
    STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY v. Judith A. WALLACE and John H. Rice.
    1981581.
    Supreme Court of Alabama.
    Sept. 17, 1999.
    
      John Earle Chason of Chason & Chason, P.C., Bay Minette, for appellant.
    Thomas P. Ollinger, Jr., of Fernandez, Ollinger, Combs & Fontenot, L.L.C., Mobile, for appellees.
   HOUSTON, Justice.

The only issue presented for review in this case is whether the plaintiffs were entitled to prejudgment interest from their underinsured-motorist insurance carrier, when there was no agreement as to the amount of the plaintiffs’ damages prior to the jury verdict.

A jury returned a $550,000 verdict in favor of the plaintiff Judith Wallace and a $150,000 verdict in favor of her husband, John Rice, for loss of consortium, against Vatanya Leerasiri and State Farm Mutual Automobile Insurance Company, the plaintiffs’ underinsured-motorist insurance carrier. The jury returned a verdict in favor of the defendant Allen F. Johnson. Based on the jury’s verdict, the trial court entered a $227,740.55 judgment against State Farm, that amount representing the $200,-000 of underinsured-motorist coverage State Farm’s policy had provided Wallace, plus interest on that amount. The trial court assessed prejudgment interest on the $200,000 owed as proceeds recoverable under the underinsured-motorist coverage, that interest being measured “from a date 30 days after [State Farm was] furnished with materials that would satisfy a reasonable person that the claim could exceed policy limits.” (Emphasis added.)

The trial lasted three days. The record contains no transcript of the evidence presented at the trial. State Farm contends that the materials that are before us — the pleadings, deposition excerpts, the jury verdict, and the judgment of the trial court — are sufficient to allow us to resolve the only issue presented for review.

The motor-vehicle accident that is the basis for this action occurred while the plaintiff Wallace was in her vehicle traveling north on Highway 59 in Foley, in Baldwin County. She was in the right-lane of the two northbound lanes. The defendant Johnson was in the left lane. The defendant Leerasiri, who was in the right lane and behind Wallace’s vehicle, attempted to move into the left lane; Leerasiri’s vehicle collided with Johnson’s vehicle in the area of Leerasiri’s left-front wheel and Johnson’s right-rear wheel. Johnson’s vehicle struck the Wallace vehicle. Following the accident, Wallace was treated by physicians for a cervical “sprain/strain.” A year after the accident, a physician ordered an MRI exam and determined that Wallace had a ruptured cervical disc. Before she discovered the ruptured cervical disc, Wallace had suffered an intervening injury caused when a horse jerked her into a corral fence with such force that she had the breath knocked from her; the injury had required her to go to an emergency room for treatment.

Leerasiri was served by publication in The Baldwin Times, a newspaper published in Bay Minette, in Baldwin County, after an attempt to serve her by certified mail had been unsuccessful. The court entered a default judgment against her. Evidently, at the time of the accident Leerasiri was driving a motor vehicle owned by the Hertz rental-car company; Hertz paid $25,000 to Wallace in return for a pro tanto release of Leerasiri. The documents before this Court do not explain the pro tanto release, and State Farm does not contend that it had anything to do with State Farm’s obligation to pay $200,000 under the underinsured-motorist provision of Wallace’s policy.

Based upon the holdings in LeFevre v. Westberry, 590 So.2d 154, 162-63 (Ala.1991), and Alfa Mutual Insurance Co. v. Beard, 597 So.2d 664 (Ala.1992), we conclude that the court should not have awarded pretrial interest in this case.

In Alfa Mutual v. Beard, this Court applied the definitions of “liquidated damages” and “unliquidated damages” it had first enunciated in United States Fidelity & Guaranty Co. v. German Auto, Inc., 591 So.2d 841 (Ala.1991), to uninsured-motorist coverage:

“ ‘The term “liquidated damages” is defined as “the amount of damages ... ascertained by the judgment in the action, or ... a specific sum of money ... expressly stipulated by the parties ... as the amount of damages to be recovered.... [Those] damages which are reasonably ascertainable at time of breach, measured by fixed or established external standard, or by standard apparent from documents upon which plaintiffs based their claim.” Black’s Law Dictionary, 391 (6th ed.1990). The term “unliquidated damages” is defined as damages that “are not yet reduced to a certainty in respect of amount, nothing more being established than the plaintiffs right to recover; or [damages] as cannot be fixed by a mere mathematical calculation from ascertained data in the case.” Black’s Law Dictionary, 393 (6th ed.1990).’

591 So.2d at 843.”

Alfa Mutual, 597 So.2d at 666-67.

The amounts awarded by the jury were in line with the plaintiffs’ demands and greatly exceeded State Farm’s under-insured-motorist policy limits of $200,000; nevertheless, applying the Alfa Mutual definitions quoted above, we hold that until the jury made its awards the amounts the plaintiffs were entitled to were “unliquidat-ed damages,” i.e., damages “not yet reduced to a certainty in respect of amount.” These damages did not become liquidated damages with respect to State Farm’s liability until the trial court entered its judgment against State Farm.

When it decided Alfa Mutual v. Beard, supra, this Court did not expressly overrule that portion of State Farm Automobile Insurance Co. v. Reaves, 292 Ala. 218, 292 So.2d 95 (1974), relating to prejudgment interest on sums paid as proceeds recoverable under uninsured-motorist coverage. However, that portion of State Farm that was inconsistent with Alfa Mutual v. Beard was overruled by implication. To assure that other trial courts and counsel are not confused by this Court’s failure to expressly overrule State Farm v. Reaves, we hereby overrule it to the extent that it provides that an insured is entitled to recover interest on a payment due under an underinsured-motorist provision, for the time before the payment due becomes “liquidated” by 1) the entry of a judgment in the action; 2) an express stipulation of the parties for a specific sum of money as the amount of damages to be recovered from the underinsured-motorist coverage carrier; or 3) the entry of a default judgment as to Lability against the underinsured motorist in a situation where the amount of the insured’s actual out-of-pocket loss, caused solely by the tortious conduct of the underinsured motorist, equals or exceeds the amount of the un-derinsured-motorist coverage or equals or exceeds the limits of the underinsured motorist’s liability coverage added to the un-derinsured-motorist coverage.

The judgment is reversed and the case is remanded.

REVERSED AND REMANDED.

HOOPER, C.J., and MADDOX, SEE, LYONS, and BROWN, JJ., concur.

COOK, J., dissents.

COOK, Justice

(dissenting).

The majority’s opinion allows uninsured- or underinsured-motorist claims to become liquidated damages only when (1) there is a judgment in the action; (2) there is an express agreement between the parties as to the amount of damages; or (3) there is a default judgment as to liability of the uninsured motorist and as to the amount of the insured’s actual, out-of-pocket damage. The majority, by limiting the manner in which such claims may become liquidated, ignores both the definition of “liquidated damages” and § 8-8-8, Ala.Code 1975. The majority defines “liquidated damages” as:

“ ‘ “[T]he amount of damages ... ascertained by the judgment in the action, or ... a specific sum of money ... expressly stipulated by the parties ... as the amount of damages to be recovered .... [Those] damages which are reasonably ascertainable at time of breach, measured by fixed or established external standard, or by standard apparent from documents upon which plaintiffs based their claim.” ’

743 So.2d at 450. The majority ignores the last sentence of the definition. “Liquidated damages” include damages that are “reasonably ascertainable at [the] time of [the] breach,” whether there is an express agreement by the parties or not. The majority assumes that one claiming under an uninsured-motorist policy can never reasonably ascertain the damages. That assumption is patently untrue. A plaintiff injured in an automobile accident caused by the negligence of an uninsured motorist should, like every other insurance claimant, be able to rely on the terms of the policy to reasonably ascertain his or her damages. In some cases the terms set out in the policy will be adequate to allow one to determine liquidated damages. In other cases, the policy terms may leave the amount of damages vague and uncertain. The facts of each case are different; thus, in every case there must be a factual determination as to whether the damages are liquidated or are unliquidated. In a case where the terms of the policy and the facts surrounding the claim are sufficient to allow the plaintiff to make a reasonable estimate of the damages, the plaintiff should not be denied his or her rights to interest on the delayed payment of those damages simply because the insurer cites some arbitrary reason for refusing to pay.

Whether a particular plaintiffs damages are liquidated or are unliquidated is a factual determination that should be conducted in the individual case. To deny a plaintiff the right to that factual determination is to the plaintiffs rights under Ala.Code 1975, § 8-8-8, which states:

“All contracts, express or implied, for the payment of money, or other thing, or for the performance of any act or duty bear interest from the day such money, or thing, estimating it at its money value, should have been paid, or such act, estimating the compensation therefor in money, performed.”

(Emphasis added.) Section 8-8-8 requires only an estimate of the money value for the plaintiff to be entitled to interest. The majority’s decision to deny the right of claimants under uninsured-motorist policies the right to reasonably ascertain and estimate their damages flies in the face of the plain language of § 8-8-8. Therefore, I must dissent in this case for the same reasons set out in State Farm Automobile Insurance Co. v. Reaves, 292 Ala. 218, 226, 292 So.2d 95, 102 (1974):

“Certainly, there may be disagreements between insurer and insured as to how much (or whether any sum) is rightfully due, and that disagreement ultimately may have to be settled in a court of law. But such is true of other contract actions as well.”  