Manieri v. Horace Mann Mut. Ins. Co.

• Decision Date: 12 October 1977
• Docket Number: No. 8351,8351
• Citation: 350 So.2d 1247
• Parties: Tyrell J. MANIERI v. HORACE MANN MUTUAL INSURANCE COMPANY.
• Court: Court of Appeal of Louisiana — District of US

Page 1247

350 So.2d 1247

Tyrell J. MANIERI v. HORACE MANN MUTUAL INSURANCE COMPANY.

No. 8351.

Court of Appeal of Louisiana, Fourth Circuit.

Oct. 12, 1977.

William J. O'Hara, III, New Orleans, for plaintiff-appellant.

Sessions, Fishman, Rosenson, Snellings & Boisfontaine, Harvey L. Strayhan, New Orleans, for defendant-appellee.

Before SAMUEL, LEMMON and BEER, JJ.

LEMMON, Judge.

This suit by plaintiff against his uninsured motorist insurer involves a car-truck collision in which plaintiff, the driver of the car, was injured and his two passengers were killed. The heirs of the two passengers filed separate suits, and the three cases were consolidated in the trial court.

The two wrongful death suits against defendant, seeking recovery in a direct action under the liability coverage and alternatively seeking recovery as an insured under the uninsured motorist coverage (with limits of $5,000.00 for each person and $10,000.00 for each accident), were compromised for $4,250.00 each. Defendant then offered to pay plaintiff the $1,500.00 remaining under the limits of the uninsured motorist coverage. Plaintiff declined to accept and moved for a summary judgment in the amount of $5,000.00. Defendant also filed a motion for summary judgment, seeking to limit its liability to $1,500.00. Defendant's motion was granted, and plaintiff appealed.

Plaintiff's principal complaint against the limitation of his recovery is that defendant should have prorated the funds and allotted more of the policy limits of its uninsured motorist coverage to his claim.

A liability insurer faced with multiple claims to inadequate proceeds is generally not required to prorate, but may enter into compromise agreements with one or several claimants to the exclusion of others, even to the extent of exhausting the entire fund, as long as the compromises are reasonable and are made in good faith. Richard v. Southern Farm Bureau Cas. Ins. Co., 254 La. 429, 223 So.2d 858 (1969); 70 A.L.R.2d 416 (1960); 15 Couch, Insurance Law § 56.32 (1966).

The reasoning which apparently underlies this general rule is that a liability insurer has an obligation to its insured not to arbitrarily refuse reasonable offers of settlement within policy limits, when its insured faces liability in excess of the policy limits. The insurer, in discharging this obligation in good faith, may exhaust the policy limits to the exclusion of particular claimants, because the liability insurer's foremost obligation is to its insured and not to the claimants.¹

Liability insurance, however, is not involved in the present case.² Therefore, the reasoning stated above arguably does not apply. Here, with the insurer concerned only with uninsured motorist coverage, there was no excess liability confronting the named insured, and all of the claimants qualified as insureds under the policy. A different obligation of the insurer was involved, and perhaps prorata distribution should...