Summary
affirming a judgment in favor of an excess insurance carrier based on the primary carrier's bad faith in refusing to settle a claim, holding that "[g]iven a record which adequately supports . . . a breach of the defendant's implied obligation to manage its insureds' defense in good faith, the imposition of liability [on the primary insurer] for the excess judgment borne by the plaintiff [excess carrier] was appropriate."
Summary of this case from National Union Fire Insurance Com. v. Univ. FabricatorsOpinion
Argued February 7, 1978
Decided March 21, 1978
Appeal from the Appellate Division of the Supreme Court in the First Judicial Department, LOUIS I. KAPLAN, J.
Edward L. Milde, John J. Stewart and John J. Stewart, Jr., for appellant.
William F. Larkin for respondent.
MEMORANDUM.
The order of the Appellate Division should be affirmed, with costs.
Although an insurance company in exclusive control of its insureds' defense cannot be compelled to concede liability and settle a questionable claim before proof has been developed on all sides (e.g., Knoblock v Royal Globe Ins. Co., 38 N.Y.2d 471), the defendant in this case refused to settle a claim in excess of its policy limits after liability had already been determined solely on factual issues by a jury (see Di Tomasso v Brookhattan Utilities, 40 A.D.2d 989, mot for lv to app den 32 N.Y.2d 609). Under these circumstances, with liability having been established at trial, the excess carrier alone was placed at further risk due to the defendant's intractable opposition to any settlement of the claim.
Given a record which adequately supports these affirmed findings, amounting to a breach of the defendant's implied obligation to manage its insureds' defense in good faith (see, e.g., Gordon v Nationwide Mut. Ins. Co., 30 N.Y.2d 427, cert den 410 U.S. 931; cf. Insurance Law, § 40-d, added by L 1970, ch 296, § 1), the imposition of liability for the excess judgment borne by the plaintiff was appropriate (see Kulak v Nationwide Mut. Ins. Co., 40 N.Y.2d 140; Decker v Amalgamated Mut. Cas. Ins. Co., 35 N.Y.2d 950).
Chief Judge BREITEL and Judges JASEN, GABRIELLI, JONES, WACHTLER, FUCHSBERG and COOKE concur in memorandum.
Order affirmed.