Palmer H. Rimes and Patricia A. Rimes, Plaintiffs-Respondents v. State Farm Mutual Automobile Insurance Company…

Summary

The Wisconsin Supreme Court held that an automobile insurer that paid medical-pay benefits under a subrogation agreement may recover nothing from the insureds' $125,000 settlement with third-party tortfeasors, because the settlement fell far short of the $300,433.54 in damages the trial court found the Rimeses sustained; under the equitable made-whole rule of Garrity, applicable to conventional as well as legal subrogation, an insurer shares in a recovery only after the insured is fully compensated for all elements of damage. The court further held that a pre-trial settlement and general release is not, as a matter of law, an acknowledgment that the insured was made whole, and that the trial court's post-settlement trial to the court to determine the sum that would have made the plaintiffs whole was appropriate methodology under Lewandowski. Justices Coffey and Steinmetz dissented: Coffey would have deemed a voluntary settlement for less than available coverage an implicit making-whole permitting proportionate subrogation recovery, and Steinmetz viewed the mini-trial as an improper advisory opinion beyond the trial court's jurisdiction and would have held the settlement made the plaintiffs whole.