Opinion ID: 2464109
Heading Depth: 1
Heading Rank: 4

Heading: liability of sentry

Text: Appellants do not dispute that Hartford is entitled to enforce its statutory lien against Daves and recover the amount it paid in benefits to Daves, less its share of the costs of collection, from the settlement proceeds. However, Sentry asserts that Hartford has no cause of action against it for the statutory lien and, accordingly, that the trial court erred in directing a verdict for Hartford against Sentry. Whether or not Hartford can enforce its lien against Sentry is a question of first impression in this state. We hold that Hartford's lien is enforceable. Initially, Sentry contends that it is normal procedure for an insurer, in attempting to subrogate a claim, to file suit against the negligent party, not that party's insurer. Although this court has not addressed whether a suit against a wrongdoer's insurer is proper, other courts have allowed such actions. See Continental Cas. Co. v. Phoenix Constr. Co., 46 Cal.2d 423, 296 P.2d 801 (1956). While it may be the normal procedure for a subrogated insurer to file a subrogation claim against the wrongdoer, we see no reason, and appellants offer none, why an insurer cannot enforce its claim against the wrongdoer by an action against the wrongdoer's insurer. Sentry, citing Trinity Universal Ins. Co. v. State Farm Mutual Auto Ins. Co., 246 Ark. 1021, 441 S.W.2d 95 (1969), claims that Hartford's suit is a direct action, which may be brought only after obtaining a judgment against the insured under Ark. Code Ann. § 23-89-101 (1987). We disagree. Sentry cites dicta in Trinity for the proposition that Hartford cannot sue Sentry directly under section 23-89-101, which concerns subrogation of an injured person to the right of an insured and the right of the injured person to sue the insurer directly. The case at bar can easily be distinguished in that it involves an attempt by an insurer who has paid benefits to its insured, pursuant to section 23-89-202, to be reimbursed from settlement proceeds subsequently received by the insured in a settlement with a tortfeasor and her insurer under section 23-89-207. In sum, we find nothing in Trinity that prohibits Hartford from filing a direct action against Sentry pursuant to section 23-89-207. Finally, appellants argue that a statutory lien cannot benefit Hartford in a suit against Sentry when the proceeds have been paid over to Daves. Prior to the settlement between Sentry and Daves, Hartford repeatedly notified Sentry of its subrogation claim. Thereafter, Sentry, with full knowledge of Hartford's interest, paid Daves pursuant to the settlement, without notifying Hartford of the settlement or Daves' suit, and then excluded Hartford's name from the settlement check in exchange for Daves' agreement, prepared by Sentry, to indemnify Sentry for all claims Hartford may make against Sentry by virtue of the medical PIP and subrogation lien that Hartford is making in this case. Obviously, from the wording in its agreement, Sentry's manuevers were simply a well designed and calculated attempt to escape its acknowledged duty to Hartford. Under the circumstances, we hold that Sentry cannot legally or equitably ignore its responsibility to pay Hartford's lien even though it may have parted with the settlement proceeds through improvident payment to Daves.