Court Opinion

ID: 9748805
Source: CourtListenerOpinion
Date Created: 2023-08-27 16:13:34.899331+00
Date Added: 2024-06-11T07:25:39.586495
License: Public Domain

McEWEN, Judge,
dissenting:
The author of the lead opinion has, in his usual manner, provided an insightful analysis of the arguments presented in this appeal, and has, as well, expressed his view in a most persuasive fashion. Thus it is that I am most reluctant to differ. Nonetheless, I am compelled to this dissent because I find myself in disagreement with both the result achieved by the lead opinion and with its characterization of the issues raised as
“first, whether appellant may pursue a garnishment action for damages which exceed the amount of the fully satisfied judgment and second, whether by subrogating her right to pursue a bad-faith claim to Erie, she is precluded from pursuing the same.”
The reflection I here relate commences with the fact that nowhere in the record of this case was I able to discern a “fully satisfied judgment”. Rather, the $75,000 judgment entered on the docket on July 13,1987, was reduced to $50,000 on the docket on April 26, 1988, as a result of the payment of $25,000 to appellant by State Auto. While appellant has received $50,000 in underinsured benefits from her insurer, Erie, a collateral source, the judgment debtor, State Auto’s insured, cannot claim the benefit of the payment made to appellant by Erie as Erie is not a party to this action and is *204not a tortfeasor.1 Simply put, neither Beane nor his insurer, State Auto, can claim to be third party beneficiaries of the policy appellant purchased from Erie. To otherwise conclude would be to afford an arsonist, in an action against him by the victim homeowner, the defense of a fully satisfied judgment in a prior action between the homeowner and his or her insurer. Neither Beane, nor his insurer, nor the hypothetical arsonist can plausibly claim to be third party beneficiaries. See: Shockley v. Harleysville Mutual Ins., 381 Pa.Super. 287, 293, 553 A.2d 973, 976 (1988), allo. denied, 526 Pa. 638, 584 A.2d 320 (1990).
In such a situation, as here, the underinsurer who has paid the damages occasioned by the tortfeasor has a claim in subrogation against any monies subsequently recovered by its insured from the tortfeasor. If State Auto were to tender $50,000 plus interest and costs to appellant, appellant would be required to mark the judgment against Beane satisfied and Erie, pursuant to the contractual provisions of both the policy of insurance and the release and agreement, would be subrogated up to the full amount of the payments it had made, minus “its pro rata share of attorney’s fees and expenses.... ”
Nor can I agree with the suggestion of the lead opinion that appellant has “subrogated her right to pursue a bad faith claim to Erie”. The terms “subrogation” and “assignment” are not, in my view,' interchangeable. Rather the two terms refer to separate and distinct legal transactions. One “subrogates” a claim and “assigns” a right.
Appellant agreed, in the release and agreement executed by Erie and appellant in connection with the settlement of her underinsured claim, to protect the subrogation rights of Erie, and Erie agreed to advance the necessary costs. Nowhere in the agreement is there language to suggest that appellant has *205assigned her cause of action to Erie. The agreement contains a simple promise to repay, in recognition of Erie’s contractual and equitable subrogation rights, up to $50,000 in underinsured benefits paid to appellant by Erie, less Erie’s pro rata share of attorney’s fees and expenses, if appellant should obtain a verdict.
Erie, by virtue of the release and agreement as well as considerations of equity, was “entitled to receive under the equitable doctrine of subrogation only what is actually paid on appellant’s behalf, less a reasonable attorney’s fee and a proportionate share of costs.” Allstate Insurance Company v. Clarke, 364 Pa.Super. 196, 205, 527 A.2d 1021, 1026 (1987) quoting Associated Hospital Service v. Pustilnik, 497 Pa. 221, 227, 439 A.2d 1149, 1151-52 (1981) (emphasis in original). The release and agreement executed by appellant and Erie, in recognition of these well-settled principles, provided inter alia:
“that Erie has agreed to advance any out-of-pocket expenses reasonably necessary to prosecute the bad faith excess action against State Auto and if said action is successful Erie has agreed to pay its pro rata share of attorneys fees and expenses as per the contingent fee agreement entered into by Angina and Rovner P.C. and [appellant], a copy of which is attached.”
Thus, by virtue of execution of the agreement, Erie bound itself to advance the costs and to pay a pro rata share of the attorney’s fees and expenses incurred by appellant in the bad faith action. See: Furia v. Philadelphia, 180 Pa.Super. 50, 56, 118 A.2d 236, 239 (1955). Cf. Allstate Insurance Co. v. Clarke, supra 364 Pa.Super. at 206, 527 A.2d at 1026. See also: Assoc. Hospital Service v. Pustilnik, supra 497 Pa. at 229, 439 A.2d at 1153.
While not dispositive of the issue on appeal, it is clear that appellant, who was injured on August 25, 1985, and received a total of $42,250 from the $25,000 paid by State Auto on April 26, 1988, and the $50,000 paid by Erie in February of 1988, has not been “made whole” — she has not received the full amount of the remitted verdict because she has not received *206the interest required by law to be paid on the outstanding judgment. However, regardless of the amount received by appellant from her underinsurer, I am compelled by my interpretation of decades of Pennsylvania jurisprudence on the collateral source doctrine to reject the notion that appellant, simply because she had the foresight to purchase $100,000 in underinsured motorist protection, is somehow barred from proceeding with this bad faith action.
The record reveals that the trial court repeatedly denied the motions filed by appellee wherein appellee alleged that it was entitled to judgment in its favor since “even if it was guilty of bad faith in failing to tender its policy limit, [appellant] is still not entitled to recover any judgment against it under a theory of unjust enrichment. [Appellee] cites Rossi v. State Farm Auto Insurance Company, 318 Pa.Super. 386, 465 A.2d 8 (1983), for the proposition that an injured party cannot recover twice for the same injury.”
The trial court properly rejected this argument as meritless (1) when it denied appellee’s first motion for summary judgment, (2) again, when it denied appellee’s motion for a compulsory non-suit, and (3) again when it denied appellee’s second motion for summary judgment. The court ultimately reversed its position on February 25,1991, in response to a motion for a rule to show cause why the judgment should not be marked satisfied based solely upon the following reasoning:
State Auto has repeatedly objected to this proceeding; thus far to no avail. A trial was held on the garnishment cause of action which resulted in a hung jury. During the course of that trial, we took in camera testimony from representatives of Erie Insurance Exchange in which they stated their objection to this garnishment proceeding and expressed the legal view that, because the plaintiff has been paid the amount of the underlying verdict and has subrogated her rights to her own underinsured motorist carrier, which carrier has indicated that it does not intend to proceed with the collection of the debt owed it, the within garnishment action should be dismissed. We now agree.
*207This is a garnishment action seeking to collect the amount of the verdict in the underlying cause of action. By the same token, it is an attempt by the plaintiff to garnish amounts from State Auto Mutual Insurance Company which have already been paid by her own underinsured motorist carrier, under circumstances where that carrier, subrogated to her right of recovery, objects.1
It must be emphasized that Erie did not intervene in this action and is without standing to “object”. If Erie had “objected” to this bad faith action at the time it tendered the $50,000 in underinsured benefits to appellant, it could have required appellant to assign all of her rights against Beane and State Auto to it. Erie did not do so. Rather, it bound itself by the terms of the agreement to “advance any out-of-pocket expenses necessary to prosecute the bad faith excess action against State Auto.” Erie may not now seek to preclude appellant from bringing this action to recover those sums which Erie itself had agreed were rightfully due her. Erie can, of course, assert its subrogation rights if appellant is successful in the bad faith excess action.2
Appellee’s unjust enrichment argument was, in my view, properly rejected by the trial court in its order of August 25, 1989, when the eminent Judge Edgar B. Bayley denied appellee’s first motion for summary judgment, and opined:
We agree with plaintiff that her recovery of $50,000 from her underinsurance carrier was from a collateral source and is not relevant in these proceedings. See, Boudwin v. Yellow Cab Co., 410 Pa. 31 [188 A.2d 259] (1963). Furthermore, plaintiff in this case is not seeking to recover damages against the garnishee for her personal injuries. She is seeking to recover damages for the alleged wrong that she was subjected to as a result of the garnishee’s bad faith. The measure of those damages is the difference between State Auto’s policy limit and the judgment against Beane. *208The affect that any verdict plaintiff may recover has on the $50,000 paid to her by Erie, is between plaintiff and Erie, not plaintiff and State Auto. State Auto is not insulated from a bad faith claim based upon plaintiffs insuring herself for the risk of being injured by an underinsured motorist.
The trial court changed it position and granted the motion filed by appellee after the first trial resulted in a hung jury presumably by reason of the testimony, taken in camera and not admitted into evidence, regarding Erie’s decision not to pursue the bad faith action and, hence, its subrogation interest. Whether appellant will obtain a windfall as a result of subsequent conduct by her insurer is not relevant to resolution of the issue of standing to pursue this bad faith action.
It is for these reasons that I differ with such jurisprudential scholars as my colleagues who have otherwise written, and proceed to these certain conclusions of dissent. The payment to appellant by Erie of $50,000 in underinsured motorist benefits has not resulted in the judgment against Beane being fully satisfied. Nor can George Beane or State Auto demand that the judgment against Beane be marked satisfied, as they have not tendered the $50,000 plus interest outstanding on the judgment. Payment of $50,000 by Erie, a collateral source, would be irrelevant to an action to execute on the judgment, just as it is irrelevant in the instant case. Erie is the only entity which can raise the issue of a windfall to appellant, via an assertion of its subrogation rights, if they have not been waived by Erie.
[W]hen an individual who has been indemnified for a loss subsequently recovers for the same loss from a third party, equity compels that the indemnifying party be restored that which he paid the injured party; thereby placing the cost of the injury upon the party causing the harm while preventing the injured party from profiting a “double recovery” at the indemnifying party’s expense. However, as the subrogee stands in the precise position of the subrogor the subrogee should be limited to recovering in subrogation the amount received by the subrogor relative to the claim paid *209by the subrogee, for equity will not allow the subrogee’s claim to be placed ahead of the subrogor’s.
Allstate Ins. Co. v. Clarke, supra 364 Pa.Super. at 201-02, 527 A.2d at 1024 (emphasis supplied).
Thus it is that I dissent.

. The applicable rule is that “the satisfaction of a judgment recovered against the tortfeasor bars a later suit against a second tortfeasor for the same injury. See: Hilbert v. Roth, 395 Pa. 270, 149 A.2d 648 (1959).” Brandt v. Eagle, 412 Pa.Super. 171, 183, 602 A.2d 1364, 1370 (1992) (Concurring Opinion by Wieand, J.) (emphasis supplied). In the instant case, of course, the judgment against Beane has not been marked satisfied and Erie is not a tortfeasor.

To our knowledge, this case is one of first impression.

. Erie may have waived its subrogation rights — both contractual and equitable — thus entitling appellant to retain the entire amount of the verdict eventually recovered in this action for State Auto.