{"id":901783,"date":"2023-10-26T15:00:38","date_gmt":"2023-10-26T21:00:38","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901783"},"modified":"2023-10-26T15:00:41","modified_gmt":"2023-10-26T21:00:41","slug":"made-whole-doctrine-isnt-defense-subrogation","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/made-whole-doctrine-isnt-defense-subrogation\/","title":{"rendered":"When the \u201cMade Whole\u201d Doctrine Isn\u2019t a Defense to Subrogation"},"content":{"rendered":"\n<p>Sydney Broom | <a href=\"https:\/\/www.butler.legal\/when-the-made-whole-doctrine-isnt-a-defense-to-subrogation\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Butler Weihmuller Katz Craig<\/a><\/p>\n\n\n\n<p>In some jurisdictions, the \u201c<a href=\"https:\/\/www.myconstructionexpert.com\/blog\/tag\/made-whole-doctrine\/\">made-whole<\/a>\u201d doctrine requires insured parties to be made whole before an insurance carrier may recover from a third-party as a subrogee. Every so often, a tortfeasor will argue this doctrine as a defense to a subrogation claim. When this happens,\u00a0subrogation attorneys\u00a0are left to argue that the \u201cmade-whole\u201d doctrine relates to claims between the insured and its insurer as to who has certain rights to recovery from a tortfeasor, and is not a defense that can be raised by the tortfeasor. Unfortunately, not all states have case law that addresses the \u201cmade-whole\u201d doctrine and whether or not it is a defense available to a tortfeasor.<\/p>\n\n\n\n<p>In&nbsp;<em>Scottsdale Ins. Co. v. Kat Constr. LLC,<\/em>&nbsp;No. CV 21-00278, 2022 WL 20652788, (D.N.J. Oct. 5, 2022), the United States District Court for the District of New Jersey determined the \u201cmade whole doctrine\u201d is not an available defense to a tortfeasor. This case involves a contractor who negligently activated a stove while performing construction work, causing a fire in the home of Scottsdale Insurance Company\u2019s (\u201cScottsdale\u201d) insured. Scottsdale paid the claim for the damage to the insured\u2019s home, and then subrogated its rights to payment against Kat Construction for its negligence. Scottsdale\u2019s insured also filed suit against Kat Construction for its deductible and any uninsured damages it had. Kat Construction then brought a Motion to Dismiss against Scottsdale, arguing that it lacked any standing to pursue subrogation against it, as New Jersey\u2019s \u201cmade-whole\u201d doctrine prevents insurers from recovering against third-parties when the insured has not been made whole first. Kat Construction argued the case would not be ripe for adjudication as the Insured\u2019s lawsuit was ongoing and the insured was not \u201cmade whole.\u201d<\/p>\n\n\n\n<p>The court rejected this argument and determined the \u201cmade whole\u201d doctrine was not applicable here due to three reasons. First, the \u201cmade whole\u201d doctrine only applies \u201c[i]n the absence of express terms in the contract to the contrary.\u201d&nbsp;<em>Providence Wash. Ins. Co. v. Hogges<\/em>, 171 A.2d 120, 124 (N.J. App. Div. 1961). Here, Scottsdale and its insured entered into a Joint Litigation Agreement which expressly rejected the \u201cmade whole\u201d doctrine.<\/p>\n\n\n\n<p>Second, the made whole doctrine only applies in scenarios where funds are so limited as to substantially affect the insured\u2019s recovery. Here, the Defendant had argued that its own insurer\u2019s policy limits could not cover both lawsuits, meaning it was underinsured and funds were limited. The court did not believe the funds were so limited as to justify declining jurisdiction. Instead, the court found that the Defendant\u2019s underinsurance problem was not a defense to subrogation. The Defendant still remained personally liable for any judgment beyond its own insurer\u2019s policy limits.<\/p>\n\n\n\n<p>Lastly, the court stated, \u201cfinally, and perhaps most fundamentally, it seems to the Court that Defendant\u2019s argument is misplaced because it lacks standing to raise it.\u201d&nbsp;<em>Scottsdale<\/em>, WL 20652788 at 3. The court notably pointed out that the \u201cmade whole\u201d defense was historically created for the benefit of the insured, not as a defense for a Defendant in a subrogation action. The court explained that \u201cbecause the doctrine was not developed for its protection, Defendant cannot rely on it to avoid this case\u2019s adjudication.\u201d&nbsp;<em>Id<\/em>.<\/p>\n\n\n\n<p>If you are faced with a \u201cmade whole\u201d defense from a tortfeasor, remember to consider the court\u2019s justification in\u00a0<em>Scottsdale Ins. Co. v. Kat Constr. LLC<\/em>, as it could be helpful to overcome the defense.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Sydney Broom | Butler Weihmuller Katz Craig In some jurisdictions, the \u201cmade-whole\u201d doctrine requires insured parties to be made whole before an insurance carrier may recover from a third-party as a subrogee. Every so often, a tortfeasor will argue this doctrine as a defense to a subrogation claim. When this happens,\u00a0subrogation attorneys\u00a0are left to argue&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/made-whole-doctrine-isnt-defense-subrogation\/\">Continue reading <span class=\"screen-reader-text\">When the \u201cMade Whole\u201d Doctrine Isn\u2019t a Defense to Subrogation<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[10721],"tags":[9895,11344,233],"class_list":["post-901783","post","type-post","status-publish","format-standard","hentry","category-insurance","tag-advise-consult","tag-made-whole-doctrine","tag-subrogation","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>When the \u201cMade Whole\u201d Doctrine Isn\u2019t a Defense to Subrogation - Advise &amp; Consult, Inc.<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/made-whole-doctrine-isnt-defense-subrogation\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"When the \u201cMade Whole\u201d Doctrine Isn\u2019t a Defense to Subrogation - Advise &amp; Consult, Inc.\" \/>\n<meta property=\"og:description\" content=\"Sydney Broom | Butler Weihmuller Katz Craig In some jurisdictions, the \u201cmade-whole\u201d doctrine requires insured parties to be made whole before an insurance carrier may recover from a third-party as a subrogee. Every so often, a tortfeasor will argue this doctrine as a defense to a subrogation claim. 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