Opinion ID: 2507460
Heading Depth: 2
Heading Rank: 2

Heading: The district court properly granted summary judgment in favor of Appellants based on the common fund doctrine.

Text: North Pacific challenges the district courts decision to grant summary judgment in favor of Appellants as to the claim based on the common fund doctrine. North Pacific asserts that the common fund doctrine does not apply to the instant action because it did not consent to have Seiniger recover its subrogation claim and it was actively pursuing its own subrogation claim through arbitration. North Pacific further argues that Seiniger did not provide an actual benefit to North Pacific, making the common fund doctrine inapplicable. Under the common fund doctrine, when an insured hires an attorney in order to pursue a claim against a tortfeasor and the eventual settling of that claim results in the creation of a fund from which the insurer benefits, the insurer must pay a proportionate amount of the cost incurred in the creation of that fund. Wensman, 134 Idaho at 151, 997 P.2d at 612. The general rule behind the common fund doctrine is that the insured may retain out of the fund recovered from the wrongdoer . . . the costs and reasonable expenses incurred in the litigation, for it would be unjust to require him to incur expenses for the recovery of money for the benefit of the insurer, without being allowed to reimburse himself. Id. at 151-52, 997 P.2d at 612-13 (quoting Cedarholm v. State Farm, 81 Idaho 136, 142, 338 P.2d 93, 96 (1959)). Notice to the insurer is necessary before it is required to pay a proportionate share of the attorney fees in order to give the insurer the right to join the action and choose its own legal counsel, if it so elects. Wensman, at 152, 997 P.2d at 613. It is not necessary that the insurer consent to the representation by the insured because this would essentially eliminate the [common] fund doctrine by allowing insurance companies to refuse the service of the attorney . . . knowing they would ultimately collect [their subrogation claim] from any settlement without having to pay a proportionate share of the costs of that settlement. Id. In Boll, the insurer refused to have its interest represented by the insured's attorney. 140 Idaho at 337, 92 P.3d at 1084. This Court noted there had been some disagreement as to the holding in Wensman stemming from Justice Kidwells special concurrence, in which he stated `[t]he notice requirement would be worthless if after having been notified, the subrogee could not refuse the services it is being notified of.' Id. at 342, 92 P.3d 1081, 92 P.3d at 1089 (citing Wensman 134 Idaho at 153-54, 997 P.2d at 614-615 (Kidwell J. concurring)). However, in Boll the Court reaffirmed its earlier articulation of the common fund doctrine, concluding that application of the doctrine required notice and an actual benefit to the insurer, irrespective of the insurer's consent to the representation by the insured. Id. We decline to revisit the issue of whether the consent of the insurer is required to apply the common fund doctrine. Our previous cases, including Boll, have settled this issue. Although the circumstances surrounding this case are unique, we affirm the district court's decision to grant summary judgment based on the common fund doctrine. This case is unique because of the circumstances surrounding the settlement of North Pacific's subrogation claim. North Pacific placed Appellants on notice that it did not wish for Appellants to pursue its subrogation claim. However, Farm Bureau refused to settle Jennings's claim unless it also settled North Pacific's claim at the same time. Despite the fact that North Pacific did not participate in the mediation between Appellants and Farm Bureau and these parties manifestly lacked the authority to resolve North Pacific's claim, Farm Bureau issued a check to North Pacific in satisfaction of its subrogation claim. North Pacific accepted this benefit when it accepted the check from Farm Bureau without pursuing its claim by way of arbitration. Under the common fund doctrine, North Pacific must pay a proportionate share of Jennings's costs in obtaining the benefit. For guidance purposes, we make it clear that neither the tortfeasor's insurance company nor the insured possess the authority to insist that the insurer subrogation claim be included in a settlement. It may be convenient for a tortfeasor or the tortfeasor's insurance company to insist upon settling the insured's claim and the insurer's subrogation claim at the same time. However, convenience does not justify exclusion of the injured party's insurer from participation in the resolution of its claim. In cases such as this, the insurer that wishes to avoid application of the common fund doctrine in cases may do so by the simple act of refusing to accept the benefits of a settlement in which it did not participate. In this case, Farm Bureau should have brought North Pacific into the negotiations in order to settle Appellant's claim and North Pacific's subrogation claim at the same time. Failing that, North Pacific could have refused to accept the $5,000 check, and thus avoided application of the common fund doctrine. However, once North Pacific accepted the benefits of Appellants' efforts, it obligated itself to pay a proportionate amount of the attorney fees and costs associated with its recovery. Therefore, we affirm the district courts grant of summary judgment with respect to the common fund doctrine.