Erie Insurance Exchange v. Calvert Fire Insurance

Marbury, J., delivered the opinion of the Court. Erie Insurance Exchange (Erie) and Mrs. Leela Jane Lee appeal from a judgment in the amount of $1,144.00 entered upon a directed verdict against them in the Circuit Court for Montgomery County in' favor of the plaintiff-appellee, Calvert Fire Insurance Company (Calvert). Erie afforded automobile liability insurance for Frederick R. Harbaugh whose automobile was involved in a collision on November 24, 1962, with an automobile owned and operated by Leela Jane Lee, who sustained personal injuries as well as damage to her automobile. Calvert insured the Lee automobile for collision damage in excess of $100.00.

The policies of both insurance companies were in effect at the time of the accident. Calvert received notice of the accident on December 4, 1962. At that time Mrs. Lee was represented by Myer Koonin, Esquire, who was in contact with Calvert’s representative, Edward Fishell. Mrs. Lee’s automobile was determined to be a “constructive total loss” and on January 18, 1963, Fishell met with Mrs. Lee to make a settlement.

The settlement effected was a replacement vehicle purchased for Mrs. Lee from Tom’s Chevrolet, and Mrs. Lee signed 'a loan receipt, and a loss or ³⁸⁷ damage agreement, which assigned to Calvert “all rights and causes of action the said undersigned [Mrs. Lee] has against any person, persons or Corporation whomsoever for damages to the insured property . . . .” After sale of the damaged automobile and adjustment of loss, the net loss or amount actually paid by Calvert was $1,144.00. According to Fishell, the settlement between Erie and its assured was approved by Mrs. Lee’s attorney, Myer Koonin, although the latter denied it. On January 31, 1963, Daniel Mitchell, Calvert’s subrogation supervisor in Baltimore, Maryland, sent a form letter to Erie advising it that the right of Mrs. Lee to recover $1,245.00 from Erie’s insured Harbaugh had been assigned by Mrs. Lee to it. No enclosures accompanied this letter.

On February 5, 1963, Erie acknowledged Calvert’s letter of January 31, 1963, by a letter which provided in pertinent part: “This is to acknowledge receipt of your letter of subrogation to our assured in regard to the above mentioned accident. As soon as we have made settlement with the claimants for Bodily Injury, we will contact you to make final disposition of this claim.” The letter was signed by E. J. Reading, an adjuster for Erie. On August 19, 1963, Calvert again wrote Erie as follows: “Please advise as to the status of your file at this time, and your anticipated settlement date. Thank you.” A reply dated August 20, 1963, from John K. Axelson, another Erie adjuster, stated: “Dear Mr. Mitchell: We are still negotiating toward settlement of the bodily injury claims and therefore we cannot satisfy your subrogation claim at present.

We suggest you place your file on a 60 day diary.” As requested in this response, Calvert placed the file on its diary. Calvert sent another letter to Erie on January 8, 1964, and furnished, for the first time, copies of the loan receipt, estimate of repairs, and sale of salvage report. By letter dated March 5, 1964, from John Axelson, Calvert learned that Erie had settled with Mrs. Lvee on November 7, 1963, for a total of $5,-290.00, which amount included both the bodily injury and property damage claims, $1,490.00 being allocated to the property damage claim. The letter further stated that Calvert’s original subrogation notice was on numerous occasions mentioned during the settlement negotiations, but that Erie had been advised ³⁸⁸ by Mrs. Lee that she never accepted collision payment from Calvert.

Mr. Mitchell, one of Calvert’s subrogation supervisors, testified that Erie never contacted his company prior to Erie’s settling directly with Mrs. Lee to see if Calvert had paid the property damage to its assured. Mr. Axelson also testified that prior to settlement with Mrs. Lee he had made no attempt to contact Calvert to advise them of the settlement he was about to make. He further stated that when he settled the personal injury and property damage claims with Mrs. Lee, “We had felt that we probably owed the claim and we’d best settle it.” On April 15, 1966, Calvert filed suit against Erie, Harbaugh and Mrs. Lee. By amended declaration, it alleged that Erie, as liability insurer, for defendant Harbaugh, had promised to pay Calvert the property damage claim in the amount of $1,144.00.

Calvert also alleged that Erie had negligently and carelessly interfered with the appellee’s contractual right with Mrs. Lee. During a jury trial before Judge Moorman, the lower court directed a verdict against Erie and Mrs. Lee in favor of Calvert on June 17, 1968. Erie and Mrs. Lee have appealed to this Court. Mrs. Lee has not