Alabama Appellate Opinions Released December 16, 2016
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Alabama Appellate Opinions Released 
December 16, 2016
Alabama Supreme Court

Jurisdiction 

Privilege Underwriters Reciprocal Exchange v. Peter Grayson

On October 1, 2012, Grayson was injured when the motorcycle he was riding collided with an automobile driven by an uninsured motorist. Grayson did not sue the uninsured motorist but instead made a claim with his personal UM carrier, who tendered its policy limits of $50,000. Grayson then made a claim on the UM portion of an automobile policy issued by Privilege Underwriters Reciprocal Exchange (“PURE”) to Robert Knizley--under which Grayson’s sister, then Knizley’s wife, was a named insured. Pursuant to § 6-6-220 et seq., Ala. Code 1975 (“the Declaratory Judgment Act”), PURE brought a declaratory-judgment action against Grayson seeking a judgment declaring that Grayson was not covered under the subject policy; specifically, PURE sought a judgment declaring that Grayson was not an insured under the policy because Grayson was not a resident of his sister’s household at the time of the accident. In response, Grayson filed an answer and a counterclaim alleging breach of contract based on PURE’s failure to pay him UM benefits under the subject policy over and above what he had already received from his UM carrier. Grayson specifically alleged that he had been involved in a motor-vehicle accident as a result of the negligence of a nonparty uninsured motorist and that, at the time of the accident, he was a resident of the same household as his sister, who was a named insured under the policy. 

PURE obtained a judgment declaring that Peter Grayson was not entitled to coverage under the uninsured-motorist portion of the automobile insurance policy. The Circuit Court granted Grayson’s motion to set aside that judgment on the basis that it was void for lack of subject-matter jurisdiction. PURE appealed to the Alabama Supreme Court. The issue on appeal was whether PURE’s declaratory judgment action seeking a determination of whether Grayson was entitled to coverage under the subject policy presented a justiciable controversy so as to invoke the subject-matter jurisdiction of the trial court. PURE argued that both its declaratory-judgment action concerning coverage and Grayson’s UM counterclaim for damages raised the issue of coverage and that either action provided a basis for the trial court's exercise of subject-matter jurisdiction, making the trial court’s judgment proper. Grayson, on the other hand, maintained that the trial court lacked subject-matter jurisdiction to enter a judgment on the jury verdict because there was no justiciable controversy between PURE and himself at the time of the trial on the coverage issue because he had not yet shown that his damages exceeded the amount he had received from his own UM carrier.  

The Court stated, “In viewing the allegations in the complaint most strongly in PURE’s favor, as this Court is required to do, we conclude that a justiciable controversy existed at the time PURE commenced its action insofar as the allegations of the complaint allege a justiciable controversy between PURE and Grayson as to whether Grayson was an insured as that term is defined under the policy.” Further, the Court noted, “At no point during the proceedings leading to the trial on the coverage issue did Grayson ever dispute the existence of a justiciable controversy.” In reversing and remanding, the Alabama Supreme Court found that the trial court had jurisdiction over the matter and that the judgment in favor of PURE was not void.

    Alabama Court of Civil Appeals

    Administrative Procedure 

    ABC Coke, a division of Drummond Company, Inc. v. GASP, Inc. (consolidated with Jefferson County Board of Health v. GASP, Inc.)

    ABC Coke operates a production plant (“the plant”) in Tarrant, Alabama which produces coke. The Group Against Smog and Pollution, (“GASP”) is a not-for-profit corporation located in Alabama. The Jefferson County Board of Health (“JCBH”) is a state agency which established the “Air Program,” a local air pollution control program. JCBH has promulgated rules of administrative procedure applicable to hearings and appeals of administrative actions pertaining to the Air Program. Pursuant to Title V of the Clean Air Act, ABC Coke is required to obtain a permit to operate the plant every five years because of the air-pollutant emissions released by the plant during the production of coke and coke by-products. JCBH, through the Air Program, functions as a “permitting authority” for Jefferson County under the Clean Air Act. ABC Coke and its predecessors have had a Title V permit from JCBH to operate the plant for decades. ABC Coke last received a permit from the Air Program on November 17, 2008. That permit was scheduled to expire on November 17, 2013. On May 15, 2013, ABC Coke submitted an application to the Air Program seeking renewal of its Title V permit. According to JCBH, ABC Coke was allowed to continue to operate under the expired permit because it had submitted a timely application for renewal before that permit expired. 

    GASP filed a petition requesting a hearing before JCBH to contest the renewal of the Title V permit to ABC Coke. A hearing officer was appointed by JCBH to serve in the matter. ABC Coke intervened in the administrative proceedings. On November 4, 2014, the Air Program filed a motion to dismiss GASP’s request for a hearing, citing alleged procedural defects in GASP’s petition. ABC Coke also filed a motion to dismiss, arguing that GASP lacked standing to bring the petition because, it said, GASP had failed to establish that it is a “person aggrieved” by the administrative action as required under JCBH’s rules of administrative procedure. 

    On March 19, 2015, the hearing officer entered an order containing findings of fact and conclusions of law holding that GASP had failed to demonstrate that it was a “person aggrieved” by the administrative action of the Air Program and that GASP had not complied with JCBH’s rules of administrative procedure, which requires a request for a hearing to include “a short statement of the terms and conditions which a requester proposes that the Board should include in an order modifying or disapproving the [Air] Program’s administrative action.” Therefore, the hearing officer concluded, GASP was not entitled to a hearing and submitted its findings and conclusions to JCBH. JCBH entered an order approving the hearing officer’s findings. On May 8, 2015, GASP filed a petition for judicial review in the Jefferson Circuit Court pursuant to § 41-22-20, Ala. Code 1975. GASP, JCBH, and ABC Coke filed motions for a summary judgment in the circuit court. On January 14, 2016, the circuit court entered an order granting GASP’s motion for a summary judgment. The circuit court concluded that GASP qualified as a “person aggrieved” under JCBH’s rules of administrative procedure and that GASP’s petition fulfilled the requirements of notice pleading under the Alabama Rules of Civil Procedure. JCBH and ABC Coke filed separate notices of appeal to the Alabama Court of Civil Appeals.  

    On appeal, the Alabama Court of Civil Appeals explained that the case involved only the petition of GASP to have an administrative hearing before JCBH; not the issue whether GASP would have “standing” to file suit in the judicial system. ABC Coke and JCBH contended that GASP could not contest the issuance of the Title V permit because it was not a “person aggrieved” under JCBH’s rules of administrative procedure. Specifically, ABC Coke and JCBH contended that GASP failed to show that it had standing by neglecting to show that it or any of its individual members had been injured by the renewal of the permit. They contended that GASP failed to specify any particularized injury in fact that any of its members suffered, failed to show that its members experienced injury to a “legally protected interest,” and failed to show that any injuries to its members were tied to an “unlawful act” of JCBH.  

    Pursuant to JCBH’s rules of administrative procedure, “any person aggrieved,” (including a corporation or an association as GASP was considered by the parties), by an administrative action may file a request for a hearing to contest such action. JCBH rules define the term “aggrieved” as “having suffered a threatened or actual injury in fact.” In its petition seeking a hearing, GASP asserted that it was a not-for-profit, membership corporation, that it was seeking relief on behalf of its members, and that its members were aggrieved by the issuance of the permit to ABC Coke because they had suffered, among other things, injurious soot deposits, unpleasant smells, and dangerous exposures to airborne carcinogens. The Alabama Court of Civil Appeals stated: “GASP’s petition met the requirements of JCBH’s rules of administrative procedure, and it was not required to meet anything more.” Thus, GASP was entitled to the administrative hearing. 

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