Porter v. MFA Mut. Ins. Co., No. 54408

CourtSupreme Court of Oklahoma
Writing for the CourtBARNES; IRWIN; SIMMS; OPALA; I am authorized to state that LAVENDER
Citation643 P.2d 302,1982 OK 23
PartiesPhillip E. PORTER, Appellant, v. MFA MUTUAL INSURANCE COMPANY, a Foreign Insurance Corporation, Appellee.
Decision Date16 February 1982
Docket NumberNo. 54408

Page 302

643 P.2d 302
1982 OK 23
Phillip E. PORTER, Appellant,
v.
MFA MUTUAL INSURANCE COMPANY, a Foreign Insurance
Corporation, Appellee.
No. 54408.
Supreme Court of Oklahoma.
Feb. 16, 1982.
Rehearing Denied April 6, 1982.

Appeal from the District Court of Oklahoma County; Carmon C. Harris, Trial Judge.

From order of the trial court sustaining Defendant's motion for summary judgment, Plaintiff appeals.

AFFIRMED.

Barry R. Davis, Of the Firm, Wheeler, Parsons, Wheeler & Davis, Oklahoma City, for appellant.

Melvin F. Pierce, Pierce, Couch, Hendrickson, Johnson & Baysinger, Oklahoma City, for appellee.

BARNES, Vice Chief Justice:

The Appellant, Phillip Porter, was injured in an automobile-motorcycle accident in Oklahoma City during April, 1978. The accident was caused by the negligence of the automobile driver, James Sheltman. At the time of the accident, Porter held four

Page 303

uninsured motorist policies issued by the Appellee, MFA Mutual Insurance Company (MFA).

Porter made demand upon Sheltman for compensation for his property and medical damages. At that point it was discovered that Sheltman's bodily injury liability policy contained limits of $5,000.00 for each person and $10,000.00 for each accident. Porter then informed MFA of a possible uninsured motorist or underinsured motorist claim, 1 as his demand for settlement exceeded Sheltman's coverage. This notice also informed MFA that Porter would expect payment under his policies with MFA if Sheltman's carrier paid only policy limits.

Sheltman's carrier offered the policy limits in settlement of Porter's claims. Porter accepted that offer and gave Sheltman and his insurance carrier a general release of all claims. Shortly thereafter, Porter demanded that MFA pay the remaining claim under the uninsured motorist policies. The demand was refused and Porter filed suit on September 7, 1978.

Porter and MFA filed a joint stipulation of facts and agreed that the trial court should decide the liability issue on motions for judgment by each party. The trial court sustained MFA's motion for judgment on the grounds that Porter destroyed MFA's right of subrogation and that the "consent to settle" claims of the policies did not involve a question of public policy. Porter makes this appeal from the trial court's judgment.

The central question in this controversy is whether Porter's settlement prejudiced the rights of MFA.

The material provisions are found in Section Five of the policies which initially outlines the "Uninsured Motorists" coverage. 2 Section Five, subpart Three, states that this coverage (Uninsured Motorists) does not apply if the insured makes a settlement with the tort-feasor without the written consent of the insurer. 3 Section Five, subpart Six, indicates that in the event of payment by the insurer, the company becomes entitled to any proceeds of a settlement or judgment against the tort-feasor and that the insured shall hold in trust for the company any rights of recovery that he might have against the tort-feasor. 4

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We initially address the validity of the "consent to settle" clause. Porter challenges this provision on the grounds that it is contrary to public policy. This clause does interfere with the policy objective of promoting settlements without resort to the judicial arena. We have previously held that consent to sue, no action, and arbitration clauses are void as against public policy and contrary to 15 O.S.1971, § 216. 5

We have held such clauses void on the rationale that said clauses attempt to place the requirement of the insurer's permission as a condition precedent and thus limits and conditions the character of coverage mandated by the statute, and is therefore void and of no effect. 6 Other jurisdictions have concluded that such a consent-to-settle clause is void or unenforceable on the rationale that the insured should not be restricted or prevented, in any manner, from employing legal counsel or instituting legal proceedings. 7

However, as will be discussed in more detail later, the insurer is also protected by the trust agreement provision in the policy if insured gives a general release pursuant to such settlement which cuts off insurer's rights in any way. 8 If the insured gives such a general release pursuant to settlement, the trust agreement provision would give insurer an adequate defense in any action by the insured against the insurer after settlement and general release by the insured with the uninsured motorist. Since MFA is protected both by the uninsured motorist statute and the trust agreement, the consent-to-settle clause is superfluous and does nothing more than to chill settlements and otherwise dilute the mandatory uninsured motorist statute and the protection for injured innocent victims against loss. We therefore hold that the consent-to-settle clause is void and of no force and effect as being against public policy and that said policy exclusion is not a valid policy defense under the facts of this case.

The question then becomes: Does MFA have a valid policy defense under the trust agreement and the uninsured motorist statute, in that Porter violated such trust agreement by settling and giving a general release to Sheltman, thereby destroying MFA's right of subrogation under the uninsured motorist statute? There is case authority that the type of subrogation claimed by MFA in this case is prohibited, in that such subrogation is the...

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34 practice notes
  • Barnes v. Oklahoma Farm Bureau Mut. Ins., No. 89,745.
    • United States
    • Supreme Court of Oklahoma
    • July 18, 2000
    ...have run the risk of forfeiting her own UIM coverage with insurer. This is so because this Court ruled in Porter v. MFA Mut. Ins. Co., 1982 OK 23, 643 P.2d 302 an insured who voluntarily and knowingly makes a settlement with and gives a general release to the tortfeasor, is precluded from b......
  • Frank v. Allstate Ins. Co., No. 60014
    • United States
    • Supreme Court of Oklahoma
    • July 8, 1986
    ...Lake v. Wright, 657 P.2d 643 (Okla.1982); Chambers v. Walker, 653 P.2d 931 (Okla.1982); Porter v. MFA Mutual Insurance Company, 643 P.2d 302 (Okla.1982); Biggs v. State Farm Mutual Automobile Insurance Company, 569 P.2d 430 (Okla.1977); Cothren v. Emasco Insurance Company, 555 P.2d 1037 4 T......
  • Auto-Owners Ins. Co. v. Hudson, AUTO-OWNERS
    • United States
    • Supreme Court of Alabama
    • June 16, 1989
    ...under it. See Stanko v. Hartford Accident & Indemnity Co., 121 R.I. 331, 397 A.2d 1325 (1979); Porter v. MFA Mutual Insurance Co., 643 P.2d 302 (Okla.1982); March v. Mountain States Mutual Casualty Co., 101 N.M. 689, 687 P.2d 1040 (1984); Motorists Mutual Insurance Co. v. Handlovic, 23 ......
  • Raymond v. Taylor, No. 113,894
    • United States
    • Supreme Court of Oklahoma
    • October 10, 2017
    ...of equitable subrogation.¶ 9 Third, the above principles are supported by this Court's prior case law. Porter v. MFA Mut. Ins. Co. , 1982 OK 23, 643 P.2d 302, concerned an underinsured motorist carrier's right to subrogation and whether that right was eliminated when its insured settled wit......
  • Request a trial to view additional results
34 cases
  • Barnes v. Oklahoma Farm Bureau Mut. Ins., No. 89,745.
    • United States
    • Supreme Court of Oklahoma
    • July 18, 2000
    ...have run the risk of forfeiting her own UIM coverage with insurer. This is so because this Court ruled in Porter v. MFA Mut. Ins. Co., 1982 OK 23, 643 P.2d 302 an insured who voluntarily and knowingly makes a settlement with and gives a general release to the tortfeasor, is precluded from b......
  • Frank v. Allstate Ins. Co., No. 60014
    • United States
    • Supreme Court of Oklahoma
    • July 8, 1986
    ...Lake v. Wright, 657 P.2d 643 (Okla.1982); Chambers v. Walker, 653 P.2d 931 (Okla.1982); Porter v. MFA Mutual Insurance Company, 643 P.2d 302 (Okla.1982); Biggs v. State Farm Mutual Automobile Insurance Company, 569 P.2d 430 (Okla.1977); Cothren v. Emasco Insurance Company, 555 P.2d 1037 4 T......
  • Auto-Owners Ins. Co. v. Hudson, AUTO-OWNERS
    • United States
    • Supreme Court of Alabama
    • June 16, 1989
    ...under it. See Stanko v. Hartford Accident & Indemnity Co., 121 R.I. 331, 397 A.2d 1325 (1979); Porter v. MFA Mutual Insurance Co., 643 P.2d 302 (Okla.1982); March v. Mountain States Mutual Casualty Co., 101 N.M. 689, 687 P.2d 1040 (1984); Motorists Mutual Insurance Co. v. Handlovic, 23 ......
  • Raymond v. Taylor, No. 113,894
    • United States
    • Supreme Court of Oklahoma
    • October 10, 2017
    ...of equitable subrogation.¶ 9 Third, the above principles are supported by this Court's prior case law. Porter v. MFA Mut. Ins. Co. , 1982 OK 23, 643 P.2d 302, concerned an underinsured motorist carrier's right to subrogation and whether that right was eliminated when its insured settled wit......
  • Request a trial to view additional results

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