PAUL RUSSAK, APPELLANT,
v.
STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, APPELLEE
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Paul Russak breached his subrogation agreement with State Farm by executing a general release that included property damage without State Farm's written consent, thereby barring the insurer's right to pursue subrogation against the at-fault driver. The court affirmed summary judgment for State Farm, holding that an insured occupies a fiduciary relationship with their insurer and owes duties of diligence, competence, and good faith.
Russak breached the subrogation agreement. An insured occupies a fiduciary relationship with the insurer and owes duties of diligence, competence, and good faith similar to those of a trustee. By executing the general release without State Farm's written consent, Russak violated this fiduciary duty and his contractual obligations under the subrogation receipt.
[1] An insured who settles a claim and executes a general release that extinguishes the insurer's subrogation rights breaches the subrogation agreement.
[2] An insured owes an insurer, with respect to subrogation rights, the duties of diligence, competence, and good faith, akin to those of a trustee.
Previewing 2 of 3 headnotes on this case. FLexlaw’s editorially structured points of law — every proposition, pinpointed — are reserved for members.
Join FLexlaw to unlock all legal intelligence“As to the insurance company, he [the insured] occupied a fiduciary relationship and owed to his beneficiary the usual duties of diligence, competence and good faith owed by a trustee.”
Establishes the fiduciary duty standard applicable to insureds in relation to their insurers regarding subrogation rights.
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Join FLexlaw to unlock all legal intelligenceRussak was insured by State Farm with collision coverage. His wife Janice was involved in a collision with Alan Telisman while operating Russak's auto…
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The appellant, Paul Russak, was insured by the appellee, State Farm Mutual Automobile Insurance Company, under an automobile liability policy which included collision coverage. Janice Russak, the appellant’s wife, was involved in an automobile collision with one Alan Telisman while she was operating an automobile owned by her husband. As a result of the collision, the appellant’s automobile was damaged and Janice Russak sustained personal injuries. Thereafter, appellant made a claim under the coilision coverage with State Farm for the damage to his automobile. The claim in the amount of $1,250 was paid, and the company received from appellant a sub-rogation receipt in the usual form which specifically provided that “ . . .no such settlement will be made nor release given by the undersigned without the written consent of the said insurer and the undersigned covenants and agrees to cooperate fully with said insurer in the prosecution of such claims . . . ”.
Thereafter, appellant and his wife filed suit for personal injuries to the wife. Upon the settlement of the suit for personal injuries, appellant and his wife executed a general release specifically including property damage. Then, the appellee, without knowledge of the general release, filed suit to enforce its subrogation rights. Upon the presentation of the general release, however, the appellee insurance company’s suit was voluntarily dismissed. The present suit was then filed by the appellee insurance company against the appellant alleging breach of the subrogation agreement. After the filing of answer and discovery proceedings, an affidavit was filed, and the trial court entered a summary judgment upon the motion of the appellee.
On this appeal, no claim is made that there is a genuine issue of material fact. Rather, each of appellant’s points urge that the summary judgment was improperly entered as a matter of law.
In Titus v. Emmco Insurance Company, Fla.App.1959, 109 So.2d 781, the insured received a satisfaction of a judgment in a suit which effectively barred an insurance company from proceeding under its sub-rogation rights. This court held that the insurance company had a right to recover from the insured. In so holding, we stated:
“As to the insurance company, he [the insured] occupied a fiduciary relationship and owed to his beneficiary the usual duties of diligence, competence and good faith owed by a trustee. Hayward v. State Farm Mutual Automobile Insurance Company, 212 Minn. 500, 4 N.W.2d 316, 140 A.L.R. 1236.”
We think that the case at bar is governed by this holding. See also the reasoning of the Court of Appeals of Georgia in Clark v. American Casualty Company, 96 Ga.App. 328, 99 S.E.2d 897 (1957).
Affirmed.
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Ortega v. Motors Ins. Corp., 552 So. 2d 1127 (Fla. 3d DCA 1989)…nts required by the Corporation in the prosecution of such rights, and the Corporation is hereby authorized and empowered to use, compromise or settle in the undersigned’s name or otherwise. Compare, Russak v. State Farm Mutual Automobile Ins. Co., 281 So. 2d 541 (Fla. 3d DCA) (insured who settled with tortfeasor without consent of insurer liable for breach of subrogation contract which provided that "... no such settlement will be made nor release given by the undersigned without the written consent of the…
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Russak v. State Farm Mut. Auto. Ins. Co., 288 So. 2d 257 (Fla. 1973)…Certiorari denied. 281 So. 2d 541. CARLTON, C. J., and ROBERTS, BOYD, McCAIN and DEKLE, JJ., concur.…
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Seneca Specialty Ins. Co. v. Jade Beach Condo. Ass'n, Inc. (Fla. 3d DCA 2024)…least two prior occasions this Court did rule on the merits of an insurer’s breach of contract claim against its insured without a prior adverse determination of the underlying subrogated claims. See, e.g., Russak v. State Farm Mut. Auto. Ins. Co., 281 So. 2d 541 (Fla. 3d DCA 1973) (appeal of final summary judgment in favor of insurer in action against insured for breach of contract following insurer’s voluntary dismissal of subrogation action upon discovering insured settled with tortfeasor and executed a g…
Authorities Cited
- Titus v. Emmco Ins. Co., 109 So. 2d 781 (Fla. 3d DCA 1959)