United States Court of Appeals, Eleventh Circuit

949 F.
2d 1124
PRUDENTIAL COMMERCIAL INSURANCE COMPANY, A

SUBSIDIARY OF the
PRUDENTIAL INSURANCE COMPANY of AMERICA on
Behalf
of NEW JERSEY AUTOMOBILE FULL INSURANCE
UNDERWRITING ASSOCIATION,
Plaintiff-Appellant,
v.
MICHIGAN MUTUAL INSURANCE COMPANY, DefendantAppellee,
Allstate Insurance Company, Defendant.
No. 89-8759.
United States Court of Appeals,

Eleventh Circuit.
Jan. 7, 1992.
Edward M. Harris, Jr., Vicki McReynolds Knott, Decatur, Ga., for

plaintiff-appellant.
Sewell K. Loggins, D. Keith Calhoun, Mozley, Finlayson & Loggins,
Atlanta, Ga., for defendant-appellee.
Appeal from the United States District Court for the Northern District of
Georgia; Robert H. Hall, Judge.
Before COX, Circuit Judge, and TUTTLE and CLARK* , Senior Circuit
Judges.
PER CURIAM:
We heretofore on February 19, 1991 issued an opinion in this case in which we

requested the Supreme Court of Georgia's assistance with respect to two
certified questions concerning insurance coverage questions raised in this law
suit. See 924 F.2d 199 (11th Cir.1991). The Georgia Supreme Court entered an
opinion dated November 1, 1991 in which it answered the first question in the
affirmative and answered the second question in the negative. See Prudential
Commercial Ins. Co. v. Michigan Mut. Ins. Co., 261 Ga. 637, 410 S.E.2d 30
(1991). In light of the Supreme Court of Georgia's opinion we reverse the
judgment of the district court based upon its opinion of August 18, 1989, 720
F.Supp. 167, and remand the case to that court for entry of an order which
conforms to the opinion issued by the Supreme Court of Georgia, attached
hereto as an appendix.
2
REVERSED and REMANDED.
APPENDIX
In the Supreme Court of Georgia
Decided:
3
S91Q0727. PRUDENTIAL COMMERCIAL INSURANCE COMPANY v.

MICHIGAN MUTUAL INSURANCE COMPANY
SMITH, Presiding Justice.
These questions are before us on certification from the United States Court of
Appeals for the Eleventh Circuit. The appellant, Prudential Commercial
Insurance Company (Prudential), as statutory subrogee of Charlotte, Allen, and
Daniel Kimerling (Prudential's insureds) sued the appellee, Michigan Mutual
Insurance Company (Michigan Mutual), to recover personal injury protection
(PIP) benefits paid to the Kimerlings. The Kimerlings had been injured in a
collision with a tractor-trailer insured by Michigan Mutual. Judge Robert Hall
of the U.S. District Court for the Northern District of Georgia granted summary
judgment for Michigan Mutual, holding that Prudential waived its right of
subrogation by failing to intervene in the Kimerlings' action against Michigan
Mutual prior to settlement. On appeal, the Eleventh Circuit certified to this
Court two questions of law:
1. Whether Prudential, which has a statutory right of subrogation, may recover

upon that right after the Kimerlings reached a settlement with Michigan Mutual
and its insureds in an action in which Prudential chose not to intervene?
2. Whether Prudential, if it is entitled to recover on its statutory right of
subrogation against Michigan Mutual and its insureds, is limited by Georgia

Code Ann. 33-34-5(a)(1) (1990) to a recovery upon that right of $50,000.00
in personal injury protection benefits paid to Charlotte Kimerling?
8
We answer question one in the affirmative, and question two in the negative.
Prudential insured the Kimerlings with a policy issued in New Jersey. On

November 17, 1986 the Kimerlings were involved in a collision outside of
Atlanta with a tractor-trailer operated by Michigan Mutual's insured. The
tractor-trailer weighed in excess of 6500 pounds unloaded.1 Charlotte and
Daniel Kimerling were injured in the accident and their son Allen was killed.
Prudential paid approximately $218,000.00 in PIP benefits on behalf of these
three insureds.
10
On March 10, 1987, the Kimerlings filed a personal injury action against
Michigan Mutual and its insured. Prudential failed to intervene in the action,
although it claims to have notified Michigan Mutual of its subrogation claim.
One week before trial, the Kimerlings settled with Michigan Mutual without
notifying Prudential and issued to Michigan Mutual a release of liability.2
11
Prudential then filed this action in State Court of Fulton County, and the case
was removed to the Federal District Court. Prudential seeks to recover from
Michigan Mutual all sums Prudential has paid to the Kimerlings, pursuant to
OCGA 33-34-3(d)(1)(B).3 The District Court granted summary judgment for
Michigan Mutual, and Prudential appealed to the Eleventh Circuit Court of
Appeals, which certified to this Court the two questions under consideration.
12
1. Michigan Mutual contends that Prudential waived its right of subrogation by

failing to intervene in the Kimerlings' suit against Michigan Mutual prior to
settlement. We disagree.
13
This case is controlled by United States Fidelity & Guaranty Co. v. Ryder
Truck Lines, Inc., 160 Ga.App. 650, 288 S.E.2d 1 (1981) and Vigilant
Insurance Co. v. Bowman, 128 Ga.App. 872, 198 S.E.2d 346 (1973). In USF &
G v. Ryder, supra, USF & G's insureds reached a compromise settlement with
Ryder (the tort-feasor) prior to trial and released Ryder from liability. The
settlement was without USF & G's consent, though Ryder had knowledge of
USF & G's subrogation claim. Recognizing USF & G's statutory right of
subrogation, the court stated:
... the release of plaintiff Ryder as to the tort case in federal court would not bar the
14
subrogation claim here. The release was executed without the consent of USF & G,
and at that time of execution [sic], Ryder had actual knowledge of USF & G's
subrogation claim. Ryder, the tort-feasor (wrongdoer), could not obtain the release
so as to protect Ryder, the self-insurer, to prevent USF & G from pursuing its
subrogation claim under the statute.
15
The court reached a similar decision in Vigilant, supra. There, the court held
that wrongdoer settles with the insured ... without the consent of the insurer ...
with the knowledge of the insurer's payment and right of subrogation, such
right is not defeated by the settlement." Id. at 874, 198 S.E.2d 346. We believe
these holdings control the present case.
16
Michigan Mutual relies heavily on a statement made by this Court in State

Farm Mutual Auto Insurance Co. v. Five Transportation Co. et al., 246 Ga.
447, 271 S.E.2d 844 (1980). There, we stated that "if the appellant [insurance
company] allowed this case to proceed to a judgment without asserting its right
of subrogation by intervening as a party plaintiff, it could be argued that it
waived its right of subrogation." Id. at 454, 271 S.E.2d 844. (Emphases
supplied.)
17
This language does not control the present case. First, because the insurance
company in State Farm v. Five actually filed a motion to intervene in the case,
the language was not necessary to the case's determination, and thus was
dictum. Second, the quoted passage merely states that "it could be argued" that
the insurance company waived its right of subrogation. We did not hold as a
matter of law that the insurance company must intervene to protect its
subrogation right.
18
Thus, Georgia case law dictates that, where a case is settled prior to trial, the
insurer's right of subrogation is not barred by its failure to intervene.
19
2. Michigan Mutual also argues that any subrogation right held by Prudential is
limited by OCGA 33-34-5 to a maximum dollar amount of $50,000.00 per
injured person.
20
Such a reading conflicts with the plain language of our no-fault subrogation
statute, OCGA 33-34-3, and Jordan v. T G & Y Stores Co., 256 Ga. 16, 342
S.E.2d 665 (1986). OCGA 33-34-3(d)(1)(B) reads in pertinent part: "The
right of recovery and the amount of recovery shall be determined on the basis
of tort law between the insurers or self-insurers involved." (Emphasis
supplied). OCGA 33-34-3(d)(2) then provides:
21
Nothing
contained in paragraph (1) of this subsection shall be deemed to increase or
enlarge the bodily injury liability, personal injury protection, or medical payments
limits of any policy of motor vehicle liability insurance in this state.
22
As we stated in Jordan v. T G & Y Stores Co., supra, 256 Ga. at 18, 342 S.E.2d
665:
23[Where subrogation under OCGA 33-34-3(d)(1) applies] the statute, by clear

...
implication subrogates the no-fault insurer to the rights of its insured against a third
party tort-feasor to the extent of no-fault benefits paid. This means the insurer may
recover benefits it paid its insured from the tort-feasor to the same extent the tortfeasor is liable to its insured. It has the same rights, neither more nor less, than its
insured possesses against the tort-feasor.
24
Thus, "a liability carrier that settles with the injured party for less than the
policy limits does so at its own risk and remains potentially liable for the nofault carrier's subrogation claim up to the policy limits." Southern General Ins.
Co. v. Cotton States Mutual Ins. Co., 193 Ga.App. 240, 241, 387 S.E.2d 435
(1989). There is no need to look to other insurance law provisions, or to create
an artificial limit to subrogation based upon the statutory requirement for
insurers (issuing relevant policies in Georgia) to offer optional benefits and
coverages under OCGA 33-34-5. We read OCGA 33-34-3 as establishing
the right of a lawful subrogee under the statute to seek recovery from the
insurer of a tort-feasor the subrogee's legitimate payments made pursuant to the
no-fault provisions of its policy with the injured, up to the aggregate of the
bodily injury liability, personal injury protection, and medical payments
provisions of the policy being subrogated against.
25
Certified questions answered. All the Justices concur.
See Rule 34-2(b), Rules of the U.S. Court of Appeals for the Eleventh Circuit
OCGA 33-34-3(d)(1) provides in pertinent part:

Insurers and self-insurers providing benefits without regard to fault described in
Code Sections 33-34-4 and 33-34-5 shall not be subrogated to the rights of the
person for whom benefits are provided except:
(A) In those motor vehicle accidents involving two or more vehicles, at least
one of which is a motor vehicle weighing more than 6,500 pounds unloaded ...
The order approving the settlement was entered on May 24, 1988
OCGA 33-34-3(d)(1)(B) provides in pertinent part: "The right of recovery and

the amount of recovery shall be determined on the basis of tort law between the
insurers or self-insurers involved."

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949 F.

PRUDENTIAL COMMERCIAL INSURANCE COMPANY, A

United States Court of Appeals,

Edward M. Harris, Jr., Vicki McReynolds Knott, Decatur, Ga., for

We heretofore on February 19, 1991 issued an opinion in this case in which we

REVERSED and REMANDED.

S91Q0727. PRUDENTIAL COMMERCIAL INSURANCE COMPANY v.

SMITH, Presiding Justice.

1. Whether Prudential, which has a statutory right of subrogation, may recover

2. Whether Prudential, if it is entitled to recover on its statutory right of

subrogation against Michigan Mutual and its insureds, is limited by Georgia

Prudential insured the Kimerlings with a policy issued in New Jersey. On

1. Michigan Mutual contends that Prudential waived its right of subrogation by

Michigan Mutual relies heavily on a statement made by this Court in State

23[Where subrogation under OCGA 33-34-3(d)(1) applies] the statute, by clear

Certified questions answered. All the Justices concur.

OCGA 33-34-3(d)(1) provides in pertinent part:

OCGA 33-34-3(d)(1)(B) provides in pertinent part: "The right of recovery and

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