Municipal Liability Cap on Damages and Uim Insurance
| Publication year | 2021 |
| Pages | 0262 |
By Angela C. Taylor
No matter which side of the fence you find yourself on in litigation involving a municipality and allegations of damages, there are some basics you need to first familiarize yourself with before you can appropriately advise your client. While the subject of municipal liability is extremely broad, and while the case law that arose from it is voluminous, this article will focus on issues relating to statutory caps on damages and underinsured motorist (UIM) insurance.
Understanding the statutory cap on municipal liability and how the courts in Alabama have applied the cap in UIM insurance-related litigation is essential. This article provides a snapshot of the applicable Alabama statutes and some key court rulings.
The amount of damages awardable against a municipality in Alabama are limited to the amounts set forth in Ala. Code § 11-93-2 (1975), which provides:
The recovery of damages under any judgment against a governmental entity shall be limited to $100,000.00 for bodily injury or death for one person in any single occurrence. Recovery of damages under any judgment or judgments against a governmental entity shall be limited to $300,000.00 in the aggregate where more than two persons have claims or judgments on account of bodily injury or death arising out of any single occurrence. Recovery of damages under any judgment against a governmental entity shall be limited to $100,000.00 for damage or loss of property arising out of any single occurrence. No governmental entity shall settle or compromise any claim for bodily injury, death or property damage in excess of the amounts hereinabove set forth.
Section 11-47-190 identifies the circumstances under which a municipality may be held liable. It specifically states: "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."
Statutory municipal immunity is an affirmative defense pursuant to Rule 8(c), Ala. R. Civ. R and must be specifically pled in order to avoid a waiver. "Although statutory municipal immunity, like the statutory employer immunity provided by the Workers' Compensation Act and like sovereign immunity, is not specifically listed in Rule 8(c), it quite obviously is of the same nature as those defenses specifically listed there."1
Municipalities are required to indemnify their employees in certain circumstances pursuant to § 11-47-24(a). Claims against municipal employees and officials sued in their official capacity are, as a matter of law, claims against the municipality, and are subject to the statutory liability cap.2 However, a municipality cannot be held liable for the intentional torts of its employees, agents, or officials. "There is no exception in the statute allowing an action against a municipality for the wanton or willful conduct of its agents or employees."3
It is important to note that municipal employees and officials sued in their individual capacity for conduct outside their official duties are not protected by the liability cap provided in § 11-47-24.4
A pivotal question must be answered in any litigation against a municipal employee or official. "Whether a state officer is being sued in an official capacity or an individual capacity is not mere semantics; the question is whether the plaintiff is reasonably seeking relief from the state coffers or from the individual's assets."5 Thus, if the plaintiff seeks relief from a municipal employee or official in their individual capacity and from his or her own assets, no statutory liability cap protection is available based on current Alabama law.
Tort lawsuits filed against municipalities and their employees have attempted to recover damages over and above the statutory cap by seeking underinsured motorist benefits from the plaintiffs' automobile insurers. Plaintiffs have argued that due to the statutory municipal liability cap, the municipality is in essence underinsured and thus the proceeds of private automobile policies should pay the uncompensated portion of plaintiffs' damages.
Typically, automobile insurance policies providing underinsured motorist (UIM) coverage in Alabama contain the "legally entitled to recover" language found in the Alabama statute governing UIM coverage, § 32-7-23. In defining the meaning of "legally entitled to recover," the Alabama Court of Civil Appeals stated:
One must, then, make a determination as to what the words, 'legally entitled to recover damages,' mean. They mean that the...
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