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YORK INS. GROUP OF MAINE v. VAN HALL12/12/1997
[ 1] Carol Van Hall appeals from a summary judgment entered in the Superior Court (Cumberland County, Brennan, J.) in favor of York Insurance Group of Maine contending that the trial court erred when it determined as a matter of law that she was not entitled to deduct a proportionate share of her attorney fees from the funds due to York pursuant to the subrogation clause of her automobile insurance policy. We agree and vacate the judgment.
[ 2] Following her automobile accident, York paid $5,000 toward Van Hall's medical expenses pursuant to the medical payment provision of her automobile insurance policy. Van Hall later settled her claim against the responsible third party for $65,000 and signed a general release. After settlement York requested reimbursement from Van Hall for the $5,000 medical payment pursuant to the insurance contract's subrogation provision. Van Hall and her attorney tendered
$3,350 to York, retaining one-third ($1,650) as a prorated share of legal fees and costs. York refused the offered payment and filed a complaint in the Superior Court seeking a declaratory judgment that it had a legal right pursuant to the insurance policy to recover the full $5,000. At the conclusion of discovery, both parties filed motions for a summary judgment. After hearing the court granted a summary judgment to York and ordered Van Hall to pay $5,000 to York.
[ 3] We review the entry of a summary judgment for errors of law, viewing the evidence in a light most favorable to the party against whom the judgment was entered. Kandlis v. Huotari, 678 A.2d 41, 42 (Me. 1996). A party is entitled to a summary judgment if there is no genuine issue of material fact and the party on the undisputed facts is entitled to judgment as a matter of law. M.R. Civ. P. 56(c); Chadwick-BaRoss, Inc. v. T. Buck Constr., Inc., 627 A.2d 532, 534 (Me. 1993).
[ 4] Van Hall asks us to adopt the "common fund" doctrine in Maine. We do so and join the majority of jurisdictions that have considered the issue. The common fund doctrine provides that when a fund is created to which more than one party is entitled each party must pay a share of the expenses incurred in creating the fund, including reasonable attorney fees. See Foremost Life Ins. Co. v. Waters, 125 Mich. App. 799, 337 N.W.2d 29, 32 (1983). "Ordinarily, where insured recovers a reimbursement of benefits for the no fault insurance company from a tortfeasor, the no fault insurance company is obligated to contribute to the payment of costs and attorney fees incurred by insured in obtaining the reimbursement for the insurance company." 46A C.J.S. Insurance § 1636 (1993).
[ 5] We believe that adoption of the common fund doctrine in Maine will result in a more equitable relationship between an insurance company and its insured in cases such as this. As one commentator has stated:
When an insurance company lays claim to subrogation proceeds,
obviously someone has to collect them, and attorneys rarely
work for free. It is grossly inequitable to expect an insured,
or other claimant, in the process of protecting his own
interest, to protect those of the [insurance] company as well
and still pay counsel for his labors out of his own pocket, or
out of the proceeds of the remaining funds. And this is
precisely the view taken by the overwhelming majority of
decisions, in that a proportionate share of fees and expenses
must be paid by the insurer or may be withheld from its share.
8A John A. Appleman & Jean Appleman, Insurance Law and Practice § 4903.85, at 335 (1981).
[ 6] York acknowledges that the common fund doctrine is an exception to the rule that an attorney-c
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