Insurance company is not in bad faith in defending case against insured.
Milroy v. Allstate Insurance Company
.2007 OK CIV APP 6
The Oklahoma State Courts Record
Milroy rear-ended Lewis at a stop sign while talking on her cell phone. It was a minor fender bender, and neither Milroy nor Lewis sought medical attention at the scene. Later that day, after talking with an attorney, however, Lewis sought medical attention. She later ran up chiropractor bills and, after a demand for settlement was denied, sued Milroy in small claims court. The case was defended on behalf of Milroy by Allstate, through Horton, an attorney who was a salaried employee of Allstate. The case was taken into district court and a jury eventually awarded Lewis $2,600.
Allstate promptly paid the judgment and the later award of attorneys fees and costs. Milroy then sued Allstate, claiming it acted in bad faith by litigating the claim against her instead of settling it. Milroy sued Allstate in part because she thought Allstate mistreated the lady who sued her by disputing her claims for damages! She admitted she was never in danger of having an excess judgment against her but complained that Allstate dragged her through court in a total waste of time. In affirming the summary judgment in favor of Allstate, the court noted that Milroy had a duty to cooperate in the defense under the policy; that Allstate had a right to control the defense, that Allstate provided Milroy with a defense and did so without any reservation of rights; Allstate paid the judgment which resulted from a defense strategy which included the decision to exercise the statutory right to request removal of the case from the small claims docket; there was no probability that litigation expenses would diminish Lewis’s ability to receive full recovery for her injuries, or that Milroy would be exposed to a verdict in excess of policy limits (especially since Lewis never sought more than $5,000 and even Milroy’s counsel admitted that with her $100,000 policy she "was never in jeopardy, never in jeopardy" of having an excess judgment entered against her).
The court also discussed Milroy’s claims that Allstate had "dragged her through the legal system" and involved her in a legal battle that was "totally unnecessary." Simply put, the court found no damages to Milroy. There were no out of pocket expenses, she never requested that Allstate pay for lost wages, and the case only took up 6 or 7 hours of her time.
Where the third party's recovery will not exceed the policy's liability limits, the question of whether the insurer will compromise or settle the claim or the manner in which it conducts the aspects of the defense are "matter[s] of no concern to the insured."
Milroy also claimed that Allstate harassed Lewis "as part of its effort to punish the plaintiffs and their attorneys who bring lower value soft tissue injury claims." Even if true, such facts could not support a bad faith claim, because the duty of an insurance company to deal fairly and in good faith with its insured does not extend to an injured third party who has no contractual or statutory relationship with the tortfeasor's insurer.
One wonders why the court simply did not state that Milroy had no standing to assert any claims against Allstate on behalf of Lewis.
.2007 OK CIV APP 6
The Oklahoma State Courts Record
Milroy rear-ended Lewis at a stop sign while talking on her cell phone. It was a minor fender bender, and neither Milroy nor Lewis sought medical attention at the scene. Later that day, after talking with an attorney, however, Lewis sought medical attention. She later ran up chiropractor bills and, after a demand for settlement was denied, sued Milroy in small claims court. The case was defended on behalf of Milroy by Allstate, through Horton, an attorney who was a salaried employee of Allstate. The case was taken into district court and a jury eventually awarded Lewis $2,600.
Allstate promptly paid the judgment and the later award of attorneys fees and costs. Milroy then sued Allstate, claiming it acted in bad faith by litigating the claim against her instead of settling it. Milroy sued Allstate in part because she thought Allstate mistreated the lady who sued her by disputing her claims for damages! She admitted she was never in danger of having an excess judgment against her but complained that Allstate dragged her through court in a total waste of time. In affirming the summary judgment in favor of Allstate, the court noted that Milroy had a duty to cooperate in the defense under the policy; that Allstate had a right to control the defense, that Allstate provided Milroy with a defense and did so without any reservation of rights; Allstate paid the judgment which resulted from a defense strategy which included the decision to exercise the statutory right to request removal of the case from the small claims docket; there was no probability that litigation expenses would diminish Lewis’s ability to receive full recovery for her injuries, or that Milroy would be exposed to a verdict in excess of policy limits (especially since Lewis never sought more than $5,000 and even Milroy’s counsel admitted that with her $100,000 policy she "was never in jeopardy, never in jeopardy" of having an excess judgment entered against her).
The court also discussed Milroy’s claims that Allstate had "dragged her through the legal system" and involved her in a legal battle that was "totally unnecessary." Simply put, the court found no damages to Milroy. There were no out of pocket expenses, she never requested that Allstate pay for lost wages, and the case only took up 6 or 7 hours of her time.
"Allstate did not contract with Milroy to eliminate any emotional distress she might suffer should she be at fault in an automobile accident."
Where the third party's recovery will not exceed the policy's liability limits, the question of whether the insurer will compromise or settle the claim or the manner in which it conducts the aspects of the defense are "matter[s] of no concern to the insured."
Milroy also claimed that Allstate harassed Lewis "as part of its effort to punish the plaintiffs and their attorneys who bring lower value soft tissue injury claims." Even if true, such facts could not support a bad faith claim, because the duty of an insurance company to deal fairly and in good faith with its insured does not extend to an injured third party who has no contractual or statutory relationship with the tortfeasor's insurer.
One wonders why the court simply did not state that Milroy had no standing to assert any claims against Allstate on behalf of Lewis.
