Opinion ID: 2351812
Heading Depth: 1
Heading Rank: 4

Heading: Collateral Estoppel Binding Effect of Judgment

Text: This Court has not previously addressed the binding effect of a judgment rendered against an uninsured/underinsured motorist vis-a-vis a prevailing tort plaintiff's uninsured/underinsured motor vehicle insurance carrier. Several courts from other jurisdictions, however, have had the opportunity to address an issue which is similar to the one presented in this appeal, i.e., whether an insurer is bound by a default judgment taken against a tortfeasor? [4] Those courts have concluded that the UM/UIM statutes do not mandate that an insurer be bound by a default judgment against the tortfeasor in all circumstances. Instead, those courts have held that the insurer will be bound by the default judgment only where the insurer had full notice and adequate opportunity to intervene and present any defenses and arguments necessary to protect its position. Champion Ins. Co. v. Denney, Ala.Supr., 555 So.2d 137, 139 (1989). In Champion, the insured did not comply with the policy's consent to sue clause. Id. at 137. The insured did, however, provide the carrier with a copy of the complaint filed against the tortfeasor. Id. The Alabama Supreme Court concluded that: The underlying purpose for including the consent to sue clause in the policy is to protect the insurance company from unknown or secret actions taken by the insured and the uninsured motorist. Once the insurer is placed on notice of the tort action and given the opportunity to intervene, this purpose is satisfied. Id. at 139. In Champion, the court held that the insurer was bound by the default judgment. In this case, the record reflects that, although State Farm was not a party to the arbitration, it received notice of the arbitrator's decision more than a month before the entry of judgment in Superior Court. Thus, State Farm had the opportunity to intervene in the proceedings between Dale and Sutch to protect its interests, once it was notified of the demand for payment of underinsurance benefits. State Farm elected not to do so. We find the ratio decidendi in Champion to be persuasive. We also find that Appleman's treatise on insurance law and practice is instructive on this issue: A judgment rendered against the uninsured motorist may be conclusive against the uninsured motorist insurer, particularly where it has been joined as a party, or has notice of the proceedings, or a right to defend, or intervene, which has elected not to do so. 8C APPLEMAN, INSURANCE LAW AND PRACTICE, § 5089.75, p. 372-73 (1981 and 1994 Supp.) (citations omitted). In this case, State Farm took no action to intervene. It had sufficient time to do so. This Court holds that the doctrine of collateral estoppel makes the judgment entered by the Superior Court, in favor of Sutch and against Dale, binding upon State Farm. Columbia Casualty Co. v. Playtex FP, Inc., Del.Supr., 584 A.2d 1214 (1991).