Many states, including Pennsylvania, recognize that once a property insurer has paid its insured for a property damage loss, that insurer owns a separate and independent cause of action against the tortfeasor responsible for causing the damage. See State Farm v. Ware’s Van Storage, 953 A.2d 568 (Pa. Super 2008). In Ware’s Van Storage, State Farm’s insured filed a lawsuit seeking compensation for his personal injuries arising out of a truck accident; he did not make a claim for his property damage deductible or any uninsured property damage. State Farm commenced a subrogation action seeking recovery of the amount it paid its insured for property damage arising out of the accident. State Farm did not include the insured’s deductible interest of other uninsured claims in its complaint. The defendants in the State Farm case filed preliminary objections in the nature of a demurrer asserting that State Farm had waived its subrogation claim because its insured had already filed a complaint seeking damages arising out of the same transaction or occurrence. The Court concluded that under Pennsylvania law, the subrogated insurer and its insured are not compelled to assert their related claims in a single action. "State Farm’s insured, once reimbursed for its property damage under the terms of the insurance policy, has no further interest in pursuing that claim… Once payment is made, the unity of the insurer’s interest with that of its insured is eliminated, rendering the parties’ interest in litigation qualitatively dissimilar." State Farm and its insured were not subject to the compulsory joinder of their cases and were permitted to maintain separate causes of action for their separate claims. However, the Court noted that if State Farm had included the insured’s deductible or any uninsured property damage claim, or if the insured had included a claim to recover its deductible or other property damage in his complaint, the causes of action would have to be consolidated and could not proceed as separate cases.
Other courts have held that all damages resulting from an "indivisible" cause of action must be addressed in one proceeding. See, e.g., Simpson v. Robert’s Express Inc., 182 A.2d 449 (NH 1962); Federal Ins. Co. v. Cheoy Lee Shipyards, Ltd., 210 W.L. 255 7484 (S.D. FL 2010). In Simpson, the plaintiff was injured in an automobile accident that also caused damage to his insured vehicle. The Court determined that since the personal injury and property damage arose out of the same accident, it constituted a single cause of action that could not be split between the insured and his insurer. The Court concluded that the insurer knew about the insured’s personal injury lawsuit and should have intervened in that case to recover its property damages. Instead, after the injured plaintiff obtained a verdict, the vehicle insurer filed a claim for property damage arising out of the same accident. The Court held that the subrogation claim was barred by the insurer’s failure to intervene in the insured’s personal injury case. The Court noted, however, "[i]f a subrogation claim becomes barred by a judgment because of the insurer’s failure to intervene owing to non-culpable ignorance of the pendency of suit, the insurer may be entitled to have judgment vacated."
In Federal Ins. Co. v. Cheoy Lee Shipyards, Ltd., the Southern District of Florida addressed the rule against splitting causes of action. A yacht was hit by a large wave causing the coachroof superstructure to fail. Nine months later, the yacht owner filed a breach of warranty claim against the yacht manufacturer for defects which were in existence prior to the damages caused by the wave. The Court noted that the yacht owner did not include a claim for damages caused by the wave. The Court noted that the yacht owner knew about the damages caused by the wave when it filed its breach of warranty claim against the yacht manufacturer. The Court determined that the insured, "and thus its insurer"(!) decided to split their causes of action by not including the wave-related damages. The Court rejected the subrogating insurer’s argument that the damages arising from the wave incident constituted a separate and distinct cause of action from the pre-existing warranty damages. The Court also rejected the insurer’s argument that the subrogation claim falls within Florida’s "insurance exception" to the rule against splitting causes of action because the damages were "of the same type" as the insured’s breach of warranty action. "The rule against splitting causes of action makes it incumbent upon plaintiffs to raise all available claims involving the same circumstances in one action… The alleged breaches by defendants occurred at one time, during manufacture, and all such claims should have been brought in one action even though the damages may have occurred at two different times." The Court found it significant that the damages caused by the wave incident occurred prior to the deadline for amending pleadings in the insured’s breach of warranty case. Therefore, there was no argument that the subrogating insurer was not aware of the claim while the first action was pending. The Court concluded, "this case involves an insurance company (and an insured yacht owner), who chose not to seek similar damages stemming from similar claims from a later incident in the Prior Action although it had every opportunity to do so."
The moral of the story for subrogating insurers, keep an eye on what your insured is doing because you may have to act quickly to preserve your claim. Consult subrogation counsel as soon as you are aware of your subrogation claim and find out if your insured has filed, or plans to file a lawsuit arising out of the same incident, or against the same tortfeasors involved in your subrogation claim.