Perez v. Ford Motor Co.
| Decision Date | 01 July 1975 |
| Docket Number | Civ. A. No. 68-737. |
| Citation | 408 F. Supp. 318 |
| Parties | Roy Paul PEREZ, etc., et al. v. FORD MOTOR COMPANY. |
| Court | U.S. District Court — Eastern District of Louisiana |
Harvey J. Lewis, Kierr, Gainsburgh, Benjamin, Fallon & Lewis, New Orleans, La., for plaintiffs.
Ben W. Lightfoot, Durrett, Hardin, Hunter, Dameron & Fritchie, Baton Rouge, La., for Traders & General Ins. Co.
We took under submission on May 7, 1975, the plaintiffs' motion for summary judgment declaring them entitled to the sum of $10,000.00 representing part of the proceeds of their compromise settlement of their claims against the defendant, Ford Motor Company. The fund in controversy was initially deposited in the registry of the Court and subsequently, by agreement of the contestants and with approval of the Court, was placed in escrow at interest.
The intervenor, Traders & General Insurance Company (Traders), claims the fund by virtue of an agreement entered into on December 30, 1968 with the plaintiffs under which it paid $10,000.00 to plaintiffs pursuant to the uninsured motorist coverage provided in a Traders policy issued to Freddie Joseph Perez.1 At that time, plaintiffs and Traders executed a document which provided that plaintiffs granted to Traders "subrogation and assignment" of their rights and claims, up to the amount paid by Traders to plaintiffs, against all others, including Derbes, the uninsured motorist,2 and Ford Motor Company. The document also provides that the plaintiffs "will reimburse said Traders & General Insurance Company for all payments made by it under the terms of this compromise agreement of settlement"3 out of recovery from any others.
Plaintiffs rely on Hebert v. Green, La., 311 So.2d 223 (1975)4 wherein the Supreme Court of Louisiana considered a clause in an insurance policy providing for uninsured motorist coverage which excluded such coverage where the insured or any person entitled to payment under that coverage would, without the written consent of the insurer, make any settlement with anyone who may be legally liable therefor.
The Court in Hebert, after reviewing the statutory mandates constituting the state's public policy regarding uninsured motorist coverage and cases in which effect had been denied to other policy provisions which would reduce or deny the mandated coverage, held the "consent to settle clause" may not thwart the uninsured motorist coverage required by LSA-R.S. 22:1406D.
The clear effect of the subrogation agreement here is to deprive plaintiffs of the full recovery they otherwise would receive under the mandatory uninsured motorist provision in their policy. Traders' right to recoup that payment out of plaintiffs' recovery against any other responsible parties frustrates the legislative aim that carriers be responsible for damages caused to insureds by uninsured motorists; and it does so just as completely and as effectively as the exclusion of responsibility through a "consent to settle" clause, or a "pro rata" clause, or an "excess" provision of an "other insurance" clause, or a "reduction clause", or a provision excluding coverage when an insured is occupying an uninsured automobile owned by the named insured or a relative, all of which have been held invalid. See Hebert, supra, at 227. Moreover, the sole justification for Traders' reimbursement would appear to be the possible prejudice to its rights by later settlement of plaintiffs' claim against Ford as a joint tortfeasor. Yet, as the court noted in Hebert, the effect of such a settlement under Louisiana law is simply to reduce by one-half the amount of the claim against the unreleased, joint tort-feasor. Harvey v. Travelers Insurance Co., 163 So.2d 915 (La.App.1964); see Hebert v. Green, supra, at 229. Here, as in Hebert, the insureds'...
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...Farm Mut. Auto. Ins. Co., 604 F.2d 573 (8th Cir.1979); White v. Nationwide Mut. Ins. Co., 361 F.2d 785 (4th Cir.1966); Perez v. Ford Motor Co., 408 F.Supp. 318 (D.La.1975), aff'd, 527 F.2d 1391 (5th Cir.1976); Capps v. Klebs, 178 Ind.App. 293, 382 N.E.2d 947 (1978); Wescott v. Allstate Ins.......
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