Brown v. Kirkpatrick, Record No. 1100-22-1 (Va. Ct. App. July 5, 2023)
In a split opinion, a Court of Appeals panel finds 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.
Issue. Whether an insurer’s waiver of its subrogation right against a tortfeasor precludes the insured-plaintiff from recovering on a judgment against the tortfeasor.
Holding. No. The mere waiver of the insurer’s right to subrogation does not discharge the underlying tort liability.
Notes. By statute, a UIM insurer is subrogated to the rights of their insured against a tortfeasor. In other words, the UIM insurer/subrogee can collect from the tortfeasor any amount they pay to their insured/subrogor for damages caused by the tortfeasor, up to the amount of any judgment against the tortfeasor. The insured’s payment to the insurer, however, is a collateral source, which means it does not satisfy the debt that the tortfeasor owes the insured. An insurer/subrogee’s decision not to pursue their right to collect on a judgment does not erase the judgment.