Uninsured Motorist Insurance Coverage


Turner v. State Farm Mut. Ins. Co., [Ms. 1181076, May 29, 2020] ___ So. 3d ___ (Ala. 2020). The Court (Bryan, J.; Parker, C.J., and Bolin, Shaw, Wise, Sellers, Stewart and Mitchell, JJ., concur; Mendheim, J., concurs in part and concurs in the result) affirms a summary judgment entered by the Baldwin Circuit Court in favor of State Farm in a case seeking underinsured motorist insurance benefits when the plaintiff accepted a tortfeasor’s settlement offer and released the tortfeasor from liability in derogation of State Farm’s “Consent-to-Settle” contractual provision. Citing Lambert v. State Farm Mut. Auto. Ins. Co., 576 So. 2d 160, 167 (Ala. 1991) (Ms. *11), the Court reiterates that:

“[T]he purpose of consent-to-settle clauses in the uninsured/underinsured motorist insurance context is to protect the underinsured motorist insurance carrier’s subrogation rights against the tort-feasor, as well as to protect the carrier against the possibility of collusion between its insured and the tortfeasor’s liability insurer at the carrier’s expense.”

Id. Because the plaintiff accepted the tortfeasor’s settlement offer and released the tortfeasor and his liability insurance carrier from liability, any subrogation interest State Farm may otherwise have had against either of those parties was extinguished. Id., Ms. **11-12. Accordingly, the plaintiff repudiated his contract with State Farm with the result that “when one party repudiates a contract, the non-repudiating party is discharged from its duty to perform.” Id. at *12, quoting Beauchamp v. Coastal Boat Storage, LLC, 4 So. 3d 443, 451 (Ala. 2008). Thus, when the plaintiff refused to abide by the terms of the consent-to-settle provision in his policy with State Farm, he repudiated the contractual agreement and State Farm’s obligation to pay UIM benefits to the plaintiff was discharged. Ibid.

The Court suggests, albeit in dicta, that a party can seek injunctive relief from the trial court in determining whether an uninsured/underinsured motorist insurance carrier is unreasonably withholding its consent to settle with a tortfeasor. See discussion at Ms. **23-25, citing United Services Automobile Ass’n v. Allen, 519 So. 2d 506 (Ala. 1988).

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