Insurer found not bound by judgment against motorist

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An insurer may enforce a policy clause requiring an insured seeking uninsured motorist (UM) benefits to obtain the insurer’s consent to sue before it will be bound by a judgment against an uninsured tortfeasor, ruled the Court of Appeals.

A man who was injured in a collision between his vehicle and an uninsured vehicle was denied uninsured motorist coverage by his insurance company because the collision was triggered by the actions of a third vehicle that was insured. The injured man then sued the uninsured motorists and obtained a final default judgment of $30,653.58 against them. He again demanded payment of uninsured motorist benefits under his insurance policy.

The insurance company again denied the claim, contending that an exclusionary clause in the policy provided it was not bound by a judgment between its insured and an uninsured motorist unless it consented, which it did not in this case.

A District Court judge denied the insured’s summary judgment motion, but certified the question of whether the insurance company’s exclusion was valid.

The Court of Appeals held that the District Court judge properly denied summary judgment in ruling the insurance company may enforce its exclusionary clause so that it is not bound by the insured’s judgments against the uninsured motorist.

The seven-page decision, Kwong v. Depositors Insurance Company, Minnesota Lawyer No. CA-660-00, was written by Judge Robert H. Schumacher.

Minneapolis attorney Timothy P. Jung, who represented the insurance company, said that decision recognizes that the provision in the insurance policy requiring the insured to obtain the consent of the insurance company before suing an uninsured tortfeasor is really a reasonable protection for the uninsured motorist carrier. Such a policy allows an uninsured motorist carrier “to avoid default judgments and other judgments not on the merits, such as settlement agreements between the plaintiff and uninsured tortfeasor and other judgments obtained without vigorous litigation,” he said.

Jung also remarked that the decision correctly follows the significantly different dynamics that exist between an uninsured motorist case and an underinsured motorist case.