ANALYSIS OF APRIL 27, 2017 SUPREME COURT OPINION

(Posted April 27, 2017) The justices hand down one published opinion today. Manu v. GEICO Casualty decides whether the duty to adjust a vehicular claim in good faith applies to an uninsured motorist carrier before the case goes to judgment.

Manu was a passenger in a collision; he sued his driver and John Doe. Manu’s driver had a $25K policy, and so did Manu. The driver’s policy quickly paid its policy limits, since Manu’s special damages exceeded $33,000. But Manu’s UM carrier, GEICO, refused to budge, insisting that the claim be tried to judgment.

Manu did that and got a verdict for $68K. GEICO immediately paid its policy limits and closed the file. But not so fast; Manu then sued GEICO, contending that its intransigence led to a needless trial. He asserted that GEICO had the same duty as a liability carrier to adjust the claim in good faith.

GEICO demurred to the lawsuit, claiming that it had no duties to Manu at all until the claim was reduced to judgment. The trial court agreed and dismissed the case. Today the Supreme Court unanimously affirms. It holds that the precipitating event in a UM claim, the event that makes the insurer legally obligated, is a judgment.

As I see it, the real issue here is this: the statute requires an insurer to adjust a “claim” in good faith. Do you have a “claim” against your UM carrier before judgment? The court decides that you don’t. The court explains the distinction in a footnote; here’s the text of that note:

We recognize that Black’s Law Dictionary also defines “claim” as “[a] demand for money, property, or a legal remedy to which one asserts a right; esp. the part of a complaint in a civil action specifying what relief the plaintiff asks for.  Also termed claim for relief.”  However, it is clear from the foregoing discussion that the term “claim” within the context of first-party insurance refers to an existing right.  Under Code § 38.2-2206, an insured does not have a “claim” against the UM carrier until he satisfies the contractual prerequisites for payment by the insurer; a mere assertion or demand is not a “claim” in this context.

While you may make a “claim” against your UM carrier before judgment, that’s really just a demand for payment. You don’t have a claim until the nice judge signs a judgment order.

Something tells me that this case will inspire a bill in the 2018 General Assembly session. I can offer you no insight into the fate of such a bill.