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Gallagher v. Sidhu2/28/2005
Concurring: Anne Ellington, Mary Kay Becker
PUBLISHED OPINION - Opinion ordered published April 11, 2005
Margaret Gallagher and her husband initiated a personal injury lawsuit after she was injured in a vehicle accident. The defendants' liability insurer became insolvent, so the Washington Insurance Guaranty Association (WIGA) stepped into its shoes pursuant to chapter 48.32 RCW. WIGA intervened in the lawsuit in order to determine whether RCW 48.32.100(1) eliminated its obligation to make payments on behalf of the defendants. On cross motions for summary judgment, the superior court ruled in WIGA's favor. We affirm, and hold that WIGA is entitled to offset its payment obligation by the amount the Gallaghers received under their underinsured motorist insurance (UIM) coverage. WIGA's obligation was negated because it equaled the amount available under the Gallaghers' UIM. We further conclude that the defendants are entitled to benefit from the offset.
I.
Margaret Gallagher was injured in a vehicle accident caused by Nirmal Sidhu. Sidhu was driving a Farwest taxi owned by Vackram Singh. Gallagher and her husband sued Sidhu, Farwest, and Singh for damages arising out of her injuries.
At the time of the accident, the defendants had a liability insurance policy with United Pacific Insurance Company, a former subsidiary of Reliance Insurance. The policy insured up to $100,000 per person for bodily injury. Reliance has since been liquidated. Under the Washington Insurance Guaranty Association Act (the Act), WIGA assumed responsibility for claims arising out of the defendants' policy with the insolvent insurer.
The Gallaghers had $100,000 UIM coverage in their own insurance policy. They claimed and received the full amount from their insurer.
The parties stipulated that WIGA could intervene in the lawsuit in order to determine whether RCW 48.32.100(1) eliminated WIGA's obligation to make payments on behalf of the defendants. WIGA and the Gallaghers filed cross motions for summary judgment. The superior court granted WIGA's motion, and denied the Gallaghers'. The court denied the Gallaghers' subsequent motion for reconsideration.
II.
The Gallaghers first argue that WIGA is not entitled to offset its obligation by the amount available under their UIM policy. They claim that the Act requires UIM benefits to be offset against a claimant's total damages, not against the amount of the defendant's policy with the insolvent carrier. So long as they have not been made whole by the receipt of their UIM coverage, argue the Gallaghers, WIGA is obligated to pay any remaining damages, up to the defendants' policy limits.
But it is well established that WIGA is entitled to offset its obligation by the amount available under a claimant's UIM policy. The purpose of chapter 48.32 RCW is to avoid financial loss to claimants when insurers become insolvent. The objective is to place both the claimant and the insured in the same position that they would have been in had the insurer been solvent. The statute is not intended to increase the insurance recovery available to claimants.
Under the Act, WIGA steps into an insolvent insurer's shoes to the extent of its obligation on all covered claims. Covered claims are unpaid claims, 'which arise{} out of and {are} within the coverage of' an insurance policy with an insolvent insurer. The nonduplication provision under RCW 48.32.100 provides, however, that a claimant who has a claim against his insurer which is also a covered claim under the Act must first exhaust his right under his own policy. Any amount collected by the c
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