Grace v. Peterson
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Appellant James Grace suffered permanent brain injuries when his helmet failed after he braked to avoid hitting a dog and was thrown over the handlebars of his motorcycle. Appellant and his wife, Kathleen, filed personal injury and loss of consortium claims against the helmet retailer and manufacturer. The Graces received disbursements from the receiver of one of the manufacturer's second-tier insurance providers that had filed for bankruptcy and gone into liquidation, and entered a settlement agreement with the third-tier insurance carrier. Appellant and his wife separated at some point after the accident, divorced for a month, and remarried. Except for a partial disbursement of funds that occurred while their final divorce hearing was pending, the Graces were unable to agree upon how the remaining settlement and insurance proceeds should be divided. The Graces' lawyer filed an action for interpleader asking the superior court to determine how to divide the remaining funds. After a one-day trial, the superior court concluded that: (1) based on the "analytic" approach in "Bandow v. Bandow," the portion of the recovery from the receiver for the manufacturer's second-tier insurance carrier that was allocated for past economic loss, past medical loss, and rehabilitation services was marital property and should have been divided equally; and (2) the recovery from the third-tier insurance carrier was the result of a jointly-assigned bad faith insurance claim and belonged to both parties. Upon review, the Supreme Court affirmed the superior court's division of the proceeds from the second-tier insurance carrier, but reversed its division of the proceeds from the third-tier insurance carrier.
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