Knobloch v. Royal Globe Ins. Co.
| Decision Date | 06 January 1976 |
| Citation | 38 N.Y.2d 471,344 N.E.2d 364,381 N.Y.S.2d 433 |
| Parties | , 344 N.E.2d 364 Fred KNOBLOCH et al., Appellants, v. ROYAL GLOBE INSURANCE COMPANY, Respondent. |
| Court | New York Court of Appeals Court of Appeals |
Bernard R. Selkowe, New York City, and David Romanoff, Woodmere, for appellants.
William F. McNulty, George S. Pickwick and Anthony J. McNulty, New York City, for respondent.
We conclude that the circumstances disclosed in this record are sufficient to sustain the jury's verdict that this insurance carrier was liable to its insureds for failure to settle a claim against them within policy limits.
The accident which was the subject of the underlying claim occurred on June 2, 1962. Fred Knobloch was driving an MGA sports car owned by his mother with John A. Wickman as his passenger. The third occupant of the vehicle, a young lady, was sitting on Wickman's lap. As the car came over a rise while traveling south on the Taconic Parkway and started down the decline, both driver and passenger Wickman observed a rough spot in the road ahead. The car left the southbound lane and overturned, in consequence of which Wickman sustained serious injuries.
In the fall of 1962 Wickman sued both Knoblochs and the East Hudson Parkway Authority, the latter on the theory that a rough section of the parkway had contributed to the accident. Their insurance carrier undertook to defend the action against the Knoblochs. An answer and demand for a bill of particulars were served in December, 1962. The report by the insurance carrier's physician of his examination of the plaintiff Wickman was received in April, 1963, and the insurance carrier had an examination before trial of Fred Knobloch, the driver, in May of 1963. The carrier was thus informed as to the details of the one-car accident and how it occurred and was aware that in consequence of the accident Wickman had sustained a subluxation involving the fifth and sixth cervical vertebrae and a compression fracture of the fourth dorsal vertebra.
Wickman's attorney had a conversation with the carrier's claim adjuster on March 19, 1964, at which time the adjuster confirmed advice previously given that the insurance coverage was limited to $10,000. Wickman's attorney then stated that he thought his client would release the Knoblochs for $9,500 The adjuster responded that he would give that figure consideration and asked for particulars of Wickman's special damages.
The bill of particulars which was not furnished until June, 1965, disclosed further details with reference to the vertebral fracture and dislocation, related injuries and the medical care received, including a claim for permanent loss of approximately 33 1/3% Rotation to the right of neck and head. The bill further revealed that Wickman had been confined to the hospital for 21 days and thereafter at home for approximately six weeks, that he had been involuntarily discharged from the United States Marine Corps Reserve for medical reasons, and that his special damages included hospital and medical expenses of $1,292.30 and loss of earnings totaling $7,590.
On December 15, 1965 Wickman's attorney had another conversation with the adjuster in the course of which the $10,000 policy limit was again mentioned by the adjuster, and the attorney stated that he was looking for full coverage or close to it. The adjuster this time asked for copies of hospital and medical bills and authorization to obtain hospital records.
In March and September, 1966 the adjuster made telephone calls to the attorney to obtain copies of hospital and medical bills. In February, 1967 the adjuster informed Wickman's attorney that he was taking up the question of settlement with the carrier's committee that passed on such matters and would report the best figure. Wickman's attorney testified that the first offer of settlement which he received from the adjuster came on March 10, 1967 in the amount of $6,500, in response to which the claimant's attorney restated his $9,500 demand. On February 14, 1968, Wickman's attorney returned a telephone call left by the adjuster. In the course of that conversation the attorney repeated his $9,500 demand, to which the adjuster said that he had $8,500 possibly'. The adjuster inquired about $9,000 but the attorney held fast at $9,500. There were no further settlement negotiations until the eve of trial.
Toward the end of 1968, while being interviewed by a representative of the carrier, Knobloch inquired as to demands and offers. The representative then declined to disclose this information on the ground that it was 'against company policy'.
On February 15, 1969, the Knoblochs retained independent counsel for their individual protection, and on February their counsel was furnished with copies of all pertinent papers by the insurance carrier. Trial counsel provided by the insurance company for the Knoblochs first saw the file in late February or early March, 1969. The case appeared on the day calendar for March 21, 1969. Wickman's attorney was in court and, on being informed that the Knoblochs had retained independent counse the attorney withdrew his settlement demand of $9,500. On April 9 trial counsel provided by the insurance company called the Knoblochs' independent counsel, told him that he was exploring settlement and that the insurance carrier would pay full policy limit. The independent counsel then stated that he was authorized to contribute had '$8,500 possibly'. The adjuster inquired
The attorneys met to draw a jury on Friday, April 11, 1969. There was testimony that at that time trial counsel for the Knoblochs told Wickman's attorney that the adjuster 'had foolishly been trying to save * * * a few dollars' on the case and for the first time offered Wickman's attorney 'the full policy of $10,000'. Wickman's attorney stated that he had withdrawn his demand and accordingly refused the $10,000 offer. On Saturday, April 12, Knobloch authorized his independent counsel to offer as much as $10,000 toward settlement, to bring the total to $20,000.
On Monday, April 14, before the case went to trial, a settlement conference was held before the Trial Judge. The insurance carrier offered its $10,000, independent counsel added $2,500, East Hudson Parkway Authority offered nothing, and Wickman's attorney then demanded $35,000.
The case went to trial and the jury returned a verdict in favor of Wickman against both the Knoblochs and East Hudson Parkway Authority in the amount of $75,383.50. That judgment, after an unsuccessful appeal (Wickman v. Knobloch, 34 A.D.2d 617, 309 N.Y.S.2d 570), was thereafter paid, with interest, in equal shares by the Knoblochs and the Parkway Authority, with the insurance carrier contributing $10,000 (plus interest and costs) to the Knobloch share.
The Knoblochs then instituted the present action against their insurance carrier alleging bad-faith failure on the part of the carrier to settle the Wickman action within policy limits, thereby exposing the Knoblochs to excess liability and associated expenses. After trial in this second action the jury returned a verdict in favor of the Knoblochs against t insurance company in the amount of $30,236.50, representing the amount above $10,000 which the Knoblochs had been obliged to pay Wickman. The Appellate Division reversed and dismissed Knobloch's complaint. We now reinstate the jury verdict with interest.
The issue on this appeal is much narrower than might be assumed. There is no claim of evidentiary error. The Trial Judge told the jury that, ...
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