Written by Stephanie G. Cook, Esq.
Edited by Bill Pfund, Esq.
Virginia Code Section 38.2-2206(F) provides, in part:
If any action is instituted against the owner or operator of an uninsured or underinsured motor vehicle by any insured intending to rely on the uninsured or underinsured coverage provision or endorsement of this policy under which the insured is making a claim, then the insured shall serve a copy of the process upon this insurer in the manner prescribed by law, as though the insurer were a party defendant.
A circuit court in Virginia recently examined the service provisions of this statute and overruled an underinsured motorist carrier’s plea in bar in which the carrier requested dismissal on the basis that it was not served within one year of the filing of the complaint. Jones v. Goldsborough, 2016 Va. Cir. LEXIS 189. In Goldsborough, an accident occurred on April 11, 2013. The plaintiff filed suit on March 8, 2015. The defendant was served on December 29, 2015, within the one year limitation prescribed by Va. Code § 8.01-275.1. The underinsured motorist carrier was served on March 23, 2016, after the one year anniversary of the filing date.
In overruling the insurer’s plea in bar, the court reiterated that the service of process rules under Va. Code § 8.01-275.1 and Rule 3:5(e) of the Rules of the Supreme Court of Virginia do not apply to uninsured or underinsured motorist carriers. Those provisions apply only to named defendants. They require service of process upon a defendant within twelve months of commencement of an action. The court reasoned that service of “a copy of the process” pursuant to Va. Code § 38.2-2206(F) does not make the insurance company a defendant to the cause of action. The service rule pursuant to Va. Code § 38.2-2206(F) “simply prescribes the precise and formal method of notification of the commencement or filing of a legal action to a party that is, or may be interested in the action.” Id. at 3 (quoting Burnett v. Mugle, 25 Va. Cir. 420, 421 (Northumberland County 1991)).
The court further pointed out that the phrase “in the manner prescribed by law” in Va. Code § 38.2-2206(F) modifies the words “shall serve” and consequently indicates a clear legislative intent to limit the requirement of the manner of service of process described elsewhere in the Code, such as in Va. Code § 8.01-275.1. In other words, the court concluded if the legislature of Virginia had intended to create a limitation of the time for service upon the uninsured or underinsured motorist carrier, then it would have done so with more explicit language. Id. at 3 (relying on Glens Falls Insurance Co. v. Stephenson, 235 Va. 420, 422-23 (1988)).
It is important to remember that even though Va. Code § 38.2-2206(F) gives an insurer the “right to file pleadings and take any other action allowable by law in the name of the owner or operator of the uninsured or underinsured motor vehicle or in its own name,” it does not treat the insurer as a defendant when it comes to service of process; and it does not make the insurer a party defendant to the action.
In Goldsborough, the underinsured motorist carrier also requested dismissal pursuant to Va. Code § 8.01-335(D). This statute provides circuit courts with authority to discontinue inactive cases. In sum, it states that a court may, in its discretion, discontinue and strike a matter from the docket if process has not been served within one year of commencement. Practically speaking, a discontinuance under this statute serves only as a nonsuit, since it still allows the plaintiff to reinstate the action. Further, the discontinuance is without prejudice, since it creates no bar to “a subsequent action for the same cause.” Virginia Concrete Co. v. Board of Supervisors, 197 Va. 821, 826 (1956).
This attempt by the underinsured motorist carrier in Goldsborough was also unsuccessful. The court found that Va. Code § 8.01-335(D), Va. Code § 8.01-275.1 and Rule 3:5(e) of The Rules of the Supreme Court of Virginia provide for different remedies, even though they seem to derive from similar purposes and policy considerations. The court explained that the purpose and intent of Va. Code § 8.01-275.1 and Rule 3:5(e) are “to provide for the timely prosecution of lawsuits and to avoid abuse of the judicial system.” Goldsborough at 5 (quoting Gilbreath v. Brewster, 250 Va. 436, 441 (1995)). On the other hand, the purpose and intent of Va. Code § 8.01-335 is to provide the courts with the ability to control inactive cases on their dockets. In addition, dismissals pursuant to Va. Code § 8.01-275.1 or Rule 3:5(e) are with prejudice and are not discretionary, whereas a discontinuance pursuant to Va. Code § 8.01-335(D) is without prejudice and more akin to a non-suit. Finally, in finding that Va. Code § 8.01-335(D) does not provide an underinsured or uninsured motorist carrier with a remedy for dismissal, the court in Goldsborough once again relied on the fact that an insurance company is not a party defendant, nor did the legislature intend to make it so.
This decision makes it clear and reminds us all that a plaintiff does not have to serve its insurer when seeking underinsured or uninsured coverage before the expiration of the statute of limitations against the defendant. An underinsured or uninsured motorist carrier can be served with process at any time prior to judgment being entered against an uninsured or underinsured defendant. Unfortunately, this allows service of a copy of the process upon an underinsured or uninsured motorist carrier even after the commencement of trial.
If you are providing coverage as an underinsured or uninsured motor carrier in a lawsuit and have any questions about these statutes or whether to make an appearance despite not having been served, please feel free to contact KPM LAW to assist you with these decisions.