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Cool Temp, Inc. v. Pennsylvania National Mutual Casualty Insurance Company

Court of Civil Appeals of Alabama

December 31, 2013

In an unanimous decision, the Court of Civil Appeals of Alabama affirmed the trial court's ruling dismissing a third party claim brought by an employer against their insurance provider regarding an obligation to provide a defense in claims that should be barred by the exclusivity provisions of §25-5-52 of the Alabama Workers' Compensation Act.

Cool Temp's employee, Pinkerton, brought claims against Cool Temp outside the exclusivity provisions of the Alabama Workers' Compensation Act alleging the "Dual Capacity" doctrine. Cool Temp's insurance agreement with Pennsylvania National contained express language exempting coverage in situations where the claim is brought against Cool Temp as an employer.

Cool Temp's third party action against their insurance provider was dismissed on summary judgment. Cool Temp asserted that they should receive a defense on the "Dual Capacity" issues brought by Pinkerton, which alleged claims against Cool Temp in a capacity other than employer. Cool Temp argued that the ultimate outcome of a claim does not govern an insurer's duty to defend, but the facts as are alleged in the complaint should dictate a duty.

The Court of Civil Appeals of Alabama reasoned that the facts alleged in the complaint are a primary contributing factor, but they are not the only factor for consideration. The facts in the present case, although they did not expressly allege an employment relationship between Cool Temp and Pinkerton, necessarily inferred an employment relationship. Such a necessarily inferred employment relationship provided Pennsylvania National with sufficient foundation to deny coverage and avoid a claim for breach of contract.

The "Dual Capacity" doctrine has been discussed, but never adopted by the Alabama appellate courts. Pennsylvania National was successful adopting a position that because the claims were barred by the Alabama Workers' Compensation Act, there was no duty to defend them.

Categories: Workers' Compensation
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