State Farm Mutual Automobile Insurance Co. v. Baggett

Summary

The Alabama Supreme Court held that State Farm was entitled to reimbursement of a $25,000 overpayment made to an insured after an automobile-accident judgment. The court rejected application of the common-fund doctrine to the overpaid amount and remanded with instructions to order reimbursement without deducting an attorney fee from that amount.

Holdings

1. An insurer that inadvertently pays $25,000 in excess of its policy limits is entitled to reimbursement of the excess amount.
2. Any attorney fee due with respect to the $85,000 collectively owed by Sagamore and State Farm must be taken from that $85,000, not from the $25,000 overpayment that State Farm is entitled to recover.

Questions Presented

1. Whether State Farm was entitled to reimbursement of the $25,000 it inadvertently paid in excess of its UIM policy limit.
2. Whether any attorney fee under the common-fund doctrine should be deducted from State Farm's $25,000 overpayment before reimbursement.

Disposition

reversed_and_remanded