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DTCI: Navigating Common Issues in UIM Litigation

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mundrick-keith.jpg Mundrick

Many defense attorneys are eventually pulled into the love triangle of underinsured litigation. Like any good drama, underinsured cases are multifaceted and involve a bizarre set of twists and relationships.

Suppose you represent the provider of an underinsured motorist policy. The plaintiff is in a somewhat adversarial position but is also your client’s valued customer (although sometimes a former customer). The co-defendant is the tortfeasor whose negligence got you into this mess, but your interests are also aligned in many ways. Most notably, if the co-defendant puts on a less-than-inspired case, your client could be responsible for much of the resulting verdict.

Further complexities arise when the UIM carrier has some form of contractual repayment right against the plaintiff’s recovery, typically the result of making medical payments. In these cases, the insurer wants the plaintiff to recover enough to fairly compensate him for his injury but also seeks satisfaction of his repayment obligation. The amount of the repayment may also become a sticking point in settlement talks, with the plaintiffs sometimes seeking a reduction or waiver in exchange for the insurer’s dismissal.

Each UIM case is unique, and each presents different considerations for attorneys. This article explores some recent and recurring issues in navigating UIM litigation.

Remember to check all policy limits

Even if the underlying lawsuit is in tort, the UIM carrier’s involvement is always contractual. Before spending too much time on any underinsured file, make sure the insurance contract actually applies.

It seems that more and more underinsured carriers are joined to a lawsuit before the tortfeasor’s underlying limits are known. If the co-defendant has plenty of insurance, then there is no underinsured issue. Accordingly, get a copy of the tortfeasor’s policy as soon as possible and seek dismissal if the limits equal or exceed the plaintiff’s UIM limits.

Deciding whether to advance or allow the tortfeasor’s settlement

Once discovery wraps up and the potential evidence takes shape, the tortfeasor’s insurance provider may decide to offer its limits. If the UIM carrier is notified of a bona fide offer by the tortfeasor to settle for his policy limits, an important decision must be made. Pursuant to Ind. Code § 27-7-5-6, the UIM carrier has 30 days either to allow the tortfeasor to settle and be dismissed or to advance the settlement funds and force the tortfeasor to stay in the litigation.

There are three primary reasons why an insurer might choose to advance funds and remain subrogated to the co-defendant.

The first scenario is the least common: The tortfeasor actually has assets beyond his insurance policy, and the UIM provider intends to pursue those assets following an adverse verdict. Second, there are some arguments that are more effectively made by an individual defendant rather than by the plaintiff’s own insurance company. This is particularly true when challenging liability or alleging comparative fault; a tort defense is best made by a tort defendant.

A third consideration deals with the interjection of insurance into the case. Although the law seeks to control any prejudice created by the presence of insurance, these challenges are harder to mitigate in first-party litigation. This is well illustrated by two recent opinions from the Indiana Court of Appeals which address a creative strategy to conceal the UIM carrier following the tortfeasor’s dismissal.

In Brown-Day v. Allstate Insurance Co., the tortfeasor settled with the plaintiff and was dismissed from the lawsuit with prejudice — and with neither objection nor advancement by the UIM provider, Allstate. 915 N.E.2d 548 (Ind. App. 2009) As the plaintiff and Allstate headed toward trial, the insurer filed a motion to remove Allstate from the caption, substituting the previously dismissed tortfeasor as the sole party to be named before the jury. Allstate’s motion was granted, and an interlocutory appeal was filed.

The Court of Appeals held that Allstate could not substitute the non-party tortfeasor as a fictitious party in order to avoid an overinflated damages award in a contract case, and that such a proposal was in accordance with neither case law nor Ind. Evidence Rule 411.

This same strategy was addressed one year later, with the Court of Appeals following the same reasoning. Howard v. American Family Mutual Ins. Co., 928 N.E.2d 281 (Ind. App. 2010) In reviewing the Brown-Day opinion, Judge Robb succinctly explained Allstate’s predicament. By standing back and allowing the driver’s dismissal instead of advancing payment, Allstate “treated the cause of action to be tried before the jury as a first party claim for contract enforcement.” Id. at 284 (internal citations omitted)

These two cases send a message: If a UIM provider doesn’t want to be left alone on the caption after the tortfeasor’s settlement, advancement may be the only way out.

Tortfeasor participation post-advancement

If the co-defendant offers his limits and has no other assets, how does the UIM carrier know that he will put on a vigorous defense after advancement? With a lame duck co-defendant, the UIM counsel must tread carefully.

The carrier for the tortfeasor is contractually obligated to provide a defense, and this obligation does not vanish upon UIM advancement. Failure to defend by the tortfeasor’s carrier, or the attorney representing the tortfeasor, may expose one or both to post-trial claims for bad faith or malpractice.

Nevertheless, knowing your case and exercising diligence in all stages of litigation following advancement will serve you well. Communication between counsel for the tortfeasor and the UIM carrier is critical to ensure a proper defense is presented at trial.

Defending the UIM carrier at trial

When an underinsured carrier is joined to a case destined for trial, the most important decision is the extent to which the insurer should participate in the defense. This determination is highly fact-sensitive and must be carefully evaluated in each case. Consider the following scenarios.

Johnny Tortfeasor is texting, shaving and eating a sandwich while driving in the rain. He blows a red light, causing a significant collision that sends Nancy Plaintiff to the hospital. Johnny has state-minimum coverage with Big Bob’s Discount Insurance, which is reluctant to pay its policy limits. (Big Bob thinks that Nancy was the primary cause of the accident, since her windshield wipers were set only on the “low” setting.) Nancy has a UIM policy through your client, Free Range Insurance Co.

In a case like this, Free Range can’t expect much help from the co-defendant. Big Bob has taken an unreasonable position, and an unreasonable verdict will probably follow if Big Bob drives the defense. Accordingly, Free Range must be prepared to guide the jury to a reasonable award. If a verdict within the range of UIM exposure is likely, Free Range’s counsel must become more involved in the defense, taking an active approach at every stage of litigation.

Now imagine that Billy Tortfeasor (Johnny’s more responsible brother) bumps into Nancy while backing out of a parking space. Nancy gets checked out at the emergency room, follows up with her primary care physician, and experiences a few days of mild soreness. Billy admits fault, leaving only the issue of “how much?” He has a $50,000 liability policy, and Nancy has incurred $2,000 in medical bills. However, they disagree on the value of her pain and suffering. As a precaution, Nancy’s attorney has joined her underinsured carrier, Free Range, and the case is headed to trial on the issue of damages.

Billy’s case represents a low-risk scenario for the underinsured carrier. Since his participation is unlikely to affect the carrier’s ultimate liability, it would be perfectly acceptable for the UIM attorney to sit back and monitor this trial from the gallery.

Such an arrangement can actually be desirable for all parties. For the co-defendant, it may keep an insurance company off the caption and the discussion of insurance off the table. For the plaintiff, the benefits are even more apparent: one less opening statement, one less attorney questioning witnesses, and one less closing argument. For these reasons, parties will often stipulate to remove the UIM carrier from the caption.

UIM participation from the middle ground

The adventures of Johnny and Billy Tortfeasor illustrate the opposite ends of the spectrum, but the potential for UIM exposure isn’t always so clear. Fortunately, these middle-ground cases are the most exciting to defend: You get to be the voice of moderation in the courtroom, forming a closer bond with the jury than in most other cases.

Suppose you represent an insurer facing a mild or moderate risk of UIM exposure. During voir dire or opening statements, explain to the jury that your client had nothing to do with the accident but has a contract with the plaintiff that may be affected by this lawsuit. Virtually all participation beyond this point is optional.

These trials allow the UIM counsel to carefully select the issues that warrant emphasis. Know the file better than anybody else and simply participate when necessary. If the co-defendant fails to ask a question that you think is important, step in to help his case. If he starts to get overly aggressive with the plaintiff, step in and hurt his case. Remember, your goal is not to minimize the verdict, but rather to keep it within a fair and reasonable range (and above your client’s medical payments interest, if applicable). UIM counsel should strive to walk the middle ground and serve as the voice of reason.

While you may reduce your involvement during the evidentiary part of trial, UIM counsel should seldom pass up the chance to give a closing argument. You are in a unique position to establish a bond with the jury. After watching the plaintiff and tortfeasor aggressively battle throughout trial, jurors will be hungry to hear the thoughts of a lawyer who seems reasonable and detached from the accident at the center of the lawsuit.

Tell the jury what you think. Thank the jury for their time. Then ask the jury to enter a verdict that is fair and reasonable.

Final thoughts

Insurance providers are in a precarious position in any UIM litigation; the defense will almost always be driven by the tortfeasor, but the UIM insurer can be left holding the bag for unreasonable verdicts. No matter what the perceived UIM exposure, know your case intimately and be prepared to pick up any of the other parties’ fumbles in discovery or at trial.

Always be mindful of the different relationships between your client and the other parties. While the co-defendant can sometimes be a partner in your defense, there may also be a need to provide assistance to ensure all aspects of the case are properly considered. Keep a level head, ask for what is reasonable, and your client will be better for it.•

Keith Mundrick is incoming co-chair of the DTCI Insurance Section and an attorney with State Farm Litigation Counsel. He advises and represents State Farm and its policyholders in a variety of litigation across Indiana. The opinions expressed in this article are those of the author.
 

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  1. Am I the only one who sees that the City is essentially giving away the MSA site AND giving millions to build new buildings on the site when this site would be the perfect place for the Justice Complex? Across from City-County, check; keeping it centrally located, check, etc. It's my understanding that the GM site must be purchased by the City from Motors Liquidation Company. STOP WASTING WHAT WE ALREADY HAVE AND OUR TAX DOLLARS! The Ballard Administration has not been known for it's common sense...never voted for him and never will!

  2. This guy sounds like the classic molester/manipulator.

  3. Louis D. Brandeis was born in 1856. At 9 years of age it would have been 1865. The Brandeis family did not own slaves. My source Louis D. Brandeis: A Life, by Melvin L. Urofsky.

  4. My name is Matthew Lucas Major, I recently went through a jury trial in Bloomington , In. It was the week of Feb 19-21. Although I have been incarcerated since August 5, 2014. The reason I 'am writing to you sir is on the 21 of February the jury came in with a very excessive and wrongful verdict of guilty on 6 child molesting charges against my daughter who was 9 at the time I was accused. I also had 2 other Felonies one of Intimidation and 1 of Sexual Vicarious Gratification. Judge Marc Kellam on the second day of trial gave me a not guilty on those 2 felonies. The jury was sent out during that time and when brought back Judge Kellam told them to not concern themselves with the 2 Felonies that he ruled on them. They were told to not let evidence they had already heard influence there verdicts. I never in my life touched any child sexually and definitely not with my own daughter. When I was arrested Detective Shawn Karr told me I would be convicted guilty just on my daughters word even without evidence. That's just what happened. my public defender did me so wrong he never once proved to the court and jury all the lies the child told, and Jeremy Noel my public defender could of proven the lies easily. The stories in Serenity's depositions and Forensic interview changed and were not consistent as Prosecutor Darcie Fawcett claimed they were. Yet my attorney never mentioned that. The facts that the child accused me of full penetration in her vagina and rectum was proven lies. Doctor Roberta Hibbard of Riley hospital in Indianapolis confirmed Serenity's hymen intact, no scars, no tearing, no signs of rape to her. Yet my attorney didn't use that knowledge . the DNA was all in my favor. I tell you I will spend my entire life in prison going through rape and beatings etc. even Judge Kellam abused his authority by telling the jurors to listen and believe what the prosecutors side in evidence like my daughters testimony. In one interview with the detectives my daughter got flustered with her mom and said on camera " I'm saying what you told me to mom"!! Yet Mr. Noel said nor did anything to even resemble a defense attorney. Judge Kellam allowed edited version of a taped conversation between the child and her mother. Also Judge Kellam allowed the Prosecutor too bring in to my case a knife found under my seat, the knife wasn't part of my case. She was allowed by my attorney and the judge to put a huge picture of it on the screen and huge picture of my naked privates in a full courtroom and open court. Ms. Fawcett says to jury see how easy Mr. Major could reach the knife and cut his Childs throat. Even though I had no weapons charge against these cases. This gave the jurors prejudice thought against me thinking I threatened her with that knife and how scared she would of been knowing i could get it and kill her. On my sentencing court March 19, 2014 my public defender told Judge Kellam he wish to resign from being my attorney and wished for the court to give me outside council to file a error to trial or appeal. We were denied. Now after openly knowing my public defender don't want to represent me he has to. Well when as parents we make our kids clean a room when they really don't wish to, well the child will but don't mean she will do a good job, that's where I'm at with Mr. Noel. please dont ignore mine and my families pleas for your help . we have all the legal proof you could need to prove Im innocent. Please dont make my spend years in prison innocent when you can fix this wrong. Im not saying Im a perfect man or that I was a perfect dad to my 2 children none of us are. Ive made some bad choices in life and I paid for them. But I didnt ever touch or rape my daughter . I love my children with all my heart. And now through needing attention and a ex-wife who told my granny several times she wish she could put me in prison to get me out of their lives. Well my ex finally accomplished her goal. Sad part is she is destroying our daughter with all this horrific lies and things she taught my daughter to say. My daughter will need therapist to ever hope for a chance of a normal life after what she had done to her by her mom and their side of the family. My daughter told everyone even on stand she had a dream months before i supposedly molested her in this dream I was molesting her and when I finally did it matched her dream perfectly. She admitted to watching movies about little girls being molested and watching U-Tube videos about child molesting all before it happened supposedly to her. Doesn't that sound very unusual that a non molested 9 yr old would need to know so much about being molested? The only reason I could think a 9 year old would need so much information is to be prepared to know what to say and be able to say how it felt what took place etc.. So when questioned by authorities she would be prepared. And there again sir if a parent is pre grooming a 9 year old child she would need intimate details . Like telling her daughter about a couple moles on my private area. The child admitted to sneaking my cell and looking many many times at nudes of me and my girlfriend even one where my penis was entering my girlfriends vagina. In that picture my moles are obvious. Yet when prosecutor showed everyone in court my privates and pictures of the moles she said the only way the child would know about them is if she saw them for herself. My attorney once again said nothing about the pictures my child saw. Or could a ex-wife be able to describe my moles to help her case against getting rid of me? I beg you help me. This is my very existence. Ive lost everything , a good job, a wonderful girlfriend, my freedom, but worse thing Ive lost is my children. They were my reason to get up every morning and strive to be better. The wonderful bond I had with my Serenity is gone. After this I would be afraid to even hug her for fear of what next can they do to me. I'm not afraid to tell you I sit here in this cell and try to hold back my tears. Everyone knows you cant show weakness in prison. My life has already been threatened here at Wabash Valley Prison. After only 3 days of arrival. I was tricked into signing a waiver now Im in G Block General Population with 6 child molesting felony charges. Mrs. Hart as a 18 year old I almost died hooked to machines in hospital almost 1 month and now I know that fear was childish compared to this . I cant help but put emotions in this, after all Mrs. Hart Im human and God help Me I never been more afraid in my life. I didnt hurt my little girl I didnt touch her sexually. As much as it shreds me and fills my mind what Im facing I worry more about my mom and granny because of their great love for me mam they are suffering so deeply. I aint done this things but my loved ones suffering right along beside me and If you take my case you will be in essence freeing them also. I sent momma this letter and asked her to email it to you. I'm scared I have been done so unjustly by our legal system and I need you to fix this and give me freedom. I ask you please don't just ignore my pleas. Here in America its nice to be able to trust our legal justice system, well they destroyed my and my loved ones trust in our justice system . And I'm trusting in You !!! My entire family is suffering this nightmare with me. My 77 year old granny had a stroke and isn't doing so well. My single mother that raised 3 kids alone is dying from Lupus and since my arrest has stayed so sick and weary. Our lives torn to peices by a government I was taught I could trust in. my momma has tried so many innocent project and wrongfully accused and cant get anywhere. please please help me. A quote from the late Nelson Mandela: To be free is not merely to cast off ones chains, But to live in a way that respects and enhances The Freedom Of Others. I have Faith in you and your clinic to cast my chains off and give me freedom I do deserve as a wrongfully accused Man, son, brother, father, friend. Matthew Major DOC# 246179 Cause # : 53c02-1308-FA-000779 God Bless you. Please contact me with your decision so I know you made a life changing decision for me , just please at least write me so I know you care enough about your citizens to respond to cries for your help. You can speak openly with my mother Charlotte Spain (828) 476-0406: 71 Lakeview Dr. Canton, NC 28716 Thank You Matthew Major I know yall get thousands of request and inmates claiming innocence, and each person who are innocent deserve to have organizations like yours willing to fight for them and I give yall so much Thanks and I thank God everyday yall are out there caring enough to help free the innocents. Since discovering firsthand how easily lives and families can be destroyed by Poor Defense attorneys not doing their job . And Prosecutors allowed to do as they please in court

  5. Frankly, it is tragic that you are even considering going to an expensive, unaccredited "law school." It is extremely difficult to get a job with a degree from a real school. If you are going to make the investment of time, money, and tears into law school, it should not be to a place that won't actually enable you to practice law when you graduate.

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