Thomas v. Nationwide Mutual Insurance Company

HIGGINS, Justice. The plaintiffs allege the defendant should have known (1) the plaintiffs had no defense to Mrs. Thomson’s action; (2) the recovery for her injuries would greatly exceed the maximum coverage of the policy; (3) since the defendant had the exclusive right to control the litigation, it was under the legal duty to plaintiffs to settle the claim for an amount not in excess of the coverage; (4) the defendant was guilty of negligence or bad faith, or both, in failing to compromise the Thomson claim for $10,000; (5) the jury, having awarded Mrs. Thomson $17,000, the plaintiffs, in order to discharge the judgment were required to pay $6,500. In this action, they demand the defendant should repay them. It appears that all essential questions in dispute in this case were before this Court and settled adversely to plaintiffs’ contention in Lumber Co. v. Ins. Co., 173 N.C. 269, 91 S.E. 946. In that case, the plaintiff alleged the defendant’s indemnity policy carried a maximum coverage of $5,000. The insurance company assumed complete control of the litigation. The insured’s claim for his injuries could have been settled for $1,000 to $2,500. The defendant negligently or in breach of its duty under its policy failed to settle the claim. The jury returned a verdict for the plaintiff in the amount of $20,000. In Lumber Co., the court sustained the demurrer and dismissed the action, *332 holding, . . the complaint failed to state a cause of action either as a breach of implied contract or in tort for negligence.” In Lumber Co., the Court said: “It is true as held by other courts that when an insurer — on being notified of an action for injuries — assumes the defense thereof and was negligent in conducting the suit to the loss of the employer, the latter was entitled to sue the insurance company for breach of its implied contract to exercise reasonable care in conducting the suit or in tort for negligence.” The court held the complaint failed to allege the insurer was guilty of any negligence in the conduct of the suit, or that it failed to employ competent counsel, or that counsel’s negligence was responsible for the unfavorable verdict. “So far as the complaint shows, the case was conducted properly and skillfully, though it resulted in a verdict of $20,000 against the plaintiff ... (I)t turns out that it would have been better ... if the offer of compromise had been accepted . . . This is a case where hindsight turns out to be better than foresight. It was a mistake of judgment, something not unusual in the affairs of this life. Such a mistake honestly made does not subject the person to legal liability.” The verdict in Lumber Co. was four times the maximum coverage; eight to twenty times the amount for which the complaint alleged the claim could have been settled. These allegations were deemed admitted for the purpose of testing the sufficiency of the complaint. Even so, the court sustained the demurrer and dismissed the action. In this case, both parties displayed some disposition to settle the original case. However, the equivocal nature of the settlement negotiations, together with the amount of the verdict in proportion to the maximum coverage, indicate neither party was sure of the outcome, especially as to the amount of a recovery. In Lumber Co., the complaint failed to state a cause of action. In the instant case, the evidence was held insufficient to support a cause of action. The proof in the latter is certainly not any stronger than the allegations of the complaint in the former. The decision in Lumber Co. has been cited many times in the opinions of this Court, among them: Connor v. Ins. Co., 265 N.C. 188, 143 S.E. 2d 98; Bradford v. Kelly, 260 N.C. 382, 132 S.E. 2d 886; Lampley v. Bell, 250 N.C. 713, 110 S.E. 2d 316; Alford v. Ins. Co., 248 N.C. 224, 103 S.E. 2d 8. After all, the plaintiffs’ negligence caused the injuries and damages. In addition to defending them in the suit, the de *333 fendant paid the full amount of its policy coverage. As the case turned out, the plaintiffs had not bought enough insurance. This evidence, stretched to its outer limits, simply does not go far enough to require the defendant to donate $6,500 additional insurance. On the authority of Lumber Co., and other cases to the same effect referred to in the cases cited, the Court now holds that the plaintiffs’ evidence was insufficient to make out a case. The directed verdict for the defendant was required under Rule 50, Rules of Civil Practice, 1A, 50 (a). The judgment dismissing the action is Affirmed.