Erie Ins. Co. v. George

• Decision Date: 11 December 1995
• Docket Number: No. 49A02-9505-CV-249,49A02-9505-CV-249
• Citation: Erie Ins. Co. v. George, 658 N.E.2d 950 (Ind. App. 1995)
• Parties: ERIE INSURANCE COMPANY, Appellant-Defendant, v. James David GEORGE and his Attorney, Gerald J. Sufleta, Appellees-Plaintiffs.
• Court: Indiana Appellate Court

Page 950

658 N.E.2d 950

ERIE INSURANCE COMPANY, Appellant-Defendant, v.James David GEORGE and his Attorney, Gerald J. SufletaAppellees-Plaintiffs.

No. 49A02-9505-CV-249.

Court of Appeals of Indiana.

Dec. 11, 1995.

Robert A. Smith, William F. McManus, Smith & Wade, Indianapolis, for Appellant.

Gerald J. Sufleta, Indianapolis, for Appellees.

OPINION

FRIEDLANDER, Judge.

Erie Insurance Company appeals the decision of the trial court granting summary judgment in favor of its insured James David George and George's attorney Gerald J. Sufleta.Erie presents three issues for review, but we find only one to be dispositive:

Did the trial court err when it determined as a matter of law that Ind.Code 34-4-41-1, et seq. requires Erie to pay Sufleta a pro rata share of attorney fees and costs from proceeds interpled in a subrogation action initiated by Erie?

We vacate and remand for further proceedings consistent with this opinion.

The facts are undisputed.On February 8, 1993, Donald Kellenberger was driving west-bound on East Kessler Boulevard.As he approached Primrose Avenue, Kellenberger rear-ended a 1989 Honda Acura driven by George.George was injured and incurred medical expenses of $4,080.00.At the time of the collision, George was insured by Erie and Kellenberger was insured by GEICO Insurance Company.On May 8, 1993, George retained attorney Sufleta to represent him in his claim for personal injuries against Kellenberger.Three days later, Sufleta notified Erie of the representation and of his lien for attorney fees and costs.Erie informed Sufleta that the medical coverage portion of George's policy allowed Erie the right of subrogation and that Erie would pursue subrogation if it was requested to issue payment to George or on his behalf.On June 2, 1993, Sufleta submitted George's medical bills to Erie for payment.Soon after, Erie sent a $4,080.00 check to Sufleta in full payment of George's medical expenses and notified Sufleta of its intent to represent its own subrogation interest.In September, 1993, Erie notified GEICO of its right to subrogation under George's policy and requested that GEICO issue a separate check to Erie for its medical subrogation claim "when settlement has been reached with our insured and his attorney, Gerald Sufleta".Recordat 167.

On November 2, 1993, Erie, in its own name as subrogee of George, filed an action against Kellenberger in the Washington Township Small Claims Court seeking reimbursement of the $4,080.00 it had paid George, as well as attorney fees and costs.Kellenberger's counsel filed an appearance and request for jury trial, and the action was removed to municipal court.After new pleadings were filed, George and Sufleta petitioned to intervene, alleging that Erie did not have a right to bring the subrogation action and that Sufleta was entitled to a pro rata share of attorney fees and costs.After a hearing, the trial court granted the motion to intervene.In April, 1994, Kellenberger deposited $4,260.00 with the clerk of the court, seeking interpleader.The same day, the parties stipulated to Kellenberger's dismissal and the court issued an order in accordance with the stipulation.The parties then realigned, with George and Sufleta named as plaintiffs and Erie named as the defendant.

On February 8, 1995, in response to George and Sufleta's motion for summary judgment and Erie's cross-motion for summary judgment, the court ruled that Erie had "no independent right to file an action in its own name either pursuant to its contract of insurance or the common law" before George had settled with the tortfeasor or obtained a judgment against him.Recordat 252.Additionally, the court rejected Erie's argument that previous court determinations that Sufleta was not entitled to attorney fees and costs collaterally estopped Sufleta from claiming the same.The court concluded its entry of judgment by stating:

"The only real issue this Court finds is whether or not the amount of payment is $4,080.00 or $4,260.00 which has been interpled by the defendant Kellenberger's carrier.Since the total amount interpled is $4,260.00, the Court will assume that is the correct amount and will order plaintiff to submit an affidavit showing his attorney's fees, percentages thereof and all costs and expenses of his pursuit of his client George's claim and a status report as to that claim, whether settled, tried or pending, before this Court will further order any disbursements from the interpled amount."Recordat 254.

Erie appeals the trial court's judgment.Oral argument was held on October 16, 1995 at Marian College in Indianapolis.

Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.Ind.Rules of Procedure, TrialRule 56(C).When reviewing an entry of summary judgment, we stand in the shoes of the trial court and liberally construe all properly designated evidentiary matter in favor of the nonmoving party.Rotec, Div. Of Orbitron, Inc. v. Murray Equip Inc. (1993), Ind.App., 626 N.E.2d 533.We may sustain a summary judgment upon any theory supported by the designated materials.T.R. 56(C).

Since the facts are not in dispute, we must determine whether the trial court erred as a matter of law.The trial court concluded that, since the "whole purpose" behind subrogation is "to prevent double recovery by a plaintiff", an insurer has no right to subrogation until its insured has obtained recovery.Recordat 250.An additional purpose of the subrogation rule, however, is to prevent a wrongdoer from shielding himself with the knowledge that a loss is covered by insurance.Auto Owners Protective Exch. v. Edwards(1922), 82 Ind.App. 558, 136 N.E. 577.The Edwards court noted that insurance contracts are not made for the benefit of wrongdoers and held that an insurer should not be forced to suffer the consequences of the wrongful act of another."The general rule is that where the tortious conduct of a third party is the cause of a loss within the terms of a policy of insurance, then, upon payment of the loss, the insurer becomes subrogated by operation of law to whatever right the insured may have against the wrongdoer."Id., 82 Ind.App. at 563, 136 N.E. at 579(emphasis supplied).Erie was entitled to initiate a subrogation action once it tendered payment for George's medical expenses.

Having clarified the common law, the sole issue before us is whether Sufleta is entitled to a portion of the interpled proceeds for attorney fees and costs.Indiana's Cost Statute, IC 34-4-41-1 et seq., requires that:

"4.An insurer claiming subrogation or reimbursement rights under this chapter shall pay, out of the amount received from the insured, the insurer's pro rata share of the reasonable and necessary costs and expenses of asserting the third-party claim.These reasonable and necessary costs and expenses include, and are not...