Chittick v. State Farm Mutual Automobile Ins. Co.

• Citation: 170 F. Supp. 276
• Decision Date: 19 December 1958
• Docket Number: Civ. A. No. 2001.
• Parties: Audrey CHITTICK, Subrogee of Charles Williams, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation of the State of Illinois, Defendant.
• Court: U.S. District Court — District of Delaware

170 F. Supp. 276

Audrey CHITTICK, Subrogee of Charles Williams, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, a corporation of the State of Illinois, Defendant.

Civ. A. No. 2001.

United States District Court D. Delaware.

December 19, 1958.

Jackson W. Raysor (of Tunnell & Raysor), Georgetown, Del., for plaintiff.

William Prickett (of Prickett & Prickett), Wilmington, Del., for defendant.

RODNEY, District Judge.

There is here involved a motion to dismiss the action for failure to state a claim upon which relief can be granted. The motion is based upon the following facts as disclosed by the complaint. The defendant is an insurance company qualified to do business in Delaware. The defendant issued its policy insuring one Charles Williams to the extent of $10,000 against liability for personal injuries involved in the operation of an automobile. On May 14, 1955 the car driven by Williams was involved in an accident with a car driven by one Kozelski and in which one John Chittick was a passenger and in which accident Chittick was killed. Suit was brought against Williams by the widow of Chittick and the insurer, the present defendant, undertook the defense of the action. It is alleged that before or during the trial Audrey Chittick, the plaintiff in that action, offered to settle the case within the monetary limits of the policy and that the insurance company, without notification to Williams, wrongfully refused the settlement. Judgment was recovered in the action by Chittick against Williams in the sum of $40,000. It is alleged that the insurance company, the present defendant, was negligent or acted in bad faith, or both, in rejecting the offers of settlement without notifying the insured of such offers and that as a result Williams "has a cause of action against the defendant for the amount which the aforesaid judgment against him exceeds the defendant's limits of liability as set out in its policy of insurance and the plaintiff herein as the holder of said judgment is subrogated to the right of the said Charles Williams against the defendant insurance company." The plaintiff demands judgment against the defendant in the sum of $30,000.

In determining the present matter it must be attempted to differentiate any rights of the present plaintiff from any rights that Williams may now have or have had. Williams is not a party to this proceeding and his rights, if any, cannot now be determined or concluded.

It seems to be conceded that this present action claiming $30,000 is brought to recover the difference between the judgment recovered against Williams ($40,000) and the liability of the defendant under the policy ($10,000) and is based upon the failure of the insurer to settle the matter within the monetary limits of the policy.

It seems also conceded that Williams has not paid the judgment against him and the question has been extensively argued whether the payment of the judgment by Williams is a necessary prerequisite to a suit by Williams against the insurer for the alleged negligence or bad faith in rejecting the settlement within the limits of the policy and without advising Williams of such offer. The argument was had because of its supposed relation to the alleged right of the present plaintiff as the judgment creditor to bring the action. I prefer not to consider this matter at the present juncture. If the payment of the judgment by Williams is a prerequisite to a suit by him against the insurer and it has not been paid and the present plaintiff's rights flow from Williams' rights, and rise no higher, then such fact may be determinative of this action. If, however, payment by Williams is not a prerequisite to a suit by him against the insurer, I must still consider the basis of the present plaintiff's claim.

Disposition of the present contentions must be determined by the allegations of the complaint alone. Policies of insurance of the nature here involved are sometimes classed as either liability or indemnity policies and they differ one from the other as to rights thereunder. No rights of the plaintiff as emanating from the policy of insurance itself are here relied upon and no such provisions of the policy are indicated and the policy itself is only mentioned incidentally.

The complaint merely sets out that Williams, the judgment debtor of the plaintiff, is entitled to a cause of action against his insurer, the present defendant, and that the present plaintiff is "subrogated" to the right of Williams against the defendant. The plaintiff suggests that the word "subrogated" may not be the exact term but that the right exists regardless of the term applied. It is herein attempted to discover, under the given facts, any right of action in the present plaintiff regardless of its name.

This is a diversity action and the law of Delaware must be considered. The Supreme Court of Delaware in Stilwell v. Parsons, 145 A.2d 397, 402, considered a question having some pertinency to the present matter. There an insurer conducting a defense did not settle with the injured party within the limits of the policy and a larger judgment was recovered. The Court said:

"If the insured has any claim against the insurer a matter which has as yet not been determined by litigation, that claim is one sounding in tort based on insurer's failure to use good faith or due care in settlement negotiations * * * prior to trial. It seems to be clear that liability of an insurance carrier to its policyholder in excess of policy limits is based on the tortious conduct of the insurance carrier, which under the policy has sole control of the defense."

If then any right of the insured under the given circumstances be in the nature of an action of tort, then any alleged or claimed right of the present plaintiff for the same relief and based upon the same facts must be of similar nature. Attention then must be given to the question as to whether any action of tort on behalf of the present plaintiff arises (a) by reason of any supposed wrong to her as separate and distinguished from any wrong done to the insured and (b) any wrong to the plaintiff arising from the wrong to the insured and accruing in some manner to the plaintiff from or through the insured himself.

(a) The plaintiff claims no right in herself as arising from the policy. The insurer owed no duty to the plaintiff other than as arising from the...