McGarry v. Rhode Island Mut. Ins. Co.
| Decision Date | 19 February 1960 |
| Docket Number | No. 10037,10037 |
| Parties | James J. McGARRY v. RHODE ISLAND MUTUAL INSURANCE COMPANY. Ex. |
| Court | Rhode Island Supreme Court |
Edward P. Gallogly, Providence, for plaintiff.
James E. Flannery, Providence, for defendant.
This is an action of trespass on the case for negligence which is here on the plaintiff's single exception to the decision of the superior court sustaining a demurrer to his second amended declaration. The demurrer alleged that the declaration did not state a cause of action.
The declaration is in two counts. The first count alleges that it was the duty of defendant to use diligence and care in the settlement of a claim made against plaintiff for damages as the result of an automobile accident in which he was involved; that defendant negligently refused to settle such claim before and during the trial thereof; that settlement could have been made within the limits of the policy, namely, $5,000, which defendant had issued to plaintiff and which was in force and effect at the time of the accident; that defendant was apprised of such opportunity to settle; and that nevertheless under its exclusive control of litigation by virtue of the provisions of the policy it persisted in proceeding with the trial, as a result of which a verdict of $16,500 was rendered against plaintiff. The second count is substantially similar except that the breach of duty is that defendant 'acted in bad faith in refusing to settle the claim * * *.'
In his brief and argument before us plaintiff contends that the superior court erred in not recognizing that the law generally authorizes an action by the insured against his insurer under a liability insurance policy where the insurer as a result of its negligence or bad faith has failed to obtain a settlement within the limits of the policy when one could have been obtained. In support of this principle he cites Annotation, 40 A.L.R.2d 168, and several cases from jurisdictions outside this state, since he points out that the issue involved has not been passed upon by this court.
However, it appears from defendant's brief that there is no controversy between the parties over this principle. The defendant states therein, 'The appellee joins with the appellant in the contention that an insurance carrier can be held liable for any excess over the policy limits if it is proven that the carrier defended a suit instead of settling same through its negligence or...
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