Lopez v. Concord General

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P.
40 as well as formal revision before publication in the Vermont Reports.
Readers are requested to notify the Reporter of Decisions, Vermont Supreme
Court, 111 State Street, Montpelier, Vermont 05602 of any errors in order
that corrections may be made before this opinion goes to press.


                                No. 88-609


Armando Lopez                                Supreme Court

                                             On Appeal From
     v.                                      Addison Superior Court

Concord General Mutual                       June Term, 1989
Insurance Group


Hilton H. Dier, Jr., J.

John L. Kellner of Langrock Sperry Parker & Wool, Middlebury, for
  plaintiff-appellee

John H. Tarlow and Christopher Roy, Law Clerk (On the Brief) of Downs
  Rachlin & Martin, Burlington, for defendant-appellant


PRESENT:  Peck, Dooley and Morse, JJ.


     DOOLEY, J.   Defendant, Concord General Mutual Insurance Group, appeals
from an order in a declaratory judgment action granting a motion for summary
judgment filed by plaintiff, Armando Lopez, and denying defendant's motion.
Defendant raises two issues:  (1) that the trial court erred in holding that
Concord had waived its right to collect its subrogated interest from a
settlement fund, and (2) that if there was no waiver, then it should not be
obligated to pay a portion of plaintiff's attorney's fees.  Because we find
that summary judgment was inappropriate in this case, we reverse and remand.
     On February 8, 1985, plaintiff was injured when his automobile
collided with a vehicle owned by Ryder Truck Rental (Ryder).  Plaintiff's
insurance company, Concord, paid $4,244.46 for medical expenses incurred
from the accident.  Pursuant to its policy with plaintiff, Concord had a
subrogation right to that amount.  The proof-of-claim forms signed by
plaintiff provided: "I (we) hereby subrogate the said Company to all rights
and causes of action I (we) have against any person, persons or corporation
whomsoever for the above listed claim for services arising out of or
incident to said accident."  Defendant informed plaintiff's attorney of its
subrogated interest, requesting that "[w]hen you settle the claim with the
adverse party, would you kindly keep our claim in mind."  Subsequently,
plaintiff filed a personal injury action against Ryder in Addison Superior
Court. (FN1) Plaintiff's attorney notified defendant of the  pending action and
asked defendant to recognize his contingency fee arrangement in the event of
a recovery.  In response, defendant wrote to plaintiff's attorney, stating
that
         We are dealing directly with Ryder . . . .  We do not
         want you to handle our subrogation claim.  We are
         dealing direct with them and expect that when the claim
         is eventually settled, they will reimburse us directly
         by separate payment.  So, you will be representing only
         Mr. Lopez in this matter.

Defendant sent a copy of this letter to Ryder, along with a request that any
payments for the subrogated medical claims be made directly to defendant.
In fact, in the letter sending Ryder proof of the last of the payments to
plaintiff, defendant's claims manager states:  "we would hope that you would
send your draft in [the total] amount direct to us without putting the
insureds attorney or the insureds name on it."
     Ryder answered plaintiff's suit denying liability.  Without defendant's
assistance or authorization, plaintiff's attorney engaged in extensive
pretrial discovery, prepared the case for trial, drew a jury, and began
trial against Ryder.  During the trial, plaintiff's attorney negotiated a
$38,000.00 settlement with Ryder.  There was no mention of defendant's
subrogation claim during the settlement discussions.  Ryder's attorney gave
no indication that defendant's subrogated claim was included in the
$38,000.00 sum.  In connection with this settlement, plaintiff's attorney
instructed plaintiff to sign a general release, releasing Ryder from all
claims of the plaintiff.  This release was given without defendant's
consent, ostensibly in contravention of written agreements between defendant
and plaintiff. (FN2) Without the agreement of plaintiff or his attorney, and
without any prior discussion, Ryder sent two separate checks to satisfy its
settlement agreement.  One check was made out to plaintiff and plaintiff's
attorney, in the amount of $33,375.54.  The second check, made out to
defendant, plaintiff, and plaintiff's attorney, was in the amount of
$4,244.46  -- the exact sum of the subrogated medical payments.  Plaintiff's
attorney objected to Ryder's unilateral deduction of this sum from the
$38,000.00 settlement, on the ground that the $38,000.00 figure as
negotiated by plaintiff's attorney and Ryder's attorney was not intended to
include defendant's subrogation claim.  Both plaintiff and defendant claimed
entitlement to the $4,244.46 check.  Defendant also rejected the demand of
plaintiff's attorney for a one-third share of the check should defendant be
entitled to it.
     Plaintiff filed a declaratory judgment action against defendant to
determine the proper distribution of the $4,244.46.  Ryder was not made a
party to the action.  The parties agreed on a stipulation of facts and then
each filed a motion for summary judgment with an affidavit.  Plaintiff's
affidavit was of his attorney and described his dealings with defendant's
claims adjuster and the attorney for Ryder.  Defendant's affidavit was of
the claims adjuster and described his dealings with Ryder and plaintiff's
attorney.  The trial court granted plaintiff's motion and denied that of the
defendant.  Defendant appeals, asserting first that it was error to grant
plaintiff's motion and deny its motion.
     Defendant's primary claim is that the lower court erred in holding that
defendant waived its right to collect its subrogation claim from the pro-
ceeds of the settlement.  Resolution of this claim involves two separate
inquiries: (1) whether defendant effectively waived its right to reimburse-
ment from plaintiff's recovery; and (2) if so, whether the waiver covers the
three-party check sent by Ryder.
     Before addressing the questions, we begin by examining the summary
judgment standard here and in the trial court.  The trial court can grant
summary judgment only if it clearly finds from the materials before it that
there is no genuine issue as to any material fact and that the moving party
is entitled to judgment on the law.  V.R.C.P. 56(c); Messier v. Metropolitan
Life Ins. Co., ___ Vt. ___, 578 A.2d 98, 99 (1990).  In this process, the
opponent to the motion must be given the benefit of all reasonable doubts
and inferences in determining whether a genuine issue exists.  Weisburgh v.
Mahady, 147 Vt. 70, 72, 511 A.2d 304, 305 (1986).  While a stipulation of
facts often allows the trial court to decide a case on summary judgment, it
is not always so.  If the stipulation is inadequate to demonstrate whether
any party is correct as a matter of law, summary judgment cannot be awarded.
See Ejnes v. Carinthia Trailside Assoc., 152 Vt. ___, ___, 571 A.2d 49, 51
(1989).  Finally, the standard on appeal is the same as that in the trial
court.  See Messier v. Metropolitan Life Ins. Co., ___ Vt. at ___, 578 A.2d 
at 99.  With the requirements for granting summary judgment in mind, we
review the law applicable to the parties' actions.
     A waiver is the voluntary, intentional relinquishment of a known right.
Segalla v. United States Fire Ins. Co., 135 Vt. 185, 189, 373 A.2d 535, 538
(1977); Liberty Mutual Ins. Co. v. Cleveland, 127 Vt. 99, 103, 241 A.2d 60,
63 (1968).  "It involves both knowledge and intent."  Id. (quoting Mancini
v. Thomas, 113 Vt. 322, 327, 34 A.2d 105, 109 (1943)).  An insurer's
subrogation rights may be lost by waiver or estoppel.  See Pettengill v. New
Hampshire Ins. Co, 129 Vt. 23, 30, 270 A.2d 883, 888 (1970).  The right of
subrogation, however,  has "particular approval" under our law.  Norfolk &
Dedham Fire Ins. Co. v. Aetna Casualty & Surety Co., 132 Vt. 341, 343, 318 A.2d 659, 661 (1974).  Indeed, a subrogation provision is required in each
liability policy in this state.  8 V.S.A. { 4203(4).  We conclude that a
waiver of a subrogation right will be found only where the subrogated party
has specifically and unequivocally relinquished that right.
     Here, defendant's letters to plaintiff, plaintiff's attorney, and Ryder
established its unequivocal intention to pursue independently its subro-
gation claim.  Confident that Ryder's liability and damages were never in
dispute, defendant informed plaintiff's attorney it would "deal directly"
with Ryder, declining to assist or participate in plaintiff's legal action.
Defendant notified Ryder on at least two occasions that it would handle
directly any settlement arrangements regarding its subrogated interest.
Although defendant was aware that plaintiff had commenced suit, it did not
join or bring an independent action.  See V.R.C.P. 17(a) (subrogated
insurance carrier can bring suit in its own name).  In short, all evidence
in the record supports the trial court's conclusion that defendant
unequivocally and intentionally waived its right to reimbursement from the
proceeds of plaintiff's action against Ryder, and the trial court was
correct to grant summary judgment to that extent.
     If the issue here were the right of the insurer to participate in
settlement proceeds provided by the tortfeasor solely to the insured, our
finding of waiver would require a judgment for the plaintiff.  The facts
here are more complicated, however, because Ryder attempted to provide part
of the settlement proceeds to both plaintiff and defendant, without
choosing between them.  To determine the significance of this act, we first
examine whether defendant had any enforceable rights against Ryder that
might give it an interest in the payment.
     In the leading case of Cushman & Rankin Co. v. Boston & Maine Railroad,
82 Vt. 390, 396-97, 73 A. 1073, 1075 (1909), this Court held that a release
given by an insured to a tortfeasor does not bar a separate action by an
insurer to enforce its subrogated rights against the tortfeasor when the
tortfeasor had prior knowledge of the insurance payments from the insurer to
the insured.  The Cushman rule is undercut to some extent, however, by the
procedural barrier to the insurer's recovery established by Moultroup v.
Gorham, 113 Vt. 317, 321, 34 A.2d 96, 98 (1943).  In Moultroup, the
subrogated insurance carrier sued in the name of the insured for property
damages arising out of an automobile accident.  The tortfeasor defended,
arguing that a prior personal injury judgment obtained by the insured in her
own behalf precluded the second suit for property damages.  This Court
agreed, concluding that the second suit violated the rule against splitting
a cause of action and thus was precluded by res judicata.  The fact that the
second suit was commenced by the insurer was not determinative:  "If others
claim a right to stand in place of the injured party, they must intervene in
proper time, or lose their recourse to the wrongdoer."  Id.  Thus, the
"insurer's right of recovery was limited to a right to intervene in the
first suit and there insist that a recovery be had for damage to the car."
Id.
     Moultroup was decided at a time when our procedural rules offered less
flexibility to existing parties to add other parties and to add claims other
than those framed in the original pleadings.  We concur with the evaluation
of Wright and Miller: "Partial assignment and subrogation provide compelling
justification for splitting a single claim.  The basic questions in this
area have been answered primarily through the modern rules on party
joinder."  18 C. Wright, A. Miller & E. Cooper, Federal Practice and
Procedure { 4415, at 122 (1981).  Certainly if Ryder were concerned about
multiplicity of litigation, it could have joined defendant into plaintiff's
suit against Ryder.
     In any event, Moultroup  applied only when the insurer was bringing an
action in the name of the insured.  Thus, when we adopted the Vermont Rules
of Civil Procedure, we established a notice requirement whereby an insurer
must notify the insured before bringing a subrogation action in the name of
the insured.  V.R.C.P. 17(c).  The Reporter's Notes indicate that the rule
"eliminates the danger that a subrogation action brought in the assured's
name may preclude an assured's personal injury claim."  Reporter's Notes to
V.R.C.P. 17.  The rule does not have a similar requirement that the insured
notify the insurer of his or her intent to commence suit.  The notes
explain:  "Similar protection is not required for the insurer, which may sue
for property damage in its own name as real party in interest even after a
judgment for the assured on the personal injury claim."  Id.
     Although defendant may have been required to bring suit against Ryder
in its own name, a question we need not decide, it retained a cause of
action against Ryder even though it did not join plaintiff's action against
Ryder.  In fact, plaintiff alleged in a memorandum filed below that defend-
ant had actually sued Ryder in an independent action in superior court.
     In light of this background, it is clear that Ryder was attempting to
discharge all the claims against it with one payment and without choosing
between the conflicting claimants.  This leaves plaintiff arguing that the
three-party check is required to go to him under his agreement with Ryder
and defendant arguing that the check discharges its claim against Ryder.
Without Ryder before us, and without additional facts to show the terms of
plaintiff's settlement agreement with Ryder, we are unable to adjudicate the
relative claims of plaintiff and defendant.  It is entirely possible that
both plaintiff and defendant are entitled to collect from Ryder the sum
covered by the three-party check and that neither has a prior claim to the
other.
     For the above reasons, we conclude that defendant's waiver of its right
to collect from the proceeds of plaintiff's action does not determine its
rights in the three-party check sent by Ryder.  Accordingly, it was error to
grant summary judgment for plaintiff.
     Reversed and remanded.

                                        FOR THE COURT:




                                        Associate Justice



FN1.      While the record does not contain a copy of plaintiff's complaint
against Ryder, it appears that plaintiff sued for all personal injury and
property damages without excluding the medical expenses reimbursed by
defendant.

FN2.      The medical payment proof of claim form, quoted in part earlier,
also provided in pertinent part:  "I(we) hereby covenant that no release has
been or will be given to or settlement or compromise made with any third
party who may be liable to me (us) for the above claim for services arising
out of or incident to said accident."