Auman v. Federal Insurance

Michigan Court of Appeals

Auman v. Federal Insurance

266 N.W.2d 457, 81 Mich. App. 740, 1978 Mich. App. LEXIS 2186

CourtMichigan Court of Appeals

DecidedFebruary 27, 1978

DocketDocket 31417

StatusPublished

Cited by1 cases

This text of 266 N.W.2d 457 (Auman v. Federal Insurance) is published on Counsel Stack Legal Research, covering Michigan Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Auman v. Federal Insurance, 266 N.W.2d 457, 81 Mich. App. 740, 1978 Mich. App. LEXIS 2186 (Mich. Ct. App. 1978).

Pincite

Opinion

Per Curiam.

Plaintiff appeals from the trial court’s order granting summary judgment to defendant.

Plaintiff in his complaint alleged that he was damaged by defendant’s breach of its duty to defend plaintiff in good faith from claims arising out of operation of a motor vehicle insured under a policy issued by defendant. Plaintiff was operating an insured motor vehicle when it was involved in an accident. Defendant negotiated a settlement for $100,000, the amount of the policy limits, with third parties who suffered damages as a result of that accident. In exchange for the settlement, the claimants signed an agreement not to sue defendant and its policyholder, but preserved their rights against plaintiff, which rights they are seeking to enforce in an action for damages in excess of $500,000.

In moving for summary judgment, defendant called the attention of the trial court to the provision in the insurance policy excusing defendant from defending claims filed after the policy limits have been exhausted. The trial court held that *742 defendant, having paid the amount of the policy limits in the settlement, had fulfilled its contractual obligation. Accordingly, he granted summary judgment to defendant.

An insurance company in negotiating settlements has a duty to act in good faith with respect to the interest of the insured, and if it fails so to act, the insured may bring an action for the damages he suffers as a result, City of Wakefield v Globe Indemnity Co, 246 Mich 645; 225 NW 643 (1929), Citizens Mutual Insurance v Nationwide Insurance, 29 Mich App 91; 185 NW2d 99 (1970). Because plaintiff’s complaint properly stated a valid cause of action, summary judgment was improper under GCR 1963, 117.2(1).

The trial court’s action in granting summary judgment to defendant is also not proper under GCR 1963, 117.2(3). The affidavit filed in support of defendant’s motion for summary judgment does not assert that defendant acted in good faith in negotiating the settlement, a matter put in issue by plaintiff in his complaint. It is clear, interpreting the pleadings and affidavits to give the benefit of reasonable doubt to plaintiff, that there exists a genuine issue of material fact, Rizzo v Kretschmer, 389 Mich 363; 207 NW2d 316 (1973). There must therefore be a trial.

Reversed and remanded for trial on the merits. Costs to plaintiff.

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Per Curiam.

Plaintiff appeals from the trial court’s order granting summary judgment to defendant.

Plaintiff in his complaint alleged that he was damaged by defendant’s breach of its duty to defend plaintiff in good faith from claims arising out of operation of a motor vehicle insured under a policy issued by defendant. Plaintiff was operating an insured motor vehicle when it was involved in an accident. Defendant negotiated a settlement for $100,000, the amount of the policy limits, with third parties who suffered damages as a result of that accident. In exchange for the settlement, the claimants signed an agreement not to sue defendant and its policyholder, but preserved their rights against plaintiff, which rights they are seeking to enforce in an action for damages in excess of $500,000.

In moving for summary judgment, defendant called the attention of the trial court to the provision in the insurance policy excusing defendant from defending claims filed after the policy limits have been exhausted. The trial court held that *742 defendant, having paid the amount of the policy limits in the settlement, had fulfilled its contractual obligation. Accordingly, he granted summary judgment to defendant.

An insurance company in negotiating settlements has a duty to act in good faith with respect to the interest of the insured, and if it fails so to act, the insured may bring an action for the damages he suffers as a result, City of Wakefield v Globe Indemnity Co, 246 Mich 645; 225 NW 643 (1929), Citizens Mutual Insurance v Nationwide Insurance, 29 Mich App 91; 185 NW2d 99 (1970). Because plaintiff’s complaint properly stated a valid cause of action, summary judgment was improper under GCR 1963, 117.2(1).

The trial court’s action in granting summary judgment to defendant is also not proper under GCR 1963, 117.2(3). The affidavit filed in support of defendant’s motion for summary judgment does not assert that defendant acted in good faith in negotiating the settlement, a matter put in issue by plaintiff in his complaint. It is clear, interpreting the pleadings and affidavits to give the benefit of reasonable doubt to plaintiff, that there exists a genuine issue of material fact, Rizzo v Kretschmer, 389 Mich 363; 207 NW2d 316 (1973). There must therefore be a trial.

Reversed and remanded for trial on the merits. Costs to plaintiff.

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Bluebook (online)

266 N.W.2d 457, 81 Mich. App. 740, 1978 Mich. App. LEXIS 2186, Counsel Stack Legal Research, https://law.counselstack.com/opinion/auman-v-federal-insurance-michctapp-1978.

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