Bear River Mut. Ins. Co. v. Wall

• Decision Date: 09 April 1999
• Docket Number: No. 970250,970250
• Parties: 367 Utah Adv. Rep. 3, 1999 UT 33 BEAR RIVER MUTUAL INSURANCE CO., Plaintiff and Petitioner, v. John WALL and Nancy Wall, Defendants and Respondents.
• Court: Utah Supreme Court

Page 460

978 P.2d 460

367 Utah Adv. Rep. 3, 1999 UT 33

BEAR RIVER MUTUAL INSURANCE CO., Plaintiff and Petitioner, v. John WALL and Nancy Wall, Defendants and Respondents.

No. 970250.

Supreme Court of Utah.

April 9, 1999.

Thomas A. Duffin, Hans M. Scheffler, Daniel O. Duffin, Salt Lake City, for plaintiff.

John Wall, Nancy Wall, North Salt Lake, pro se.

On Certiorari to the Utah Court of Appeals

STEWART, Justice:

¶1 Nancy Wall was in an auto accident in August 1992 with Lana Waters. Wall's insurer, Bear River Mutual Insurance Company, paid her personal injury protection ("PIP") benefits. Wall sued Waters. Wall, Waters, and Waters' insurer entered into a settlement that released Waters and her insurer from any further liability. Thereafter, Wall requested additional PIP benefits from Bear River. Bear River asserted that the Wall/Waters settlement released it from further PIP obligations and brought a declaratory judgment action against the Walls in district court, which granted summary judgment in the Walls' favor and required Bear River to pay additional PIP benefits to Wall. The Court of Appeals affirmed. Bear River Mutual Ins. Co. v. Wall, 937 P.2d 1282 (Utah Ct.App.1997). We granted certiorari, 945 P.2d 1118 (Utah 1997), and affirm.

¶2 The sole issue Bear River raises is whether Allstate Insurance Co. v. Ivie, 606 P.2d 1197 (Utah 1980), overruled Jones v. Transamerica Insurance Co., 592 P.2d 609 (Utah 1979). Both cases construed Utah Code Ann. § 31-41-11 of the former No-Fault Insurance Act, ¹ which states:

(1) Every insurer authorized to write the insurance required by this act shall agree as a condition to being allowed to continue to write insurance in the State of Utah:

(a) That where its insured is or would be held legally liable for the personal injuries sustained by any person to whom benefits required under this act have been paid by another insurer, including the state insurance fund, it will reimburse such other insurer for the payment of such benefits, but not in excess of the amount of damages so recoverable, and

(b) That the issue of liability for such reimbursement and the amount of same shall be decided by mandatory, binding arbitration between the insurers.

Utah Code Ann. § 31-41-11 (1974). ²

¶3 The Court of Appeals, after analyzing Jones and Ivie, held: "[T]he supreme court rejected the analysis underlying Jones in Ivie, and has reaffirmed the Ivie analysis in subsequent cases[; therefore], the holding and underlying subrogation principles of Jones have been overruled sub silentio by Ivie and later supreme court cases." Bear River, 937 P.2d at 1291. The Court of Appeals stated:

Bear River's obligation to continue to pay full PIP benefits was not extinguished by the settlement and release between the Walls and the tortfeasor because there was no evidence that the parties to the settlement and release understood or intended that the settlement sum include PIP benefits. In addition, the release did not extinguish Bear River's right, under Utah's no-fault statute, to seek reimbursement for further PIP payments from the tortfeasor's insurer through binding arbitration. Thus, the Walls were entitled to judgment as a matter of law.

Id. at 1292.

¶4 "On certiorari, we review the decision of the court of appeals, not the decision of the trial court." State v. Harmon, 910 P.2d 1196, 1199 (Utah 1995). "We review the court of appeals' decision for correctness and give its conclusions of law no deference." Newspaper Agency Corp. v. Auditing Div., 938 P.2d 266, 267 (Utah 1997).

¶5 Bear River argues that Ivie did not overrule Jones and that Jones is dispositive. The Walls counter that Ivie overruled Jones, as the Court of Appeals held.

¶6 Jones held that PIP insurers, under section 31-41-11, need not pay continuing PIP benefits to tort victims after the victims settle with the tortfeasors and the tortfeasors' liability insurer. There, the tort victim in an auto accident received no-fault benefits from his PIP insurer. Approximately 18 months later, he claimed additional PIP benefits and also "entered into settlement negotiations with his tortfeasors" for general damages. Jones, 592 P.2d at 610. He settled with the tortfeasors, but the PIP insurer refused to pay further benefits. The tort victim sued to recover the benefits. After the district court granted the PIP insurer's motion for summary judgment, the tort victim appealed. See id. at 611. We affirmed, holding under principles of subrogation that a PIP insurer is not obligated to make PIP payments after the tort victim's settlement with the tortfeasor and liability insurer. See id. at 612.

¶7 Ivie held, under section 31-41-11, that PIP insurers could not be reimbursed for previously paid PIP benefits from tort victims after their settlements with the tortfeasors and liability insurers. There, an accident victim received PIP benefits from its insurer and sued the tortfeasor for general damages. After the tort victim settled with the tortfeasor, the PIP insurer sued the tort victim for reimbursement of PIP benefits. See Ivie, 606 P.2d at 1198. The trial court granted summary judgment for the PIP insurer, and the tort victim appealed. See id. at 1199. We reversed, holding that tort victims are not obligated to reimburse their PIP insurers from their settlements for paid PIP benefits. However, we stated that PIP insurers may pursue reimbursement from liability insurers in arbitration according to their statutory right. See id. at 1203.

¶8 In Ivie, we gave the first broad overview of no-fault statutes in general and Utah's no-fault insurance statute specifically. We explained the two types of "no-fault" statutes: add-on statutes and partial tort exemption statutes. See id. at 1199. The first type, the add-on statute, is not truly no-fault but "merely add[s] to the negligence system of reparations with some kind of no-fault benefits to an injured person, without regard to fault." Id. These statutes preserve all tort claims; however, some add-on statutes provide for reimbursement that avoids double recovery. See id.

¶9 The second type is the partial tort exemption type. These statutes give tort victims a right of action against their insurers, which must pay no-fault benefits up to a certain statutory limit. See id. Under this second type, tort victims can still bring fault-based claims against tortfeasors and their insurers for pain and suffering and for economic losses greater than the statutory limit. See id.

¶10 We explained in Ivie that Utah's no-fault insurance statute is a partial tort exemption statute and has two components. See id. The first component, "no-fault insurance benefits," allows accident victims to claim PIP benefits from their own insurers--regardless of fault--up to statutory limits. See Utah Code Ann. § 31-41-6 (1974 & Supp.1979). ³ The second component, "partial elimination of tort claims for bodily injury," provides that tortfeasors who maintain no-fault insurance on their vehicles are not personally liable for PIP benefits and are immune from suit for PIP-type claims. See id. § 31-41-9(2). However, this immunity is partial: tort victims may still bring claims against tortfeasors for pain and suffering, as well as for economic losses, in excess of the statutory PIP limit. See id. §§ 31-41-2, -9(1). ⁴ Because tortfeasors who comply with the Act are not personally responsible for PIP benefits, a PIP insurer seeking "reimbursement" for PIP benefits it paid must undergo "mandatory, binding arbitration" with the liability insurer. Id. § 31-41-11(1)(b). ⁵

¶11 Factually, this case is closer to Jones than Ivie because Bear River's declaratory action concerns its continuing obligation to pay PIP benefits. However, as to the responsibilities of tort victims, tortfeasors, PIP insurers, and liability insurers, Ivie and Jones are irreconcilable. Ivie implicitly rejected Jones. Although Ivie did not expressly overrule Jones--indeed, the Ivie majority did not even cite Jones--the two Ivie dissents referred to Jones and accused the majority of promulgating a "new rule of law." ⁶ See Ivie, 606 P.2d at 1205 (Hall, J., dissenting); see id. at 1206 (Crockett, C.J., dissenting). The Ivie dissents also explicitly recognized that Jones and Ivie are irreconcilable.

¶12 Jones and Ivie construed Utah Code Ann. § 31-41-11 differently. Jones assumed without analysis that section 11 incorporated an equitable right of subrogation: "[T]he statute specifically affords subrogation rights and arbitration between insurers whenever no-fault benefits are paid." Jones, 592 P.2d at 611. However, Ivie analyzed the basic purpose and intent of the No-Fault Act for the first time and stated that section 11 did not permit an equitable right of subrogation for PIP payments. See Ivie, 606 P.2d at 1201-03. This is true, Ivie stated, because a tortfeasor's "personal liability does not include PIP payments. " Id. at 1203 (emphasis added). Since a liability insurer stands in the shoes of a tortfeasor, a liability insurer is not liable to a tort victim for PIP payments. ⁷ "Thus, the tort victim's recovery from the liability insurer cannot be reduced by the PIP payments." ⁸ Id. Accordingly, Ivie held that a PIP insurer has "no right of subrogation to the [tort victim's] recovery." Id. Ivie 's rejection of the principle of equitable subrogation with respect to PIP payments did not distinguish between future and past PIP benefits. ⁹ Ivie, however, did recognize that section 11 "grants the no-fault insurer a limited equitable right to seek reimbursement in [an] arbitration proceeding against the liability insurer." Id. at 1202.

¶13 Under Jones, it would logically be assumed that the settlement of an auto accident claim includes compensation for injuries covered by PIP benefits. See Jones, 592 P.2d at 612. However, under Ivie, a tortfeasor/tort victim settlement does not include money for PIP-type amounts. See Ivie, 606 P.2d at 1202-03.

¶14 Post-Ivie cases...