THE CIRCUIT COURT OF HENRICO COUNTY Gary A. Hicks, Judge
All the Justices
BERNARD GOODWYN, JUSTICE.
appeal, we consider whether the circuit court erred when it
held that a settlement agreement between the plaintiff and
her underinsured motorist carrier did not entitle the
underinsured defendant to a statutory reduction of the jury
verdict rendered against her, pursuant to the offset
provision of Code § 8.01-35.1.
21, 2013, Ann Michelle White (White) was driving on Ziontown
Road in Henrico County, Virginia, when Ann Elizabeth
Llewellyn (Llewellyn) drove out of her driveway and struck
White's vehicle. White suffered serious injuries to her
hips, shoulders, and knee, requiring extensive surgeries as a
result of the collision. After the accident, Llewellyn was
charged with and pled guilty to failing to yield to oncoming
time of the accident, White had a $1 million motor vehicle
insurance policy through Erie Insurance Exchange (Erie).
Llewellyn had automobile liability insurance coverage
totaling $250, 000.
filed an action against Llewellyn in the Circuit Court for
the County of Henrico, for personal injuries she suffered as
a result of the automobile accident caused by Llewellyn's
negligence. In her amended complaint, White asked for $3
million in compensatory damages for personal injuries she
suffered, including pain and suffering, and $350, 000 in
punitive damages. White served the amended complaint on
Llewellyn. Intending to rely upon the uninsured/underinsured
motorist (UIM) coverage provision of her policy with Erie,
White also served a copy of her lawsuit against Llewellyn
upon Erie, as required by Code § 38.2-2206.
to trial, White settled her potential UIM claims against her
insurance provider, Erie, for $750, 000. The settlement
between White and Erie was "in full and complete
settlement of all claims" White had against her insurer.
White agreed to release Erie from liability for "any and
all claims" arising out of the lawsuit White had filed
against Llewellyn. In addition to the monetary payment, Erie
agreed with White that Erie would waive its right, arising
from Code § 38.2-2206 or otherwise, to be subrogated to
the rights White had against Llewellyn. Llewellyn was not a
party to the settlement agreement.
March 27, 2017, the circuit court entered an order dismissing
the amended complaint as to Erie, pursuant to the settlement
agreement between White and Erie. The lawsuit otherwise
remained on the court's docket.
circuit court held a jury trial on the lawsuit against
Llewellyn, and on May 2, 2018, the jury returned a verdict
awarding White damages of $1, 500, 000 against Llewellyn.
Llewellyn made a motion to apply Code § 8.01-35.1 to
reduce the verdict against her because of the $750, 000 paid
to White by White's insurer, Erie. Llewellyn argued that
Erie, as White's UIM insurance carrier, was liable for
the same injury as Llewellyn, and that because of the
settlement between White and Erie, Llewellyn was statutorily
entitled to an offset of $750, 000.
argued that Code § 8.01-35.1 did not apply because Erie,
unlike Llewellyn, was not "a person liable for the . . .
injury" to White. She argued that Code § 8.01-35.1
was enacted to enable the release of one joint tortfeasor
without affecting the remaining tortfeasors, and Erie and
Llewellyn were not joint tortfeasors. She also contended that
the settlement between Erie and White only concerned a
contract claim, not the resolution of a tort dispute, and
Code § 8.01-35.1 did not apply.
circuit court held a hearing on Llewellyn's motion on
June 8, 2018. It denied the motion and ruled that Code §
8.01-35.1 did not entitle Llewellyn to an offset. The circuit
court entered a final order, which awarded White a judgment
against Llewellyn for the full amount of the jury's
verdict. Llewellyn appeals.
This Court granted one assignment of error, which states:
The trial court erred by refusing to apply the underinsured
carrier's $750, 000 settlement with Respondent to the
final judgment order as a statutory offset pursuant to Va.
Code [§] 8.01-35.1, and by entering judgment for the
entire $1, 500, 000 jury verdict.
argues that the circuit court erred when it refused to apply
Code § 8.01-35.1 to reduce the $1.5 million verdict
against her because of White's $750, 000 settlement with
Erie. Llewellyn contends that UIM carriers are nominal
defendants, have an independent right to defend the tort
action, and become legally obligated to pay only when the
insured is legally entitled to recover. She asserts that as a
nominal defendant, the UIM carrier is a "person liable
for the same injuries giving rise to the ...