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CIVIL PROCEDURE / CONTRACTS / INSURANCE / PERSONAL INJURY - NATIONWIDE MUT. INS. CO. AND STATE FARM MUT. AUTO INS. CO. V. WOOD, ADM'X

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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