Smith v. General Acc. Ins. Co.

• Decision Date: 10 November 1997
• Citation: Smith v. General Acc. Ins. Co., 664 N.Y.S.2d 605, 244 A.D.2d 402 (N.Y. App. Div. 1997)
• Parties: , 1997 N.Y. Slip Op. 9561 David SMITH, et al., Respondents, v. GENERAL ACCIDENT INSURANCE COMPANY, Appellant.
• Court: New York Supreme Court — Appellate Division

Page 605

664 N.Y.S.2d 605

244 A.D.2d 402, 1997 N.Y. Slip Op. 9561

David SMITH, et al., Respondents, v. GENERAL ACCIDENT INSURANCE COMPANY, Appellant.

Supreme Court, Appellate Division Second Department.

Nov. 10, 1997.

Lieber & Lieber, New York City (Eugene H. Lieber, of counsel), for appellant.

Sgarlato & Sgarlato, PLLC, Staten Island (Richard J. Sgarlato, Philip Monier III, and Perry S. Reich, of counsel), for respondents.

Before JOY, J.P., and GOLDSTEIN, FLORIO and LUCIANO, JJ.

MEMORANDUM BY THE COURT.

Motion by the respondents for reargument of an appeal from a judgment of the Supreme Court, Richmond County, dated May 17, 1996, which was determined by decision and order of this court dated August 18, 1997. Upon the papers filed in support of the motion and the papers filed in opposition thereto, it is

ORDERED that the motion is granted, and upon reargument, it is

ORDERED that the decision and order of this court dated August 18, 1997, is recalled and vacated and the following decision and order is substituted therefor:

In an action to recover damages for bad faith in refusing to settle an underlying personal injury action, the defendant appeals from a judgment of the Supreme Court, Richmond County (Cusick, J.), dated May 17, 1996, which, upon a jury verdict, is in favor of the plaintiff and against it in the principal sum of $590,000.

ORDERED that the judgment is reversed, on the law, and a new trial is granted, with costs to abide the event. The facts have been considered and determined to have been established.

Although an insurance carrier is obliged in most circumstances to respond accurately to requests from its insured with reference to the progress of any settlement negotiations, the carrier is not obligated to consult its insured in regard to settlement (see, Knobloch v. Royal Globe Ins. Co., 38 N.Y.2d 471, 381 N.Y.S.2d 433, 344 N.E.2d 364). Notwithstanding that the trial court instructed the jury consistent with PJI 4:67, the charge incorrectly instructed the jury that the appellant had an obligation to advise its insured as to the progress of settlement negotiations (see, Knobloch v. Royal Globe Ins. Co., supra, at 479, 381 N.Y.S.2d 433, 344 N.E.2d 364; 2 N.Y. PJI 341).

The appellant's obligation to advise its insured regarding the progress of any settlement negotiations was one of a series of factors the jury was told it could consider on the issue of the appellant's bad faith. There is no way to determine the relative...