Posted by Jonathan A. Barash
In Ramos-Silva v. State Farm Inc. Co., 2009 Ga. App. LEXIS 1250 (2009), the Georgia Court of Appeals held that a Uninsured Motorist (“UM”) insurer’s right of subrogation survives the execution of a limited liability release.
The Georgia legislature created the limited liability release in 1992 to make possible the ability of a claimant to settle with the tortfeasor’s insurance carrier while preserving her UM claim. Daniels v. Johnson, 270 Ga. 289 (1998). Prior to the enactment of O.C.G.A. § O.C.G.A. § 33-24-41.1, a UM carrier could insist on a judgment in excess of the liability policy limits before paying a UM claim. Id. As a result, a claimant could not maintain an action against her own UM carrier if she had settled with the tortfeasor’s carrier without the agreement of the UM carrier. Id. In enacting O.C.G.A. § 33-24-41.1, the legislature changed this circumstance by expressly providing that UM policies cannot require permission of the UM carrier before a claimant settles with a liability carrier, and created the limited liability release as the mechanism for such settlement to take place. Id.
In Ramos-Silva, Roberto Ramos-Silva was involved in a motor vehicle accident with Mary Reddy. Ms. Reddy was injured in the accident. Ramos-Silva’s liability insurer settled with Ms. Reddy and her husband, agreeing to pay its $25,000 policy limits in return for a limited liability release pursuant to O.C.G.A. § 33-24-41.1. Ms. Reddy also recovered $75,000 from her own insurer, State Farm Insurance Company, pursuant to the UM provision of her automobile insurance policy.
Following these settlements, State Farm filed suit against Ramos-Silva seeking subrogation for the money it paid to Ms. Reddy pursuant to O.C.G.A. § 33-7-11, which expressly grants a UM carrier the right to bring a subrogation claim against the tortfeasor to recover monies paid to the carrier’s insured. See O.C.G.A. § 33-7-11(f). However, when State Farm sought to pursue its subrogation rights against Ramos-Silva, Ramos-Silva contended that the limited release barred State Farm’s action because State Farm’s right to subrogation was not expressly reserved within the limited release. The trial court rejected Ramos-Silva’s argument and denied his motion for summary judgment on those grounds. The Court of Appeals upheld the trial court’s ruling.
In reaching its decision, the Court determined that doing so was necessary in order to construe O.C.G.A. § 33-7-11 and O.C.G.A. § 33-24-41.1 “in a consistent and harmonious manner.” Significantly, the Court also found it important to recognize (as it has done previously) that one of the equitable purposes of subrogation is “to deter wrongdoing by placing the ultimate responsibility for paying an obligation on the person who in equity and good conscience ought to pay for it.” (citations omitted)