Barth v. Keffer
| Decision Date | 26 October 1995 |
| Docket Number | No. 22691,22691 |
| Citation | 195 W.Va. 51,464 S.E.2d 570 |
| Parties | Mary Jo BARTH, Plaintiff Below, Appellee, v. William D. KEFFER, Defendant Below, Appellee, Allstate Insurance Company, Appellant. |
| Court | West Virginia Supreme Court |
Syllabus by the Court
1. "A consent-to-settle provision of an automobile insurance policy pertaining to underinsured motorists coverage whereby an insured voids his underinsurance coverage by settling a claim with a tortfeasor without first obtaining the insurer's written consent when such claim involves either the insured's underinsurance coverage or potentially involves that coverage is a valid and enforceable means by which an insurer may protect its statutorily-mandated right to subrogate claims pursuant to West Virginia Code § 33-6-31(f) (1992)." Syllabus Point 3, Arndt v. Burdette, 189 W.Va. 722, 434 S.E.2d 394 (1993).
2. "W.Va.Code, 33-6-31(f) (1988), authorizes a right of subrogation by an uninsured or underinsured insurance carrier for the amount paid to an injured person as against the tortfeasor." Syllabus Point 3, Postlethwait v. Boston Old Colony Ins. Co., 189 W.Va. 532, 432 S.E.2d 802 (1993).
3. "A plaintiff is not precluded under W.Va.Code, 33-6-31(d) (1988), from suing an uninsured/underinsured insurance carrier if the plaintiff has settled with the tortfeasor's liability carrier for the full amount of the policy and obtained from the uninsured/underinsured carrier a waiver of its right of subrogation against the tortfeasor." Syllabus Point 4, Postlethwait v. Boston Old Colony Ins. Co., 189 W.Va. 532, 432 S.E.2d 802 (1993).
4. The statutory subrogation right contained in W.Va.Code, 33-6-31(f) (1988), ordinarily precludes an injured party from settling for less than the liability policy limits of the tortfeasor and giving a general release without the consent of the underinsured motorist carrier that has coverage for the injured party.
5. "A party in a civil action who has made a good faith settlement with the plaintiff prior to a judicial determination of liability is relieved from any liability for contribution." Syllabus Point 6, Board of Educ. of McDowell County v. Zando, Martin & Milstead, Inc., 182 W.Va. 597, 390 S.E.2d 796 (1990).
7. This statutory subrogation right under W.Va.Code, 33-6-31(f) (1988), is sui generis as it relates only to the right of an uninsured or underinsured motorist insurance carrier to recover sums paid under its policy to the injured plaintiff who is its policyholder. The broad principles of contribution contained in Board of Education of McDowell County v. Zando, Martin & Milstead, Inc., 182 W.Va. 597, 390 S.E.2d 796 (1990), that release a tortfeasor from further liability to the injured party upon a good faith settlement without regard to the tortfeasor's liability insurance coverage are completely different and should not be confused with W.Va.Code, 33-6-31(f).
Frederick E. Gardner, Chase & Gardner, Moundsville, for appellee Mary Jo Barth.
B. Karleton Kesner, Anita R. Casey, Meyer, Darragh, Buckler, Bebenek & Eck, Charleston, for appellant Allstate Insurance Company.
1
The appellant, Allstate Insurance Company (Allstate), appeals a June 21, 1994, order of the Circuit Court of Marshall County, which denied Allstate's motion to be dismissed. Allstate carried underinsurance coverage for Mary Jo Barth, the plaintiff below and one of the appellees herein. Allstate claims Ms. Barth settled her personal injury claim with a tortfeasor for less than the limit of his liability insurance coverage and she should be barred from recovering underinsurance based on Arndt v. Burdette, 189 W.Va. 722, 434 S.E.2d 394 (1993). We agree, and we reverse the judgment of the circuit court.
On July 30, 1990, Ms. Barth was a passenger in an automobile operated by William D. Keffer, one of the defendants below and one of the appellees herein. Mr. Keffer's automobile struck a vehicle owned by David H. Dobbs, a defendant below, which vehicle was parked along the shoulder of State Route 2, south of Moundsville, West Virginia.
Ms. Barth filed suit in July, 1992, alleging negligence on the part of Mr. Keffer for driving his vehicle into Mr. Dobbs's car. Negligence was asserted against Mr. Dobbs under W.Va.Code, 17C-15-15(b) (1978), for parking on a roadway or shoulder between sunset and sunrise where there was insufficient light to reveal any person or obstacle within a distance of five hundred feet. Allstate was served as the underinsured motorist carrier pursuant to W.Va.Code, 33-6-31(d) (1988). 2
Prior to trial, Ms. Barth settled with MICO Insurance Company, the liability carrier for Mr. Keffer, for its policy limits of $20,000. This settlement was approved by Ms. Barth's underinsurance carrier, Allstate. Mr. Keffer was subsequently dismissed from this suit. Immediately prior to trial, Ms. Barth also requested consent from Allstate to settle with Mr. Dobbs for $15,000, but Allstate refused to consent. 3 Subsequently, Allstate was informed that Ms. Barth settled with Mr. Dobbs for $15,000, which was less than the full limit of Mr. Dobbs's liability policy with Motorists Mutual Insurance Company. Ms. Barth also gave a complete release to Mr. Dobbs for further liability arising from the accident.
Allstate then filed a motion to dismiss Ms. Barth's claim for underinsurance coverage on the basis that her release of Mr. Dobbs terminated its right to subrogation. The circuit court heard arguments on the motion and concluded that Ms. Barth's claim against Mr. Dobbs was "tenuous," and that the best interests of justice would have been served by approval of the settlement. The circuit court determined the settlement was made in good faith under Board of Education of McDowell County v. Zando, Martin & Milstead, Inc., 182 W.Va. 597, 390 S.E.2d 796 (1990), and Mr. Dobbs was dismissed from the suit. The circuit court rejected Allstate's reliance on Arndt v. Burdette, supra, because in that case the unconsented settlement was made prior to suit being filed. The circuit court reasoned that in this case the settlement occurred after institution of the suit by the plaintiff.
Following a jury trial, Ms. Barth received a $70,582.95 verdict against Allstate. This amount was reduced by 30 percent for her comparative contributory negligence, less the $20,000 offset for Mr. Keffer's liability policy payment and the $15,000 paid under Mr. Dobbs's liability policy. These offsets left a net judgment of $14,408.07.
Allstate maintains that because Ms. Barth violated the consent-to-settle provisions of her underinsured coverage, Allstate is not legally obligated to provide underinsured benefits. It contends that its motion to dismiss should have been granted under Syllabus Point 3 of Arndt v. Burdette, supra:
"A consent-to-settle provision of an automobile insurance policy pertaining to underinsured motorists coverage whereby an insured voids his underinsurance coverage by settling a claim with a tortfeasor without first obtaining the insurer's written consent when such claim involves either the insured's underinsurance coverage or potentially involves that coverage is a valid and enforceable means by which an insurer may protect its statutorily-mandated right to subrogate claims pursuant to West Virginia Code § 33-6-31(f) (1992)."
The plaintiff initially advances a procedural bar based on the fact that Allstate's insurance policy was not made a part of the official record. Therefore, Allstate is not entitled to rely on the consent-to-settle language in the policy to defeat its underinsured motorist obligation. The language of Syllabus Point 3 of Arndt, supra, suggests that the consent-to-settle language in an insurance policy is merely an adjunct to enforcing the insurer's statutory right of subrogation contained in W.Va. Code, 33-6-31(f). 4 Arndt makes explicit what we earlier stated in Syllabus Point 3 of Postlethwait v. Boston Old Colony Insurance Co., 189 W.Va. 532, 432 S.E.2d 802 (1993):
"W.Va.Code, 33-6-31(f) (1988), authorizes a right of subrogation by an uninsured or underinsured insurance carrier for the amount paid to an injured person as against the tortfeasor."
Although this statutory right of subrogation does not arise until payment is made, it is apparent that when an injured party settles with a tortfeasor and gives a complete release, the injured party thereby abolishes the uninsured or underinsured carrier's statutory subrogation rights. Consequently, the injured party should not be able to recover against the uninsured or underinsured motorist carrier. Thus, in order to protect the insurer's statutory subrogation right, the injured party must obtain the insurer's consent to settle with the tortfeasor or, as we explained in Syllabus Point 4 of Postlethwait, supra, waive his or her right of subrogation:
"A plaintiff is not precluded under W.Va.Code, 33-6-31(d) (1988), from suing an uninsured/underinsured insurance carrier if the plaintiff has settled with the tortfeasor's liability carrier for the full amount of the policy and obtained from the uninsured/underinsured carrier a waiver of its right of subrogation against the tortfeasor."
The foregoing principles deal with our statutory subrogation right contained in W.Va.Code, 33-6-31(f), and exist independently of the language in the insurance contract. Thus, we conclude that the statutory subrogation right contained in ...
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