Court Opinion

ID: 9537536
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:19:41.409881+00
Date Added: 2024-06-11T14:56:46.052746
License: Public Domain

STEWART, Justice
(concurring):
I concur in the opinion of Justice Mau-ghan and add the following comments in explanation of my position.
The Utah Automobile No-Fault Insurance Act, § 31 — 41—1, et seq., U.C.A. (1953), as amended, is neither clear nor specific with respect to the relative rights of a no-fault insurer in an insured’s recovery from a third-party tortfeasor. Accordingly, it is our obligation to construe the Act to effectuate the purposes set out in § 31-41-2. That provision, in part, provides:
The intention of the legislature is hereby to possibly stabilize, if not effectuate certain savings in, the rising costs of automobile accident insurance and to effectuate a more efficient, equitable method of handling the greater bulk of the personal injury claims that arise out of automobile accidents, these being those not involving great amounts of damages.
Contrary to the view of the dissenting opinion in this case, the result reached by a majority of the Court will not result in double recovery to an injured person. It will, on the other hand, result in greater efficiency, accuracy and fairness in determining the relative rights of the interested parties. Also, it will have the beneficial effect of reducing the possibilities for controversy and litigation between no-fault insurers and their insureds.
Pursuant to the majority opinion, a no-fault insured in an action against a tort-feasor may not recover from the tortfeasor any sums already paid by the no-fault insurer. Thus, double recovery by an insured is in fact barred. The no-fault insurer, by being subrogated to the rights of the insured as provided by § 31-41-11, has a right to collect directly from the tort-feasor’s insurer (whether or not the insured party has filed a tort claim) by way of arbitration pursuant to § 31 — 41-11. If the injured party files an action against the third-party tortfeasor which results in a judgment for the insured, the judgment would be given dispositive effect on the issue of fault and the relative liabilities of the insurance companies in the arbitration proceedings, for it is in the arbitration proceedings that the no-fault insurer is subro-gated to the rights of the insured. Because the insurance company stands in privity with its insured, principles of res judicata and collateral estoppel dictate as much. In cases which do not go to judgment because of a settlement, the no-fault insurer and the tortfeasor’s insurer may be able to use the settlement agreement and amount as a guide in settling liability for the no-fault payments. If no voluntary settlement is recorded, the arbitration apparatus may be used to settle the dispute. No doubt the insurance companies will be able in most *1204cases to settle the accounts between themselves without resort to formal proceedings. This procedure comports with the language and intent of § 31-41-11.
On the other hand, a construction of the Act which subrogates the insurer to the rights of the insured in a judicial proceeding would render meaningless the arbitration provisions of the Act, lead to insuperable practical difficulties in making an equitable allocation between the insurance company and its insured, and increased litigation and its attendant costs.
In Transamerica Insurance Co. v. Barnes, 29 Utah 2d 101, 505 P.2d 783 (1972), this Court held that an insurer’s claim under a right of subrogation to a portion of the proceeds from a settlement made by the insured with a third-party tortfeasor was a matter which had to be proved on a record with evidence showing that the item of damage sought to be recovered was in fact included in the settlement sum. The court stated that the insurer must:
. present proof which establishes that the damages covered by defendant’s settlement were the same or cover those for which defendant has already received indemnity from [insurer]; otherwise, the receipt of payment from the tort-feasor does not entitle the [insurer] to the return of the payments made by it. [29 Utah 2d at 106-07, 505 P.2d at 787.]
If the no-fault insurer were accorded a right of subrogation in amounts recovered in its insured’s tort action against a third-party tortfeasor, insuperable problems would arise. The most conspicuous problem would arise with respect to the settlements of an action by an insured against the tort-feasor and the allocation of the settlement among the insured and his no-fault insurer. Settlements are almost always compromises, and they are often negotiated on a lump-sum basis without particular damage items being dealt with individually. Reference to particular damage items may not be made in the course of settlement discussions, and if each particular damage item is discussed, the value, if any, accorded a particular damage item in the ultimate sum reached is often unascertainable. The problem is even more difficult when dealing with a general verdict because it is impossible to determine what damage factors are included in a general verdict. Because of the failure to segregate and identify damage items, subrogation may not be an effective remedy to prevent double recovery on the one hand, and to insure the victim the full value of his lawsuit on the other.
These difficulties are avoided if the personal injury protection payments made to the insured are not a recoverable damage item in an action by the insured against the tortfeasor — whether the action results in a settlement or a judgment.
The interpretation of the Act adopted by a majority of the Court has the further merit of avoiding serious problems with respect to legal representation of the insured and the insurance company. If the same counsel represents both parties in settlement negotiations, conflicts of interest may well arise in determining, for example, whether or not to settle a lawsuit or to press for a larger recovery by way of a jury verdict and, of course, run the risk of no recovery at all. On the other hand, if both the insurance company and the insured are to be represented by independent counsel in pressing the claim against the third-party tortfeasor, conflict in many cases is likely.
In sum, the most effective and least costly way of dealing with the relative rights of the insured and the no-fault insurer in a recovery from a third party is to require each party to pursue its own remedy. The insured may sue for all damages less the amount paid by the no-fault insurer. The no-fault insurer has a right to protect its interests in an arbitration proceeding if that be necessary. To prevent double recovery, the no-fault amounts are not recoverable by the victim either in a settlement or in a litigated judgment. This approach will have the effect of reducing litigation, attorney’s fees, and the cost of automobile accident insurance.