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HomeMy WebLinkAbout86-1249oZ LESLIE ANN JOHNSON, IN THE COURT OF COMMON PLEAS OF Plaintiff CUMBERLAND COUNTY, PENNSYLVANIA vs. CIVIL ACTION - LAW GEORGE L. BEANE, . Defendant vs. N0. 1249 CIVIL 1986 STATE AUTO MUTUAL INSURANCE COMPANY, Garnishee JURY TRIAL DEMANDED IN RE: GARNISHEE'S MOTION TO DISMISS BEFORE HESS, J. ORDER AND NOW, this i~~ day of April, 1991, the within garnishment proceeding is DISMISSED. BY THE COURT, '~/ Kevi A. Hess, J. Richard Angino, Esquire For the Plaintiff F. Lee Shipman, Esquire For the Garnishee :rlm ~_ LESLIE ANN JOHNSON, Plaintiff vs. GEORGE L. BEANE, Defendant vs. STATE AUTO MUTUAL INSURANCE COMPANY, Garnishee IN THE COURT OF COMMON PLEAS OF CUMBERLAND COUNTY, PENNSYLVANIA CIVIL ACTION - LAW NO. 1249 CIVIL 1986 JURY TRIAL DEMANDED IN RE: GARNISHEE'S MOTION TO DISMISS BEFORE HESS, J. OPINION AND ORDER This case has its genesis in an automobile accident that occurred on August 25, 1985. Following a jury trial in May of 1987, the plaintiff received a verdict in her favor of $200,000.00. This verdict substantially exceeded the limits of the defendant's insurance coverage provided by State Auto Mutual Insurance Company. Thus, the plaintiff proceeded against her own insurance company, Erie Insurance Exchange, seeking underinsured motorist coverage for the difference. In the meantime, in July of 1987, in connection with post-trial motions filed by Mr. Beane, a remittitur order was entered reducing the verdict to $75,000.00. Eventually, in February of 1988, the plaintiff executed a release and agreement, whereby the matter was settled with Erie Insurance Exchange for $50,000.00, and at the same time agreed to subrogate any right of recovery, in connection with a bad faith claim, against State Auto, to Erie. NO. 1249 CIVIL 1986 i On February 9, 1988, Erie made payment of the $50,000.00 to the plaintiff and indicated that it did not intend to pursue the matter further; in other words, that Erie did not intend to proceed against State Auto Mutual. As we dispose of the instant motion, it is important to reiterate that the plaintiff has been paid the amount of the original verdict. Notwithstanding, the plaintiff has proceeded, in the context of the original action, to garnish, from State Auto Mutual Insurance Company, the difference between Mr. Beane 's insurance coverage and the verdict. 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. In Shaw v. Botens, 403 F.2d 150 (1968) the United States Court of Appeals for the third circuit made the following observations concerning the state of Pennsylvania law: The Pennsylvania Supreme Court has held that attachment works "an assignment to the plaintiff of the debt due to the defendant from the garnishee." See, In re Boyd's Estate, 394 Pa. 225, 242-243, 146 A.2d 816, 825 (1958), and cases therein cited. The Supreme Court of Pennsylvania has permitted attachment of amounts due under the terms of an insurance policy to a judgment debtor by the -2- NO. 1249 CIVIL 1986 plaintiff who holds such judgment. See Boyle v. Franklin Fire Insurance Company, 7 W. & S. 76 (1844); Girard Fire & Marine Insurance Co. v. Field 45 Pa. 129 (1863); Fritchie v. Miller's Pa. Extract Co., 197 Pa. 401, 47 A. 351 (1900). Shaw, at 153-154. We do not believe, however, that these well-established legal principles have application to this case given its current posture. This 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.l We have no difficulty accepting the proposition that where a `•_. defendant, by virture of the bad faith dealing of his own insurance company, is exposed to an excess verdict, he may bring an action against his own insurance company for bad faith. Similarly, we understand the principle that, in such cases, in lieu of an assignment by the defendant to the plaintiff of the right to bring such a bad faith claim, the plaintiff may bring the action directly against the defendant's insurer as a garnishee. Shaw, Id. In this case, however, the plaintiff's right to bring an action for the difference between the defendant's insurance coverage and the verdict was subrogated to her own underinsured motorist carrier. This subrogation occurred in the context of making her whole; i.e., she was paid the entire amount of the original judgment. Black's Law Dictionary defines garnishment 1 To our knowledge, this case is one of first impression. -3- NO. 1249 CIVIL 1986 ~,~ as a satisfaction "of an indebtedness out of property or credits of debtor in possession of, or owing by, a third person." In this case, the plaintiff initially had judgment against the defendant for those amounts in excess of his insurance coverage. In the meantime, however, certain critical events transpired. Specifically, the amounts owed to the plaintiff from the defendant have been paid. In making the payment, the underinsured motorist carrier made settlement with the plaintiff in accordance with a release whereby the plaintiff subrogated her rights to the insurance carrier making the payment. The pertinent language of the release reads: In consideration of such payment [$50,000], I agree as follows: (1) to subrogate Erie Insurance Exchange/Erie Insurance Company to my right of recovery against any person or party legally liable to me for the amount of and for the purpose of the payment noted above; (2) that I have not and will not make any separate settlement with nor give any separate release to any person or parties who caused or alleged to have caused me the above mentioned loss or accident; (3) to authorize my attorneys, Angino and Rovner, P.C., to proceed with a bad faith/excess action against State Auto; and (4) to cooperate in prosecuting said action. We are satisfied that the plaintiff has effectively assigned her right to recover in garnishment to Erie in exchange for payment of the entire sum due her. The plaintiff has not filed a separate bad faith action but rather has chosen to proceed to garnish the original amount of the excess verdict under circumstances in which those amounts have already been paid to her. We know of no appellate case in Pennsylvania, dealing with bad faith in the context of a garnishment proceeding, which permits the plaintiff a double recovery by allowing her to override a settlement with her own underinsured motorist carrier. To do so, we note, would deprive the insurance companies -4- r NO. 1249 CIVIL 1986 ~ involved (here, Erie and State Farm) of any opportunity to negotiate among themselves a final settlement with respect to the sums due the plaintiff. ORDER AND NOW, this ~~ r day of April, 1991, the within garnishment proceeding is DISMISSED. BY THE COURT, ~ ~ /~ Revi A..Hess, J. Richard Angino, Esquire For the Plaintiff F. Lee Shipman, Esquire For the Garnishee :rlm -5-