If, after being fully compensated for injuries, the insured assigns her rights to underinsured benefits to another insurer, is the insurer entitled to the insured's right to benefits? The Hawaii Intermediate Court of Appeals answered no in AIG Hawaii Ins. Co. v. State Farm Ins. Co., No. 27789 (Haw. Ct. App. Oct. 8, 2008).
Manuel, State Farm's insured, was rear-ended by Negron, AIG's insured. Negron was insured for bodily injury coverage and Manuel was insured for uninsured (UM) and underinsured (UIM) coverage. AIG agreed to pay Manuel $20,000 in exchange for an assignment of her interest in the UM benefits under her State Farm policy. Manuel then demand UIM benefits from State Farm. State Farm agreed to pay an additional $13,500 in UIM benefits. Manuel accepted the settlement of her UIM claim.
AIG then sued State Farm for damages in the amount AIG paid to Manuel. Meanwhile, the underlying case went to arbitration where it was determined Manuel injuries totaled $33,500. After applying the deductible of $10,000, Manual's claim was $23,500.
The Circuit Court subsequently granted State Farm's motion for summary judgment, finding that based on the Arbitration Award, Manuel had been fully compensated. Consequently, neither she nor AIG had any right to UM benefits under her State Farm policy.
On appeal, the ICA first held the assignment to AIG was valid even though State Farm had never consented. Manuel had merely assigned her contractual right to receive UM payments, if available, to AIG. This created no additional risk to State Farm.
Nevertheless, AIG stood in the shoes of Manuel and was not entitled to recover more than Manuel would be entitled to under her State Farm policy. Therefore, AIG was not entitled to seek UM benefits from State Farm because Manuel had been fully compensated.
Finally, the ICA affirmed the award of attorney fees to State Farm under the assumpsit statute, Haw. Rev. Stat. 607-14. AIG's claim for UM benefits was in the nature of assumpsit under section 607-14. Further, AIG sought "costs and reasonable attorney fees" in its Complaint, preventing AIG from denying the underlying action was in the nature of assumpsit.
