Opinion ID: 1996492
Heading Depth: 3
Heading Rank: 3

Heading: Allstate's Consent and Subrogation Rights

Text: [¶ 38] Beal's UIM policy contains a no-consent-to-settlement clause, which reads: Allstate will not pay any damages an injured person is legally entitled to recover because of: 1. bodily injury... to any person who makes a settlement without our written consent. (Emphasis omitted.) The purpose of no-consent-to-settlement clauses is to protect the insurer's subrogation rights [7] against a party released through a settlement. Bazinet v. Concord Gen. Mut. Ins. Co., 513 A.2d 279, 282 (Me.1986); Wescott, 397 A.2d at 168. When an insurer consents to a settlement, it assumes the risk of losing its subrogation rights, and it cannot later deny a claim on the ground that its subrogation rights were prejudiced. Therefore, if Allstate had consented to or approved Beal's settlement, it could be precluded from denying Beal's claim pursuant to its no-consent-to-settlement clause. See 3 Widiss & Thomas, Uninsured and Underinsured Motorist Insurance § 34.1, at 172. [¶ 39] Failure to obtain Allstate's consent to settlement would not, however, necessarily eliminate Beal's opportunity to seek coverage pursuant to her UIM policy. See Greenvall, 1998 ME 204, ¶ 10, 715 A.2d at 954 (When the insurer's subrogation rights are unaffected by the settlement, courts may not permit [no-consent-to-settlement] clauses to defeat the claim of insureds.) (citing Bazinet, 513 A.2d at 282). If Allstate did not consent to the settlement, then Beal could still be entitled to recover UIM benefits unless Allstate could demonstrate prejudice as a result of the loss of subrogation rights from the insured's failure to obtain the insurer's consent before settling with the tortfeasor. Id. ¶¶ 11, 12, 715 A.2d at 954. By settling with and releasing Prosky through the high-low provision, Beal eliminated Allstate's capacity, as her UIM carrier, to seek recovery from Prosky through subrogation. See id. ¶ 11, 715 A.2d at 954. By itself, however, this would not prejudice Allstate's subrogation rights because Prosky may have limited or unreachable resources such that recovery through subrogation is not realistically available. See id. (citing Galinko v. Aetna Cas. & Sur. Co., 432 So.2d 179, 182 (Fla.Dist.Ct.App. 1983)). As we held in Greenvall, Allstate has the burden of demonstrating prejudice by providing evidence of Prosky's financial situation as it relates to Allstate's subrogation rights. See id. ¶¶ 12, 13, 715 A.2d at 954-55; see also Ouellette v. Me. Bonding & Cas. Co., 495 A.2d 1232, 1235 (Me.1985) (In general, proof of prejudice to an insurer is a question of fact.). [¶ 40] In this case, although Allstate was aware of the settlement, the summary judgment record does not reveal whether Allstate, in its role as Beal's UIM carrier, consented to or approved the settlement between Beal and Prosky. Similarly, the record is silent as to facts that would demonstrate whether Allstate's subrogation rights were prejudiced by Beal's settlement with Prosky. [8] If no consent to settlement was given, and Allstate can demonstrate on remand that Prosky had income or assets that could have been available for recovery by Allstate in a subrogation action against Prosky, then Allstate could demonstrate prejudice by violation of the no-consent-to-settlement clause. With prejudice demonstrated and the no-consent-to-settlement clause effective, any further recovery by Beal under the UIM policy would be barred. [¶ 41] In sum, on the issue of Beal's claim for UIM benefits, Allstate was not entitled to judgment as a matter of law; the court incorrectly concluded that Beal was no longer legally entitled to recover damages from Allstate after settling her claim against Prosky. There remain, however, genuine issues of material facts regarding whether Allstate consented to Beal's settlement with Prosky and whether Allstate's subrogation rights against Prosky were prejudiced by the settlement. We conclude, therefore, that the court erred when it entered a summary judgment in favor of Allstate with respect to Beal's UIM benefits. [9] The entry is: Judgment vacated in part. Remanded for further proceedings consistent with this opinion.