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Roberts v. Progressive Northwestern Insurance Co.12/21/2004
the splitting of Dickhans' cause of action against Sanford by settling with him separately. Id . at 106. Since the settlement did not extinguish MPPIF's right of subrogation, Dickhans' right to recover benefits under his MPPIF policy was preserved.
Dickhans was followed by the Western District of this Court in Marshall v. Northern Assur. Co. of America , 854 S.W.2d 608 (Mo. App. 1993). There, Carolyn Marshall was injured in an automobile accident caused by William VanDruff. He was insured by Farmers and only had liability coverage in the amount of $25,000 per person. The Marshalls had underinsured motorist coverage with Northern Assurance Company of America ("NACA"), and VanDruff qualified as an underinsured motorist under the terms of NACA's policy. The Marshalls obtained a judgment against VanDruff in the amount of $45,000. On the same day the judgment was entered, the Marshalls entered into a covenant not to garnish or execute on the assets of VanDruff in exchange for payment of his $25,000 limits. Id . at 609. Thereafter, NACA refused to pay, and the Marshalls filed suit to recover their underinsured motorist benefits. NACA contended the covenant not to garnish or execute against VanDruff's assets prejudiced NACA's subrogation rights so as to relieve the carrier of its duty to pay. The trial court entered summary judgment in favor of the Marshalls, and NACA appealed. The Western District affirmed the judgment in favor of the Marshalls. Relying upon Dickhans, the appellate court held as follows:
It is obvious from the language of the covenant entered into between the Marshalls and VanDruff that VanDruff knew of NACA's interest. Therefore, we find that it would be "patently unjust" to allow VanDruff to enter into a covenant with the Marshalls limiting his own liability and thereby insulating himself against NACA's right of subrogation against him. Accordingly, we find that the covenant entered into between the Marshalls and VanDruff is not binding on NACA. Therefore, the Marshalls did not breach their contractual obligation to protect NACA's subrogation right because that right still exists. Because the Marshalls have not breached their contract, NACA must perform under the contract. When NACA has paid the Marshalls pursuant to the underinsured provision of the insurance policy, NACA then will be entitled to attempt to recover from VanDruff any monies NACA has paid to the Marshalls because of the automobile accident that was the subject of the tort action.
Id . at 612. Thus, the settlement between the Marshalls and VanDruff did not destroy NACA's right of subrogation because the covenant not to execute was not binding on NACA. Consequently, the Marshalls' right to recover underinsured motorist benefits from NACA was not affected by the settlement.
We reach the same conclusion here. Prior to August 1999, there had been a joint effort by Universal, Progressive and Grinnell to settle Thomas' and Cara's uninsured motorist claims. On April 22, 1999, the attorney who jointly represented Progressive and Grinnell sent a letter to Universal's attorney. The letter stated:
On behalf of Grinnell and Progressive, I am withdrawing our previous offer to contribute $10,000 from each carrier to settle all outstanding claims. Since your client has made little or no effort to get these cases settled, we will litigate the declaratory judgment action and defend the three UM cases which have been filed. If either of my clients are forced to pay any amounts on the underinsured motorist claims, I will fully pursue the subrogation claims.
In August 1999, Universal proceeded to negotiate an independent settlement of Thomas' and Cara's uninsured motorist claims, an
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