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Heaton v. Geico Insurance Company of Alabama

United States District Court, S.D. Alabama, Southern Division

January 23, 2017

PHILLIP HEATON, Plaintiff,
v.
GEICO INSURANCE COMPANY OF ALABAMA, Defendant.

          ORDER AND MEMORANDUM OPINION

          CALLIE V. S. GRANADE, SENIOR UNITED STATES DISTRICT JUDGE

         This matter is before the Court on a motion for summary judgment filed by Defendant Geico Insurance Company of Alabama (“Defendant”) (Doc. 46), response in opposition filed by Plaintiff Phillip Heaton (“Plaintiff”) (Doc. 53), and reply by Defendant (Doc. 54). For the reasons stated below, Defendant's motion is GRANTED.

         I. FACTUAL BACKGROUND

         In July 2009, Plaintiff resided with his parents, Jasper and Mary Heaton, in Foley, Alabama. At that time, Jasper and Mary owned a 2008 Kia Optima insured with Defendant under an Alabama automobile insurance policy (“the Policy”).[1](Doc. 46-4). The Policy contained uninsured/underinsured motorist coverage (“UIM coverage”). Id. at 4. As it pertains to UIM coverage, the Policy explained as follows:

Under the Uninsured Motorists Coverage we will pay damages for bodily injury caused by accident which the insured is legally entitled to recover from the owner or operator of the uninsured auto or hit-and-run auto arising out of the ownership, maintenance or use of that auto.
The amount of the insured's recovery for these damages will be determined by agreement between the insured or his representative and us. The dispute may be arbitrated if an agreement cannot be reached.

Id. at 14. UIM coverage, however, “does not apply to bodily injury to an insured if the insured or his legal representative has made settlement or has been awarded a judgment of his claim without [Defendant's] prior approval.” Id.

         As it relates to UIM coverage, the person or persons named in the declaration are not the only persons covered. Instead, “relatives of [the person(s) named in the declaration] if residents of his household” are also provided UIM coverage. Id. Defendant does not contest that Plaintiff meets this criteria. (Doc. 46-1, p. 2). Bodily injury to any person covered includes injury “resulting [in] sickness, disease or death.” Id. at 7. Although the language above primarily speaks to uninsured motorist or autos, the Policy also covers underinsured motorist or auto situations in UIM coverage claims. Id. at 14.

         While a resident of his parents' home, Plaintiff's nephew needed a way back to Galveston, Texas for work. (Doc. 46-2, p. 2). Plaintiff's parents were unable to drive to Texas, so Plaintiff drove his nephew to Texas using the 2008 Kia Optima his parents owned. Id. While in Texas on July 23, 2009, Gerald Ray Rivera (“Rivera”) struck the 2008 Kia Optima Plaintiff was driving. Plaintiff suffered extensive physical injury and the 2008 Kia Optima was totaled. Id. at 5.

         On August 25, 2009, a Texas division of Defendant's company wrote Plaintiff's father, Jasper Heaton, in accordance with Texas law regarding recovery of any deductible Jasper Heaton paid under the Policy. The letter stated, in relevant part:

Please be advised that in accordance with Section 542.204 of the Texas Insurance Code, we are notifying you that with respect to recovery of your deductible or our subrogation interest, we do not intend to take further collection actions against the third party(ies) who may be liable for this claim. As such, we hereby authorize you to bring an action at your option and your expense against the responsible third party(ies), if any, in order to attempt to recover your deductible.

(Doc. 53, p. 3). Jasper Heaton had a $500.00 deductible for any collision damage the 2008 Kia Optima sustained. (Doc. 46-4, p. 4). The extent of Plaintiff's contact with Defendant was related to reimbursement of certain medication and mileage expenses under Defendant's “med pay” portion of the policy, which totaled approximately $5, 000.00. (Doc. 46-2, pp. 8-9). The Policy capped medical payments at $5, 000.00. (Doc. 46-4, p. 4).

         On July 1, 2011, Plaintiff filed suit against Rivera and Kia Motors Corporation in a Texas court, under representation of a Texas attorney. (Doc. 46-2, p. 27). Relevant to the instant motion, Plaintiff brought a negligence claim against Rivera for the injuries he sustained in the accident. Id. 32. During the pendency of the suit, Plaintiff's Texas attorney was aware of the Policy. Id. at 11. Plaintiff spoke with his Texas attorney about adding Defendant to the suit because of Rivera's “minimal coverage.” Defendant, however, was never added and an UIM claim was never filed. Id. at 16. The Texas attorney told Plaintiff that he would have to retain an Alabama attorney if he wanted to file an UIM claim. Id. at 20. Plaintiff testified that he did not send a letter to Defendant informing it that the lawsuit had been initiated in Texas. Id. at 21. Further, Plaintiff testified that he was unaware of whether the Texas attorney wrote Defendant informing it of the Texas lawsuit. Id. But evidence suggests Defendant was aware that Plaintiff filed suit against Rivera in a Texas court. (Doc. 53, p. 4).

         On November 20, 2012, Plaintiff and Rivera reached a final settlement in the amount of $5, 000.00 for the negligence claim. (Doc. 46-2, p. 35). Thereupon, the Texas court entered a final judgment, which denied any further claims against Rivera in regards to the accident. Id. Plaintiff testified that he has no knowledge of whether the Texas attorney ever communicated with Defendant prior to entering settlement with Rivera. Id. at 22. Additionally, Plaintiff did not inform Defendant of the settlement, settlement specifics, or a potential UIM claim prior to entering settlement with Rivera. Id. at 24-25.

         On April 28, 2015, Plaintiff, acting pro se, initiated the present suit. (Doc. 1). On October 27, 2015, Plaintiff, then represented by counsel, filed his First Amended Complaint. (Doc. 25). Therein he claimed Defendant breached the Policy by “failing to pay Plaintiff's bodily injury and ...


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