McCoy v. Zurich Ins. Co., 80-71260.

• Decision Date: 13 March 1981
• Docket Number: No. 80-71260.,80-71260.
• Citation: 509 F. Supp. 1106
• Parties: Daniel Anthony McCOY by his next friend, Rosemary McCoy and Daniel Wayne McCoy and Rosemary McCoy, Assignees of Hartwell Construction Company and Jimmie Loggins, Plaintiffs, v. ZURICH INSURANCE COMPANY, a New York Corporation, Defendant.
• Court: U.S. District Court — Western District of Michigan

509 F. Supp. 1106

Daniel Anthony McCOY by his next friend, Rosemary McCoy and Daniel Wayne McCoy and Rosemary McCoy, Assignees of Hartwell Construction Company and Jimmie Loggins, Plaintiffs, v. ZURICH INSURANCE COMPANY, a New York Corporation, Defendant.

No. 80-71260.

United States District Court, E. D. Michigan, S. D.

March 13, 1981.

Murdoch J. Hertzog, Detroit, Mich., for plaintiffs.

Ivin E. Kerr, Detroit, Mich., for defendant.

MEMORANDUM OPINION

THOMAS P. THORNTON, District Judge.

On June 7, 1978 in the Circuit Court for the County of Wayne, State of Michigan a Judgment was entered in favor of Daniel Anthony McCoy and for Daniel Wayne McCoy and Rosemary McCoy in an amount totalling $943,032.50. The defendants in that case were Jimmie Loggins and Hartwell Construction Co., a Michigan corp. On December 5, 1979 said defendants assigned to the McCoys "our demands of every kind and description which we have against Zurich American Insurance Company." On March 3, 1980 plaintiffs herein filed suit against Zurich in the Wayne County Circuit Court from which defendant removed the action to this Court on the basis of diversity of citizenship and the jurisdictional amount in controversy. The instant action is one to recover from Zurich the amount of the State Court Judgment less $122,500, said amount being the policy limits of $100,000 plus $22,500 statutory interest paid by Zurich as a result of the State Court Judgment. Zurich had issued a policy of automobile public liability insurance to Hartwell which was in effect at the time of the accident which occasioned the lawsuit resulting in the judgment for the McCoys.

The accident involved in the primary state court case occurred May 1, 1974 when plaintiff Daniel Anthony McCoy, then about six years of age, was riding his bicycle on the sidewalk and crossing an alley. A truck, owned by Hartwell, (driven by Loggins) drove out from the alley crossing the sidewalk en route to the street and the boy was run over. The severity of the boy's injuries and suffering need not be detailed here. Suffice it to say that they were extensive and that he will never be able to live a normal life.

The instant suit seeks recovery from defendant Zurich for damages based on the "bad faith" theory, for what plaintiffs allege was Zurich's refusal to settle. In their Complaint plaintiffs state as follows in Paragraphs 6 and 7:

6. The Defense of Hartwell and Loggins in the suit was assumed by Defendant, Zurich-American Insurance Company in accordance with the terms of their insurance policy, and they provided defense counsel and suggested to Hartwell to secure individual counsel to protect their interest as to the amount in excess of policy limits of One Hundred Thousand ($100,000.00) Dollars.

7. Prior to the trial of the suit against Hartwell and Loggins, Plaintiffs made settlement offers to Defendant, Zurich-American, in amounts equalling the policy limits plus accrued interest. The offers were based on Plaintiffs' understanding that an automobile insurance policy, providing public liability coverage, between Hartwell and Defendant, Zurich-American, was in full force and effect at the time of the accident.

There appears to be no question as to the fact that Zurich, the insurer, offered to pay the policy limits of $100,000 shortly after the primary state court action was commenced November 14, 1974 and continued to so offer right up until the trial commenced and during the trial in March 1978. The response of the McCoys to Zurich's offer of the policy limits was that Zurich should offer the policy limits plus interest and that plaintiffs would accept such an offer. Zurich refused on the ground that there was no legal obligation under its contract with the insured to pay statutory interest, such interest being owed only subsequent to judgment and dating back to the filing of the lawsuit. MSA § 27A.6013 M.C.L.A. § 600.6013. It should here be noted that Zurich filed an offer of Judgment in the primary state court action February 14, 1975, inclusive of "all costs, attorney fees and interest." Subsequently on March 30, 1978 Zurich made its second Offer of Judgment which reads as follows:

Defendant, Hartwell Construction Company, hereby

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