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Llewellyn v. White

Supreme Court of Virginia

August 15, 2019

ANN ELIZABETH LLEWELLYN
v.
ANN MICHELLE WHITE

          FROM THE CIRCUIT COURT OF HENRICO COUNTY Gary A. Hicks, Judge

         PRESENT: All the Justices

          OPINION

          S. BERNARD GOODWYN, JUSTICE.

         In this 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.

         Background

         On July 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 traffic.

         At the 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.

         White 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.

         Prior 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.

         On 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.

         The 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.

         White 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.

         The 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.

         Analysis

         Llewellyn 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 ...


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