Auto insurer has traditional subrogation rights to recover property damage

By William H. Waechter

An auto insurer is entitled to traditional subrogation against the tortfeasor for its property-damage payment and does not owe its insured a share of the insured's attorney fees, the Washington Court of Appeals recently held.

In Meas v. State Farm Fire & Cas. Co., no. 32818-6-II (Nov. 22, 2005), Quoc To injured Sarith Meas in an auto accident on February 19, 2002. State Farm provided no-fault collision coverage to Meas. In May 2002, State Farm paid for repair of Meas's car, less his deductible. Meas's lawyer had told State Farm by letter that Meas would claim against To and his liability insurer, Allied, not only personal-injury damages but also all subrogation claims by State Farm, including for property damage. Just a week after State Farm had paid for Meas's property damage, State Farm recovered that payment directly from Allied, before Meas had settled his personal-injury claim.

In February 2003, Meas's counsel submitted a settlement demand to Allied for both personal injury and property damage. Allied responded that it had paid State Farm for the property damage already. In April 2003, Meas's attorney wrote to State Farm, demanding that either it pay Allied back or tender Allied's property-damage payment to Meas until he settled his personal-injury claim. He argued that under Mahler v. Szucs, 135 Wn.2d 398 (1998), State Farm did not have the right to recover property damage directly from the tortfeasor or his insurer. Mahler required a personal-injury-protection (PIP) insurer to share in its insured's legal expense that resulted in reimbursement of the PIP insurer's payments. State Farm disagreed and retained the payment.