Bear River Mut. Ins. Co. v. Wall

• Decision Date: 01 May 1997
• Docket Number: No. 960362-CA,960362-CA
• Citation: 937 P.2d 1282
• Parties: 316 Utah Adv. Rep. 7 BEAR RIVER MUTUAL INSURANCE COMPANY, a Utah corporation, Plaintiff and Appellant, v. John WALL and Nancy Wall, his wife, Defendants and Appellees.
• Court: Utah Court of Appeals

Page 1282

937 P.2d 1282

316 Utah Adv. Rep. 7

BEAR RIVER MUTUAL INSURANCE COMPANY, a Utah corporation, Plaintiff and Appellant, v. John WALL and Nancy Wall, his wife, Defendants and Appellees.

No. 960362-CA.

Court of Appeals of Utah.

May 1, 1997.

Thomas A. Duffin and Daniel O. Duffin, Salt Lake City, for Plaintiff and Appellant.

John Wall and Nancy Wall, North Salt Lake, Defendants and Appellees pro se.

Before BENCH, JACKSON and ORME, JJ.

JACKSON, Judge:

Bear River Mutual Insurance Company (Bear River) appeals the district court's order granting summary judgment in favor of John and Nancy Wall. The district court ordered Bear River to continue to pay personal injury protection (PIP) benefits to its no-fault insureds, the Walls, despite the insureds' settlement with and release of the third-party tortfeasor and the tortfeasor's insurer. We affirm.

FACTS

The material facts in this case are undisputed. In August 1992, Nancy Wall was in an automobile accident in Colorado. Pursuant to its insurance policy with the Walls, Bear River began to pay the Walls PIP benefits for Nancy Wall's medical expenses.

Because Nancy Wall's damages exceeded the statutory threshold limitations controlling tort actions against tortfeasors, see Utah Code Ann. § 31A-22-309(1) (1994), the Walls sought recovery from the tortfeasor. On March 4, 1994, the Walls entered into a settlement with the tortfeasor and the tortfeasor's Upon learning of the settlement and release, Bear River refused to make further PIP payments to the Walls. Bear River then brought this action for a declaratory judgment in district court. Bear River asked the district court to determine whether, under Utah's no-fault statute and under its insurance policy with the Walls, it had to pay further PIP benefits to the Walls after the Walls settled with and released the tortfeasor. ¹ Both parties moved for summary judgment on the issue.

                insurer, receiving $16,000 in return for releasing the tortfeasor from "any and all actions, claims and demands whatsoever which claimants now have or may have, whether known or unknown, developed or undeveloped, on account of or arising out of the accident ... which happened on or about the 7th day of August, 1992."   The tortfeasor's insurer then issued a single check in the amount of $16,000 to the Walls through their attorney
                

The district court granted the Walls' motion for summary judgment, concluding that Bear River was required to pay further PIP benefits to the Walls under the terms of its policy with the Walls. Bear River appeals.

ANALYSIS

A grant of summary judgment is proper when there are no disputed issues of material fact and the moving party is entitled to judgment as a matter of law. See Utah R. Civ. P. 56(c). "Since the facts are undisputed here, we examine only issues of law. We review the [district] court's conclusions of law for correctness, granting them no deference." American Nat'l Fire Ins. Co. v. Farmers Ins. Exch., 927 P.2d 186, 188 (Utah 1996).

Bear River asserts the district court erred in concluding that the release signed by the Walls did not discharge Bear River from its obligation to continue to pay PIP benefits to the Walls under its policy and under Utah's no-fault statute. Bear River also asserts the district court erred in determining that the Walls' release did not extinguish Bear River's statutory right to seek reimbursement in arbitration proceedings for any PIP benefits paid after the Walls settled with the tortfeasor.

In arguing that it is not obligated to make further PIP payments following its insureds' settlement, Bear River relies on Jones v. Transamerica Insurance Co., 592 P.2d 609 (Utah 1979). In Jones, the Utah Supreme Court held that a no-fault insured was precluded, based on subrogation principles, from asserting a claim against his no-fault insurer for further PIP payments after the insured settled with the tortfeasor. See id. at 612. Bear River also relies on language from a number of Utah cases, including Jones, stating that a primary purpose of Utah's no-fault statute is to prevent double recovery. See id. at 611. Bear River argues that requiring it to continue to make PIP payments, despite the Walls' settlement and release, would result in a double recovery by the Walls, in contravention of this purpose of the no-fault statute. ²

The Walls, on the other hand, argue that the holding in Jones is not dispositive in this case. Instead, the Walls rely on the supreme court's analysis and holding in Allstate Insurance Co. v. Ivie, 606 P.2d 1197 (Utah 1980), and subsequent cases. In Ivie, the court concluded that a no-fault insurer that has paid PIP benefits to its insured is not entitled, by way of subrogation, to reimbursement of those funds from a later recovery by its insured against a tortfeasor or the tortfeasor's insurer. See id. at 1202. Instead, the no-fault insurer must exercise its right under the no-fault statute to seek reimbursement through a binding arbitration proceeding between the insurance companies of the respective parties. See id. at 1203. The We agree with the Walls that Jones is not dispositive of this case, as its holding and analysis are inconsistent with Ivie and subsequent Utah Supreme Court cases involving Utah's no-fault statute.

Walls assert that under the supreme court's analysis in Ivie, PIP benefits are considered separate and distinct from tort claims. They argue that their settlement with the tortfeasor did not therefore include PIP benefits, and that requiring Bear River to continue to make PIP payments would thus not result in a double recovery.

I. Utah's No-Fault Automobile Insurance Statute

Utah law requires motor vehicle owners to maintain owner's or operator's security. See Utah Code Ann. § 41-12a-301(2) (Supp.1996). Under Utah's no-fault statute, Utah Code Ann. §§ 31A-22-302, -305 to -309 (1994 & Supp.1996), ³ insurance policies "purchased to satisfy the owner's or operator's security requirement of Section 41-12a-301 ... shall ... include personal injury protection." Id. § 31A-22-302(2). Personal injury protection benefits include benefits for the reasonable value of medical expenses, not to exceed a total of $3000 per person; benefits for loss of income and household services; funeral or burial benefits; and death benefits. See id. § 31A22-307.

In addition to the provisions requiring that automobile insurance policies provide minimum PIP benefits, Utah's no-fault statute places restrictions on tort actions for personal injuries alleged to have been caused by an automobile accident. Section 31A-22-309 provides that a person covered by PIP benefits cannot maintain an "action for general damages arising out of personal injuries" unless certain threshold requirements are met. ⁴ Id. § 31A-22-309(1). Thus, the statute preserves tort actions in only the more serious cases, including those in which there is death, permanent disability, or medical expenses incurred over $3000. See id.

The no-fault statute further states that

[e]very policy providing personal injury protection coverage is subject to the following:

(a) that where the insured under the policy is or would be held legally liable for the personal injuries sustained by any person to whom benefits required under personal injury protection have been paid by another insurer ... the insurer of the person who would be held legally liable shall reimburse the other insurer for the payment, but not in excess of the amount of damages recoverable; and

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

Id. § 31A-22-309(6).

II. Jones v. Transamerica Insurance Co.

Bear River asserts that the supreme court's holding in Jones v. Transamerica Insurance Co., 592 P.2d 609 (Utah 1979), interpreting Utah's no-fault statute, is dispositive of the issue in this case. In Jones, the plaintiff insured was involved in an automobile accident, and thereafter was paid PIP benefits by his no-fault insurer for medical expenses and lost wages. About eighteen Because his no-fault insurer refused to pay further PIP benefits based on the later PIP claims, the insured brought an action against his no-fault insurer to recover for these claims. See id. The trial court held that the no-fault insured could not recover PIP benefits from his insurer once the insured settled his claim with his tortfeasor because an insured is not "entitled to both recovery under the No-Fault Act and a suit against and recovery from the tort feasor." Id. at 611.

                months after receiving these PIP benefits, the insured submitted additional claims for PIP benefits for lost earnings and inability to perform household services.  See id. at 610.   At the same time as the insured submitted the additional PIP claims to his no-fault insurer, the insured entered into a settlement agreement with his tortfeasors, releasing "his tortfeasors of any and all claims he may have had against them for personal injury [and] property damage" for the consideration of $6000.  Id. (emphasis omitted)
                

On appeal, the plaintiff argued that the release did not bar him from pursuing a claim against his no-fault insurer because "the specific exclusion in the release agreement preserved any no-fault claims which may be made against the tortfeasors," and because "the recovery from the tortfeasors is not the same as the disability sought from the insurance carrier." Id. at 612. The Utah Supreme Court rejected these arguments and affirmed the trial court's holding, specifically concluding that "[b]y executing the release, plaintiff discharged the tortfeasors of any and all liability, notwithstanding the attempted 'specific exclusion' [in the release agreement] relating to no-fault benefits. By so doing, plaintiff has chosen his recovery and cannot now successfully assert a claim against his insurer." Id.

In concluding that the plaintiff could not maintain a claim against...