Tuffnail v. Meekes
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The Facts
Gregory Tuffnail was seriously hurt in a single-vehicle crash in September 2009 after a wedding reception where he and the driver, Steven Meekes, had been served alcohol. A jury apportioned fault 65% to Meekes, about 20% to the groom who hosted the reception, about 11% to the bartender, Steve Coulthard, and under 4% to Mr. Tuffnail. His net award was about $3.4 million. The liability insurance available was $200,000 for Meekes, $2 million for the host and $1 million for the bartender, and the amounts were shared with the family of a passenger who died. Mr. Tuffnail sued the driver, the host and his own insurer, State Farm, for coverage under the OPCF 44R. He did not sue the bartender; State Farm did, bringing a third-party claim for contribution. The trial judge ordered State Farm to pay $800,000, the endorsement's limit less Meekes' $200,000, reasoning that the bartender's policy was not available to Mr. Tuffnail because he had not sued the bartender.
What the Court Decided
Writing for the court, Associate Chief Justice Hoy allowed State Farm's appeal on the deduction. Section 7(b) of the endorsement makes the insurer's payment excess to amounts available from the insurers of a person jointly liable with the inadequately insured motorist. The court held that the bartender was jointly liable for this purpose. State Farm's third-party claim was in substance a subrogated claim in Mr. Tuffnail's name, which put the bartender's liability to him in issue and which the jury and trial judge resolved against the bartender. The bartender's $1 million policy was therefore available, and State Farm could deduct it. On the trial judge's numbers its payment fell from $800,000 to roughly $347,000. A second ruling went the other way. The trial judge had said State Farm must share subrogation recoveries with Mr. Tuffnail only until he received full indemnity under the OPCF 44R, which made no sense when the shortfall was on the judgment as a whole. The court held that section 278(2) of the Insurance Act applies, filling a gap in the endorsement, and that the pro rata sharing continues until he has full indemnity under the judgment. It stressed that the point was narrow and did not settle the calculation. The court also decided other issues in the appeals, including the bartender's share and interest, that are not covered here.
The leading Court of Appeal decision on one question that arises in many underinsured claims: whether the injured person's own insurer can subtract insurance held by other responsible parties. It means that suing only the obvious defendants does not necessarily increase what the endorsement will pay, and that an insurer who pursues other wrongdoers may be treated as having put their liability in play. The case involved a bartender and a host. It does not mean any person who could have been sued is automatically treated as jointly liable, and it should be read together with later decisions on umbrella and excess policies.
Does This Affect You?
- ✓You were hurt in a crash where several people or businesses may share fault, such as a host, a bar, a driver and a vehicle owner.
- ✓Your own insurer says it can subtract other parties' liability insurance from your OPCF 44R claim.
- ✓Your insurer has sued, or may sue, someone else in your name to recover what it paid you.
Key Takeaways
- An endorsement insurer can subtract the limits of insurance available from a person jointly liable with the underinsured driver.
- A person can be treated as jointly liable where the insurer's subrogated claim puts that person's liability to the injured claimant in issue, even if the claimant never sued them.
- Later recoveries by the insurer through subrogation are generally shared pro rata with the injured person until the claimant is fully indemnified for the judgment, under section 278(2) of the Insurance Act.