Daus v. Lumbermen's Mut. Cas. Co.
Citation | 659 N.Y.S.2d 584,241 A.D.2d 665 |
Parties | Kurt F. DAUS, Respondent, v. LUMBERMEN'S MUTUAL CASUALTY COMPANY, Appellant. |
Decision Date | 10 July 1997 |
Court | New York Supreme Court Appellate Division |
Thuillez, Ford, Gold & Conolly, LLP (Donald P. Ford, Jr., of counsel), Albany, for appellant.
Robert A. Becher, Albany, for respondent.
Before MIKOLL, J.P., and MERCURE, CREW, YESAWICH and PETERS, JJ.
Appeal from an order of the Supreme Court (Canfield, J.), entered September 13, 1996 in Rensselaer County, which denied defendant's motion for summary judgment dismissing the complaint.
Injured in a one-car accident in October 1988, plaintiff--who contends that the car was driven by Thomas Fanniff, the vehicle's owner and its only other occupant at the time of the collision--obtained a default judgment against Fanniff. After an inquest, plaintiff was awarded damages of $169,880.37; the applicable limit of the liability policy defendant had issued to Fanniff was $10,000. In exchange for plaintiff's agreement not to seek enforcement of the judgment, Fanniff assigned all of his rights and claims against defendant to plaintiff, and the latter thereafter commenced this action, charging defendant with bad faith in its failure to settle or defend the underlying lawsuit. Supreme Court denied defendant's motion for summary judgment, prompting this appeal.
To prevail on his claim that defendant breached its duty of good faith by refusing to settle the action against Fanniff, plaintiff must establish that the insurer acted in "gross disregard" of Fanniff's interests, by "engag[ing] in a pattern of behavior evincing a conscious or knowing indifference to the probability that [Fanniff] would be held personally accountable for a large judgment" as a result of the company's refusal to accept a settlement offer within the policy limits (Pavia v. State Farm Mut. Auto. Ins. Co., 82 N.Y.2d 445, 453-454, 605 N.Y.S.2d 208, 626 N.E.2d 24). This requires a showing that an opportunity to settle was lost "at a time when all serious doubts about the insured's liability were removed" (id., at 454, 605 N.Y.S.2d 208, 626 N.E.2d 24).
Defendant's initial rejection of plaintiff's settlement offer was based on Fanniff's representations in the loss notice, the police accident report and his motor vehicle report (all of which were completed shortly after the accident) that plaintiff, and not he, had been driving when the accident occurred. Inasmuch as it was Fanniff's own statements that raised a question as to his liability, he--and therefore plaintiff, who stands in his shoes for the purposes of this action--is estopped from contending that defendant acted in bad faith by failing to disregard or question those statements (see, Newham v. Nationwide Mut. Ins. Co., 61 A.D.2d 1067, 1068, 403 N.Y.S.2d 147; Pipoli v. United States Fid. & Guar. Co., 38 A.D.2d 249, 250-251, 328 N.Y.S.2d 688, affd 31 N.Y.2d 679, 337 N.Y.S.2d 257, 289 N.E.2d 178; Colbert v. Home Indem. Co., 35 A.D.2d 326, 329, 315 N.Y.S.2d 949).
Moreover, because...
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