Home Ins. Co. v. Royal Indem. Co.
| Citation | 68 Misc.2d 737,327 N.Y.S.2d 745 |
| Parties | HOME INSURANCE COMPANY, Plaintiff, v. ROYAL INDEMNITY COMPANY, Defendant. |
| Decision Date | 04 January 1972 |
| Court | United States State Supreme Court (New York) |
Bower & Gardner, New York City, John J. Bower, New York City, of counsel, for plaintiff.
Simpson, Thacher & Bartlett, New York City, Roy L. Reardon, Ernest J. Getto and Robert B. McKay, New York City, of counsel, for defendant.
Plaintiff (Home) moves to dismiss the counterclaim. The facts giving rise to the claim and counterclaim are substantially undisputed.
On October 6, 1968, one Thomas Dyrnes, while a passenger in a motor vehicle owned by one Czapala, was struck by a truck owned by Equipment Rental Service, Inc. and leased to Consolidated Edison Company.
The injuries suffered by Dyrnes were most grievous. Suit was brought against Equipment Rental, Con Ed, George Torro, the driver of the truck and Czapala and resulted in a verdict of $1,250,000 in favor of Dyrnes. As against Czapala, the verdict was set aside on jurisdictional grounds. Judgment was entered against the other defendants in that action in the amount of the verdict, together with interest and costs.
Equipment Rental was insured by defendant (Royal) for the sum of $500,000. That policy contained the usual clauses requiring the insurer to defend on behalf of its insured and obligating Royal to pay any judgment recovered against Equipment Rental not exceeding the amount of the policy, together with interest and costs. Con Ed was covered by an excess policy issued by Home in the amount of $1,500,000.
Appeal was taken by Royal from the judgment and during the pendency thereof, there were negotiations between Royal and counsel for Dyrnes looking toward settlement of the judgment. In the interim, in November 30, 1970 Home wrote Royal charging it with bad faith in the handling of the Dyrnes action by refusing to settle that case within its policy limits and with negligence in the defense. The letter asserted that Home would hold Royal responsible for any losses accruing to it as a consequence. On January 6, 1971, January 29, 1971, February 8, 1971 and February 18, 1971, Royal wrote Home that it was negotiating with Dyrnes' counsel, looking to a settlement of the major action. In the first two letters the figure of $900,000 was fixed as a settlement figure acceptable to Dyrnes' counsel. The third letter fixed a sum of $750,000 to $800,000 and the last letter fixed a possible settlement figure between $700,000 and $800,000. In each of these letters Royal insisted that the amount of its contribution to this settlement be limited to $500,000 with Home paying the balance. The last letter, which was sent after this action had been commenced, provided that such contribution would be without prejudice to Home's rights arising out of that action.
Subsequently, the Appellate Division modified the Dyrnes judgment by reducing it to the sum of $700,000 (Dyrnes v. Consolidated Edison Co., 36 A.D.2d 766, 321 N.Y.S.2d 334). Judgment was thereupon entered for the sum of $700,000, together with interest in the sum of $48,844.15 and costs of $267.38, totaling in all the sum of $749,111.53. This judgment was paid, with Home contributing the sum of $200,000 and Royal contributing the balance of $549,111.53.
Home brings this action to recover the sum contributed by it to payment of the judgment asserting that Royal acted negligently and in bad faith in refusing reasonably to negotiate a settlement within the limits of the policy issued by it to Equipment Rental. Royal has counterclaimed alleging that Home's action in refusing to concur in settlement arrangements in the Dyrnes case was in bad faith and that, as a consequence, it has been damaged in the sum of $100,000.
The development of the doctrine which requires an insurer to negotiate, in good faith, a claim asserted against its assured (Harris v. Standard Accident & Ins. Co., D.C., 191 F.Supp. 538; Brown v. United...
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