Griffin v. Calistro

[195]

Opinion

GILBERT, J.

Plaintiffs Kathleen and August Griffin appeal an order enforcing a judicial settlement. We reverse and hold Insurance Code section 11583

1

does not permit defendants to deduct from settlement proceeds an advance payment made to plaintiffs’ insurer-subrogee.

Facts

On April 13, 1987, defendant David Frank Calistro collided with an automobile driven by plaintiff Kathleen Ann Griffin. Griffin suffered personal injuries from the accident and her automobile was significantly damaged. Her insurer paid her $2,713 for damages to her automobile and thereafter filed a subrogation claim with Calistro’s liability insurer. On July 15, 1987, Calistro’s insurer sent Griffin’s insurer a check for $2,563 as payment of the subrogation claim. (The $150 difference between $2,713 and $2,563 represents the salvage value of the automobile.)

Six months later Griffin and her husband brought this negligence action against Calistro and his mother, the owner of the automobile Calistro was driving. The Griffins requested damages for personal injuries and property damage.

Thereafter, pursuant to Code of Civil Procedure section 998, the Calistros proposed settlement for $14,500. The Griffins accepted. The Calistros’ insurer then presented the Griffins with a check for $11,937, explaining it had subtracted the $2,563 subrogation payment from the proposed $14,500 settlement. When the Griffins demanded full payment, the Calistros moved for an order enforcing settlement for $11,937, relying upon section 11583. The trial court granted this order. The Griffins appeal and challenge the deduction of $2,563 paid to satisfy the subrogation claim of their insurer.

Discussion

Section 11583 provides: “No advance payment or partial payment of damages made by any person, or made by his insurer under liability insurance ... as an accommodation to an injured person or on his behalf to others . . . shall be construed as an admission of liability .... Any such payments shall, however, constitute a credit and be deductible from any final settlement made . . . which does not expressly take into account such advance payments . . . .” To be deductible from settlement proceeds under section 11583, an advance or partial payment must be made as “an accommodation to an injured person or on his behalf to others.”