eNotes: Liability – February 2024 – Virginia

SIGNIFICANT CASE SUMMARIES

Virginia Case Summary

Brown v. Kirkpatrick
Virginia Court of Appeals
No. 1100-22-1

Decided: December 19, 2023

An insurance carrier’s waiver of subrogation rights does not divest the carrier of the right.

Background

In April 2022, a jury awarded Michael Brown a judgment for $286,000 against Timothy Kirkpatrick for damages arising from a motor vehicle accident. Kirkpatrick was insured by State Farm with a coverage limit of $50,000. Brown was insured by USAA, and his contract included $300,000 in uninsured/underinsured (“UIM”) coverage. Brown received the full amount of the judgment from a combination of payments made by his own insurance carrier as well as from Kirkpatrick’s automobile insurance carrier.

Brown, however, refused to mark the judgment satisfied. The Circuit Court for the City of Newport News ordered the judgment to be marked satisfied. Brown appealed, claiming the Trial Court erred in crediting Kirkpatrick for the payments made by Brown’s own insurance carrier. Brown argued he was free to collect the full judgment amount against appellee without any offset for the payments made under his own contract of insurance (an additional $236,000) because his insurance carrier had waived its right to subrogation against the underinsured motorist. The Court of Appeals reversed the Trial Court’s judgement. In December of 2023, the Court of Appeals reheard the case en banc and affirmed the Trial Court’s judgment.

Holding

As required under Virginia law, all automobile insurance policies issued in Virginia must include UIM coverage. Here, the Court found that USAA paid underinsurance benefits to Brown in accordance with the UIM provision of their policy. As the insurer paying such claim, USAA became the owner of the subrogation rights by operation of law when it completed its payment of underinsurance benefits to Brown. USAA alone owned the right to recoup the amount of its UIM insurance payment from Kirkpatrick. As the sole owner, USAA was free to use or waive the subrogation right. Ultimately, the Court found that under the plain meaning of the UIM statute, the subrogation right belonged exclusively to USAA, and Brown no longer had a right to recover the amount paid by USAA directly against Kirkpatrick.

Questions about this case can be directed to Nicolette DeFrank at (571) 470-0395 or ndefrank@tthlaw.com.