Prutzman v. Armstrong
| Decision Date | 01 June 1978 |
| Docket Number | No. 45047,45047 |
| Citation | 579 P.2d 359,90 Wn.2d 118 |
| Parties | Irene PRUTZMAN, Respondent, v. Ronald ARMSTRONG and Safeco Insurance Company, Defendants, Washington Insurance Guaranty Association, Appellant. |
| Court | Washington Supreme Court |
Ausum, Bassett & Gemson, R. L. Gemson, Seattle, James Thompson, Bellingham, for defendants.
Welts & Welts, David A. Welts, Mount Vernon, George McIntosh, Mount Vernon, for respondent.
The trial court, in a tort declaratory judgment action, ruled in favor of the respondent, Irene Prutzman, holding that she could accept a settlement offer of $12,600 from her insurer, Safeco, with whom she had uninsured motorist coverage for $15,000 and that she could also recover the difference between that settlement and $15,000 from the appellant, Washington Insurance Guaranty Association (WIGA). 1 We reverse and hold that under the facts of this case respondent has no right of recovery against the WIGA.
Respondent was injured in an automobile accident in 1972. She then sued defendant Armstrong, who is not involved in this appeal. Armstrong had insurance with a $15,000 per person maximum through the Medallion Insurance Company. The lawsuit was set for trial on September 22, 1975, but no trial was held on that date as the parties had reached a settlement agreement. On September 22, notification of the insolvency of the Medallion Insurance Company was sent to the parties. After receiving notice of this insolvency in receivership, the parties nonetheless proceeded to submit a stipulated judgment to the superior court on October 1, 1975. The court entered judgment on that date for $15,000 against Armstrong for personal injuries and an additional award for property damage and costs.
In June of 1976, respondent instituted a declaratory action naming Safeco and the appellant WIGA as third-party defendants. Safeco was the insurance carrier for respondent under which she had uninsured motorist coverage with a $15,000 limit. The declaratory complaint requested a judgment declaring Safeco's liability for the full $15,000 provided for in the uninsured motorist provision of the policy between respondent and Safeco, or in the alternative a decision that respondent could accept Safeco's offer of settlement of $11,600 and retain entitlement to the difference between that amount and $15,000 from WIGA. Safeco eventually offered $12,600 in settlement and the trial court ruled that respondent could accept this settlement offer and retain her rights against the WIGA. The court entered judgment for the difference between $12,600 and the $15,000 coverage less $100 deductible as provided for by the act. We reverse the judgment against the WIGA.
There are two issues presented on appeal: whether the WIGA is bound by the stipulated judgment entered against defendant Armstrong and his insolvent insurer Medallion, and whether respondent is entitled to a recovery from WIGA despite her settlement with her insurer for less than the maximum amount of her policy limits.
The answer to whether the WIGA is bound by the stipulated judgment entered against defendant Armstrong and Medallion is found in the language of the statutes. RCW 48.32.160 provides: "All proceedings in which the insolvent insurer is a party or is obligated to defend a party in any court in this state shall be stayed for one hundred eighty days and such additional time thereafter as may be fixed by the court from the date the insolvency is determined to permit proper defense by the association of all pending causes of action." This statute precludes giving effect to the judgment signed after notice of insolvency. The purpose of the statute is to provide the WIGA with an opportunity to become a party to a suit in which it may bear ultimate responsibility, to investigate the plaintiff's claims, and to settle or defend as necessary. This purpose was thwarted and the role of the WIGA as defined in RCW 48.32 was extinguished except as a passive source of funds by the judgment in this case. If the function of the WIGA is to retain its intended scope and vitality, then the stay provisions of RCW 48.32.160 must be enforceable in favor of the WIGA. Under the mandate of that statute, we hold that the judgment entered during the statutory stay period was of no effect.
The second question whether respondent is entitled to proceed against the WIGA after her settlement with her insurer for less than the maximum amount of her policy limits is more difficult. The function of the WIGA is to step into the shoes of an insolvent insurer to protect residents of the state...
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