Barth v. Keffer
Annotate this Case
September 1995 Term
___________
No. 22691
___________
MARY JO BARTH,
Plaintiff Below, Appellee
v.
WILLIAM D. KEFFER,
Defendant Below, Appellee
ALLSTATE INSURANCE COMPANY,
Appellant
_______________________________________________________
Appeal from the Circuit Court of Marshall County
Honorable John Madden, Judge
Civil Action No. 92-C-371-M
REVERSED
_______________________________________________________
Submitted: September 12, 1995
Filed: October 26, 1995
Frederick E. Gardner B. Karleton Kesner
Chase & Gardner Anita R. Casey
Moundsville, West Virginia Meyer, Darragh, Buckler, Bebenek
Attorney for the Appellee & Eck
Mary Jo Barth Charleston, West Virginia
Attorneys for the Appellant
Allstate Insurance Company
RETIRED JUSTICE MILLER, sitting by temporary assignment, delivered the Opinion of
the Court.
JUSTICE ALBRIGHT did not participate.
SYLLABUS BY THE COURT
1. "A consent-to-settle provision of an automobile insurance policy pertaining
to underinsured motorists coverage whereby an insured voids his underinsurance coverage
by settling a claim with a tortfeasor without first obtaining the insurer's written consent when
such claim involves either the insured's underinsurance coverage or potentially involves that
coverage is a valid and enforceable means by which an insurer may protect its statutorily-
mandated right to subrogate claims pursuant to West Virginia Code § 33-6-31(f) (1992)."
Syllabus Point 3, Arndt v. Burdette, 189 W. Va. 722, 434 S.E.2d 394 (1993).
2. "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." Syllabus Point 3, Postlethwait v. Boston Old Colony Ins. Co., 189
W. Va. 532, 432 S.E.2d 802 (1993).
3. "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."
Syllabus Point 4, Postlethwait v. Boston Old Colony Ins. Co., 189 W. Va. 532, 432 S.E.2d 802 (1993).
4. The statutory subrogation right contained in W. Va. Code, 33-6-31(f)
(1988), ordinarily precludes an injured party from settling for less than the liability policy
limits of the tortfeasor and giving a general release without the consent of the underinsured
motorist carrier that has coverage for the injured party.
5. "A party in a civil action who has made a good faith settlement with the
plaintiff prior to a judicial determination of liability is relieved from any liability for
contribution." Syllabus Point 6, Board of Educ. of McDowell County v. Zando, Martin &
Milstead, Inc., 182 W. Va. 597, 390 S.E.2d 796 (1990).
6. "'The doctrine of contribution has its roots in equitable principles. The
right to contribution arises when persons having a common obligation, either in contract or
tort, are sued on that obligation and one party is forced to pay more than his pro tanto share
of the obligation.' Syllabus Point 4, in part, Sydenstricker v. Unipunch Prods., Inc., 169 W.
Va. 440, 288 S.E.2d 511 (1982)." Syllabus Point 1, Board of Educ. of McDowell County
v. Zando, Martin & Milstead, Inc., 182 W. Va. 597, 390 S.E.2d 796 (1990).
7. This statutory subrogation right under W. Va. Code, 33-6-31(f) (1988),
is sui generis as it relates only to the right of an uninsured or underinsured motorist insurance
carrier to recover sums paid under its policy to the injured plaintiff who is its policyholder.
The broad principles of contribution contained in Board of Education of McDowell County v. Zando, Martin & Milstead, Inc., 182 W. Va. 597, 390 S.E.2d 796 (1990), that release a
tortfeasor from further liability to the injured party upon a good faith settlement without
regard to the tortfeasor's liability insurance coverage are completely different and should not
be confused with W. Va. Code, 33-6-31(f).
Miller, Justice:See footnote 1
The appellant, Allstate Insurance Company (Allstate), appeals a June 21, 1994,
order of the Circuit Court of Marshall County, which denied Allstate's motion to be
dismissed. Allstate carried underinsurance coverage for Mary Jo Barth, the plaintiff below
and one of the appellees herein. Allstate claims Ms. Barth settled her personal injury claim
with a tortfeasor for less than the limit of his liability insurance coverage and she should be
barred from recovering underinsurance based on Arndt v. Burdette, 189 W. Va. 722, 434 S.E.2d 394 (1993). We agree, and we reverse the judgment of the circuit court.
I.
On July 30, 1990, Ms. Barth was a passenger in an automobile operated by
William D. Keffer, one of the defendants below and one of the appellees herein. Mr.
Keffer's automobile struck a vehicle owned by David H. Dobbs, a defendant below, which
vehicle was parked along the shoulder of State Route 2, south of Moundsville, West Virginia.
Ms. Barth filed suit in July, 1992, alleging negligence on the part of Mr. Keffer
for driving his vehicle into Mr. Dobbs's car. Negligence was asserted against Mr. Dobbs
under W. Va. Code, 17C-15-15(b) (1978), for parking on a roadway or shoulder between
sunset and sunrise where there was insufficient light to reveal any person or obstacle within
a distance of five hundred feet. Allstate was served as the underinsured motorist carrier
pursuant to W. Va. Code, 33-6-31(d) (1988).See footnote 2
Prior to trial, Ms. Barth settled with MICO Insurance Company, the liability
carrier for Mr. Keffer, for its policy limits of $20,000. This settlement was approved by Ms.
Barth's underinsurance carrier, Allstate. Mr. Keffer was subsequently dismissed from this
suit. Immediately prior to trial, Ms. Barth also requested consent from Allstate to settle with
Mr. Dobbs for $15,000, but Allstate refused to consent.See footnote 3 Subsequently, Allstate was informed that Ms. Barth settled with Mr. Dobbs for $15,000, which was less than the full
limit of Mr. Dobbs's liability policy with Motorists Mutual Insurance Company. Ms. Barth
also gave a complete release to Mr. Dobbs for further liability arising from the accident.
Allstate then filed a motion to dismiss Ms. Barth's claim for underinsurance
coverage on the basis that her release of Mr. Dobbs terminated its right to subrogation. The
circuit court heard arguments on the motion and concluded that Ms. Barth's claim against Mr.
Dobbs was "tenuous," and that the best interests of justice would have been served by
approval of the settlement. The circuit court determined the settlement was made in good
faith under Board of Education of McDowell County v. Zando, Martin & Milstead, Inc., 182
W. Va. 597, 390 S.E.2d 786 (1990), and Mr. Dobbs was dismissed from the suit. The circuit
court rejected Allstate's reliance on Arndt v. Burdette, supra, because in that case the
unconsented settlement was made prior to suit being filed. The circuit court reasoned that
in this case the settlement occurred after institution of the suit by the plaintiff.
Following a jury trial, Ms. Barth received a $70,582.95 verdict against Allstate.
This amount was reduced by 30 percent for her comparative contributory negligence, less
the $20,000 offset for Mr. Keffer's liability policy payment and the $15,000 paid under Mr.
Dobbs's liability policy. These offsets left a net judgment of $14,408.07.
Allstate maintains that because Ms. Barth violated the consent-to-settle
provisions of her underinsured coverage, Allstate is not legally obligated to provide
underinsured benefits. It contends that its motion to dismiss should have been granted under
Syllabus Point 3 of Arndt v. Burdette, supra:
"A consent-to-settle provision of an automobile
insurance policy pertaining to underinsured motorists coverage
whereby an insured voids his underinsurance coverage by
settling a claim with a tortfeasor without first obtaining the
insurer's written consent when such claim involves either the
insured's underinsurance coverage or potentially involves that
coverage is a valid and enforceable means by which an insurer
may protect its statutorily-mandated right to subrogate claims
pursuant to West Virginia Code §33-6-31(f) (1992)."
The plaintiff initially advances a procedural bar based on the fact that Allstate's
insurance policy was not made a part of the official record. Therefore, Allstate is not entitled
to rely on the consent-to-settle language in the policy to defeat its underinsured motorist
obligation. The language of Syllabus Point 3 of Arndt, supra, suggests that the consent-to-
settle language in an insurance policy is merely an adjunct to enforcing the insurer's statutory
right of subrogation contained in W. Va. Code, 33-6-31(f).See footnote 4 Arndt makes explicit what we
earlier stated in Syllabus Point 3 of Postlethwait v. Boston Old Colony Insurance Co., 189
W. Va. 532, 432 S.E.2d 802 (1993):
"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."
Although this statutory right of subrogation does not arise until payment is
made, it is apparent that when an injured party settles with a tortfeasor and gives a complete
release, the injured party thereby abolishes the uninsured or underinsured carrier's statutory
subrogation rights. Consequently, the injured party should not be able to recover against the
uninsured or underinsured motorist carrier. Thus, in order to protect the insurer's statutory
subrogation right, the injured party must obtain the insurer's consent to settle with the
tortfeasor or, as we explained in Syllabus Point 4 of Postlethwait, supra, waive his or her
right of subrogation:
"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."
The foregoing principles deal with our statutory subrogation right contained in W. Va. Code,
33-6-31(f), and exist independently of the language in the insurance contract. Thus, we
conclude that the statutory subrogation right contained in W. Va. Code, 33-6-31(f),
ordinarily precludes an injured party from settling for less than the liability policy limits of
the tortfeasor and giving a general release without the consent of the underinsured motorist carrier that has coverage for the injured party.See footnote 5 This statutory subrogation rule is consistent
with general liability insurance law relating to subrogation principles. See, e.g., Federal
Kemper Ins. Co. v. Arnold, 183 W. Va. 31, 393 S.E.2d 669 (1990); Runner v. Calvert Fire
Ins. Co., 138 W. Va. 369, 76 S.E.2d 244 (1953). See generally 44 Am. Jur. 2d Insurance
§ 1813 (1982); 16 George J. Couch, Couch on Insurance § 61:197 (2nd rev. ed. 1983); 2
Alan I. Widiss, Uninsured and Underinsured Motorist Coverage 355, et seq. (2nd ed. 1985).
III.
Ms. Barth advances a more substantive argument that we should apply our rule
regarding contribution among joint tortfeasors where there is an automobile accident
involving both liability insurance coverage for the tortfeasor and uninsured or underinsured
motorist coverage for the injured party. This theory would permit insurance payments made
in good faith to exonerate the payee under Syllabus Point 6 of Board of Education of
McDowell County v. Zando, Martin & Milstead, Inc., 182 W. Va. 597, 390 S.E.2d 796
(1990):
"A party in a civil action who has made a good
faith settlement with the plaintiff prior to a judicial
determination of liability is relieved from any liability for
contribution."
Such a good faith settlement would then allow the remaining defendants to
offset the payments on any verdict rendered against them as outlined in Syllabus Point 7 of
Zando, supra.See footnote 6 We defined the doctrine of contribution in Syllabus Point 1 of Zando, supra:
"'The doctrine of contribution has its roots in
equitable principles. The right to contribution arises when
persons having a common obligation, either in contract or tort,
are sued on that obligation and one party is forced to pay more
than his pro tanto share of the obligation.' Syllabus Point 4, in
part, Sydenstricker v. Unipunch Prods., Inc., 169 W. Va. 440,
288 S.E.2d 511 (1982)."
Here, we deal with the statutory right of subrogation under W. Va. Code, 33-6-31(f).See footnote 7
Despite some superficial similarity, contribution is different from our statutory subrogation.
This subrogation right is available only to insurers who issue uninsured or underinsured
motorist liability coverage under W. Va. Code, 33-6-31(b). As subsection (f) refers to claims
filed under W. Va. Code, 33-6-31(b), which is the uninsured and underinsured motorist
provision, statutory subrogation is more limited than the general right of subrogation, which
we outlined in Syllabus Point 4 of Ray v. Donohew, 177 W. Va. 441, 352 S.E.2d 729 (1986):
"'The doctrine of subrogation is that one who has the right to pay, and does pay, a debt which
ought to have been paid by another is entitled to exercise all the remedies which the creditor
possessed against that other.' Syl. Pt. 1, Bassett v. Streight, 78 W. Va. 262, 88 S.E. 848
(1916)."
Subrogation ordinarily involves an antecedent obligation that made the payor
liable to pay the debt of another; whereas, contribution among joint tortfeasors, as discussed
in Zando, supra, arises out of concurrent negligent acts which combine to cause injury to a
third party. The right of contribution between joint tortfeasors is inchoate in the sense that
it allows a party to bring into the suit another joint tortfeasor prior to judgment.See footnote 8 Moreover, the right of contribution is not dependent on a contract. On the other hand, the right of
subrogation under W. Va. Code, 33-6-31(f), rests on the statutory obligation contained in W.
Va. Code, 33-6-31(b), which requires a motor vehicle insurance carrier to provide uninsured
and underinsured motorist coverage, as explained in Syllabus Point 4 of Marshall v. Saseen,
192 W. Va. 94, 450 S.E.2d 791 (1994):
"Under W. Va. Code, 33-6-31(b) [(1988)], an
insurance carrier is statutorily required to pay to its insured, who
has uninsured or underinsured motorist coverage, all sums
which the insured is legally entitled to recover as damages from
the owner or operator of an uninsured or underinsured motor
vehicle. W. Va. Code, 33-6-31(b)."See footnote 9
The statutory obligation to offer uninsured and underinsured motorist coverage
required under W. Va. Code, 33-6-31(b), to its own insured when accepted creates what we
termed in Marshall v. Saseen, supra, first party insurance. This relationship creates specific obligations and damage exposure to the insurer which are stated in Syllabus Point 6 of
Marshall, supra:
"When a policyholder of uninsured or
underinsured motorist coverage issued pursuant to W. Va. Code,
33-6-31(b) [(1988)], substantially prevails in a suit involving
such coverage under W. Va. Code, 33-6-31(d), the insurer
issuing such policy is liable for the amount recovered up to the
policy limits, and policyholder's reasonable attorney fees, and
damages proven for aggravation and inconvenience."
The good faith settlement standard in Zando is not applicable to our statutory
subrogation claim, which we discussed herein and which under Arndt and our other cases
forecloses a plaintiff from settling with a tortfeasor and giving a general release. This
statutory subrogation right under W. Va. Code, 33-6-31(f), is sui generis as it relates only
to the right of an uninsured or underinsured motorist insurance carrier to recover sums paid
under its policy to the injured plaintiff who is its policyholder. The broad principles of
contribution contained in Board of Education of McDowell County v. Zando, Martin &
Milstead, Inc., supra, that release a tortfeasor from further liability to the injured party upon
a good faith settlement without regard to the tortfeasor's liability insurance coverage are
completely different and should not be confused with W. Va. Code, 33-6-31(f).
IV.
For the foregoing reasons, we reverse the judgment of the Circuit Court of
Marshall County as we find the judgment against Allstate was improper once the plaintiff
made a partial settlement with Mr. Dobbs without the consent of Allstate.
Reversed.
Footnote: 1
Pursuant to an Administrative Order entered by this Court on September 11,
1995, retired Justice Thomas B. Miller was recalled for the September 1995 term because
of the retirement of Justice W.T. Brotherton, Jr. Footnote: 2
W. Va. Code, 33-6-31(d), states, in material part:
"Any insured intending to rely on the coverage
required by subsection (b) of this section shall, if any action be
instituted against the owner or operator of an uninsured or
underinsured motor vehicle, cause a copy of the summons and
a copy of the complaint to be served upon the insurance
company issuing the policy, in the manner prescribed by law[.]"
The minor changes in the 1995 amendment to W. Va. Code, 33-6-31, did not affect this
subsection. Footnote: 3
Allstate asserts that Mr. Dobbs had liability coverage with Motorists Mutual
Insurance Company in the amount of $50,000. Footnote: 4
W. Va. Code, 33-6-31(f), in material part, states: "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." This subsection
was unaffected by the minor changes in the 1995 amendment to W. Va. Code, 33-6-31. Footnote: 5
In Syllabus Point 11 of State ex rel. Allstate Insurance Co. v. Karl, 190 W. Va.
176, 437 S.E.2d 749 (1993), cert. denied, ___ U.S. ___, 114 S. Ct. 1302, 127 L. Ed. 2d 653
(1994), we recognized this limitation on the statutory right of subrogation: "The right of
subrogation in W. Va. Code, 33-6-31(f) (1988), is not available where the policyholder has
not been fully compensated for the injuries received and still has the right to recover from
other sources. Subrogation is permitted only to the extent necessary to avoid a double
recovery by such policyholder." Footnote: 6
Syllabus Point 7 of Zando states:
"Defendants in a civil action against whom a
verdict is rendered are entitled to have the verdict reduced by
the amount of any good faith settlements previously made with
the plaintiff by other jointly liable parties. Those defendants
against whom the verdict is rendered are jointly and severally
liable to the plaintiff for payment of the remainder of the
verdict. Where the relative fault of the nonsettling defendants
has been determined, they may seek contribution among
themselves after judgment if forced to pay more than their
allocated share of the verdict." Footnote: 7
For the text of W. Va. Code, 33-6-31(f), see note 4, supra.Footnote: 8
We stated in Syllabus Point 2 of Zando, supra:
"A defendant in a civil action has a right in
advance of judgment to join a joint tortfeasor based on a cause
of action for contribution. This is termed an 'inchoate right to
contribution' in order to distinguish it from the statutory right of
contribution after a joint judgment conferred by W. Va. Code,
55-7-13 (1923)."Footnote: 9
In Marshall v. Saseen, supra, we pointed out that W. Va. Code, 33-6-31(b),
mandates that an insurance policy issued in this State "must have an endorsement giving the
policyholder uninsured motorist coverage with limits no less than that required under our
Motor Vehicle Safety Responsibility Law. W. Va. Code, 17D-4-2 (1979)." 192 W. Va. at
98, 450 S.E.2d at 795. We also said that this section requires the company to offer to its
insured the additional option of obtaining higher limits for uninsured and underinsured
motorist coverage.
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