Alabama Supreme Court Addresses Intervenor Rights When Third Party Lawsuit is Dismissed Against Plaintiff

04
Jan
2019

Alabama Supreme Court Addresses Intervenor Rights When Third Party Lawsuit is Dismissed Against Plaintiff

On January 4, 2019, the Alabama Supreme Court released its opinion in Ace American Insurance Company v. Rouse’s Enterprises, LLC d/b/a Rouses Markets wherein it reversed a trial court’s order dismissing the lawsuit for failure to prosecute. At the trial court level, Ace American Insurance successfully intervened in the lawsuit in order to protect its sizable subrogation lien. When the plaintiff failed to prosecute the case, the judge issued an order giving a set amount of time in which the plaintiff was to respond or the case would be dismissed. Although the plaintiff failed to respond, Ace American Insurance did respond seeking to keep the case pending so that it could take the necessary steps to protect its subrogation interest. Despite the response from Ace, the trial court dismissed the entire case. Ace appealed.

On appeal, the Alabama Supreme Court noted that Ace fully complied with the trial court’s order and set forth its intention to proceed against the defendant on its own. Since dismissals with prejudice are considered drastic sanctions that are only to be applied in extreme situations, the Court carefully scrutinized the trial court’s order and determined that judgment was due to be reversed.

My Two Cents

Interestingly, Ace’s subrogation lien concerned workers’ compensation benefits paid pursuant to a Louisiana claim. The Complaint for Intervention was filed in an Alabama Circuit Court by a Mississippi lawyer. Since the subject accident occurred in Alabama, the laws of Alabama apply to the lien recovery rights. Alabama Code Section 25-5-11(d) states that an employer or insurance carrier may bring a civil action directly against the alleged third party tortfeasor but only if the injured party (claimant) fails to file a civil action within the time allowed by law. In that event, the employer or insurance carrier is afforded an additional 6 months in which to bring a direct civil action against the third party. In this case, the claimant did bring a civil action within the 2 year statute of limitations. This begs the question, was the carrier’s right to proceed directly ever triggered? If not, this is definitely a loophole that needs to be corrected during the next major revision of the Alabama Workers’ Compensation Act.

About the Author

This blog submission was prepared by Mike Fish, an attorney with Fish Nelson & Holden, LLC, a law firm dedicated to representing self-insured employers, insurance carriers, and third party administrators in all matters related to workers’ compensation. Fish Nelson & Holden is a member of the National Workers’ Compensation Defense Network. If you have any questions about this submission or Alabama workers’ compensation in general, please contact Fish by e-mailing him at mfish@fishnelson.com or by calling him directly at 205-332-1448.

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