Opinion
No. C4-95-2421
Filed June 25, 1996.
Appeal from the District Court, Chisago County, File No. C593886.
Douglas G. Sauter, (for Respondent)
Robert H. Tennant, (for Plaintiff)
Owen L. Sorenson, Suzanne Wolbeck Kvas, (for Appellant)
Considered and decided by Norton, Presiding Judge, Peterson, Judge, and Amundson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994)
Unpublished Opinion
Appellant Farm Bureau Mutual Insurance Co. argues that the trial court erred by requiring it to pay uninsured motorist benefits to respondent Scott Raymond Gusk. We affirm.
Facts
While Gusk was riding his bicycle along a highway, an unidentified car nearly collided with him and caused him to lose control of his bike. Another car, driven by Darrel Spencer, then collided with Gusk, resulting in serious injuries to Gusk.
Gusk sued Spencer and his own insurer, Farm Bureau Mutual Insurance Company, which provided both underinsured and uninsured motorist coverages. Allstate Insurance Company, Spencer's insurer, reached a tentative settlement with Gusk for $80,000 of Spencer's $100,000 policy limit. Gusk then notified Farm Bureau of the tentative settlement in accordance with Schmidt v. Clothier, 338 N.W.2d 256, 263 (Minn. 1983). Pursuant to Schmidt, Farm Bureau substituted its own draft, thereby protecting its subrogation rights against Spencer and his insurer.
An unidentified vehicle is considered an uninsured vehicle under Gusk's insurance policy.
The case went to trial in February 1995. By special verdict, the jury found total damages to be $122,190.10 and apportioned fault 50% to the unidentifed driver, 30% to Spencer, and 20% to Gusk. After deducting no-fault benefits received and Gusk's share of the liability, Gusk was awarded $74,462.72 in damages and pre-judgment interest.
Farm Bureau moved the court for JNOV or a new trial. The court denied Farm Bureau's motion and ordered that judgment be entered against Farm Bureau for $60,584.10, the amount of damages attributable to the unknown driver, plus costs and disbursements.
Decision
As the carrier for both underinsured and uninsured motorist coverages, Farm Bureau was responsible for paying damages that Gusk was legally entitled to recover from two separate tortfeasors, Spencer and the driver of the unidentified vehicle. By substituting its draft pursuant to Schmidt, Farm Bureau preserved its subrogation rights with respect to the damages Gusk was legally entitled to recover from Spencer.
The outcome of the trial revealed that the amount Farm Bureau paid to preserve its subrogation rights with respect to underinsured benefits was greater than the total damages Gusk was entitled to recover from both tortfeasors. Farm Bureau argues that "[b]ecause the available liability coverage sufficiently compensated Gusk, there should have been no additional judgment entered against Farm Bureau." Farm Bureau claims that requiring it to pay Gusk uninsured motorist benefits will allow Gusk to receive an impermissible double recovery because Farm Bureau has already paid him an amount that exceeds the total damages awarded. We disagree.
Farm Bureau's argument ignores the fact that the $80,000 payment it made was related only to damages Gusk was legally entitled to recover from Spencer. The uninsured motorist coverage Farm Bureau provided was related only to damages Gusk was legally entitled to recover from the unidentified driver. In effect, Farm Bureau argues that it should be permitted to meet its obligations as an uninsured motorist carrier through the payment it made to preserve the subrogation rights it possesses as an underinsured motorist carrier.
The total amount Gusk will receive simply reflects the uninsured motorist benefits to which he is entitled under his contract with Farm Bureau and the proceeds of what ultimately proved to be a favorable settlement negotiated with Spencer. While it is true that Gusk will receive payments that exceed the total amount of damages the jury determined he suffered, the amount he will receive is not an impermissible double recovery. As the supreme court has explained,
[u]nder established tort law, this kind of "overpayment" is not the kind of double recovery of which a cotortfeasor can complain. Shantz v. Richview, Inc., 311 N.W.2d 155, 156 (Minn. 1981) ("It should be no concern of the nonsettling defendant how much the plaintiff received from the settling defendant.")
State Farm Mut. Auto. Ins. Co. v. Galloway, 373 N.W.2d 301, 305 (Minn. 1985).
Farm Bureau simply misjudged the amount it needed to pay to preserve its subrogation rights. As things turned out, Spencer was not underinsured, and Farm Bureau would have had no obligation to pay underinsured motorist benefits.
Had the driver of the unidentified car been available to respond to Gusk's claims, it would be no concern of that driver how much Farm Bureau paid to preserve its subrogation rights. The payment made by Farm Bureau to preserve its subrogation rights would not have been used to pay damages that Gusk was legally entitled to recover from the unidentified driver. The fact that the driver remains unknown does not change this result.
[U]ninsured motorist benefits should be administered in a way that does not leave the insured in a position which is less advantageous than if the uninsured motorist had been insured.
Id. at 306.