Woodfield v. Bowman

• Citation: 193 F.3d 354
• Decision Date: 19 October 1999
• Docket Number: No. 98-30780,98-30780
• Parties: (5th Cir. 1999) VIRGINIA WOODFIELD, et al., Plaintiffs, NATIONWIDE MUTUAL INSURANCE CO., Plaintiff-Third Party Defendant-Appellant, v. CHARLIE BOWMAN, et al., Defendants, PLANET INSURANCE CO., Defendant-Third Party Plaintiff-Appellee
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 354

193 F.3d 354 (5th Cir. 1999)

VIRGINIA WOODFIELD, et al., Plaintiffs NATIONWIDE MUTUAL INSURANCE CO., Plaintiff-Third Party Defendant-Appellant, v. CHARLIE BOWMAN, et al., Defendants PLANET INSURANCE CO., Defendant-Third Party Plaintiff-Appellee.

No. 98-30780

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

October 19, 1999

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Appeal from the United States District Court for the Eastern District of Louisiana

Before JONES and WIENER, Circuit Judges, and LITTLE, Chief District Judge ^*

WIENER, Circuit Judge:

In this diversity case, arising from a multi-vehicle highway accident, Third-party Defendant-Appellant Nationwide Mutual Insurance Co. ("Nationwide") appeals the judgment of the district court holding it liable to Third-party Plaintiff-Appellee Planet Insurance Co. ("Planet"), which had settled with parties who were covered by the uninsured motorist ("UM") provisions of policies issued by Nationwide. In this appeal, Nationwide challenges the jury's determination of liability and the quantum of the trial court's judgment, which exceeds the sum paid in settlement by Planet. We affirm.

I. Facts and Proceedings

The pile-up that led to this lawsuit occurred on Interstate 10 in St. Tammany Parish, Louisiana. Because of road construction, Plaintiff Virginia Woodfield, driving in a van with her minor daughter, Plaintiff Kimberly Woodfield (the "Woodfields"), merged to the left lane and came to a complete stop. Several vehicles back, Defendant Wilson Scott ("Scott"), an employee of Defendant Lane Trucking ("Lane"), was driving a tractor trailer in the left lane of the same highway, and was slowing down as he approached the construction area when he was passed on his right by Defendant Charlie Bowman ("Bowman"). Immediately after passing Scott, Bowman zipped into the left lane, directly ahead of Scott, and was rear-ended. This caused Bowman to rear-end the vehicle ahead of him, driven by Celine Nederveld (not a party to the lawsuit), and she in turn rear-ended the Woodfields' van.

The Woodfields initially sued (1) Bowman, (2) Bowman's insurer, Allstate Insurance Co. ("Allstate"), (3) Scott, (4) Lane, and (5) Lane's Insurer, Planet. The Woodfields amended their complaint to add their uninsured motorist carrier, Nationwide, as another defendant. The Woodfields subsequently settled with Bowman and Allstate for $10,000 (the Allstate policy limit) and dismissed them from the suit. The Woodfields also settled with Scott, Lane, and Planet for $400,000. An integral part of that settlement agreement is an assignment to Planet of the Woodfields' right, title, and interest in any and all claims against Nationwide in the subject litigation for the injuries sustained by Virginia Woodfield. In implementation of that assignment, Planet filed a third-party complaint against Nationwide.

By consent of the parties, the case was tried to a jury before a magistrate judge. In the liability stage of the Planet-Nationwide portion of the litigation, the jury found Bowman 100% at fault for the accident and exonerated Scott from any liability. In the damages stage, the jury found that the Woodfields had suffered damages totalling $589,973.86. As Bowman, the sole tort feasor, was insured only for $10,000, Nationwide was held liable under the UM provision of the policies that it had issued to the Woodfields, and a judgment was entered in favor of Planet, the Woodfields' putative assignee, but was limited to the $400,000 that Planet had paid the Woodfields in settlement.

At the request of both parties, the magistrate judge vacated that judgment and allowed additional arguments regarding offset, subrogation, contribution, and insurance coverage relative to the quantum of the judgment. The court again concluded that Planet could not recover more than the $400,000 settlement amount and allowed Nationwide a $48,870.44 offset, ¹ producing a net judgment for Planet of $351,129.56 plus interest and costs.

Both parties again filed post-trial motions: Planet sought to recover the full $589,973.86 amount assessed by the jury, less any offset; Nationwide requested a new trial and other relief. No longer limiting Planet's recovery to the amount that it had paid the Woodfields, the court reinstated the judgment in the amount awarded by the jury but reduced it to $422,365.86 and deducted the offset of $48,870.44, to produce a final judgment of $373,495.24 ² which Nationwide now appeals.

II. Analysis

A. Standards of Review

Questions of law such as the interpretation of a statute or a contract, legal conclusions of the district court, and choice of law are subject to de novo review. ³ Findings of fact are reviewed for clear error. ⁴ The decision to grant or deny a motion for a new trial will be disturbed only for abuse of discretion or misapprehension of the law. ⁵

B. Issues

Nationwide first argues that the court erred in concluding that the Woodfields validly assigned Planet their rights against Nationwide. Second, Nationwide asserts that the Woodfields waived their right to recover under the UM provisions of the policies by failing to obtain Nationwide's consent to settle. Nationwide then argues that, in the event we should determine that the assignment was valid and that coverage was not waived, we should apply Louisiana law, which prohibits "stacking" of UM policy limits, and cap Nationwide's liability at $100,000, the limit of one policy. Alternatively, Nationwide would have us subtract $22,365.86 from Planet's judgment, that being the amount by which the final judgment against Nationwide (before offset) exceeds the $400,000 that Planet paid in settlement. Finally, Nationwide argues that the jury clearly erred in finding Bowman 100% liable and seeks reversal of the verdict or a new trial on liability.

Planet counters by insisting, first, that under controlling law, the Woodfields' assignment was valid and, second, that Nationwide waived its right to insist on its consent as a condition to settlement, both by failing to raise the defense in a timely manner and by denying UM coverage. With respect to the amount of the judgment, Planet argues that Mississippi law, which permits stacking, should govern interpretation and application of the terms of the policy. Planet also argues that the jury verdict, and not the settlement amount, was the proper measure of damages because, under Louisiana law, the purchaser of litigious rights, who is a conventional ---- as opposed to an equitable ---- subrogee, is entitled to all rights of the original obligee. ⁶ Finally, Planet asks us to affirm the jury verdict and the lower court's denial of Nationwide's motion for a new trial.

C. Assignment of Rights in the Lawsuit

First, we conclude that the Woodfields' assignment of rights to Planet is a valid sale of litigious rights, i.e., the plaintiff's rights in a filed lawsuit, and that the assignment incorporates a conventional subrogation. The issue of assignability of these rights is governed by Louisiana law ⁷ which provides that litigious rights are rights in an already-filed personal injury suit and are "real" rights, not "strictly personal" rights,⁸ heritable and freely assignable.⁹ In the instant case, the Woodfields assigned Planet their rights to recover in a lawsuit already pending against Nationwide; they did not purport to assign their UM coverage as such. Thus, the assignment was valid under the scheme of Louisiana's Civil Code, and Planet stepped into the shoes of the Woodfields for the purposes of this lawsuit.¹⁰ In addition, the Woodfields accomplished the assignment to Planet through express language in a written settlement agreement as part of the consideration for the $400,000 paid by Planet; therefore, the type of subrogation that resulted is conventional (or contractual) rather than legal (or equitable).¹¹

Nationwide asks us to follow the Louisiana Court of Appeal's holding in Constans v. Choctaw Transport, Inc.¹² to the effect that conventional subrogation of a personal injury claim is not permitted.¹³ We decline this invitation. We have recently confirmed our recognition of the Louisiana Supreme Court's distinction between a personal injury claim that is the subject of an extant lawsuit, which is heritable and assignable, and a claim that is merely an inchoate personal injury cause of action that has not yet been sued on, which is strictly personal and not heritable or assignable.¹⁴ As Constans conflicts with our precedent, we decline to follow it.¹⁵ And, as Louisiana law is clear that the express assignment of a cause of action for which suit has been instituted is valid, we do not need to reach Planet's alternative recovery theories of legal subrogation and unjust enrichment.

Nationwide next argues that under the terms of the UM policies themselves the assignment was invalid because the Woodfields failed to obtain the insurer's consent to settle. We hold, however, that Nationwide waived its right to assert this affirmative defense under the consent-to-settle clause of the insurance policy by failing to plead it adequately.

As a preliminary matter, we note that under the choice of law provisions of Louisiana, the forum state,¹⁶ issues concerning the terms of an insurance policy are governed by Mississippi law. The Louisiana Civil Code's generally applicable choice of law article specifies that "an issue in a case having contacts with other states is governed by the law of the state whose policies would be most seriously impaired if its law were not applied to the case."¹⁷ Specifically regarding contracts, the Code instructs courts to assess the strength of the relevant policies of the involved states in light of the place of negotiation, formation, and performance of the contract as well as the location of the object of the contract.¹⁸ Applying these principles, Louisiana courts generally choose the law of the state in which the insurance policy in...