Court Opinion

ID: 9610252
Source: CourtListenerOpinion
Date Created: 2023-08-22 03:38:56.06861+00
Date Added: 2024-06-11T18:02:57.930042
License: Public Domain

Judge GREENE
concurring.
I disagree with the majority’s holding that the facts of this case are not materially different from the facts in Silvers v. Horace Mann Ins. Co., 90 N.C. App. 1, 367 S.E. 2d 372 (1988). First, I note that unlike Silvers, in the present case the release given by the insured to the underinsured tortfeasor contained no reservation of a right of action against the insurer. However, as the insurer does not raise on appeal the lack of a reservation as a bar to the insured’s action, the issue of whether such a reservation was required need not be addressed.
Second, unlike Silvers, in the present case Grain Dealers had a right to be subrogated to the insured’s right of action once it made payment to the insured. See Milwaukee Ins. Co. v. McLean Trucking Co., 256 N.C. 721, 726, 125 S.E. 2d 25, 29 (1962). In Silvers, the insurer specifically waived this right to be subrogated in the policy. In the present case, the insured destroyed Grain Dealers’ right to be subrogated by settling with the tortfeasor and executing a release.
However, I do agree with the majority that the insurer’s loss of its right to be subrogated does not itself bar the insured’s claim for underinsurance benefits. In many instances, pursuit of a subrogation claim against an underinsured tortfeasor is futile because of the financial status of the tortfeasor. 2 A. Widiss, Uninsured and Underinsured Motorist Insurance Sec. 43.5 at 122 (2d ed. 1987). A technical and illusory “loss” of subrogation rights should not result in the forfeiture of underinsurance benefits. See Southeastern Fidelity Ins. Co. v. Earnest, 395 So. 2d 230, 231 (Fla. 3d Dist. Ct. App. 1981); see also Prudential Property and Cas. Ins. Co. v. Nayerahamadi, 593 F. Supp. 216 (E.D. Pa. 1984).
Therefore, the inquiry becomes whether the destruction of the insurer’s right to be subrogated prejudiced the insurer to the extent that it may avoid partial or complete payment on the policy. Insurance contract provisions should be construed in accord with their purposes and with the reasonable expectations of the parties. See Great American Ins. Co. v. Tate Const. Co., 303 *650N.C. 387, 390, 279 S.E. 2d 769, 771 (1981). The Great American Court held that an insured’s breach of a policy provision requiring notice of an accident did not relieve the insurer of its obligations under the policy unless violation of the notice provision operated to materially prejudice the insurer. Id. at 390, 279 S.E. 2d at 771.
Accordingly, in keeping with the Supreme Court’s opinion in Great American, I would remand this case and place the burden on the insurer to prove that it has been materially prejudiced by the loss of its subrogation rights. See id. at 398, 279 S.E. 2d at 775. Among the relevant factors that may be considered in deciding whether the insurer has been materially prejudiced are the assets of the underinsured tortfeasor, the potential for the under-insured tortfeasor to obtain assets in the future, and the present and future earning capacity of the tortfeasor. Compare Southeastern Fidelity, 395 So. 2d at 330-31 (insurer not prejudiced by release of tortfeasor where she was completely judgment proof) with General Accident Ins. Co. v. Taplis, 493 So. 2d 32 (Fla. 5th Dist. Ct. App. 1986) (insurer prejudiced by release of tortfeasor who was healthy twenty-three-year-old man earning $32,000 per year with unrestricted future earning capability).