W. Dean DeLaMater
DeLaMater, Magg & Bohach
Weirton, West Virginia
Attorney for the Plaintiffs
Michael L. Solomon
Solomon & Solomon
Morgantown, West Virginia
Attorney for the Defendants
JUSTICE MILLER delivered the Opinion of the Court.
1. W. Va. Code, 33-6-31(d) (1988), outlines certain
rights given to an uninsured/underinsured insurance carrier where
a tortfeasor who is uninsured or underinsured is sued by a
plaintiff. It requires that a copy of the complaint be served upon
the insurance carrier. It also allows the carrier "the right to
file pleadings and to take other action allowable by law in the
name of the owner, or operator, or both, of the uninsured or
underinsured vehicle or in its own name."
2. "W. Va. Code, [33-6-31(d) (1988)], our uninsured
motorist statute, does not authorize a direct action against the
insurance company providing uninsured motorist coverage until a
judgment has been obtained against the uninsured motorist."
Syllabus Point 2, as amended, Davis v. Robertson, 175 W. Va. 364,
332 S.E.2d 819 (1985).
3. W. Va. Code, 33-6-31(f) (1988), authorizes a right
of subrogation by an uninsured or underinsured insurance carrier
for the amount paid to an injured person as against the tortfeasor.
4. A plaintiff is not precluded under W. Va. Code, 33-6-31(d) (1988), from suing an uninsured/underinsured insurance carrier if the plaintiff has settled with the tortfeasor's liability carrier for the full amount of the policy and obtained from the uninsured/underinsured carrier a waiver of its right of subrogation against the tortfeasor.
In this appeal, we are asked to determine whether under
our uninsured motorist statute, W. Va. Code, 33-6-31(d) (1988), an
insured may sue his insurance carrier without obtaining a formal
judgment against the tortfeasor.
The facts are not in substantial dispute. On April 15,
1989, the Postlethwaits were involved in an automobile accident in
Maryland. The accident was caused by the negligence of a Mr.
Nowlan. The Postlethwaits negotiated a settlement with Mr.
Nowlan's insurance carrier, Liberty Mutual Insurance Company, for
the full amount of Mr. Nowlan's liability policy. Prior to
actually consummating the settlement, the Postlethwaits advised
their insurance carrier, Boston Old Colony (Boston) of the proposed
settlement and Boston agreed to waive its subrogation rights
against Mr. Nowlan.
After consummating the settlement with Liberty Mutual
Insurance Company, the Postlethwaits, residents of Wetzel County,
brought suit against Mr. NowlanSee footnote 1 and Boston in the Circuit Court
of Wetzel County. Boston was qualified to do business in this
State, and, thus, was subject to the court's jurisdiction. Its
underinsured policy on behalf of the Postlethwaits was for the
amount of $500,000. Service of process could not be obtained on
Mr. Nowlan because he was a resident of Massachusetts. Boston
filed a motion to dismiss claiming that it could not be sued
because no judgment was obtained by the Postlethwaits against Mr.
Nowlan. It was asserted that such a judgment was a necessary
precondition to an underinsured motorist suit under W. Va. Code,
33-6-31(d), and our case of Davis v. Robertson, 175 W. Va. 364, 332
S.E.2d 819 (1985). The trial court agreed; however, since
affidavits had been filed, the trial court converted the motion to
dismiss to a motion for summary judgment. Judgment was entered in
favor of Boston, and the Postlethwaits appeal.See footnote 2
The trial court concluded that W. Va. Code, 33-6-31(d),
as interpreted by this Court in Davis v. Robertson, supra, required
a judgment against Mr. Nowlan before suit could be filed against
Boston for underinsured motorist coverage. Syllabus Point 2 of
"W. Va. Code, 33-6-31, our uninsured motorist statute, does not authorize a direct action against the insurance company providing uninsured motorist coverage until a judgment has been obtained against the uninsured motorist."
In Davis, we dealt with a known uninsured motorist and a co-tortfeasor who had coverage. The plaintiff was a passenger in a car driven by her husband when the car collided with a vehicle driven by Mr. Robertson. She sued both drivers. The plaintiff's husband was insured by State Farm and his policy contained uninsured motorist coverage; Mr. Robertson, however, had no insurance. A State Farm agent advised Mr. Robertson that if he did not defend himself at trial, State Farm would pursue a subrogation claim against him in the event it received an adverse verdict. The plaintiff then sought to join State Farm as an additional party defendant.
In Davis, the trial court certified two questions to this
Court. The first question dealt with the right to join a
defendant's liability carrier in a tort action.See footnote 3 It is clear that
this question solely referred to the liability side of the claim.
Citing our prior law, we held in Syllabus Point 1 of Davis that a
defendant's liability carrier in a tort action could not be so
"An injured plaintiff may not join the defendant's insurance carrier in a suit for damages filed against the defendant arising from a motor vehicle accident, unless the insurance policy or a statute authorizes such direct action."
The second certified question in Davis involved whether the insurance carrier providing the uninsured motorist coverage could be joined in the same suit as against the uninsured tortfeasor.See footnote 4 It is this question that gave rise to our Syllabus Point 2 quoted above.
There are key factual distinctions between Davis and the
present case. First, in Davis, the tortfeasor was sued initially
to establish liability and to recover the plaintiff's damages.
Here, the tortfeasor, through his liability carrier, paid the
Postlethwaits the full amount of the liability policy. Moreover,
the underinsured motorist carrier, Boston, waived its right to
subrogation. The two cases are dissimilar factually.
W. Va. Code, 33-6-31(d), which we found to be controlling
in Davis, outlines certain rights of an uninsured/underinsured
insurance carrier where a tortfeasor who is uninsured or
underinsured is sued by a plaintiff. It requires that a copy of
the complaint be served upon the insurance carrier. It also allows
the carrier "the right to file pleadings and to take other action
allowable by law in the name of the owner, or operator, or both, of
the uninsured or underinsured vehicle or in its own name."
The purpose of W. Va. Code, 33-6-31(d), is to protect an uninsured/underinsured insurance carrier from having a judgment entered against the uninsured/underinsured tortfeasor without the carrier having an opportunity to defend the suit. This protection is afforded in recognition of the fact that it is the uninsured/underinsured carrier which will be responsible for all or part of the judgment.
Syllabus Point 2 of Davis, supra, referred generally to
W. Va. Code, 33-6-31. However, it is clear from the opinion that
only W. Va. Code, 33-6-31(d), was at issue therein because the suit
was instituted against the uninsured tortfeasor, Mr. Robertson.
Within the confines of subsection (d), the uninsured/underinsured
carrier could not be sued until after the judgment was obtained
against the uninsured tortfeasor.
Syllabus Point 2 of Davis would have been more accurate
if it had cited W. Va. Code, 33-6-31(d), along with its syllabus
phrase "our uninsured motorist statute." From a textual
standpoint, W. Va. Code, 33-6-31, covers a variety of subjects
relating to automobile insurance policies issued in this State. It
is not limited to uninsured and underinsured coverage. Therefore,
to clear up any confusion concerning Syllabus Point 2 of Davis, we
amend it to refer to its proper subsection, i.e., 31(d):
"W. Va. Code, [33-6-31(d) (1988)], our uninsured motorist statute, does not authorize a direct action against the insurance company providing uninsured motorist coverage until a judgment has been obtained against the uninsured motorist."
It is well to emphasize again that W. Va. Code, 33-6-31(d), deals only with the situation where the plaintiff has sued
the uninsured/underinsured tortfeasor. We have not found any
provision in the uninsured/underinsured section of W. Va. Code, 33-6-31, that contains a procedure for suing an uninsured/underinsured
carrier where a settlement was made with the tortfeasor's liability
carrier for the full amount of the policy limits, as is the issue
in this case. Moreover, this case includes the additional fact
that the uninsured/underinsured carrier waived its right of
subrogation against the settling tortfeasor. Although the parties
do not discuss the origin of this right of subrogation, we note
that it arises by virtue of W. Va. Code, 33-6-31(f), which
authorizes a right of subrogation by an uninsured or underinsured
insurance carrier for the amount paid to an injured person as
against the tortfeasor.See footnote 5
It must be remembered that in this case the plaintiffs
are seeking only the right to maintain a suit against their own
underinsured carrier after obtaining the policy limits from the
tortfeasor's liability carrier. As previously pointed out, W. Va.
Code, 33-6-31(d), relates to uninsured/underinsured motorist suits
against a known tortfeasor. It does not foreclose suit by an
insured who received the full amount of the tortfeasor's liability
policy and also obtained a waiver of the uninsured/underinsured
carrier's right of subrogation against the tortfeasor. Davis v.
Robertson, supra, applies only where a suit is filed against the
tortfeasor. In that situation, W. Va. Code, 33-6-31(d), applies
and a judgment must be obtained against the tortfeasor before the
suit can be filed against the uninsured/underinsured carrier.
Indeed, the provisions of W. Va. Code, 33-6-31(d), would seem to
indicate that where the suit is filed against the tortfeasor and a
copy is served on the uninsured/underinsured carrier, the judgment
against the tortfeasor would be binding upon the carrier under the
doctrine of collateral estoppel, as set out in Conley v. Spillers,
171 W. Va. 584, 301 S.E.2d 216 (1983).
In this case, to require the Postlethwaits to take the
additional step of getting a judgment against the tortfeasor flies
in the face of concepts of judicial economy, which we outlined in
Christian v. Sizemore, 181 W. Va. 628, 632, 383 S.E.2d 810, 814
(1989): "Permitting an adjudication of the respective rights and
duties of the parties in the same proceeding as the underlying tort
action also enhances judicial economy by avoiding multiple lawsuits
and the possibility, as here, of separate proceedings in different
courts." (Citation omitted).
Moreover, Boston suffers no harm by this procedure.
Since it is not bound by collateral estoppel principles because no
judgment was rendered against the tortfeasor, Mr. Nowlan, the
plaintiffs still will have to prove liability and their applicable
damages.See footnote 6 However, in this situation because the insured is
proceeding against his or her own insurance carrier to recover the
proceeds of the uninsured/underinsured portion of the policy, the
suit is a first-party action. In Smithson v. United States
Fidelity & Guaranty Co., 186 W. Va. 195, 202, 411 S.E.2d 850, 857
(1991), we identified a "first-party claim where the insured and
[his] insurance company fail to agree about the amount of the
loss." Customarily, in the insurance field, a first-party action
is where the insured seeks to recover some policy rights against
its own insurer.
We have recognized that in first-party actions, an
insured may sue the insurer directly. See, e.g., Smithson v.
United States Fidelity & Guar. Co., supra; Thomas v. State Farm
Mut. Auto. Ins. Co., 181 W. Va. 604, 383 S.E.2d 786 (1989);
Hayseeds, Inc. v. State Farm Fire & Casualty Co., 177 W. Va. 323,
352 S.E.2d 73 (1986). As we pointed out in Davis v. Robertson,
supra, this result is consistent with the vast majority of
jurisdictions which have considered "general uninsured motorist
statutes . . . [and] have concluded that an insured party may sue
his insurer without obtaining a judgment against the uninsured
motorist who injured him." 175 W. Va. at 369, 332 S.E.2d at 825.
(Citations omitted). See generally Annot., 73 A.L.R.3d 632 (1976).
Boston argues that the inability to obtain service upon the tortfeasor, Mr. Nowlan, hampers its ability to defend liability. However, this inability to obtain service does not mean that it is precluded from obtaining his testimony by deposition or otherwise. Its position bears some analogy to those cases where the out-of-state defendant is served under the nonresident motor vehicle statute. W. Va. Code, 56-3-31 (1990). The insurance carrier for the nonresident still is obligated to defend. Those jurisdictions that have considered the absent tortfeasor in a suit against an uninsured/underinsured carrier have held that this is no bar to the direct action against the insurer. See, e.g., Christiansen v. Farmers Ins. Exch., 540 F.2d 472 (10th Cir. 1976) (construing Utah law); Hodges v. Canal Ins. Co., 223 So. 2d 630 (Miss. 1969); High v. Southwestern Ins. Co., 520 P.2d 662 (Okla. 1974); Turlay v. Farmers Ins. Exch., 259 Or. 612, 488 P.2d 406 (1971); Story v. Southern Fire & Casualty Co., 532 S.W.2d 277
(Tenn. App. 1975); Wilford v. Aetna Casualty & Sur. Co., 213 Va.
481, 193 S.E.2d 776 (1973) (construing North Carolina law).
Moreover, in the final analysis, Boston is not without
some ability to protect itself by simply refusing to waive its
statutory subrogation right against the tortfeasor. The rule we
fashion today is a narrow one. It is that a plaintiff is not
precluded under W. Va. Code, 33-6-31(d), from suing an
uninsured/underinsured insurance carrier if the plaintiff has
settled with the tortfeasor's liability carrier for the full amount
of the policy and obtained from the uninsured/underinsured carrier
a waiver of its right of subrogation against the tortfeasor.
Therefore, the judgment of the Circuit Court of Wetzel
County is reversed and this case is remanded for further
Reversed and remanded.
Footnote: 1In their release, the Postlethwaits reserved the right to sue Mr. Nowlan, but agreed not to collect any verdict against him as a result of its suit on its underinsured motorist coverage.
Footnote: 2Initially, we note that the parties disagree over the choice of law question. The Postlethwaits contend that because the accident happened in Maryland, then the Maryland underinsured motorist law should apply. We decline to address this issue because it was not addressed by the trial court. See Syllabus Point 8, Charlton v. Charlton, 186 W. Va. 670, 413 S.E.2d 911 (1991).
Footnote: 3The first certified question in Davis, 175 W. Va. at 365, 332 S.E.2d at 820, stated: "'Is a liability insurance carrier who insures a defendant in a civil action a real party in interest and an indispensable party in a civil action and properly includable as a defendant in a civil action?'"
Footnote: 4The second certified question in Davis, 175 W. Va. at 365, 332 S.E.2d at 820, was: "'When an uninsured motorist is made a defendant in a civil action and is covered by liability insurance under another motorist's insurance policy for his neglect, may this insurance carrier be made a party defendant to the action as an indispensable party or real party in interest?'"
Footnote: 5W. Va. Code, 33-6-31(f), in pertinent part, provides: "An insurer paying a claim under the endorsement or provisions required by subsection (b) of this section shall be subrogated to the rights of the insured to whom such claim was paid against the person causing such injury, death or damage to the extent that payment was made."
Footnote: 6This is the traditional rule in those states where the suit is brought initially against the uninsured/underinsured carrier. See, e.g., Harvey v. Mitchell, 522 So. 2d 771 (Ala. 1988); Jernigan v. Progressive Am. Ins. Co., 501 So. 2d 748 (Fla. App. 1987); Allied Fidelity Ins. Co. v. Lamb, 361 N.E.2d 174 (Ind. App. 1977); Allstate Ins. Co. v. Elkins, 63 Ill. App. 3d 62, 21 Ill. Dec. 66, 381 N.E.2d 1, aff'd, 72 Ill. 2d 384, 33 Ill. Dec. 139, 396 N.E.2d 528 (1979); Reese v. State Farm Mutual Auto. Ins. Co., 285 Md. 548, 403 A.2d 1229 (1979); Sunwalt v. Allstate Ins. Co., 12 Ohio St. 3d 294, 466 N.E.2d 544 (1984); Sahloff v. Western Casualty & Sur. Co., 45 Wis. 2d 60, 171 N.W.2d 914 (1969).