PRUDENTIAL v. MICHIGAN MUT. INS., 949 F.2d 1124 (11th Cir. 1992)
PRUDENTIAL COMMERCIAL INSURANCE COMPANY, A SUBSIDIARY OF THE PRUDENTIALINSURANCE COMPANY OF AMERICA ON BEHALF OF NEW JERSEY AUTOMOBILE FULLINSURANCE UNDERWRITING ASSOCIATION, PLAINTIFF-APPELLANT, v. MICHIGAN MUTUALINSURANCE COMPANY, DEFENDANT-APPELLEE, ALLSTATE INSURANCE COMPANY,DEFENDANT.
No. 89-8759.United States Court of Appeals, Eleventh Circuit.
January 7, 1992.
Edward M. Harris, Jr., Vicki McReynolds Knott, Decatur, Ga., for plaintiff-appellant.
Sewell K. Loggins, D. Keith Calhoun, Mozley, Finlayson
Loggins, Atlanta, Ga., for defendant-appellee.
Appeal from the United States District Court for the Northern District of Georgia; Robert H. Hall, Judge.
Before COX, Circuit Judge, and TUTTLE and CLARK[fn*], Senior Circuit Judges.
[fn*] See Rule 34-2(b), Rules of the U.S. Court of Appeals for the Eleventh Circuit.
PER CURIAM:
[1] We heretofore on February 19, 1991 issued an opinion in this case in which we requested the Supreme Court of Georgia's assistance with respect to two certified questions concerning insurance coverage questions raised in this law suit. See924 F.2d 199 (11th Cir. 1991). The Georgia Supreme Court entered an opinion dated November 1, 1991 in which it answered the first question in the affirmative and answered the second question in the negative. See Prudential Commercial Ins. Co. v. MichiganMut. Ins. Co., 261 Ga. 637, 410 S.E.2d 30 (1991). In light of the Supreme Court of Georgia's opinion we reverse the judgment of the district court based upon its opinion of August 18, 1989,720 F. Supp. 167, and remand the case to that court for entry of an order which conforms to the opinion issued by the Supreme Court of Georgia, attached hereto as an appendix.
[2] REVERSED and REMANDED.
APPENDIX
In the Supreme Court of Georgia
Decided:
S91Q0727. PRUDENTIAL COMMERCIAL INSURANCE COMPANY v. MICHIGAN
MUTUAL INSURANCE COMPANY
SMITH, Presiding Justice.
These questions are before us on certification from the United
States Court of Appeals for the Eleventh Circuit. The appellant,
Prudential Commercial Insurance Company (Prudential), as
statutory subrogee of Charlotte, Allen, and Daniel Kimerling
(Prudential's insureds) sued the appellee, Michigan Mutual
Insurance Company (Michigan Mutual), to recover personal injury
protection (PIP) benefits paid to the Kimerlings. The Kimerlings
had been injured in a collision with a tractor-trailer insured by
Michigan Mutual. Judge Robert Hall of the U.S. District Court for
the Northern District of Georgia granted summary judgment for
Michigan Mutual, holding that Prudential waived its right of
subrogation by failing to intervene in the Kimerlings' action
against Michigan Mutual prior to settlement. On appeal, the
Eleventh Circuit certified to this Court two questions of law:
1. Whether Prudential, which has a statutory right of
subrogation, may recover
Page 1125
upon that right after the Kimerlings reached a
settlement with Michigan Mutual and its insureds in
an action in which Prudential chose not to
intervene?
2. Whether Prudential, if it is entitled to recover
on its statutory right of subrogation against
Michigan Mutual and its insureds, is limited by
Georgia Code Ann. § 33-34-5(a)(1) (1990) to a
recovery upon that right of $50,000.00 in personal
injury protection benefits paid to Charlotte
Kimerling?
We answer question one in the affirmative, and question two in
the negative.
Prudential insured the Kimerlings with a policy issued in New
Jersey. On November 17, 1986 the Kimerlings were involved in a
collision outside of Atlanta with a tractor-trailer operated by
Michigan Mutual's insured. The tractor-trailer weighed in excess
of 6500 pounds unloaded.[fn1] Charlotte and Daniel Kimerling were
injured in the accident and their son Allen was killed.
Prudential paid approximately $218,000.00 in PIP benefits on
behalf of these three insureds.
On March 10, 1987, the Kimerlings filed a personal injury
action against Michigan Mutual and its insured. Prudential failed
to intervene in the action, although it claims to have notified
Michigan Mutual of its subrogation claim. One week before trial,
the Kimerlings settled with Michigan Mutual without notifying
Prudential and issued to Michigan Mutual a release of
liability.[fn2]
Prudential then filed this action in State Court of Fulton
County, and the case was removed to the Federal District Court.
Prudential seeks to recover from Michigan Mutual all sums
Prudential has paid to the Kimerlings, pursuant to OCGA §
33-34-3(d)(1)(B).[fn3] The District Court granted summary
judgment for Michigan Mutual, and Prudential appealed to the
Eleventh Circuit Court of Appeals, which certified to this Court
the two questions under consideration.
1. Michigan Mutual contends that Prudential waived its right of
subrogation by failing to intervene in the Kimerlings' suit
against Michigan Mutual prior to settlement. We disagree.
This case is controlled by United States Fidelity Guaranty
Co. v. Ryder Truck Lines, Inc., 160 Ga. App. 650, 288 S.E.2d 1
(1981) and Vigilant Insurance Co. v. Bowman, 128 Ga. App. 872,
198 S.E.2d 346 (1973). In USF G v. Ryder, supra, USF G's
insureds reached a compromise settlement with Ryder (the
tort-feasor) prior to trial and released Ryder from liability.
The settlement was without USF G's consent, though Ryder had
knowledge of USF G's subrogation claim. Recognizing USF G's
statutory right of subrogation, the court stated:
.
. . the release of plaintiff Ryder as to the tort
case in federal court would not bar the subrogation
claim here. The release was executed without the
consent of USF G, and at that time of execution
[sic], Ryder had actual knowledge of USF G's
subrogation claim. Ryder, the tort-feasor
(wrongdoer), could not obtain the release so as to
protect Ryder, the self-insurer, to prevent USF G
from pursuing its subrogation claim under the
statute.
The court reached a similar decision in Vigilant, supra. There,
the court held that "as a matter of general law, where the
Page 1126
wrongdoer settles with the insured . . . without the consent of
the insurer . . . with the knowledge of the insurer's payment and
right of subrogation, such right is not defeated by the
settlement." Id. at 874, 198 S.E.2d 346. We believe these
holdings control the present case.
Michigan Mutual relies heavily on a statement made by this
Court in State Farm Mutual Auto Insurance Co. v. Five
Transportation Co. et al., 246 Ga. 447, 271 S.E.2d 844 (1980).
There, we stated that "if the appellant [insurance company]
allowed this case to proceed to a judgment without asserting
its right of subrogation by intervening as a party plaintiff, it
could be argued that it waived its right of subrogation." Id. at
454, 271 S.E.2d 844. (Emphases supplied.)
This language does not control the present case. First, because
the insurance company in State Farm v. Five actually filed a
motion to intervene in the case, the language was not necessary
to the case's determination, and thus was dictum. Second, the
quoted passage merely states that "it could be argued" that the
insurance company waived its right of subrogation. We did not
hold as a matter of law that the insurance company must intervene
to protect its subrogation right.
Thus, Georgia case law dictates that, where a case is settled
prior to trial, the insurer's right of subrogation is not barred
by its failure to intervene.
2. Michigan Mutual also argues that any subrogation right held
by Prudential is limited by OCGA § 33-34-5 to a maximum dollar
amount of $50,000.00 per injured person.
Such a reading conflicts with the plain language of our
no-fault subrogation statute, OCGA § 33-34-3, and Jordan v. T G
Y Stores Co., 256 Ga. 16, 342 S.E.2d 665 (1986). OCGA §
33-34-3(d)(1)(B) reads in pertinent part. "The right of recovery
and the amount of recovery shall be determined on the basis of
tort law between the insurers or self-insurers involved."
(Emphasis supplied). OCGA § 33-34-3(d)(2) then provides:
Nothing contained in paragraph (1) of this subsection
shall be deemed to increase or enlarge the bodily
injury liability, personal injury protection, or
medical payments limits of any policy of motor
vehicle liability insurance in this state.
As we stated in Jordan v. T G Y Stores Co., supra,
256 Ga. at 18, 342 S.E.2d 665:
.
. . [Where subrogation under OCGA § 33-34-3(d)(1)
applies] the statute, by clear implication subrogates
the no-fault insurer to the rights of its insured
against a third party tort-feasor to the extent of
no-fault benefits paid. This means the insurer may
recover benefits it paid its insured from the
tort-feasor to the same extent the tort-feasor is
liable to its insured. It has the same rights,
neither more nor less, than its insured possesses
against the tort-feasor.
Thus, "a liability carrier that settles with the injured party
for less than the policy limits does so at its own risk and
remains potentially liable for the no-fault carrier's subrogation
claim up to the policy limits." Southern General Ins. Co. v.
Cotton States Mutual Ins. Co., 193 Ga. App. 240, 241,
387 S.E.2d 435 (1989). There is no need to look to other insurance law
provisions, or to create an artificial limit to subrogation based
upon the statutory requirement for insurers (issuing relevant
policies in Georgia) to offer optional benefits and coverages
under OCGA § 33-34-5. We read OCGA § 33-34-3 as establishing the
right of a lawful subrogee under the statute to seek recovery
from the insurer of a tort-feasor the subrogee's legitimate
payments made pursuant to the no-fault provisions of its policy
with the injured, up to the aggregate of the bodily injury
liability, personal injury protection, and medical payments
provisions of the policy being subrogated against.
Certified questions answered. All the Justices concur.
[fn1] OCGA § 33-34-3(d)(1) provides in pertinent part:
Insurers and self-insurers providing benefits without regard to fault described in Code Sections 33-34-4 and 33-34-5 shall not be subrogated to the rights of the person for whom benefits are provided except:
(A) In those motor vehicle accidents involving two or more vehicles, at least one of which is a motor vehicle weighing more than 6,500 pounds unloaded . . .
[fn2] The order approving the settlement was entered on May 24, 1988.
[fn3] OCGA § 33-34-3(d)(1)(B) provides in pertinent part: "The right of recovery and the amount of recovery shall be determined on the basis of tort law between the insurers or self-insurers involved."Page 1127