This is a devolutive appeal by Philip and Joyce Panepinto, defendants-appellants, from a judgment granting a motion for a summary judgment, the effect of which was to permit St. Paul Fire & Marine Insurance Company, an underinsured motorist carrier, to proceed against the Panepintos, the tortfeasors, for amounts paid to the injured victim, notwithstanding the release of the tortfeasor by the victim. We affirm.
Margaret Moncrief, a passenger in a car being driven by James Meyers, which was rear-ended by a car being operated by Joyce Panepinto and owned by her husband, Philip Panepinto, and on which State Farm was the liability insurer, instituted an action in tort for damages against the Panepintos and their insurer. Subsequently, Moncrief amended her petition to include as a defendant St. Paul Fire & Marine Insurance Company, the uninsured motorist carrier on the car in which Moncrief was a passenger. In turn, St. Paul filed a third party petition against the Panepintos.
On December 12, 1984, Moncrief's attorney sent a letter to the attorney representing
On December 19, 1984, apparently pursuant to an oral agreement to settle, St. Paul's attorney delivered to Moncrief's attorney a draft for $42,500.00 and settlement papers, which upon execution would release Meyers and St. Paul from further liability. At that time, no draft had been delivered by State Farm to Moncrief's attorney. On January 7, 1985, Moncrief, for the recited consideration of $25,000.00, executed a document releasing the Panepintos and State Farm from all liability, reserving her right to proceed against all others. On the next day, January 8, 1985, she executed the settlement papers received by her attorney on December 19, 1984, releasing St. Paul and Meyers from all liability arising out of the accident of March 27, 1983.
Subsequently, on January 18, 1985, Moncrief's attorney filed a motion for and obtained a court order dismissing the Panepintos and State Farm from Moncrief's suit with prejudice. Similarly, on January 23, 1985, she filed a motion for and obtained a court order dismissing St. Paul from Moncrief's suit with prejudice. On the same day, St. Paul filed a motion entitled "Motion for Summary Judgment," but in effect, a rule nisi ordering the Panepinto's to show cause why St. Paul should not be permitted to proceed on its third party petition notwithstanding the dismissal of the main demand and the release of the Panepintos by Moncrief.
The trial judge concluded St. Paul was entitled to proceed with its third party claim and ruled accordingly. For the following reasons we believe his ruling was correct and hence affirm the ruling.
The issue presented on the appeal is whether the release of the tortfeasor by Moncrief, the victim, before St. Paul made its payment to the victim, bars the exercise of its claim for reimbursement against the tortfeasor. The answer turns on the interpretation of the provisions of LSA-R.S. 22:1406(D)(4) which provide as follows:
Panepintos, appellants, joined by State Farm, contend that the mere fact the injured victim released the tortfeasors and their insurer prior to releasing St. Paul Fire and Marine Insurance Company is dispositive of the legal issues raised by St. Paul's motion for summary judgment. He argues that the uninsured motorist insurer has no right to reimbursement from the underinsured tortfeasor's liability insurance once the insured has negotiated a settlement as to such insurer within the policy limits. Additionally, he argues that no provision of LSA-R.S. 22:1406 grants an uninsured motorist insurer the right to exercise the legal rights and actions of its insured. Rather, he contends the insurer is afforded only certain reimbursement rights and then only by exercising them through the victim from whom they were obtained.
To support his position, he cites Niemann v. Travelers Ins. Co., 368 So.2d 1003 (La.1979); Oliver v. Capitano, 405 So.2d 1102 (4th Cir.1981); Bourgeois v. U.S. Fidelity & Guaranty Co., 385 So.2d 584 (4th Cir.1980); Jilek v. Covert, 465 So.2d 102 (4th Cir.1985), and a line of cases holding that where an insured released a third party
As pointed out by the appellee, St. Paul is not seeking recovery from the tortfeasor's insurer, nor from the injured victim, but rather, directly from the tortfeasor, and only after the injured victim has been paid for all of her damages. Thus, in our view the answer turns on whether the rights sought to be enforced by St. Paul are those derived by virtue of a subrogation created by an agreement (the insurance policy) between the injured victim and St. Paul, or a right created by operation of law in favor of St. Paul and against the tort-feasor through the victim, or an independent right created by operation of law in favor of St. Paul against the tortfeasor.
If St. Paul's rights are derived merely through a conventional subrogation agreement, the release of the tortfeasor by its insured (Moncrief) would defeat the right of subrogation because at the time the uninsured motorist carrier made payment to the insured, the insured had no rights against his former debtor (the tortfeasor) to subrogate because he had already disposed of them through execution of the release. Pace v. Cage, 419 So.2d 443 (La. 1982). In contrast, if St. Paul's right is derived through the operation of law, it is either a direct right of recovery from the tortfeasor independent of the injured victim's right of recovery or a legal subrogation (as opposed to a conventional subrogation) exercisable through the victim. Where the right is derived by operation of law the release of the tortfeasor by the victim does not necessarily bar St. Paul's right of recovery once it has made payment to the victim.
The Supreme Court, in Bond v. Commercial Union Assurance Co., 407 So.2d 401 (La.1981), at page 408, said:
Thus, the Bond case involved the enforcement of a conventional subrogation created by the insuring contract or a legal subrogation created by virtue of an in solido obligation and not the exercise of an independent right created by operation of law.
Here St. Paul sought to proceed on its third party petition against the tortfeasor alone and only after the injured victim had been fully compensated for her injuries. Additionally, the rights it seeks to exercise are those granted by LSA-R.S. 22:1406(D)(4) and/or its subrogation rights obtained by operation of law under the provisions of the Civil Code, i.e., old Civil Code article 2161(3) or new Civil Code articles 1829(3) and 1804, by virtue of its in solido obligation with the tortfeasor and not solely the conventional subrogation rights it may have been entitled to under the terms of its policies.
As we interpret the rights granted by LSA-R.S. 22:1406(D)(4) St. Paul has a direct
Moreover, no inequities result from such a construction because the injured victim is entitled to recover by preference over the insurance carrier until full compensation is received. (See footnote (2) in quotation from Bond case, supra.) Additionally, it puts the burden of the tort on the tortfeasor where, under our general tort law, it is imposed.
Thus, the release of the tortfeasor by the injured victim served only to release the preferential claim of the injured victim against the tortfeasor and her insurer and had no effect on the rights of St. Paul to seek recovery from the tortfeasor for payments made to the injured victim on its behalf.
Since the obligation of the tortfeasor and of St. Paul is in solido,
Accordingly, the judgment of the trial court is affirmed. All costs are to be borne by the appellant.
and in Hoefly v. Government Employees Insurance Company, 418 So.2d 575 (La.1982) the Supreme Court said, at page 576:
and at page 578 said:
Also, at page 580, it further stated:
Thus, through the legal concept of in solido liability the Supreme Court, in essence, has equated the statutorily created reimbursement rights of the uninsured or underinsured motorist insurance carrier to reimbursement from the tortfeasor to contribution between co-tortfeasors, except that the victim must be totally satisfied before the insurance carrier can exercise the contribution rights.