St. Paul Fire & Marine Ins. Co. v. U.S. Fidelity & Guaranty Co.

• Decision Date: 21 March 1978
• Citation: St. Paul Fire & Marine Ins. Co. v. U.S. Fidelity & Guaranty Co., 404 N.Y.S.2d 552, 43 N.Y.2d 977, 375 N.E.2d 733 (N.Y. 1978)
• Parties: , 375 N.E.2d 733 ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Respondent, v. UNITED STATES FIDELITY AND GUARANTY COMPANY, Appellant.
• Court: New York Court of Appeals Court of Appeals

Page 552

404 N.Y.S.2d 552

43 N.Y.2d 977, 375 N.E.2d 733

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Respondent, v.UNITED STATES FIDELITY AND GUARANTY COMPANY, Appellant.

Court of Appeals of New York.

March 21, 1978.

Edward L. Milde, New York City, John J. Stewart and John J. Stewart, Jr., Huntington Station, for appellant.

William F. Larkin, New York City, for respondent.

OPINION OF THE COURTMEMORANDUM.

The order of the Appellate Division should be affirmed, with costs.

Although an insurance company in exclusive control of its insureds' defense cannot be compelled to concede liability and settle a questionable claim before proof has been developed on all sides (e. g., Knobloch v. Royal Globe Ins. Co., 38 N.Y.2d 471, 381 N.Y.S.2d 433, 344 N.E.2d 364), the defendant in this case refused to settle a claim in excess of its policy limits after liability had already been determined solely on factual issues by a jury (seeDi Tomasso v. Brookhattan Utilities, 40 A.D.2d 989, 338 N.Y.S.2d 590, mot. for lv. to app. den. 32 N.Y.2d 609, 342 N.Y.S.2d 1025, 295 N.E.2d 655).Under these circumstances, with liability having been established at trial, the excess carrier alone was placed at further risk due to the defendant's intractable opposition to any settlement of the claim.

Given a record which adequately supports these affirmed findings, amounting to a breach of the defendant's implied obligation to manage its insureds' defense in good faith (see, e. g., Gordon v. Nationwide Mut. Ins. Co., 30 N.Y.2d 427, 334 N.Y.S.2d 601, 285 N.E.2d 849, cert. den.410 U.S. 931, 93 S.Ct. 1374, 35 L.Ed.2d 593;cf.Insurance Law, § 40-d, added by L.1970, ch. 296, § 1), the imposition of liability...