Allstate Insurance Co. v. Druke

In Allstate Insurance Co. v. Druke, 118 Ariz. 301, 576 P.2d 489 (1978), a class action, the court considered an insurance policy provision that required insureds to "repay Allstate out of the proceeds" received from the tortfeasor. Id. at 302, 576 P.2d at 490. The court held that the provision was "unenforceable as an assignment of the insured's cause of action against the third party tortfeasor." Id. at 304, 576 P.2d at 492. The court explained: Whatever the form, whatever the label, whatever the theory, the result is the same. The policies create an interest in any recovery against a third party for bodily injury. Such an arrangement, if made or contracted for prior to settlement or judgment, is the legal equivalent of an assignment and therefore unenforceable. Id.