Haddick v. Valor Insurance
Case Date: 08/14/2000
Court: 3rd District Appellate
Docket No: 3-00-0027 Rel
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14 August 2000
___________________________________________________________________________________ JUSTICE BRESLIN delivered the opinion of the court: Plaintiff Ella Haddick, administrator of the estate of her son, James Griffith, filed this suitagainst defendant Valor Insurance Company (Valor), alleging that Valor acted in bad faith when itrefused to settle a claim against its policyholder within the policy limits. The trial court grantedValor's motion to dismiss, finding that Valor had no duty to settle prior to the filing of a lawsuitagainst its policyholder. We reverse and hold that an insurance company has a duty to act in good faith in settling aclaim against its policyholder in a timely manner both before and after suit is filed. We further holdthat a plaintiff may maintain a cause of action against an insurance company for failure to settle aclaim in good faith though the plaintiff withdrew her offer to settle within the policy limits beforefiling suit. FACTS On May 6, 1996, Griffith was killed in a single car accident when the vehicle in which he wastraveling left the road. Both of the occupants of the car, Griffith and Larry Woodley Jr., had beenthrown from the car. The two men were taken to a hospital where Griffith died. Griffith incurredmedical bills in excess of $80,000. The vehicle was owned by Woodley. A police report from the accident included an accidentreconstruction report indicating that Woodley was driving. At the hospital, the police officer askedan emergency room doctor to question Woodley about who was driving. Woodley responded to thedoctor's question that he was. Woodley was then arrested for driving under the influence. Approximately a week later, Woodley claimed that he could not remember who was driving. On August 22, 1996, after a demand for settlement was made by Haddick's attorney onbehalf of Griffith's estate, Valor responded by letter indicating that it would discuss settlement afterreceiving a copy of the police report. Haddick sent a copy of the report to Valor but heard nothingfrom Valor for seven months. Thereupon Haddick sent a letter to Valor on March 7, 1997,demanding that it settle for the policy limits of $20,000. The letter outlined Haddick's claim,discussed the probability that Woodley was driving the vehicle, and requested that settlement bemade within 14 days. Valor responded that it was still investigating the claim to determine who wasdriving. At the end of the 14 days, Haddick extended the deadline for settlement for another twoweeks after learning that a new claims adjustor had taken over the case. After Valor did not respond, Haddick sent a letter indicating that suit would be filed and shewould no longer accept settlement for the policy limits. Approximately one year later, Valor offeredthe policy limits of $20,000 but that offer was rejected. The case went to trial and a verdict wasreturned in favor of Haddick for $150,924.80. Following the entry of judgment against him, Woodley assigned to Haddick all of his causesof action against Valor. Haddick then filed this action against Valor claiming that it should be liablefor the whole judgment because it acted in bad faith in refusing to settle within the policy limits. Thetrial court granted Valor's motion to dismiss pursuant to section 2-615(b) of the Illinois Code ofCivil Procedure (Code) (735 ILCS 5/2-615(b) (West 1998)), and Haddick appeals. ANALYSIS On appeal, we must determine whether the trial court erred when it dismissed Haddick'scomplaint pursuant to section 2-615(b) of the Code (735 ILCS 5/2-615(b) (West 1998)). A motion to dismiss pursuant to section 2-615 admits all well-pled facts in the plaintiff'scomplaint. Jackson v. Michael Reese Hospital & Medical Center, 294 Ill. App. 3d 1, 689 N.E.2d 205(1997). Considering such well-pled facts as true, an involuntary dismissal on the pleadings is properif it is clearly apparent that no set of facts can be proved which would entitle the plaintiff to recover. Grassini v. Du Page Township, 279 Ill. App. 3d 614, 665 N.E.2d 860 (1996). On appeal, this courtreviews the trial court's decision to dismiss a claim de novo. Kedzie & 103rd Currency Exchange,Inc. v. Hodge, 156 Ill. 2d 112, 619 N.E.2d 732 (1993). The trial court dismissed Haddick's complaint finding both that Valor had no duty underIllinois law to settle Haddick's claim prior to suit being filed and that Haddick could not maintaina bad faith claim after she withdrew her policy limit demand. Haddick disputes both of thesefindings. An insurer has a duty to act in good faith in responding to settlement offers arising from theinsurer's exclusive control over settlement negotiations. See Krutsinger v. Illinois Casualty Co., 10Ill. 2d 518, 141 N.E.2d 16 (1957). While the insurer may have an incentive to refuse settlement andproceed to trial, the policyholder may prefer to settle within the policy limits to avoid the risk of trial,thus avoiding a verdict in excess of the policy limits for which the policyholder will theoretically bepersonally liable. Cramer v. Insurance Exchange Agency, 174 Ill. 2d 513, 675 N.E.2d 897 (1996). The duty to settle is implied in law to protect the policyholder from exposure to liability inexcess of coverage as a result of the insurer's gamble on which only the policyholder may lose. 14Couch on Insurance 3d |
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