Allstate Ins. Co. v. Superior Court

Robert S. Gerstein; Law Offices of Sheldon A. Ostroff and Sheldon A. Ostroff; Huffman & Kostas, James C. Kostas and David M. Huffman, San Diego, for Real Party in Interest.

An insurer that pays benefits to its insured under a first party policy is generally entitled to reimbursement from funds paid by the third party wrongdoer for the covered losses. One exception to this rule is the common law "made-whole" doctrine, which provides that an insurer is not entitled to these funds unless the insured has been made whole by the recovery from the tortfeasor and any other source. Whether an insured has been made whole is determined by comparing the insured's total damages resulting from the third party's tortious conduct with the total amount the insured recovered in compensation for those damages. The narrow issue presented in this writ proceeding is whether, in calculating the made-whole amount under no-fault medical payments insurance coverage, the insured's total recovery amount must be reduced by the insured's attorney fees and costs incurred to obtain the compensation from the third party tortfeasor. We conclude that under California law these expenses are not deducted…