Court Opinion

ID: 4711501
Source: CourtListenerOpinion
Date Created: 2021-08-12 00:36:58.977528+00
Date Added: 2024-06-11T08:07:09.007676
License: Public Domain

Madsen, J.
(concurring) — Although I agree with the majority, I do not agree with its explanation as to why the exception to cost-sharing in Paragraph d retains validity. The exception appears in the insurance contract in the third sentence of Paragraph d, under the heading “ ‘Our Right to Recover our Payments,’ ” and provides that State Farm will not pay its share of legal expenses for any amounts recovered or recoverable by State Farm from any other insurer under an inter-insurer arbitration agreement. Majority at 418-19. The majority reasons that this language *437retains meaning in cases like Leader Nat’l Ins. Co. v. Torres, 113 Wn.2d 366, 779 P.2d 722 (1989), and in cases where an insurer seeks to recover on its own. Majority at 424 n.15.
I disagree. In Leader, the insurance company’s right to subrogation concerned $10,000 it had paid in personal injury protection (PIP) benefits. The insured’s settlement involved claims for medical costs, lost wages and general damages; however, the insured refused to seek recovery for the $10,000 which its insurance company had paid in PIP benefits. The court held in Leader that the insurance company was not foreclosed by a release signed by the tortfeasor and its insured from pursuing a subrogation right to recover the PIP payments where the tortfeasor and the insured both knew the insurance company did not agree to the settlement, and the tortfeasor had additional assets. Under such facts, the insurance company would expend its own resources to recover the amount of PIP insurance paid from the tortfeasor. No issue of cost-sharing arises at all because the insured did not recover the amount representing the PIP payments and did not incur costs for doing so. The same is true where the insurer otherwise chooses to seek recovery on its own because the insured declines to pursue a recovery.
I am satisfied, nevertheless, with the majority’s analysis in general even if the result is that the exception concerning amounts recovered or recoverable under an inter-insurer arbitration agreement has little or no application.21 This is because if the exception is given effect as State Farm urges it should be, an insurer could avoid its promise to share costs simply by virtue of the inter-company arbitration agreement. For example, under the facts in Mahler’s case, State Farm proceeded under the inter-company arbitration agreement only after the insured settled with the tortfeasor. The arbitration panel’s decision *438that American States (the tortfeasor’s insurance company) was liable for the $4,173.32 of PIP coverage State Farm had paid did not result in an additional payment of that amount, but instead effectively determined that of the settlement amount already received by Mahler, $4,173.32 represented the amount of liability from American States. As the majority notes, however, Mahler’s attorney had already placed the amount representing PIP benefits paid by State Farm in his trust account, informing Mahler that this amount would be reserved until the “ ‘amount of subrogation is resolved.’ ” Majority at 407 (quoting Mahler Clerk’s Papers at 431). While Mahler and State Farm disputed whether State Farm should be reimbursed the entire $4,173.32 or a net amount after cost sharing, there was no dispute that State Farm was entitled to recover from the settlement proceeds the amount of PIP benefits it had paid. In these circumstances, the determination that American States was liable to State Farm for the amount of PIP benefits paid, would, if viewed as a determination of an amount recovered or recoverable under the agreement, allow State Farm to obtain the full $4,173.32 without incurring costs of recovery. Resort to the inter-insurer arbitration agreement simply allows the insurer to avoid its promise to share costs.
I agree with the majority’s analysis that State Farm cannot recover directly from the tortfeasor’s insurance company nor can it recover its PIP payments until after the insured is fully compensated. Full compensation cannot be determined until after the settlement has been reached. Thus, as the Court of Appeals opined, the inter-company arbitration agreement acts merely as a “rubber stamp of personal injury litigation,” not as the vehicle for recovery. Fisher v. Aldi Tire, Inc., 78 Wn. App. 902, 909, 902 P.2d 166 (1995).
With these clarifications, I concur in the majority’s analysis and decision.

However, I add that circumstances in another case might reveal a viable application of the exception, and so stop short of concluding the exception can never be effective.