Llewellyn v. White
| Decision Date | 15 August 2019 |
| Docket Number | Record No. 181108 |
| Citation | 831 S.E.2d 494 |
| Parties | Ann Elizabeth LLEWELLYN v. Ann Michelle WHITE |
| Court | Virginia Supreme Court |
Wm. Tyler Shands (Carter T. Keeney ; E. Brandon Ferrell ; Carter & Shands, on briefs), Richmond, for appellant.
Robert W. Loftin (Scott C. Oostdyk ; Matthew D. Fender ; McGuireWoods, on brief), Richmond, for appellee.
PRESENT: All the Justices
OPINION BY JUSTICE S. BERNARD GOODWYN
In this appeal, we consider whether the circuit court erred when it held that a settlement agreement between the plaintiff and her underinsured motorist carrier did not entitle the underinsured defendant to a statutory reduction of the jury verdict rendered against her, pursuant to the offset provision of Code § 8.01-35.1.
On July 21, 2013, Ann Michelle White (White) was driving on Ziontown Road in Henrico County, Virginia, when Ann Elizabeth Llewellyn (Llewellyn) drove out of her driveway and struck White’s vehicle. White suffered serious injuries to her hips, shoulders, and knee, requiring extensive surgeries as a result of the collision. After the accident, Llewellyn was charged with and pled guilty to failing to yield to oncoming traffic.
At the time of the accident, White had a $1 million motor vehicle insurance policy through Erie Insurance Exchange (Erie). Llewellyn had automobile liability insurance coverage totaling $250,000.
White filed an action against Llewellyn in the Circuit Court for the County of Henrico, for personal injuries she suffered as a result of the automobile accident caused by Llewellyn’s negligence. In her amended complaint, White asked for $3 million in compensatory damages for personal injuries she suffered, including pain and suffering, and $350,000 in punitive damages. White served the amended complaint on Llewellyn. Intending to rely upon the uninsured/underinsured motorist (UIM) coverage provision of her policy with Erie, White also served a copy of her lawsuit against Llewellyn upon Erie, as required by Code § 38.2-2206.
Prior to trial, White settled her potential UIM claims against her insurance provider, Erie, for $750,000. The settlement between White and Erie was "in full and complete settlement of all claims" White had against her insurer. White agreed to release Erie from liability for "any and all claims" arising out of the lawsuit White had filed against Llewellyn. In addition to the monetary payment, Erie agreed with White that Erie would waive its right, arising from Code § 38.2-2206 or otherwise, to be subrogated to the rights White had against Llewellyn. Llewellyn was not a party to the settlement agreement.
On March 27, 2017, the circuit court entered an order dismissing the amended complaint as to Erie, pursuant to the settlement agreement between White and Erie. The lawsuit otherwise remained on the court’s docket.
The circuit court held a jury trial on the lawsuit against Llewellyn, and on May 2, 2018, the jury returned a verdict awarding White damages of $1,500,000 against Llewellyn. Llewellyn made a motion to apply Code § 8.01-35.1 to reduce the verdict against her because of the $750,000 paid to White by White’s insurer, Erie. Llewellyn argued that Erie, as White’s UIM insurance carrier, was liable for the same injury as Llewellyn, and that because of the settlement between White and Erie, Llewellyn was statutorily entitled to an offset of $750,000.
White argued that Code § 8.01-35.1 did not apply because Erie, unlike Llewellyn, was not "a person liable for the ... injury" to White. She argued that Code § 8.01-35.1 was enacted to enable the release of one joint tortfeasor without affecting the remaining tortfeasors, and Erie and Llewellyn were not joint tortfeasors. She also contended that the settlement between Erie and White only concerned a contract claim, not the resolution of a tort dispute, and Code § 8.01-35.1 did not apply.
The circuit court held a hearing on Llewellyn’s motion on June 8, 2018. It denied the motion and ruled that Code § 8.01-35.1 did not entitle Llewellyn to an offset. The circuit court entered a final order, which awarded White a judgment against Llewellyn for the full amount of the jury’s verdict. Llewellyn appeals.
This Court granted one assignment of error, which states:
The trial court erred by refusing to apply the underinsured carrier’s $750,000 settlement with Respondent to the final judgment order as a statutory offset pursuant to Va. Code [§] 8.01-35.1, and by entering judgment for the entire $1,500,000 jury verdict.
Llewellyn argues that the circuit court erred when it refused to apply Code § 8.01-35.1 to reduce the $1.5 million verdict against her because of White’s $750,000 settlement with Erie. Llewellyn contends that UIM carriers are nominal defendants, have an independent right to defend the tort action, and become legally obligated to pay only when the insured is legally entitled to recover. She asserts that as a nominal defendant, the UIM carrier is a "person[ ] liable for the same injuries giving rise to the underlying tort claim," and that she is therefore, entitled to an offset of the settlement amount pursuant to Code § 8.01-35.1.
Further, Llewellyn argues the circuit court’s decision violates doctrines prohibiting double recovery and/or unjust enrichment. She contends that Code §§ 8.01-35.1 and 38.2-2206 work together to permit settlement prior to a verdict, but offset the verdict with the amount of the settlement; otherwise the injured party may be unjustly enriched by recovering more than the amount of the jury verdict.
This Court reviews an issue of statutory interpretation de novo. Boynton v. Kilgore , 271 Va. 220, 227, 623 S.E.2d 922 (2006). In such review, this Court seeks to effectuate the intent of the legislature as expressed by the plain meaning of the words used in the statute. Id. Thus, this Court applies the plain language unless the words are ambiguous or such application would render the law internally inconsistent or incapable of operation. Id. at 227 & n.9, 623 S.E.2d 922.
Code § 8.01-35.1(A)(1) provides:
When a release or a covenant not to sue is given in good faith to one of two or more persons liable for the same injury to a person or property, ... [the release or covenant not to sue] shall not discharge any other person from liability for the injury ... unless its terms so provide; but any amount recovered against the other person or any one of them shall be reduced by any amount stipulated by the covenant or the release .
(Emphases added.) The release or covenant not to sue "shall be considered by the court in determining the amount for which judgment shall be entered." Id.
Before Code § 8.01-35.1, the common law provided that the release of one of several joint tortfeasors released all tortfeasors, even if language in the settlement agreement stated otherwise. Hayman v. Patio Prods., Inc. , 226 Va. 482, 486, 311 S.E.2d 752 (1984).1 The purpose of enacting Code § 8.01-35.1 was to encourage settlement without discharging from liability other persons alleged to be liable for the same injury "who prefer to have their liability determined in litigation." Id. at 487, 311 S.E.2d 752 ; Thurston Metals & Supply Co. v. Taylor , 230 Va. 475, 485, 339 S.E.2d 538 (1986).
To be "liable" is to be "responsible or answerable in law; legally obligated" or "subject to or likely to incur a fine, penalty, etc." Black’s Law Dictionary 1099 (11th ed. 2019). "Same" is defined as "[i ]dentical or equal; resembling in every relevant respect." Id. at 1607 (emphasis added). Further, "injury" is defined as "the violation of another’s legal right, for which the law provides a remedy; a wrong or injustice." Id. at 939. Thus, under the plain meaning of Code § 8.01-35.1(A), a defendant is entitled to a reduction of the judgment entered against him by the amount the plaintiff receives in settlement from another who is also responsible for the identical wrong, harm, or damage as the defendant.
In this case, the jury rendered a verdict against Llewellyn for her liability in tort that resulted from her negligent conduct towards White. We must consider whether, by virtue of its UIM policy with White, Erie was responsible for the same wrong or harm as that represented by the jury award against Llewellyn.
Negligence is the failure to use ordinary care for the safety of another, which causes injury to the other. Yeary v. Holbrook , 171 Va. 266, 287, 198 S.E. 441 (1938). "Negligence carries with it liability for consequences that, in view of the circumstances, could reasonably have been anticipated by a prudent person." Interim Personnel of Central Virginia, Inc. v. Messer , 263 Va. 435, 442, 559 S.E.2d 704 (2002) (emphasis added).
By comparison, when providing UIM coverage, an insurer is contractually "obligate[d] ... to make payment for bodily injury or property damage caused by the operation or use of an underinsured motor vehicle to the extent the vehicle is underinsured ." Code § 38.2-2206(A) (emphasis added).2 UIM coverage "protects an insured against damages sustained as the result of the negligence of an [underinsured] motorist," but the insurance company is not a tortfeasor, has no liability in tort to the injured insured, and does not stand in the place of the tortfeasor. Seals v. Erie Ins. Exch. , 277 Va. 558, 563, 674 S.E.2d 860 (2009) (emphasis added); Virginia Farm Bureau Mut. Ins. Co. v. Gibson , 236 Va. 433, 441, 374 S.E.2d 58 (1988).
[U]ninsured motorist protection does not provide insurance for an uninsured motorist; it provides insurance to the insured motorist. In effect, it is a safety net to give an injured insured a fund from which to recover where the tort-feasor either has no insurance or has inadequate insurance. By its very nature, uninsured motorist coverage is not intended to be the ultimate source of payment where any tort-feasor liable in part for the injury to the insured has adequate resources to pay the judgment.
Gibson , 236 Va. at 438, 374 S.E.2d 58 (emphasis added).
Here, when the jury found...
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