EMC is not asserting a subrogation right to share in the Blakelys’ recovery from a third party. This appeal presents the made whole doctrine in a different setting. The Court therefore remanded for resolution of the made whole issue. Ruling on a certified question, the Supreme Court held that, “absent an agreement or settlement between the parties, an insurer’s right to subrogation does not accrue until there has been a legal determination by a court that the insured has been made whole.” 381 S.W.3d at 850. The insured sought injunctive relief to invalidate the lien on the ground that the third party settlement had not made her whole. In Riley, typical of situations in which the made whole issue commonly arises, an insurer paid the injured insured’s medical bills and then asserted the right to a statutory reimbursement lien on the insured’s settlement recovery from a tortfeasor’s insurer. Whether the insured has been made whole is an issue of equity for the court. Thus, “he general rule is that an insurer is not entitled to subrogation unless the insured has been made whole for his loss.” Riley v. Hickey, United States District Judge for the Western District of Arkansas. 1997) (quotation 1 The Honorable Susan O. The made whole doctrine in Arkansas reflects the principle that “equity will require that the insured be made whole before the insurer’s right to subrogation will arise.” Franklin v. In applying equitable subrogation principles, the Supreme Court of Arkansas has adopted a “made whole” doctrine that has also been adopted, with significant variations, in many jurisdictions. “Subrogation is a normal incident of indemnity insurance” that “assures against unjust enrichment by way of double recovery.” S. “Subrogation at its essence is the substitution of one party for another in the exercise of some legal right.” Welch Foods, Inc. When there is no state supreme court case directly on point, our role is to predict how the state supreme court would rule if faced with the same issue before us.” Blankenship v. “Under Erie,2 we are obligated to apply governing precedent from the Arkansas Supreme Court. We apply the substantive law of Arkansas in this diversity action. prior to initiating this subrogation action.” EMC appeals. At the close of plaintiff EMC’s evidence, the district court1 granted Entergy’s motion for judgment as a matter of law, concluding that EMC “does not have standing to pursue its subrogation claim” because “it failed to obtain a legal determination that its insureds had been made whole. The Blakelys’ homeowner’s insurer, EMC Insurance Companies, paid $203,247.49 for their total property damage and then brought this diversity action against Entergy, alleging the utility’s equipment caused the 2014 fire and asserting subrogation claims for damages “in excess of $203,247.49.” The case proceeded to a jury trial. In August 2015, the home was completely destroyed by a second fire while being repaired without electric power service. Entergy Arkansas, Inc., provided electric power to the home. A fire seriously damaged the home of Milton and Norma Blakely in Crossett, Arkansas, in October 2014. lllllllllllllllllllllDefendant - Appellee _ Appeal from United States District Court for the Western District of Arkansas - El Dorado _ Submitted: JanuFiled: _ Before LOKEN, GRASZ, and STRAS, Circuit Judges. 18-2327 _ EMC Insurance Companies lllllllllllllllllllllPlaintiff - Appellant v. United States Court of Appeals For the Eighth Circuit _ No. In this action by an insurer asserting subrogation claims against a utility alleging the utility's equipment caused a fire at the insured parties' property,the district court erred in determining the insurer did not have standing to bring the claim without first obtaining the insureds' agreement or a court determination that the insured had been made whole however, the district court properly granted defendant's motion for judgment as a matter of law, as the insurer never argued to the district court that it had presented adequate proof before or during trial that the insureds had been made whole, an essential element of the claim on which the insurer bears the burden of proof. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here.Ĭourt Description: Loken, Author, with Grasz and Stras, Circuit Judges] Civil case - Insurance. You already receive new opinion summaries from Eighth Circuit US Court of Appeals. Sign up for free summaries delivered directly to your inbox. Want to stay in the know about new opinions from the Eighth Circuit US Court of Appeals?
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