Opinion ID: 1736759
Heading Depth: 1
Heading Rank: 3

Heading: Forfeiture of UIM Benefits by Accepting Less Than the Policy Limits

Text: Omni contends that Foreman's acceptance of a settlement from John in an amount less than the limits of John's liability coverage prevents her from recovering under Omni's UIM coverage. In State Farm Mutual Automobile Insurance Co. v. Scott, 707 So.2d 238 (Ala.Civ.App.1997), the Court of Civil Appeals held that an injured person who accepts from a tortfeasor driver's automobile liability insurer an amount that is less than the limits of the driver's coverage forgoes any right under Alabama's UIM statute to collect the shortfall, that is, the difference between the amount of the settlement and the amount of available coverage. However, Scott recognizes that acceptance of an amount less than the available coverage does not defeat the right of an injured person to recover any damages to which he or she might be entitled that are in excess of the tortfeasor's limits of coverage. In Scott, the Court of Civil Appeals recognized a split of authority among the courts that had considered the question and recognized that its holding was consistent with the majority view. Id., 707 So.2d at 243 n. 6. Omni acknowledges that Scott stands for a result contrary to that which it urges in this case. However, Omni maintains that this Court overruled Scott sub silentio in Knowles v. State Farm Mutual Automobile Insurance Co., 781 So.2d 211 (Ala. 2000). In Knowles, a plurality of this Court stated that the UIM carrier had no obligation where the plaintiff had accepted $32,500 from the tortfeasor's liability-insurance carrier in a setting where the liability limits under the tortfeasor's policy were $1 million. We choose to read the Knowles plurality opinion as consistent with Scott. Had the plaintiff in Knowles offered substantial evidence that his damages exceeded $1 million, and had this Court concluded that the UIM carrier had no obligation under those facts, then we would have to reconcile Knowles and Scott. However, because Knowles is so readily distinguishable from this case and from Scott, it is unnecessary for us to attempt to harmonize the rule announced in Scott. We find Scott to be a sound decision, and we agree with its reasoning. We therefore hold that Foreman did not forfeit UIM benefits when she accepted a settlement from John in an amount less than the limits of his liability coverage. The trial court properly declined to enter a JML on that basis.