Court Opinion

ID: 5758802
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:10:56.473485+00
Date Added: 2024-06-11T08:41:29.564598
License: Public Domain

Kavanagh, J. (dissenting).
I do not agree with the majority’s position that, prior to gaining access to supplementary uninsured/underinsured motorist (hereinafter SUM) coverage, an insured must fully exhaust the applicable policy limits of every tortfeasor’s insurance policy who was involved in the accident or, in the alternative, once it has fully exhausted the applicable policy limits of one tortfeasor, it must obtain written permission from the SUM carrier to enter into any settlement with any other tortfeasor that is less than the policy limits. For this reason, I respectfully dissent.
When respondent stopped her vehicle as a result of a car accident that occurred in front of her, she was struck in the rear by the first tortfeasor’s vehicle. The second tortfeasor’s vehicle then struck the first tortfeasor’s vehicle in the rear, causing it to strike respondent’s vehicle a second time. As a result, respondent commenced an action against both tortfeasors for injuries she sustained as a result of the accident. In the discussions that ensued, the settlement offer received from the second tortfeasor was drastically lower than that of the first tortfeasor, reflecting the relative level of culpability of each party.
Paragraph 9 of respondent’s SUM policy—entitled “Exhaustion Required”—provides that “[e]xcept as provided in [paragraph] 10, we will pay under this SUM coverage only after the limits of liability have been used up under all motor vehicle bodily injury liability insurance policies or bonds applicable at the time of the accident in regard to any one person who may be *503legally liable for the bodily injury sustained by [respondent]” (emphasis added). It is conceded that when respondent settled with the first tortfeasor, she exhausted all bodily injury insurance policies with respect to that tortfeasor and, per the literal reading of this provision of her policy, she was not required to exhaust the second tortfeasor’s bodily injury policies in order to make a SUM claim under her policy.
Paragraph 10 provides the manner in which respondent was able to settle with the first tortfeasor—it allowed respondent to sign a release with a tortfeasor if she provided petitioner with written notice of her intent to settle for the full available limit of the first tortfeasor’s policy and if, after 30 days, petitioner choose not to advance the settlement amount to respondent and proceed against the first tortfeasor. Respondent provided such notice to petitioner and petitioner did not respond. Once this notice was provided and the requisite time period expired, respondent was within her rights under her policy with petitioner to settle for the full amount of that tortfeasor’s insurance policy and provide a release to that tortfeasor for any further liability. Moreover, to gain access to the SUM policy, she was not then required, once this had occurred, to provide the SUM carrier with written notice of her intent to settle with the second tortfeasor even if for less than the policy limits.
The majority’s reference to the last sentence of paragraph 10 is, in my view, misplaced. While it states that “[a]n insured shall not otherwise settle with any negligent party, without our written consent, such that our rights would be impaired,” this does not apply to the second tortfeasor herein. This sentence— found in the “Release or Advance” paragraph—applies to a party seeking in the first instance to settle for the full limits of a liability policy and requires that the settlement must be done in accordance with the aforementioned provisions of paragraph 10. However, once those conditions have been met, and a settlement has been reached with respect to the full limits of one tortfeasor’s policy, paragraph 10, and all of its terms, no longer applies to restrict a party’s ability to settle with a second tortfeasor. Here, the exhaustion of the first tortfeasor’s policy triggered respondent’s SUM coverage and the settlement reached with the second tortfeasor did not render the SUM coverage unavailable (see S’Dao v National Grange Mut. Ins. Co., 87 NY2d 853, 854-855 [1995]; Matter of Liberty Mut. Ins. Co. v Doherty, 13 AD3d 629, 630 [2004]; see also Matter of Hertz Claim Mgt. Corp. v Kulakowich, 53 AD3d 578, 579 [2008]).
To require otherwise would result in a circumstance where an insured who has sued multiple tortfeasors would only be al*504lowed to pursue SUM benefits after he or she had fully exhausted each tortfeasor’s insurance policy—or, after fully exhausting one of the tortfeasor’s policies, had obtained written permission from the SUM carrier to settle for less than the policy limits as to all of the remaining tortfeasors. Where there are multiple tortfeasors and the level of legal responsibility among the various tortfeasors is so dramatically different, it would be virtually impossible to obtain settlements that completely exhaust each applicable policy. In such a circumstance, the SUM carrier would have little or no incentive to give its consent to such a settlement. By the majority’s view, the insured would be forced to fully litigate any claims it might have against less culpable tortfeasors in order to preserve its rights to SUM benefits. Such a finding is clearly at odds with that rendered in S’Dao v National Grange Mut. Ins. Co. (87 NY2d at 854-855). There, the plaintiff was injured in a two-car accident and reached settlements with two carriers and did not exhaust the coverage of one of the vehicles involved. The SUM coverage was found to be available even though the limits of the policies held by all of the tortfeasors had not been exhausted.*
The majority holds that, once a plaintiff has exhausted the personal injury policy limits as to any one tortfeasor, he or she may access his or her SUM policy as long as the plaintiff has not settled or in any way compromised the SUM carrier’s claim against any other tortfeasor. Per such a holding, a plaintiff would have no incentive to ever settle for less than the policy limit with any secondary tortfeasor absent the express consent of the SUM carrier. What is left unanswered by the majority’s position is the question of what happens after the SUM claim has been resolved—whether a plaintiff must maintain his or her position of no compromise against any and all tortfeasors regardless of their culpability in order to ensure that he or she has not in any way compromised the award that it has already received from the SUM carrier. This position, in my view, is dramatically at odds with the longstanding goal of creating an environment that is designed to result in responsible settlements of this type of litigation.
The effect that this has is to discourage settlements in this *505type of litigation and to invite—indeed command—a plaintiff s counsel to fully litigate any and all personal injury claims that it might have against any and all tortfeasors. Clearly, this is not the result that was intended by the Legislature when it enacted these provisions and, in my view, it constitutes a waste of precious judicial resources.
Moreover, such a result is clearly at odds with the overriding purpose of SUM coverage, which, as stated in the instant SUM policy, is to provide compensatory damages that an insured is legally entitled to recover from the owner or operator of an underinsured motor vehicle that, as a result of his or her negligence, has caused the insured bodily injury. Here, the party primarily responsible for respondent’s injuries was underinsured. SUM coverage is specifically designed to address such a circumstance and to provide an injured party with access to coverage that will insure that he or she is properly compensated for the injuries that he or she sustained as a result of such other party’s negligence. The purpose of such coverage would clearly be frustrated when, as a practical matter, access to a SUM policy could only be obtained when the policy limits of each and every tortfeasor involved in the accident has been fully exhausted. In addition, such a result is inherently inconsistent with the purpose of the settlement mechanism erected within the release and advance provisions of the SUM policy.
Moreover, the majority’s position is, in my view, contrary to the stated purpose of Regulation 35-D (see 11 NYCRR 60-2.0 et seq.). Regulation 35-D was promulgated in response to preregulation SUM endorsements that provided for “different methods of claim settlement and arbitration” that would “create confusion in the process and, as a result, diminish the utility of SUM coverage” (11 NYCRR 60-2.0 [b] [emphasis added]). The regulation was enacted to establish “a standard form for SUM coverage, in order to eliminate ambiguity, minimize confusion and maximize its utility” (11 NYCRR 60-2.0 [c] [emphasis added]). If the majority’s view accurately states the law of this state, it is difficult to imagine how, in situations involving multiple tortfeasors, SUM benefits could ever be effectively obtained and, as a result, such a view fails to comport with the regulation’s stated purpose.
Finally, respondent should not, in my view, be penalized because she had the misfortune to be involved in an accident that involved more than one wrongdoer. Had she only brought suit against the primary tortfeasor and settled against him under precisely the same circumstances while forgoing her right to sue others that were involved in this accident, respondent *506would clearly have been entitled to make this claim under her SUM policy. As a result, I would reverse and deny petitioner’s application to stay arbitration.
Ordered that the order is affirmed, without costs.

 While this matter was litigated prior to the promulgation of Regulation 35-D (see 11 NYCRR 60-2.0 et seq.), the Court of Appeals, by footnote, took “note that [Regulation 60-2.3 (e) (prescribed Supplementary Uninsured Motorists Endorsement, Conditions para [9]) provides that the condition precedent to payment is satisfied when the limits of liability ‘in regard to any one person who may be legally liable for the bodily injury sustained by the insured’ . . . are exhausted” (S’Dao v National Grange Mut. Ins. Co., 87 NY2d at 854 n).