Hawkins v. Travelers Ins. Co.

• Decision Date: 16 April 1982
• Docket Number: No. 63244,63244
• Citation: 162 Ga.App. 231,290 S.E.2d 348
• Parties: HAWKINS v. The TRAVELERS INSURANCE COMPANY.
• Court: Georgia Court of Appeals

Page 348

290 S.E.2d 348

162 Ga.App. 231

HAWKINS v. The TRAVELERS INSURANCE COMPANY.

No. 63244.

Court of Appeals of Georgia.

April 16, 1982.

Sammy J. Hawkins, Marietta, for appellant.

Don C. Keenan, Atlanta, Charles R. Ashman, Savannah, for amicus curiae.

Alan F. Herman, Atlanta, for appellee.

CARLEY, Judge.

Appellant-Hawkins suffered serious personal injuries on May 9, 1975, in a collision between her automobile and a vehicle being operated by Gerald Remer. Appellee-Travelers Insurance Company (Travelers) is the no-fault carrier for Hawkins under a policy providing both mandatory PIP benefits and an additional $20,000 in optional PIP coverage. Allstate Insurance Company (Allstate) is Remer's liability carrier under a policy providing up to $50,000 coverage.

On July 28, 1975, Allstate was placed on notice that Travelers was Hawkins' no-fault carrier and, accordingly, the insurer entitled to the right of subrogation under former Code Ann. § 56-3405b(d) (Ga.L.1974, pp. 113, 119). Subsequently, Hawkins was paid $20,456.73 in no-fault benefits by Travelers. With regard to settlement of Hawkins' claims against Remer, however, Allstate was in a quandary. Allstate's agent in charge of the negotiations testified that he would have authorized payment to Hawkins of $50,000, the full limits of Remer's policy, if he had not been put on notice of Travelers' subrogation rights. Allstate's agent further testified: "At that time,..., it was just completely up in the air as far as the law on it [Travelers' subrogation rights] was concerned. I didn't--we didn't know whether the injured party was going to get the first money or whether the claimant--the [no-fault] insurance carrier was entitled to the first money, so at that time, we tried to--in cases of this type, where we were paying our policy limits--we tried to contact the carrier who had a [subrogation] claim against us and either compromise the claim or get them to waive it, if they would." Apparently there were discussions held between Allstate, Travelers and Hawkins concerning the disbursement of the proceeds of Remer's policy. Both Allstate and Travelers informed Hawkins that "it was the law" that Travelers was entitled as the no-fault insurer with subrogation rights to recover from the proceeds of Remer's liability insurance the amount of the PIP benefits it had paid to Hawkins. As the consequence of these discussions, Hawkins, through her attorney, "agreed to settle the Hawkins' claims against Gerald Remer and Allstate for $50,000 subject to Travelers' PIP claim." Thereafter, Allstate and Travelers reached an agreement whereby the former would tender and the latter would accept in settlement of its subrogation claim an amount equal to one-half of the $20,456.73 PIP benefits it had paid out to Hawkins. Accordingly, under what Hawkins terms a "mistake of law with full knowledge of all the facts," she and her husband received $39,771.64 from the $50,000 proceeds of the Remer policy and Travelers received the balance of $10,228.36. Hawkins, in consideration of this payment, signed a general release of Allstate and its insured, Remer.

The instant action was instituted by Hawkins against Travelers. In Count I, Hawkins sought to recover the $10,228.36 that Travelers had been paid by Allstate from the proceeds of Remer's liability policy. In Count II, Hawkins sought to recover benefits under the medical payments provision of the policy and, in addition, sought penalties and attorney fees under Code Ann. § 56-1206. After extensive discovery, Hawkins moved for partial summary judgment on the issue of liability and Travelers moved for summary judgment as to the entire action. Hawkins also moved under Code Ann. § 81A-156(g) for an order awarding her reasonable expenses and adjudging Travelers in contempt for filing an allegedly "false" affidavit in the action. After a hearing, the trial court denied Hawkins' motions and entered summary judgment in favor of Travelers as to all claims. It is from that order that Hawkins appeals.

1. Hawkins is correct in her assertion that, under the facts of this case, Blaylock v. Georgia Mut. Ins. Co., 239 Ga. 462, 238 S.E.2d 105 (1977) is controlling on the question of Travelers' right to subrogation and the priority of that right under the applicable former statute. In that decision, the Supreme Court held that "having the right of subrogation [does] not necessarily establish priorities where the assets of the tortfeasor are inadequate to pay his liabilities... [A]n injured person insured pursuant to the [no-fault] Act is to receive full compensation for his injuries before his insurer is compensated on the basis of subrogation rights..." Blaylock, 239 Ga. at 465, 238 S.E.2d 105. It is essentially Hawkins' position that, under Blaylock and subsequent cases, her entitlement as the "injured person" to receive "full compensation" for her injuries had priority over Travelers' subrogation rights as her no-fault carrier, and if her right and priority been recognized she would have received the full $50,000 of the insurance proceeds in settlement of her tort claim to the extinguishment of Travelers' subrogation rights in connection with Remer's liability policy. See generally Georgia Farm Bureau Mut. Ins. Co. v. Southeastern Fid. Ins. Co., 144 Ga.App. 811, 242 S.E.2d 743 (1978). Thus, Hawkins asserts an invasion of her right and priority to full satisfaction of her tort claim through Travelers' assertion of its subordinate right and priority to satisfaction of its subrogation claim. On the basis of this "invasion" she seeks a return of the $10,228.36 representing "her" tort claim which was paid out under a "mistake of law" to Travelers in settlement of its no-fault subrogation claim. See Culbreath v. Culbreath, 7 Ga. 64 (1849).

We note at the outset that the mere fact that Hawkins' right to "full compensation" had priority over Travelers' right to subrogation is not dispositive. To paraphrase Blaylock, priority of the right of the injured party to "full compensation" does not necessarily establish the right of the no-fault carrier to subrogation, even where the assets of the tortfeasor are inadequate to pay his liabilities. This is true because, as we interpret Blaylock, "[t]o the extent that [the injured party has in fact] been [fully] compensated for [his] injuries ... the balance [of the policy proceeds], if any, [is] due the [no-fault] insurer [having subrogation rights.]" Blaylock, 239 Ga. at 465-466, 238 S.E.2d 105, supra. Thus, even though the liability policy limits may otherwise be "inadequate" to compensate both the injured party and his no-fault carrier, to the extent that the former receives "full compensation" from the policy proceeds, the latter has a right to the balance thereof to the extent of its subrogation claim. Thus, the decisive issue is whether Hawkins received "full compensation" for her injuries.

The application of the aforesaid principles to the facts of the instant case demonstrates the following: Travelers' initial subrogation claim was properly asserted against Allstate, Remer's insurer. Compare Aetna Cas. & Surety Co. v. Sosebee, 150 Ga.App. 354, 258 S.E.2d 37 (1979). Because Travelers had asserted this subrogation claim, Remer's liability policy which contained a $50,000 limit would have been inadequate to compensate both Hawkins and Travelers. While, in view of the evidence that Allstate apparently would willingly have exhausted the full $50,000 in satisfaction of Hawkins' tort claim and for that reason the priority of Travelers' right to subrogation was "doubtful" under Blaylock, it is undisputed that Allstate did not pay Hawkins the full policy limits because it was "up in the air" on the question of which claim, Hawkins' or Travelers', had priority. Compare Georgia Farm Bureau Mut. Ins. Co., 144 Ga.App. 811, 242 S.E.2d 743, supra. Under this set of facts it appears that Hawkins, when confronted with Travelers' subrogation claim and Allstate's consequent confusion and uncertainty, agreed to settle her tort claim "for $50,000 subject to Travelers' PIP claim."

Pursuant to Hawkins' agreement, Allstate subsequently offered and Hawkins and her husband then accepted a total of $39,777.64 in settlement of their respective tort claims and executed a general release in favor of Remer and Allstate. A release "operates to release a tortfeasor on the theory that there should be a just satisfaction and there has been a complete accord and satisfaction. [Cits.]" Cash v. Street & Trail, Inc., 136 Ga. 462, 464-465, 221 S.E.2d 640 (1975). " 'When a release is taken, the consideration paid is presumptively full compensation.' " Gilmore v. Fulton-DeKalb Hosp. Auth., 132 Ga.App. 879, 880-881, 209 S.E.2d 676 (1974). " 'Where, without the practice of any fraud upon her, a plaintiff accepts, in full satisfaction of her claim, a lesser amount than what she claims is due her, there is an accord and satisfaction, and she is not entitled to a recovery. [Cits.]' [Cit.]" Mullinax v. Shaw, 143 Ga.App. 657, 659, 239 S.E.2d 547 (1977). Therefore, when Hawkins accepted the payment from Allstate on behalf of Remer and executed a general release in their favor, she was "fully compensated" by them for her injuries and the balance of Remer's assets, "if any", was thereby subject to Travelers' formerly subordinate subrogation rights. Blaylock, 239 Ga. 463, 465-466, 238 S.E.2d 105, supra. Accordingly, Travelers' receipt of the balance of Remer's assets in satisfaction of its subrogation claim resulted from Hawkins' voluntary action in settling her own tort claim with Allstate and Hawkins is not entitled to recover that balance from Travelers. See Code Ann. § 20-1007; Stein Steel & Supply Co. v. K. & L. Enterprises, 97 Ga.App. 71, 102 S.E.2d 99 (1958). Under the evidence, Hawkins voluntarily, though perhaps mistakenly, relinquished her right and priority to the full amount of Remer's "inadequate" assets and she cannot recover...