How to Make Insurers Pay Excess Verdicts

 Edward K. Le, Esq.135 Park Ave N.

Renton, Wa 98057(425) 335-2255

www.edwardkle.com

First, Know the Insurer’s Duties To Its Insured

• Duty to Defend

• Duty to Investigate and Fairly Evaluate Liability Claims

• Duty to Compromise and Protect Insured Against Financial Exposure

Recognize When That Duty is Breached

Hamilton v. State Farm, 83 Wn. 2d 787 (1974)

Insurer  may  be  held  liable  to insured  for  failure  to  adjust  or compromise  a  claim  within  the limits of liability due to negligence or bad faith

UNDERSTAND WHAT THE LEGAL AND PROCEDURAL HOOKS ARE

Demand to Know What the Policy Limits Are

Smith v. Safeco, 150 Wn.2d 478, 78 P.3d 1274 (2003)

It  may  be  bad  faith  to  not disclose  policy  limits  if  a lawsuit  that  is  filed  against insured  leads  to  an  excess verdict.

Write a “Bullet Proof” Policy Limits Demand

Demand the Precise Policy Limits Amount or Use Phrase:

“For the Amount of the Liability Limits”

Write a “Bullet Proof” Policy Limits Demand

State a Definitive Expiration Date When the Settlement Offer Will Expire

If Insurer Balks, Seek Direct Settlement Negotiation with Defense Counsel

Elements of The Exchange

Defendant Stipulate to Judgment& Assign Claims

Plaintiff Stipulate Not to Execute

Get Approval at Reasonableness Hearing

Make Sure to Invite the Insurer

Cases that Hold Insured Has Independent Right to Settle Action If Insurer Refuses to Settle in Bad Faith

• Evans v. Continental Cas. Co., 40 Wn. 2d 614 (1952).

• Besel v. Viking, 46 Wn.2d 730 (2002).

• Chaussee v. Maryland Casualty Co., 60 Wn. App. 504 (1991). 

• Bird v. Best Plumbing Group LLC, 175 Wn. 2d 756  (2012)

• Covenant judgments are determined reasonable under RCW 4.22.060.

• Bird v. Best Plumbing Group LLC, 287 P. 3d 551, 175 Wn. 2d 756  (2012): 

“If the amount of the covenant judgment is deemed reasonable by a trial court, it becomes the presumptive measure of damages in a later bad faith action against the insurer.”   

• Miller v. Kenny, 325 P.3d 278, 291 (2014). 

Stipulated judgment of $4,150,000 determined to be reasonable by trial judge served as the “presumptive” floor of damages in a bad faith case, not the ceiling.

Covenant Judgments

Chausee Factors to Establish Reasonableness(1) Damages involved; (2)    Merits of plaintiff’s liability theory; 

(3)    Merits of defendant’s defense theory; (4)    Defendant’s relative fault; 

(5)    Risks and expenses of continued litigation; 

(6)    Defendant’s ability to pay; 

(7)    Countered with evidence of bad faith, collusion, or fraud; 

(8)    Extent of defendant’s investigation and preparation; 

(9)     Interests of parties not being released.

Materials to Submit at Reasonableness Hearing

1. Declarations from physicians or experts to support damages;

2. Declarations from lay witnesses;

3. Declarations from attorneys to support the reasonableness of the settlement;

4. A list of the depositions and pleadings in the suit;

5. A detailed analysis as to why the settlement is appropriately valued

Try the Case if Defendant Refuses to Stipulate

Available Post-Judgment Remedies

1.Garnishment

2.Sequestration

3.Levy on Personal Property

4.Real Property Foreclosure;

5.Involuntary Bankruptcy

Take Detailed Post-Judgment Deposition

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SAMPLE CASE POST-JUDGMENT DISCOVERYQ    Let me ask you now about your dealings with GEICO.   Did GEICO ever inform you that a settlement demand was made to them to settle the claim against you within the policy limits?

A    They told me that you were asking for the policy limits within that first year.

Q    Did they ever show you the settlement demand?

A    They never showed it to me.

Q    Did they ever show you any medical records?

A    No.

Q    Did they ever show you any bills as part of the settlement demand?

A    No.

Q    Did they ever give you any inkling of what the claim against you was about? 

A    No.

Q    Did anybody ever tell you -- at GEICO ever tell you that your own personal assets could be at stake if they do not pay the policy limits?

A    What I was told by GEICO is that they felt they had a strong case, they've never -- and that even if it did go south, they never leave their insureds hanging.

Q    What did that mean to you?

A    Which meant to me, my interpretation of that was that if, by some horrendous maljustice, it came over the policy limits, that they would have my back. 

Q.  And what did you take to mean by that, they would have your back?

A    That I wouldn't be paying; I wouldn't be fiscally financially responsible, that they would cover whatever judgment was because they were taking the gamble of the trial. 

Constant Pressure Finite Time

Essential Elements of Strategy

Cooperation with O/C Fortitude

Essential Elements of Strategy