BROOME v. WATTS
8/7/1995
This appeal arises from an automobile wreck case. Appellants appeal the denial of their motion for a new trial, arguing that the trial judge erred in granting a jury trial to Respondent. They also appeal the judge's granting to Respondent a set-off against the jury's verdict. We affirm.
FACTS
As a result of an automobile accident with Traci Watts, John Broome sued Watts for personal injury , and his wife, Carol Broome, sued Watts for loss of consortium. Watts was insured by Nationwide Mutual Insurance Company (Nationwide) under a policy providing liability limits of $50,000/$100,000. The Broomes had underinsured motorist (UIM) coverage with United Services Automobile Association (USAA). The Broomes served USAA with the complaints as required by S.C. Code Ann. § 38-77-160 (Supp. 1994).
USAA filed notices of appearance in both cases, "reserving any and all rights and objections and defenses." USAA also filed motions for intervention. Subsequently, the Broomes, Nationwide, and Watts entered into a settlement agreement in which Nationwide agreed to pay its $50,000 liability limits to the Broomes.
In the agreement, Watts waived her right to a jury trial. The Broomes agreed not to execute against Watts or Nationwide
After Nationwide paid its $50,000 liability limits to the Broomes, USAA assumed the defense of the action as permitted by § 36-77-160 and filed answers in which it made a proper demand for a jury trial. Despite the Broomes' objections, the trial judge ordered a jury trial.
The jury awarded Mr. Broome $90,000 and Mrs. Broome $500 (this award was increased by additur to $7,500). Against this $97,500 verdict, the judge granted USAA a set-off for the $50,000 liability policy limits paid by Nationwide.
ISSUES
I. Is USAA bound by a settlement agreement between
Watts and the Broomes in which Watts waived her
right to a jury trial?
II. Did the trial judge err in setting off the
liability policy payout against the verdict?
DISCUSSION
I. Jury Trial
The Broomes argue that the settlement agreement between them, Watts, and Nationwide bound USAA to a non-jury forum. Under the Broomes' rationale, Watts is the named defendant and a waiver by the named defendant binds the UIM carrier even though the carrier was not a party to the settlement agreement. We disagree.
Section 38-77-160 provides that the UIM carrier
has the right to appear and defend in the name of the
underinsured motorist in any action which may affect
its liability. . . . In the event the automobile insurance
insurer for the putative at-fault insured chooses to
settle in part the claims against its insured by payment
of its applicable liability limits on behalf of its
insured, the underinsured motorist insurer may assume
control of the defense of action for its own benefit.
(Emphasis added.)
In Williams v. Selective Ins. Co., 315 S.C. 532, 534, 446 S.E.2d 402, 404 (1994), we held that
the intent of § 38-77-160 is to protect an insurance
carrier's right to contest its liability for
underinsured benefits. An insured must therefore
preserve the right of action against an at-fault driver
so long as the underinsured carrier has not agreed to
the amount and payment of underinsured motorist benefits.
In the event the insured chooses to settle with the
at-fault party's liability carrier, the underinsured
carrier has the option to assume control of the defense
of the action as provided in § 38-77-160.
Williams further held that the purpose of § 38-
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