Lima v. Chambers

• Decision Date: 26 November 1982
• Docket Number: No. 17622,17622
• Citation: 657 P.2d 279,35 A.L.R.4th 747
• Parties: Barbara LIMA, Plaintiff and Respondent, v. Earl CHAMBERS, Defendant and Respondent, v. PRUDENTIAL PROPERTY & CASUALTY INSURANCE COMPANY, Intervenor and Appellant.
• Court: Utah Supreme Court

Page 279

657 P.2d 279

35 A.L.R.4th 747

Barbara LIMA, Plaintiff and Respondent, v. Earl CHAMBERS, Defendant and Respondent, v. PRUDENTIAL PROPERTY & CASUALTY INSURANCE COMPANY, Intervenor

and Appellant.

No. 17622.

Supreme Court of Utah.

Nov. 26, 1982.

Timothy R. Hanson, Salt Lake City, for intervenor and appellant.

David Bert Havas, pro se.

STEWART, Justice:

On this appeal we decide whether an automobile liability insurance carrier providing uninsured motorist coverage may intervene as of right as a party defendant in a tort action between its insured and an uninsured motorist tortfeasor. The trial court denied intervention; we reverse.

The facts are not in dispute. In July of 1977 plaintiff, Barbara Lima, was involved in an automobile collision with defendant Earl Chambers, an uninsured motorist. Lima brought a negligence action against Chambers, an answer was filed, and discovery ensued. Thereafter, Chambers' attorney withdrew from the case. The following day Chambers executed an affidavit prepared by plaintiff's attorney acknowledging that he was uninsured and admitting that he had caused the collision with plaintiff Lima. On the basis of that admission, plaintiff moved for and obtained a summary judgment on the issue of defendant's liability, leaving the question of damages to be decided at trial. Thereafter, plaintiff's liability insurer, Prudential Property & Casualty Insurance Company (Prudential), which is contractually liable for a judgment against an uninsured motorist, moved to intervene as a party defendant in the litigation of the damages issue. Apparently considering our prior decision in Kesler v. Tate, 28 Utah 2d 355, 502 P.2d 565 (1972), to be controlling, the trial court denied the motion to intervene.

Prudential appeals, urging that we overrule Kesler and allow intervention because (1) it will be bound by a judgment against the uninsured motorist and denial of intervention therefore violates its constitutional right to due process; and (2) Rule 24, Utah R.Civ.P., governing intervention, entitles it to intervene as of right. Plaintiff Lima counters that Kesler was decided correctly, that Prudential has only a potential contractual obligation to plaintiff with no interest in the pending tort action, and therefore, that neither due process nor Rule 24 requires Prudential's intervention.

I.

Utah Code Ann., 1953, § 41-12-21.1 requires that automobile liability insurance policies include coverage for accidents with uninsured motorists:

[N]o automobile liability insurance policy insuring against loss resulting from liability imposed by law for bodily injury or death or property damage suffered by any person arising out of the ownership, maintenance or use of a motor vehicle, shall be delivered ... unless coverage is provided in such policy ... for the protection of persons insured thereunder who are legally entitled to recover damages from owners or operators of uninsured motor vehicles and hit-and-run motor vehicles because of bodily injury, sickness or disease, including death, resulting therefrom. [Emphasis added.]

Thus, if an insured is injured by an uninsured motorist, the insured may recover damages from his own insurance company upon showing that he is "legally entitled" to recover those damages from the uninsured tortfeasor. This showing of legal entitlement typically entails a lawsuit against the uninsured tortfeasor to litigate the issues of liability and damages. A judgment favorable to the insured fixes the insurer's contractual duty to satisfy that judgment, within the policy limits. The insurer is then left to pursue its subrogation remedy against the uninsured tortfeasor.

Because of the direct effect of the tort litigation on the insurer's contractual duty, both insureds and insurers have sought, under certain circumstances, to involve the insurer in the tort litigation. Insureds have pressed for intervention to make the tort judgment binding on the insurer, and insurers have sought intervention to make certain the tort issues are fully and fairly litigated. Three different attempts have been made in this Court to involve an uninsured motorist insurance carrier in the tort litigation between the insured and the uninsured tortfeasor.

The first attempt was in Christensen v. Peterson, 25 Utah 2d 411, 483 P.2d 447 (1971). There we held that to avoid the disclosure of insurance coverage to the jury, to prevent the mixture of a contract action with a tort action, and to avoid placing the insurer in a position hostile to its own insured, a plaintiff could not join its insurer as a party defendant in the tort action against the uninsured tortfeasor. The following year in Kesler v. Tate, 28 Utah 2d 355, 502 P.2d 565 (1972), we addressed the precise issue raised again on this appeal: Whether the insurer may, on its own motion, intervene as a party defendant in the tort action between the insured and the uninsured tortfeasor. There we concluded that Christensen v. Peterson was controlling and, without discussing whether the requirements of Rule 24 were satisfied, held that the insurer could not intervene. Most recently, in Wright v. Brown, Utah, 574 P.2d 1154 (1978), we held that the nonparty insurer lacked standing to appeal the default judgment entered in favor of the insured against the uninsured tortfeasor. Thus, one-by-one we have closed all three doors to possible insurer participation in the tort litigation and have thereby effectively precluded the insurer from ensuring that its contractual obligation is properly and fairly invoked. As the law now stands, the insurer may not be joined, may not intervene, and may not appeal. We are here asked to open only the door of intervention.

II.

The overwhelming majority of courts have allowed an uninsured motorist insurance carrier to intervene in a tort action between its insured and an uninsured tortfeasor. See, e.g., Oliver v. Perry, 293 Ala. 424, 304 So.2d 583 (1974); State Farm Mutual Automobile Ins. Co. v. Brown, 114 Ga.App. 650, 152 S.E.2d 641 (1966); Wert v. Burke, 47 Ill.App.2d 453, 197 N.E.2d 717 (1964); Indiana Ins. Co. v. Noble, 148 Ind.App. 297, 265 N.E.2d 419 (1970); Rawlins v. Stanley, 207 Kan. 564, 486 P.2d 840 (1971); Barry v. Keith, Ky., 474 S.W.2d 876 (1971); State v. Craig, Mo.App., 364 S.W.2d 343 (1963), Dominici v. State Farm Mut. Ins. Co., 143 Mont. 406, 390 P.2d 806 (1964); Heisner v. Jones, 184 Neb. 602, 169 N.W.2d 606 (1969); Allstate Ins. Co. v. Pietrosh, 85 Nev. 310, 454 P.2d 106 (1969); Kirouac v. Healey, 104 N.H. 157, 181 A.2d 634 (1962); Keel v. MFA Ins. Co., Okl., 553 P.2d 153 (1976); Glover v. Tennessee Farmers Mutual Ins. Co., 225 Tenn. 306, 468 S.W.2d 727 (1971). See also 7 Am.Jur.2d Automobile Insurance § 331 (1980); Annot., 95 A.L.R.2d 1330 (1964); Comment, Insurer Intervention in Uninsured Motorist Cases, 55 Ind.L.J. 717 (1980). The weight of these authorities is sufficient to persuade us to reevaluate our construction of Rule 24, upon which the outcome of this case rests.

Intervention of right is asserted in this case under Rule 24(a)(2). ¹ By the terms of that rule, an applicant must be allowed to intervene if four requirements are met: 1) the application is timely; 2) the applicant has an interest in the subject matter of the dispute; 3) that interest is or may be inadequately represented; and 4) the applicant is or may be bound by a judgment in the action. The timeliness of the application to intervene in the hearing on damages in this case has not been challenged and is deemed satisfied. The remaining requirements are discussed in order.

1. To justify intervention, the party seeking intervention must demonstrate a direct interest in the subject matter of the litigation such that the intervenor's rights may be affected, for good or for ill. In State v. Craig, Mo.App., 364 S.W.2d 343 (1963), the court stated:

[The required] interest does not include a mere, consequential, remote or conjectural possibility of being in some manner affected by the result of the original action. It must be such a direct claim upon the subject matter of the action that the intervenor will either gain or lose by direct operation of the judgment to be rendered.

Id. at 346. See also State Farm Mutual Automobile Ins. Co. v. Brown, 114 Ga.App. 650, 152 S.E.2d 641, 646 (1966); Commercial Block Realty Co. v. United States Fidelity & Guaranty Co., 83 Utah 414, 28 P.2d 1081 (1934).

The court in State v. Craig, supra, held that an insurer providing uninsured motorist insurance has such a direct and immediate interest because the insurer "should have the right to dispute the questions which make it liable on its contract." 364 S.W.2d at 347. Heisner v. Jones, 184 Neb. 602, 169 N.W.2d 606 (1969), relied on that same interest in allowing intervention:

It is apparent that the questions litigated [in] the action between the insured and the uninsured tort-feasor, for liability and damages, are the identical issues which determine liability of Protective under the insurance policy and which give rise to Protective's contractual duty to pay the insured. Protective has a direct interest in the matter of litigation within the meaning of our intervention statute.

169 N.W.2d at 611. Vernon Fire and Casualty Ins. Co. v. Matney, 170 Ind.App. 45, 351 N.E.2d 60 (1976), identified the interest in similar terms:

Clearly the basis of the action by Matney [insured] against Vernon [insurer] is contractual. However, any action on the contract is inseparably tied to the legal liability of Thoms [uninsured tortfeasor]. Therefore, the initial action in which the liability of Thoms is determined is but the first link in an unbroken chain leading to the contractual liability of Vernon.

Id. 351 N.E.2d at 64. See also Continental Ins. Co. v. Smith, 115 Ga.App. 667, 155 S.E.2d 713, 715 (1967). In requiring the insurer to pay its insured what the insured is "legally entitled" to recover from the uninsured tortfeasor, within the limits of the...