The Alabama Supreme Court reversed a summary judgment favoring an accident victim and her husband against their insurance company for uninsured motorist benefits on grounds the order improperly relied on a default judgment against the other driver.
In Travelers v. Gray, the state high court found a default judgment against the driver who caused the crash is not binding against a plaintiff’s own insurer where the firm was not listed as a defendant in the original complaint. The court relied on its previous ruling in Bailey v. Progressive Specialty Insurance Co. to reach its conclusion.
The court previously held that in order for both the insured and the uninsured/underinsured motorist carrier to protect their rights in the course of making a claim, the plaintiff can either join his own liability insurer as a defendant in the lawsuit or give notice of the filing and the possibility of a claim at the close of trial. In cases where the insurer is named as a party, it has the right to choose whether to participate. In either case, the insurer will be bound by the court’s decision on the issues of liability and damages.
In Bailey, plaintiff sued an uninsured at-fault driver, notifying her own auto insurer of the action. The insurer elected to intervene in the litigation, as was its right. Plaintiff attempted service on defendant driver numerous times, and eventually ended up serving him via publication. Defendant driver never responded, and a default judgment was secured. The court determined damages at $125,000. Plaintiff’s insurer than filed a motion to set aside entry of default judgment to the extent the court would bind the insurer to that amount. The trial court declined to set aside, but did find the insurer was not bound by the default judgment against the at-fault driver. Plaintiff then filed a supplemental complaint against the insurer for UM benefits, asserting breach of contract and bad faith failure to pay benefits based on the default judgment. The trial court ended up granting summary judgment to the insurer, and the state supreme court affirmed that ruling, saying the insured has to be able to establish fault on the part of the uninsured motorist and the extent of damages to which he or she would be entitled.
A default judgment, the court found, did not amount to finding of fact on the issues of liability and damages. A UM carrier doesn’t have any relationship to a third-party tortfeasor and can’t control whether he or she answers the complaint. The plaintiff is still required to prove that he or she suffered damages as a result of the actions of the uninsured defendant. Only then can plaintiff collect from the carrier.
Plaintiff was struck by an uninsured driver in February 2010 and suffered injuries as a result. In a three-count lawsuit against the other driver, she alleged negligence resulting in physical injuries, substantial medical expenses, past and future pain and mental anguish and permanent disability. Her husband asserted a claim for loss of consortium.
When the other driver failed to respond, trial court entered a default judgment. Plaintiff requested, and was later granted, assessed damages in the amount of $500,000 for plaintiff and $50,000 for her husband. However, plaintiff’s motion did not include a request for relief as to her own insurance company.
After the damages were assessed, plaintiff filed a motion for summary judgment against the insurer which, for the first time, sought relief from the insurer. The basis for summary judgment was solely the default judgment against the third-party driver.
The trial court granted it.
However on appeal, the state supreme court ruled a non-final, default judgment against a third-party defendant driver isn’t enough on its own to automatically bind the insurer to pay. Therefore, the case was remanded for further proceedings to determine findings of fact as to the extent of injuries, damages and insurer liability for those claims.
Call Allred & Allred P.C. at 1-866-942-9315 to speak with a Montgomery personal injury lawyer.
Travelers v. Gray, Dec. 19, 2014, Alabama Supreme Court
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