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Liberty Mutual Insurance Co. v. Eades9/16/1994
OPINION BY JUSTICE A. CHRISTIAN COMPTON
In this appeal, we deal with a collateral attack on a judgment entered upon a stipulation of the parties.
In May 1989, appellee Pamela Wray Eades, the plaintiff below, was injured while a pedestrian in Prince George County when struck by a Toyota truck owned and operated by Dana L. Veazey. At the time of the accident, appellant Liberty Mutual Insurance Company, the defendant below, had issued a policy of motor vehicle liability insurance labelled "Business Auto Policy" to Veazey's father as the named insured. The father operated a home improvement business and the policy listed four vehicles, including the daughter's truck, as "covered autos."
Upon being notified of the accident and a subsequent personal injury suit brought in the Circuit Court of Prince George County by the plaintiff against Veazey, the insurer refused to provide coverage to Veazey. The insurer asserted that it had been given improper
"ownership information" in the application for the policy and that the business policy did not cover vehicles owned by family members of the named insured. Apparently, the insurer did not seek adjudication of the coverage question by declaratory judgment nor did it undertake to furnish Veazey a defense under a reservation of its rights later to deny coverage. The insurer simply took no part in the tort action.
As a result, Veazey employed counsel, who subsequently reached an agreement with counsel for the plaintiff regarding Disposition of the pending action. The parties agreed to present a stipulation to the court and to ask that judgment be entered for the plaintiff against Veazey. As a part of the agreement, the plaintiff promised not to seek collection of the judgment against Veazey.
Accordingly, in December 1991, a final order was entered in the pending action as follows:
"Came this day the parties, by counsel, upon the stipulation of certain facts and issues and upon consideration thereof, it is ORDERED that the plaintiff, Pamela Wray Eades, shall have judgment against the defendant, Dana L. Veazey, in the sum of Forty Thousand Dollars ($40,000.00), with interest from the date of entry of this order as provided by [statute]."
Subsequently, the insurer refused the plaintiff's demand to indemnify Veazey and to satisfy the judgment. Thereafter, Veazey and her father assigned to the plaintiff all rights, claims, and causes of action existing in their favor against the insurer.
In October 1992, the plaintiff filed the present action in the Circuit Court of the City of Richmond against the insurer seeking indemnification under the insurance contract and satisfaction of the prior judgment. Denying liability, the insurer raised the coverage question and also asserted that the judgment was "a result of collusion" between the plaintiff and Veazey.
During the course of a jury trial, the court rejected the insurer's argument that the plaintiff had the burden of establishing that the underlying judgment was reasonable in light of the injuries actually suffered by the plaintiff in the accident. The insurer presented evidence that the plaintiff suffered no "broken bones," was treated and released at a hospital immediately after the accident, and incurred
only $1,872 in medical bills as the result of the injury. The trial court ruled that the insurer was not permitted to challenge the reasonableness of the amount of the judgment, unless it could prove fraud or collusion.
Therefore, the
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