Opinion
No. 8710SC422
Filed 5 July 1988
Insurance 69 — automobile underinsurance claim — injured party's settlement with tort feasor — claim not barred Plaintiff's underinsurance claim was not barred because she was no longer legally entitled to recover damages of the tort feasor and was barred by the settlement made without defendant insurer's consent only to the extent, if any, that defendant's subrogation rights were prejudiced.
APPEAL by plaintiff from Hight, Judge. Orders entered 2 April and 10 April 1987 in Superior Court, WAKE County. Heard in the Court of Appeals 28 October 1987.
Johnny S. Gaskins for plaintiff appellant.
Patterson, Dilthey, Clay, Cranfill, Sumner Hartzog, by Patricia L. Holland, for defendant appellee.
Judge GREENE concurring.
Plaintiff, who was seriously injured by and settled with an underinsured motorist, brought this action for underinsurance benefits under the provisions of the liability insurance policy defendant issued for the car she was riding in. Defendant denied coverage and following a hearing in which affidavits, the policy and other documents were submitted by the parties, an order of summary judgment was entered dismissing plaintiff's action pursuant to the provisions of Rule 56, N.C. Rules of Civil Procedure. The materials presented to the court established the following uncontradicted facts:
On 17 August 1985, while a passenger in the vehicle covered by defendant's policy, which had liability limits of $100,000 per person for each accident and underinsurance coverage tied to those limits, plaintiff was seriously injured when a speeding vehicle operated by Reginald L. Ligon on the wrong side of the road struck her vehicle. After her attorney's investigation indicated that Ligon had no personal assets that could be levied on, on 25 August 1986 the claim against him was settled with his auto carrier, American Mutual Fire Insurance Company, for his policy limits of $25,000 per person for each accident. Incident thereto plaintiff signed a release on a standard insurance form styled "RELEASE OF ALL CLAIMS," which contained the following provisions:
That the Undersigned, being of lawful age, for the sole consideration of . . . $25,000.00 . . . does hereby . . . release, acquit and forever discharge Reginald Ligon . . . of and from any and all claims . . . whatsoever, which the undersigned now has . . . or which may hereafter accrue on account of . . . the accident . . . which occurred on or about the 17 day of August 1985 at or near Raleigh N.C.
Before the settlement there was no contact between plaintiff and defendant, but on the same day settlement was made plaintiff's attorney wrote defendant and informed it of the collision, plaintiff's injuries, the $25,000 settlement, and of her claim against the underinsured motorist coverage of its policy. In responding to the letter defendant denied coverage for the reasons later stated in its answer.
The policy involved, subject to its limits and other conditions, requires defendant to pay "all sums the insured is legally entitled to recover as damages from the owner or driver" of the other vehicle after all applicable liability bonds or policies "have been exhausted by judgment or payments"; and it states that the underinsurance "does not apply to . . . [a]ny claim settled without our consent." The policy further provides that:
If we make any payment, we are entitled to recover what we paid from other parties. Any person to or for whom we make payment must transfer to us his or her rights of recovery against any other party. This person must do everything necessary to secure these rights and must do nothing that would jeopardize them.
. . . .
No legal action may be brought against us until there has been full compliance with all the terms of this policy.
The facts in this case are not materially different from those recorded in Silvers v. Horace Mann Insurance Company, 90 N.C. App. 1, 367 S.E.2d 372 (1988), where this same panel held that the summary judgment dismissing the plaintiff's claim for underinsurance benefits was erroneous. For the reasons stated therein we hold that plaintiff's underinsurance coverage claim is not barred because she is no longer legally entitled to recover damages of the tort feasor and is barred by the settlement made without defendant's consent only to the extent, if any, that defendant's subrogation rights were prejudiced. Thus, the order of summary judgment dismissing plaintiff's claim is vacated and the case is remanded to the Superior Court for trial consistent with the provisions of the foregoing opinion. Defendant, of course, is not bound by any acknowledgment that the tort feasor may have made and in the trial, unless defendant agrees otherwise, plaintiff will have the burden of proving, along with the other matters alleged in the complaint, that the tort feasor was legally liable for her damages before the settlement was made.
Vacated and remanded.
Judges BECTON and GREENE concur.