Poteet v. Sauter

CourtCourt of Special Appeals of Maryland
Citation136 Md. App. 383,766 A.2d 150
Docket NumberNo. 2694,2694
PartiesEvelyn POTEET v. Raymond SAUTER, Jr., et al.
Decision Date01 February 2001

Lawrence E. Ballantine (H. Barritt Peterson, Jr. & Associates, on the brief), Towson, for appellant.

Russell R. Marks (Gilbert, Marks & DiGirolamo, P.A., on the brief), Hagerstown, for appellees.


In this case, we must decide whether the Circuit Court for Washington County erred by failing to compel the joinder of a partially subrogated insurance company as a party plaintiff. The case arises from a serious automobile accident that occurred in Berkeley Springs, West Virginia on August 21, 1996, involving two vehicles, one driven by Evelyn Poteet, appellant, and the other by Raymond Sauter, Jr. ("Mr.Sauter"), appellee. Mr. Sauter's wife, Brenda, and two of their three children, Jan and Kasey,1 were passengers in his car and are appellees here.

Following the motor vehicle accident, Poteet's insurance company, State Farm Mutual Automobile Insurance Company ("State Farm"), offered to settle with the Sauters for Poteet's policy limit of $50,000, but appellees refused to accept that sum. Instead, on June 2, 1998, appellees reached a settlement agreement with their own insurance carrier, State Auto Mutual Insurance Company ("State Auto"), pursuant to the underinsured motorist provision of the Sauters' policy. In accordance with the terms of the settlement, appellees received $150,000 collectively, in exchange for an assignment of rights to State Auto.

Thereafter, on August 17, 1998, appellees filed suit against Poteet in Washington County.2 Appellant subsequently sought to join State Auto as a plaintiff, claiming the Sauters had assigned their rights against Poteet to State Auto. The court denied appellant's motion.

Following a three-day jury trial that began on December 1, 1999, the jury returned a verdict in favor of appellees in the amount of $308,388.83. From that verdict, appellant noted her appeal. She presents two issues for our consideration, which we have rephrased slightly:

I. Did the court err in refusing to add State Auto as a necessary party to the action?

II. Did the court err in refusing to submit the issue of contributory negligence to the jury?

We answer both questions in the negative and shall affirm.

A. The Proceedings Below

After the accident, State Farm, Poteet's liability insurer, offered to pay the Sauters $50,000, which was the maximum per accident limit of coverage available under Poteet's policy. As we noted, the Sauters declined to accept that sum in settlement of their claim against Poteet. Instead, they pursued a claim with their own insurance company, State Auto, based on the underinsured policy provisions of their own policy, which had "a single limit" of $100,000. On June 2, 1998, in exchange for $150,000, the Sauters entered into an Agreement and Release with State Auto (the "Agreement").3 In the Agreement, State Auto expressly refused to waive its subrogation rights against Poteet. As the terms of the Agreement are central to this case, we shall set forth below its pertinent provisions:


* * *



2.01 As a result of the Occurrence, the Sauters have made a Claim against Poteet who is insured under the State Farm Policy. State Farm has offered to pay to the Sauters the per accident limit of liability coverage ($50,000.00) under the State Farm Policy. The Sauters have made a claim against State Auto for underinsured motorist coverage benefits provided under the State Auto Policy. State Auto, after an examination of the land and tax records in Washington County, Maryland, has determined that Poteet is the sole owner of an unencumbered piece of real estate located in Hancock, Washington County, Maryland, which has a minimum value of $90,000.00. Therefore, State Auto is unwilling to waive its rights of subrogation against Poteet. State Auto has agreed to pay the Settlement Amount to the Sauters in consideration for which the Sauters, pursuant to the State Auto Policy and the terms of this Agreement, will cooperate with State Auto who plans to subrogate against Poteet.


3.01 In consideration of the Settlement Amount paid by State Auto to the Sauters, the receipt and sufficiency of which is hereby acknowledged by the Sauters, the Sauters do hereby remise, release and forever discharge State Auto from (a) any and all Claims under, pursuant to or arising out of the State Auto Policy and (b) any and all Claims for Damages.

* * *

3.03 The Sauters expressly agree to indemnify and hold State Auto and State Farm forever harmless against any losses sustained by State Auto and State Farm as a result of any further Claims that may hereafter or at any time be made or brought by the Sauters (or any of them) against State Auto or State Farm in connection with the Occurrence, the State Auto Policy, the State Farm Policy, or the Damages.
3.04 The Sauters agree to discharge all Liens, if any, and expressly agree to indemnify and hold State Auto and State Farm forever harmless against all Losses sustained by either of them as a result of the Sauters' failure to do so
3.05 The Sauters expressly waiver [sic], and assume the risk of, any and all Claims for Damages which exist now or which may exist in the future, but of which the Sauters are or may be unaware, whether through ignorance, oversight, error, negligence or otherwise and which, if known, would materially affect the Sauters' decision to enter into this Agreement.
3.06 The Sauters hereby irrevocably assign to State Auto their right to the per accident limit of liability coverage ($50,000.00) under the State Farm Policy. State Farm acknowledges this assignment and joins in this Agreement to evidence its consent to this assignment.
3.07 The Sauters hereby assign to State Auto the proceeds of their Claim against Poteet and agree, pursuant to and consistent with the terms of the State Auto Policy and this Agreement, to cooperate fully with State Auto and to do all things necessary or convenient to the prosecution of State Auto's subrogation claim against Poteet including, without limitation, travelling to the venue of the subrogation litigation, meeting with State Auto's attorneys, appearing in Court, appearing for depositions, responding to discovery, providing information, and appearing for medical evaluations.
State Auto will be responsible for the payment of all expenses related to travel and lodging for an [sic] such activity as aforesaid;

* * *

3.07.02 Sauter hereby agrees to hold in trust for the benefit of State Auto all rights of recovery against Poteet. The Sauters, subject to the provisions of Section 3.08 below, hereby assign to State Auto the proceeds of any settlement with or judgment against Poteet. The Sauters hereby authorize State Auto to take any action against Poteet which may be necessary either in law or in equity, in the Sauters' own names.
3.07.03 The Sauters warrant that they have made no settlement with, given a release to, or prosecuted any claim to judgment against Poteet, and that no such settlement will be made, no such release will be given and no such claim will be prosecuted to judgment without State Auto's prior written consent.

3.08 If, as a result of State Auto's subrogation effort against Poteet, State Auto obtains and collects a verdict against Poteet for a sum which, after reduction of State Auto's legal fees and litigation expenses, is more than sufficient to fully satisfy State Auto's subrogation claim of $150,000.00, then State Auto will pay the excess jointly to the Sauters who will be solely responsible for the allocation of the excess proceeds and who, if necessary, will seek Court approval of that allocation. Nothing in this Agreement or in this paragraph 3.08 shall be construed (a) to require State Auto to proceed with litigation against Poteet (b) to give the Sauters any control over such litigation, (c) to require consent by the Sauters to any settlement of such litigation, or (d) to require consent by the Sauters to any settlement of State Auto's Claim against Poteet prior to the initiation of litigation, all such matters being left to State Auto's sole discretion.

(Emphasis added.)

On August 17, 1998, after the Sauters settled with State Auto, suit was filed against Poteet, captioned "Raymond Sauter, Jr. and Brenda Sauter, Individually and as Parents and Next Friends and Guardians of Jan Michael Sauter and Kasey Sauter, minor children, Plaintiffs v. Evelyn F. Poteet, Defendant." Thereafter, on November 12, 1999, appellant filed a "Motion To Include A Necessary Party", pursuant to Rule 2-311 and Rule 2-211. In support of her motion, appellant said: "State Auto Insurance Company, by virtue of its claim against the proceeds of any judgment is a real party in interest and should be included in this lawsuit as a matter of law." In her motion, Poteet pointed to State Auto's "real financial interest", based on the Agreement between State Auto and Sauter, which "entitled [State Auto] to the first $150,000 of any judgment" entered against Poteet. Appellees opposed the motion, arguing that joinder of State Auto "would tend to depress an assessment of damages against the tortfeasor", and "claiming that their injuries entitled them to compensation in excess of the amount paid by their insurer." The joinder motion was denied on November 20, 1998. The court subsequently denied a motion to reconsider.

B. The Accident

The accident occurred at about 9:00 p.m. on August 21, 1996, at the intersection of Fairview Drive and River Road. The intersection is controlled by a stop sign that requires traffic on Fairview Drive to stop and yield the right-of-way to traffic on River Road. At the time, appellant was driving north on Fairview Drive, towards River Road, while Mr. Sauter was...

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