LIMITS SETTLEMENT WITH ADVERSE CARRIER IS NOT A JUDGMENT, EVEN WHEN UIM CARRIER CONSENTS

In Adedpipe v. Safeco Ins., No. 4:17-CV-347, 2018 WL 295428 (E.D. Tex. Jan. 4, 2018) (slip copy), a federal district judge in Sherman recently confirmed existing Texas law holding that the mere fact of a UIM carrier's consent to a settlement for the limits of the tortfeasor's policy does not convert the settlement into a judgment demonstrating that the claimant is “legally entitled” to more than the adverse limits.  The injured claimant settled for the $30,000 limit of the tortfeasor's policy and did so with Safeco's approval and consent. Safeco then denied his UIM claim. When he sued Safeco for UIM benefits (and alleged various Insurance Code violations), the court granted Safeco's motion to dismiss.  The court's message was clear that UIM claimant should go get an excess judgment from the tortfeasor, and then re-file.  Of course, having released the tortfeasor, this is probably no longer possible for the claimant.

[Editor’s Note: The lesson here is that the UIM carrier may approve and consent to a limits settlement, and still demand full compliance with the policy condition that the claimant demonstrate he is legally entitled to more money from the tortfeasor.  In some claims, this means obtaining a judgment against the tortfeasor, not a settlement. Thus, a claimant with damages exceeding the tortfeasor's liability limit is ill-served by settling for less than the amount of his damages and releasing the tortfeasor if he wants to recover additional sums from his own UIM carrier. Results may vary depending on how compelling the evidence is, but when in doubt, policyholders should not sign away their opportunity to recover an excess judgment against the tortfeasor.