Doherty v. Merchants Mutual Insurance

Appeal from an order of the Supreme Court, Erie County (Penny M. Wolfgang, J.), entered October 2, 2008. The order granted defendant’s motion for summary judgment dismissing the complaint. It is hereby ordered that the order so appealed from is affirmed without costs. Memorandum: Plaintiffs, as assignees of Thomas S. Fitzpatrick, the defendant in the underlying personal injury action, commenced this action alleging that defendant acted in bad faith by failing to settle the underlying action and thereby exposing Fitzpatrick to personal liability. Plaintiffs commenced the underlying action seeking damages for injuries sustained by Jennifer M. Doherty (plaintiff) when the vehicle she was operat [1871] ing was rear-ended by a vehicle operated by Fitzpatrick. The jury awarded plaintiffs damages in excess of the coverage that Fitzpatrick had pursuant to his insurance policy with defendant and, in this action, plaintiffs seek damages in the amount of the difference between the verdict and the policy limit. Supreme Court (Wolfgang, J.) granted defendant’s motion seeking summary judgment dismissing the complaint. We affirm. “To prevail in . . .an action [seeking damages for an insurer’s bad faith refusal to settle an underlying action], a plaintiff must establish that the insured lost an actual opportunity to settle the . . . [action] ... at a time when all serious doubts about [his or her] liability were removed . . . , and that defendant insurer [acted with gross disregard for the insured’s interests, i.e., it] engaged in a pattern of behavior evincing a conscious or knowing indifference to the probability that [the] insured would be held personally accountable for a large judgment if a settlement offer within the policy limits were not accepted” (Kumar v American Tr. Ins. Co., 57 AD3d 1449, 1450 [2008] [internal quotation marks omitted]; see Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445, 453-454 [1993], rearg denied 83 NY2d 779 [1994]). In the underlying action, Supreme Court (Curran, J.) denied Fitzpatrick’s motion seeking summary judgment dismissing the complaint based in part on its determination that plaintiffs raised a triable issue of fact whether plaintiff sustained a serious injury within the meaning of Insurance Law § 5102 (d), and the court granted plaintiffs’ cross motion seeking partial summary judgment on the issue of Fitzpatrick’s negligence. It is undisputed that, prior to the trial of the underlying action, the attorneys for plaintiffs and Fitzpatrick requested that defendant settle the underlying action for the policy limit of $300,000. Nevertheless, “[i]t is settled that an insurer ‘cannot be compelled to concede liability and settle a questionable claim’ . . . simply ‘because an opportunity to do so is presented’ ” (Pavia, 82 NY2d at 454). In support of its instant motion, defendant established that it investigated the claim in the underlying action and arranged for a physical examination of plaintiff to determine the extent of her alleged injuries and whether they constituted a serious injury. Although the expert retained by defendant and plaintiffs treating physician had differing views with respect to the extent of plaintiffs injuries, the expert determined that plaintiff sustained cervical, thoracic and lumbar strains that resulted in a “moderate, partial, temporary disability for recreational activities and activities of daily living in the home.” Defendant’s investigation included a videotape of [1872] plaintiff engaged in activities without apparent difficulty, despite her alleged injuries. Defendant further established that it participated in settlement negotiations prior to and during the trial and that Supreme Court (Curran, J.) was actively engaged in the settlement negotiation process. Prior to trial, plaintiffs reduced their demand to $250,000 and, during the trial, they further reduced their demand to $240,000. Defendant thereafter increased its settlement offer from $25,000 to $55,000. Furthermore, the internal records of defendant submitted in support of the instant motion establish that the “high-low” offer that it made after the trial commenced was “not well received,” and plaintiffs’ attorney testified at his deposition that the “high-low” offer was rejected. We conclude that defendant established that Fitzpatrick did not lose an actual opportunity to settle the claim at a time when all serious doubts about his liability were removed and it was clear that the potential recovery far exceeded the insurance coverage (see id.), and thus that it did not act with gross disregard for Fitzpatrick’s interests (see id. at 453). We therefore conclude that defendant established its entitlement to summary judgment dismissing the complaint, and that plaintiffs failed to raise a triable issue of fact in opposition (see generally Zuckerman v City of New York, 49 NY2d 557, 562 [1980]). All concur except Centra and Carni, JJ., who dissent and vote to reverse in accordance with the following memorandum.