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Transportation Insur. Co. v. Womack

August 5, 2020

Plaintiff was injured in a motor vehicle accident.  Plaintiff had a one million dollar underinsured motorist policy with Transportation Insurance Company (“Transportation”).  The Defendant, who was insured by GEICO, admitted to causing the car accident, but disputed the extent of damages suffered by the Plaintiff.  Transportation filed an answer, but stated that  Defendant and GEICO were to plead and prove any defenses.  Defendant subsequently filed for bankruptcy while the suit was pending and listed Plaintiff’s personal injury claim as uncontested.  Plaintiff’s counsel argued that the Defendant could not take inconsistent legal positions in two legal actions, arguing that Defendant should be bound by the bankruptcy pleading.   The trial court agreed and entered judgment for the Plaintiff.  The trial court also refused to allow Transportation to defend its underinsured motorist interest, finding that the insurer had given up said right when it relied on GEICO to assert affirmative defenses.  The Supreme Court of Virginia disagreed.  The court held that Transportation did not relinquish its right to conduct its own defense if (and when) the interest of Transportation and the other carrier’s interest diverged.