Nationwide Mut. Ins. Co. and State Farm Mut. Auto Ins. Co. v. Wood, Adm'x, [Ms. 1111486, Feb. 22, 2013] ___ So. 3d ___ (Ala. 2013). The Court answers
a certified question from the Northern District of Alabama as follows:
"Under Alabama law, an insurance company is bound to a settlement
agreement negotiated on behalf of an injured minor, even if that minor
dies before the scheduling of the court hearing that all parties agreed
was necessary to obtain approval of the settlement agreement. In accordance
with the parties' understanding, such a hearing is still required,
and the minor's death does not render that hearing impossible."
The minor in question, D.V.G., was injured as a passenger in a single-vehicle
accident. Without filing suit, her mother's attorney negotiated policy-limits
payments from the driver's personal-injury liability coverage with
Nationwide and D.V.G.'s UM/UIM coverage with State Farm (each policy
providing $50,000 in coverage). A week after the settlement agreement,
D.V.G. died in an unrelated motor vehicle accident. The insurers took
the position that a pro ami hearing was a condition precedent to the existence
of a binding contract. The Supreme Court noted that D.V.G.'s tort
claims were extinguished when she died, but any contractual claim did
not. The Court first rejects an argument that because a minor lacks capacity
to contract and cannot enter into a binding settlement, the agreement
was not enforceable. The Court notes that a minor's contract is not
void, but merely voidable at the election of the minor. Thus, the contract
was binding upon the insurers. The Court agrees that the pro ami hearing
was necessary before the settlement could be consummated, but it disagrees
with the insurers' argument that a pro ami hearing is impossible after
the death of the minor. The only impediment to conducting the hearing
was the insurers' refusal to participate. "The rule is clear
and well settled, ... that a party to a contract cannot prevent performance
by another and ... escape any liability, from his own failure to perform
a necessary condition." The Court sees no reason the pro ami could
not be conducted after the death of the minor to determine whether, at
the time the parties agreed to the settlement, it was in the minor's
best interest.
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