Opinion ID: 1752918
Heading Depth: 1
Heading Rank: 3

Heading: nugents' policy arguments for joinder

Text: The Nugents, however, suggest that this Court should not follow the holding in Sago and its progeny because it is contrary to the public policy of Missouri. Specifically, the Nugents argue that by not permitting the joinder of underinsured motorist carriers in these types of lawsuits, we are (1) requiring multiple lawsuits, (2) discouraging settlements, (3) requiring discovery to be duplicated, and (4) hindering the resolution of claims. It should be noted, however, that unambiguous insurance policies will be enforced as written absent a contrary public policy consideration or statute. Rodriguez v. General Acc. Ins. Co., 808 S.W.2d 379, 382 (Mo. banc 1991).
First, the Nugents argue that not allowing them to join American Family in the underlying suit would give rise to the multiplicity of suits envisioned by the court in State v. Craig, 364 S.W.2d 343 (Mo.App. 1963). The Nugents are concerned that even if they obtained a judgment against the tort-feasor, they still will be required to retry the issues of liability and damages against their underinsured motorist carrier. This is not a problem because of the principle of estoppel. See Wells v. Hartford Accident and Indemnity Co., 459 S.W.2d 253, 259 (Mo. banc 1970); Sago, 827 S.W.2d at 756. In Wells , this Court held that an uninsured motorist carrier was estopped from relitigating issues necessarily decided in an action brought by its insured against an uninsured motorist if the carrier had been given notice and an opportunity to intervene and defend. Although Wells involved an uninsured motorist provision, its rationale holds equally true in an underinsured motorist case. Sago, 827 S.W.2d at 756. The Nugents can give American Family notice of the litigation and afford it an opportunity to intervene and defend. This concept is sometimes referred to as vouching in. If notice is given and American Family chooses not to intervene, it will be bound by the resulting judgment as to liability and damages. This alleviates any concern regarding multiplicity of lawsuits.
The Nugents also argue that they should be permitted to join American Family in the underlying action to promote a settlement with American Family. However, an underinsured motorist carrier's motive for settlement is the same whether or not it is a party to the underlying action. If the carrier believes that the plaintiff is legally entitled to recover and that damages will be in excess of the defendant's liability coverage, then the underinsured motorist carrier will consider settlement as an option to minimize its potential liability. While it is true that if the underinsured motorist carrier follows a short-sighted policy of settling only when it is on the courthouse steps, not allowing it to be joined as a party in the underlying action may falsely deter the carrier from seriously considering settlement at this stage. However, the carrier's potential liability is the same regardless of whether it is a party to the underlying action, and the insurer has an obligation to act in good faith toward its own insured with regard to any settlement offer. See Shafer v. Auto. Club Inter-Ins. Exchange, 778 S.W.2d 395 (Mo.App.1989). If the underinsured carrier is realistic in its evaluation of a claim, not being a party to the underlying action should not be a factor in settlement. Plus, this is not reason enough to rewrite an insurance contract to join a party whose liability has not matured based on the language in the contract. The Nugents also claim that the provisions relating to settlement in American Family's policy inhibit their ability to settle with the tort-feasor. The Nugents allege the policy provides that they cannot (1) settle for less than the full amount of the tort-feasor's policy and still recover under their underinsured motorist provision, or (2) settle without the consent of American Family. This argument at least implicitly asks us to determine the enforceability of contractual provisions that are not at issue in this case. We are unwilling to consider these issues at this time.
The Nugents also contend that if the underlying lawsuit is settled, they will be required to duplicate all of the discovery when suing American Family. They argue that American Family will not be bound by any of the previous discovery because it was not a party to the underlying lawsuit. The scenario painted by the Nugents assumes that the settlement agreement is reached on the courthouse steps after all discovery has been completed. This is a limited situation that does not justify adding a party whose liability has not matured. In the final analysis, discovery may need to be repeated in some suits against underinsured motorist carriers. But we are unwilling to rewrite a contractual provision based on this fact. It would be far more egregious to force insurance companies to defend lawsuits where their liability has not matured than to require plaintiffs to occasionally duplicate discovery efforts. Moreover, if the insurer is vouched in so as to be bound by the underlying judgment, it would be a lesser step to conclude that it is bound by any discovery in which it could have participated. As with the previous issue, however, this issue is not before us today, and we decline to consider it at this time.
Next, the Nugents contend that American Family should be joined so that their claims can be resolved expeditiously. They argue that if we do not allow underinsured motorist carriers to be sued until the underlying lawsuit has been resolved in excess of all policy limits, lawsuits against underinsured motorist carriers will not be filed until years after the accident occurred. This is a choice that the insurance companies make when they draft their underinsured motorist provisions. If the carrier is concerned about delays, it may intervene in the underlying lawsuit. But we are unwilling to allow all plaintiffs with underinsured motorist coverage to join their carrier in the underlying action so that a few legitimate but premature claims can be resolved more expediently. Such an interpretation would require us to rewrite insurance contracts and would be an unfair burden on an underinsured motorist carrier whose liability has not matured.