Brown v. Kirkpatrick, Record No. 1100-22-1 (Va. Ct. App. Dec. 19, 2023) (en banc)
In a split en banc decision, the Court of Appeals reverses a panel decision that had found that an insured can pursue a tortfeasor for full payment of a judgment when a UIM carrier waives its right of subrogation.
Facts. Michael Brown obtained a $286,000 judgment against Timothy Kirkpatrick. Before trial, Brown’s UIM carrier USAA agreed to waive subrogation against Kirkpatrick if he appeared for trial, which he did. After the trial, Kirkpatrick’s liability carrier paid its policy limits of $50,000 and USAA paid the remaining $236,000 of the judgment. Because USAA had waived subrogation, however, Brown argued that he could still pursue Kirkpatrick for the full amount of the judgment. He argued that the UIM payment was a collateral source that did not satisfy the judgment against Kirkpatrick.
Kirkpatrick filed a motion to mark the judgment as satisfied, which the circuit court granted. Brown appealed. A panel of the Court of Appeals agreed with Brown, finding that a mere waiver of the insurer’s right to subrogation does not discharge underlying tort liability. Kirkpatrick petitioned for a rehearing en banc, which the Court of Appeals granted.
Issue. Whether a plaintiff may recover the full amount of a judgment directly from the defendant when the plaintiff’s UIM insurer paid part of the judgment but waived its subrogation right against the defendant.
Holding. No. Under the UIM statute (Code § 38.2‑2206), the right to subrogate belongs exclusively to the UIM carrier.
Notes. By statute, a UIM insurer is subrogated to the rights of their insured against a tortfeasor. In other words, the UIM insurer can collect from the tortfeasor any amount they pay to their insured for damages caused by the tortfeasor, up to the amount of any judgment against the tortfeasor. Under the UIM statute, however, that right to recoupment belongs exclusively to the UIM insurer, and the UIM insurer does not divest itself of that right by merely agreeing not to exercise it.
Dissent. The three dissenting judges would have held that the UIM insurer’s payment to the plaintiff is a collateral source, which means that it does not satisfy the debt that the tortfeasor owes the plaintiff. A UIM insurer’s decision not to pursue their right to step into their insured’s shoes to collect on a judgment does not discharge the judgment.