Apperson v. Auto Owners Insurance Company

Filing 59

MEMORANDUM AND ORDER re: 46 MOTION to Dismiss for Lack of Jurisdiction filed by Third Party Defendant Wayne Pruitt motion is DENIED. Signed by District Judge Rodney W. Sippel on 2/13/14. (LGK)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MISSOURI
NORTHERN DIVISION
AUTO-OWNERS INSURANCE
COMPANY,
Plaintiff,
v.

WAYNE PRUITT,
Defendant.

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Case No. 2:13 CV 35 RWS

MEMORANDUM AND ORDER
This matter is before me on Defendant Wayne Pruitt’s motion to dismiss Plaintiff AutoOwners Insurance Company’s complaint for lack of jurisdiction. For the reasons stated below, I
will deny Defendant’s motion.
Procedural Background
On January 6, 2012, Larry Apperson, the original plaintiff in this action, was a passenger
in a car accident that occurred in Audrain County, Missouri. Apperson filed suit in state court
against the driver of the car, Wayne Pruitt. Prior to filing suit, Apperson notified his insurer,
Auto-Owners Insurance Company, of the accident and requested a copy of his insurance policy.
After Apperson filed his action against Pruitt, he sent Auto-Owners a copy of the petition.
On October 22, 2012, Apperson received a judgment against Pruitt in the amount of
$2,500,000.00. Apperson and Pruitt entered into an agreement whereby Apperson collected
$100,000.00 from the Pruitt, which was the limit of Pruitt’s liability coverage. Apperson then
made a claim to Auto-Owners under the underinsured motorist insurance provision of his policy,
which Auto-Owners refused to pay.
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On March 14, 2013, Apperson filed an action against Auto-Owners in the Circuit Court
of Randolph County, Missouri, seeking a declaration that Auto-Owners owed him underinsured
motorist coverage. On April 19, 2013, Auto Owners removed the action to this Court based on
diversity jurisdiction. Additionally, Auto-Owners raised affirmative defenses and brought a
counterclaim seeking a declaratory judgment that it is not required to pay Apperson underinsured
motorist benefits.
On October 30, 2013, I granted Auto-Owners leave to file a third-party complaint against
Pruitt. On November 6, 2013, Auto-Owners file a third-party complaint against Pruitt seeking a
declaratory judgment of its subrogation rights against Pruitt in the event it is determined to owe
coverage to Apperson.
After Auto-Owners filed its complaint against Pruitt, Auto-Owners and Apperson settled
their claims on December 6, 2013. Auto-Owners agreed to pay Apperson $500,000.00 under the
underinsured motorist insurance provision of his policy, and it has since satisfied this obligation.
On December 13, 2013, I dismissed all claims and counterclaims between Auto-Owners and
Apperson. Auto-Owners’ third-party complaint against Pruitt remains pending.
On December 23, 2013, Auto Owners filed an amended complaint against Pruitt. Pruitt
now moves to dismiss Auto-Owners complaint.
Discussion
Auto-Owners’ amended complaint seeks subrogation recovery against Pruitt for the
payment it has made to Apperson. Pruitt correctly argues that a subrogation action is generally
brought in the name of the subrogor. Kroeker v. State Farm Mut. Auto. Ins. Co., 466 S.W.2d
105, 110–11 (Mo. App. 1971). Under Missouri law, the insured is generally the party in interest

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in a subrogation action. See Hagar v. Wright Tire & Appliance Inc., 33 S.W.3d 605, 610 (Mo.
App. 2000).
However, Missouri courts have contemplated allowing an insurer to bring a subrogation
action in its own name where the tortfeasor has consented to the splitting of the cause of action
against him and the potential of an unjust double recovery by the insured does not exist. See
Marshall v. Northern Assur. Co. of America, 854 S.W.2d 608 (Mo. App. 1993. Here, Apperson
reduced his claim against Pruitt to a final judgment in state court. After receiving judgment,
Apperson entered into an agreement with Pruitt whereby Apperson collected $100,000.00 from
Pruitt, an amount less than Pruitt’s full liability as a result of the judgment. The agreement
released Pruitt from his full liability without Auto-Owners’ consent. Auto-Owners contends that
because Pruitt was aware of Auto-Owners’ subrogation interest at the time he reached this
agreement, Pruitt consented to the splitting of the cause of action against him. See Dickhans v.
Missouri Property Ins. Placement Facility, 705 S.W.2d 104 ( Mo. App. 1986) (“[I]t would be
patently unjust to permit a third party tortfeasor, with knowledge of an insurer's subrogation
interest, to settle with the insured for less than the wrongdoer's full liability, and become thereby
insulated against the insurer's right of action.”).
I am persuaded by Auto-Owners’ argument. The circumstances of this case resemble
those in Marshall, where the court held:
[I]f a third party tort-feasor, with knowledge of an insurer's right of action as
subrogee, and without the consent of the insurer, settles with the insured, the
insurer's right to proceed against such tort-feasor is not affected. In such case, the
primary wrongdoer, and not the insured, should repay the insurer. Whatever
rights the insurer had against the tort-feasor prior to the settlement, the insurer still
has.
Marshall, 854 S.W.2d at 612 (citations omitted). Because Auto-Owners has paid Apperson
pursuant to the underinsured motorist provision of the policy, Auto-Owners is entitled to attempt
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to recover that amount from Pruitt. Id. Apperson has fully released Pruitt, so the potential of an
unjust double recovery by Apperson does not exist. Any recovery in the present action will
belong to Auto-Owners to reimburse it for the amount it paid the Apperson. Under such
circumstances, Auto-Owners is entitled pursue a subrogation action in its own name. Dickhans,
705 S.W.2d at 107 (“[Insurer] may proceed in its own name against [tortfeasor] in a separate
action after making payments to its insured.”).
Accordingly,
IT IS HEREBY ORDERED that Defendant’s motion to dismiss [#46] is DENIED.

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RODNEY W. SIPPEL
UNITED STATES DISTRICT JUDGE
Dated this 13th day of February, 2014.

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