Court Allows Plaintiff’s Recovery Against At-Fault Motorist’s Insurance Company Despite Subsequent Bankruptcy Filing

Earlier this month, an appellate court in Alabama issued a written opinion that presented an interesting legal issue that may be of interest to Maryland car accident victims. The case presented the court with the opportunity to determine whether an accident victim should be able to seek compensation for her injuries against the insurance company of the at-fault motorist when that motorist had subsequently filed for bankruptcy. Ultimately, the court concluded that the plaintiff’s claim was not barred and allowed her claim against the insurance company to proceed.

The Facts of the Case

The plaintiff in this case was the surviving husband of a woman who was injured in a car accident and then subsequently died. There was conflicting evidence as to whether the woman’s death was related to the accident; however, the husband’s claim asserted that the at-fault driver was at least liable for his wife’s injuries, and potentially for her wrongful death. The plaintiff filed a personal injury lawsuit against the at-fault driver as well as the insurance companies for both drivers.

After the lawsuit was filed, but before the case was resolved, the at-fault driver filed for bankruptcy. As a part of the bankruptcy proceeding, the pending case against the driver would be dismissed. The plaintiff’s own insurance company then sought dismissal of the case against it as well, arguing that since the plaintiff no longer had a right to recover from the at-fault driver, the insurance company could no longer be held liable. In support of its claim, the insurance company pointed to a pertinent state law stating that a plaintiff can only seek insurance benefits from an insurer if he is “legally entitled to recover damages” from the at-fault party.

The court rejected the insurance company’s interpretation of the law and found that it was still potentially liable for the plaintiff’s claim. The court explained that the bankruptcy filing merely prevented the plaintiff from collecting any damages from the at-fault driver that were awarded due to her negligence. The court continued to explain that the bankruptcy filing in no way prevented a finding of liability. Thus, the bankruptcy injunction preventing the plaintiff from pursuing damages against the at-fault driver did not extend to that driver’s insurance company.

Have You Been Injured in a Maryland Car Accident?

If you or a loved one has recently been injured in any kind of Maryland car accident, you may be entitled to monetary compensation. The skilled Maryland personal injury lawyers at the law firm of Lebowitz & Mzhen Personal Injury Lawyers have extensive experience representing clients in a wide range of personal injury and wrongful death lawsuits, and we understand what it takes to be successful on behalf of our clients. We offer free consultations with accident victims to discuss their case, their potential claim for damages, and how we may be able to help. Call 410-654-3600 to schedule your free consultation today.

More Blog Posts:

Plaintiff’s Jury Verdict Affirmed in Recent Product Liability Case Against Auto Manufacturer, Maryland Car Accident Attorney Blog, published September 18, 2017.

Insurance Company Permitted to Question Accident Victims Under Oath Prior to Approval of Claim, Maryland Car Accident Attorney Blog, published September 4, 2017.

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