-2 was not
28
1121006; 1121014; 1121038; 1121039
unconstitutional, that § 11-93-2 limited the liability of the
insurer to $100,000, the liability of the hospital board, and
that § 11-93-2, therefore, limited the plaintiff's rights
under § 27-23-2 against the insurer.
Nowlin is distinguishable because in Nowlin the
municipality's liability was limited by the statutory damages
cap and, in turn, the municipality's insurer's liability was
also limited by the cap. In the present case, the statutory
damages cap does not apply to Allen's and Holmes's judgments
against Beard individually.
We note that it would be unlikely that a municipal
employee would by covered by insurance paid for by the
municipality for acts outside the employee's employment. Here,
however, the City obtained an insurance policy for its police
cars. The City opted to have its police officers' vehicles
insured for activities outside the officers' employment, and
AMIC accepted premiums for such coverage and has admitted that
Beard was an insured under its policy with the City.3
Conclusion
3
AMIC does not raise any argument as to whether the City
had the authority under § 11-47-24(b) to purchase insurance
for activities outside employment.
29
1121006; 1121014; 1121038; 1121039
The $100,000 statutory cap of § 11-47-190 does not apply
when a peace officer, acting outside his employment, is sued
in his individual capacity. The limitation on recovery in the
second sentence of § 11-47-190 is intended to protect the
public coffers of the municipality, not to protect municipal
employees from claims asserted against them in their
individual capacity. The cap on damages for claims against
a municipality does not limit the recovery on a claim against
a municipal employee, acting outside his employment, when he
is sued in his individual capacity. We recognize that
municipal employees were not the intended subject of the
legislature's enactment of § 11-17-190,4 and we also recognize
4
"[T]he fact and amount of liability by a municipal
employee in his or her individual capacity were not and are
not proper, or intended, subjects of the legislature's
enactment of §§ 11–47–190 and –191 and their predecessors.
Instead, employees, officers, and agents of a municipality
find themselves referenced in the last sentence of § 11–47–190
simply because of the need to be clear that governmental
liability is limited to $100,000 even where that liability is
a function of an action against one of those persons in his or
her official capacity or of the special statutory indemnity
obligation imposed on the municipality by § 11–47–24, Ala.Code
1975. The legislature's use of the word 'however' to introduce
the second sentence of § 11–47–190, and the relationship
between the first and second sentences of § 11–47–190 that, as
discussed in the main opinion, it reflects, simply reinforces
this understanding." Morrow, So. 3d at . (Murdock, J.,
concurring specially) (emphasis omitted).
30
1121006; 1121014; 1121038; 1121039
that the legislature is better suited to speak comprehensively
on the individual liability of municipal employees. Based on
the foregoing, the judgment in favor of Allen and against AMIC
is affirmed; the judgment in favor of Holmes and against AMIC
is affirmed; the judgment in favor of Holmes and against the
City is affirmed; and the judgment in favor of Allen and
against the City is affirmed.
1121006 –- AFFIRMED.
1121014 –- AFFIRMED.
1121038 –- AFFIRMED.
1121039 –- AFFIRMED.
Moore, C.J., and Stuart, Bolin, Parker, Shaw, Main, Wise,
and Bryan, JJ., concur.
Murdock, J., concurs in the rationale in part and concurs
in the result.*
*Although Justice Murdock did not attend oral argument in
this case, he has viewed a video recording of that oral
argument.
31
1121006; 1121014; 1121038; 1121039
MURDOCK, Justice (concurring in the rationale in part and
concurring in the result).
I concur in the main opinion with the exception of its
comment regarding the latter of the two issues addressed in
this writing. First, I wish simply to reiterate my
understanding that the $100,000 cap expressed in § 11-47-190,
Ala. Code 1975, would be inapplicable to a claim against
Richard Alan Beard in his individual capacity, even if the
claim had arisen from acts or omissions by Beard while acting
within the line and scope of his employment or, in the
language of § 11-47-24, Ala. Code 1975, "out of the
performance of his official duties." As explained in Morrow
v. Caldwell, [Ms. 1111359, March 14, 2014] ___ So. 3d ___
(Ala. 2014), and reconfirmed here, § 11-47-190 is intended to
protect municipal coffers; the cap on municipal liability
expressed therein is only that -- a cap on municipal
governmental liability (whether for payment of damages to a
third party or of indemnity to its own employee). The cap is
simply inapposite to a judgment against any other entity,
32
1121006; 1121014; 1121038; 1121039
including a municipal employee sued in his or her individual
capacity.5
The main opinion comments that "the legislature is better
suited to speak comprehensively on the individual liability of
municipal employees." ___ So. 3d at ___. First, our existing
statutory and caselaw jurisprudence arguably already speaks
comprehensively to the question. State-agent immunity, as
developed extensively in our caselaw, will apply in most cases
involving municipal law-enforcement officials, particularly
when they are acting within the line and scope of their
duties; it will apply in many cases to non-law-enforcement
municipal employees. In addition, there may be instances in
which municipal employees are sued where, notwithstanding the
filing of a lawsuit by a third party, the nature of the
employee's obligations to his or her municipal employer do not
in fact also create a duty on the part of an employee to the
5
The nature of the employee's conduct may serve to relieve
a municipality from any indemnity obligation at all (if the
tortious conduct does not arise out of the performance of
official duties), or it may leave the municipality with up to
a $100,000 obligation (if the tortious conduct does arise out
of the performance of official duties). Either way, it does
not apply to limit the amount of any underlying damages
verdict rendered against the employee personally, rather than
in his or her official capacity.
33
1121006; 1121014; 1121038; 1121039
third party. See generally, e.g., Morrow v. Caldwell, ___
So. 3d at ___ (Murdock, J., concurring specially) ("[T]he
question before us in this permissive appeal is limited to
whether, if an employee of a municipality is personally liable
for a tort he or she commits in the course of his or her
employment by a municipality, that liability can exceed the
$100,000 cap referenced in § 11–47–190. Any such liability,
however, would of course depend as a threshold matter on the
existence of a duty that was personal to the employee (not
merely a duty of his or her employer) and that ran to the
plaintiff (and not merely from the employee to his or her
employer). This and other questions concerning the
prospective liability of a municipal employee in Wayne
Morrow's position are not before us, and the main opinion
should not be understood as implying any answer to them.").
As to any circumstances outside the foregoing, i.e., where the
employee is not considered a State agent and has breached some
individual duty owed by him or her to a third party,
provisions of the Alabama constitution appear to present an
obstacle to a legislative prescription of limits on individual
liability. Id. (citing Garner v. Covington Cnty., 624 So. 2d
34
1121006; 1121014; 1121038; 1121039
1346 (Ala. 1993), and Home Indem. Co. v. Anders, 459 So. 2d
836 (Ala. 1984), for the proposition that, it is only because
"[t]he common-law doctrine of governmental immunity for
municipal and county governments predates ... the adoption of
the 1901 Constitution, that [that] doctrine survived the
adoption of that Constitution, including §§ 11 and 13 thereof
... and is subject to modification by the legislature"); see
also Smith v. Schulte, 671 So. 2d 1334 (Ala. 1995).
35