Can You Recover Compensation In Excess of the Amount Recovered from the Insurance Company ?
In Johnson v. Beane, 541 Pa. 449, 664 A.2d 96 (1995), plaintiff Johnson was injured in an automobile accident with Beane.
Beane admitted liability but his insurance company, State Auto Mutual Insurance Company (State Auto), refused to settle for the policy limit of $ 25,000.
Following trial, a jury returned a verdict of $ 200,000 in Johnson's favor.
Johnson requested $ 175,000 from her underinsured motorist carrier, Erie Insurance Group (Erie).
No agreement was reached, and Johnson filed a petition to compel underinsured motorist arbitration.
In the meantime, the trial court ordered a remittitur reducing the verdict to $ 75,000.
State Auto paid the $ 25,000 policy limit.
Johnson agreed to settle with Erie for the remaining $ 50,000 of the judgment and executed a release agreement in which she agreed to subrogate Erie to her right of recovery against any other liable party. Johnson then commenced a bad faith garnishment action against State Auto, Beane's insurer, seeking $ 50,000 based on the existing judgment against Beane.
The trial court dismissed the action, holding that Johnson had effectively assigned her right to recovery to Erie in exchange for payment of the entire sum due her.
The superior court affirmed.
Our supreme court also affirmed, holding that there was no debt owing from Beane to Johnson because Johnson had been fully compensated by Erie.
The court stated that "regardless of the language contained in the Release and Agreement, Johnson's claim passed to Erie by virtue of the fact that Erie paid the remainder of the judgment." Id. at 456, 664 A.2d at 100.
The court held that because Johnson was fully compensated for her loss, she had no claim to pursue.