Elm Insurance v. GEICO Direct

Appellate Division of the Supreme Court of New York

Elm Insurance v. GEICO Direct

23 A.D.3d 219, 805 N.Y.S.2d 34

CourtAppellate Division of the Supreme Court of the State of New York

DecidedNovember 10, 2005

StatusPublished

Cited by2 cases

This text of 23 A.D.3d 219 (Elm Insurance v. GEICO Direct) is published on Counsel Stack Legal Research, covering Appellate Division of the Supreme Court of the State of New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook

Elm Insurance v. GEICO Direct, 23 A.D.3d 219, 805 N.Y.S.2d 34 (N.Y. Ct. App. 2005).

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Opinion

Order, Supreme Court, New York County (Richard B. Lowe, III, J), entered August 24, 2004, which, to the extent appealed [220]*220from, denied so much of defendant-appellant’s motion as sought dismissal of the complaint as against it, unanimously modified, on the law, to grant appellant’s motion insofar as to dismiss the fourth cause of action, sounding in breach of contract, and otherwise affirmed, without costs.

Plaintiff, in its capacity as excess liability insurer, paid $700,000 to settle the underlying action. The defense of the action was handled by lawyers retained by the primary liability insurer, defendant-appellant GEICO, which, in connection with the settlement, paid its policy limit of $100,000. Alleging that defendant and the law firm it retained misinformed plaintiff regarding the status of the case and the extent of the injuries involved, failed to inform plaintiff that its insured was precluded from testifying, failed to conduct an investigation, and specifically advised plaintiff that liability would not exceed the policy limits of the primary layer of coverage, plaintiff now sues the law firm for malpractice and breach of contract, and defendant-appellant GEICO for bad faith and breach of contract. The breach of contract claim against GEICO is not sustainable since plaintiff does not specify any contractual provision that was breached, and because the law firm was an independent contractor for whose acts and omissions GEICO is not answerable (see Feliberty v Damon, 72 NY2d 112 [1988]).

While this is not a case in which bad faith may be found in the context of a failure to settle, the underlying litigation having in fact been settled, dismissal of plaintiffs bad faith claim was properly denied in light of allegations permitting the inference that GEICO, by deliberately or recklessly misrepresenting the status of the litigation, effectively deprived plaintiff subrogee of a meaningful opportunity to protect its client’s interests by realistically evaluating and prosecuting the case (see Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445 [1993]). Concur—Mazzarelli, J.P., Saxe, Ellerin, Gonzalez and Catterson, JJ.

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Order, Supreme Court, New York County (Richard B. Lowe, III, J), entered August 24, 2004, which, to the extent appealed [220]*220from, denied so much of defendant-appellant’s motion as sought dismissal of the complaint as against it, unanimously modified, on the law, to grant appellant’s motion insofar as to dismiss the fourth cause of action, sounding in breach of contract, and otherwise affirmed, without costs.

Plaintiff, in its capacity as excess liability insurer, paid $700,000 to settle the underlying action. The defense of the action was handled by lawyers retained by the primary liability insurer, defendant-appellant GEICO, which, in connection with the settlement, paid its policy limit of $100,000. Alleging that defendant and the law firm it retained misinformed plaintiff regarding the status of the case and the extent of the injuries involved, failed to inform plaintiff that its insured was precluded from testifying, failed to conduct an investigation, and specifically advised plaintiff that liability would not exceed the policy limits of the primary layer of coverage, plaintiff now sues the law firm for malpractice and breach of contract, and defendant-appellant GEICO for bad faith and breach of contract. The breach of contract claim against GEICO is not sustainable since plaintiff does not specify any contractual provision that was breached, and because the law firm was an independent contractor for whose acts and omissions GEICO is not answerable (see Feliberty v Damon, 72 NY2d 112 [1988]).

While this is not a case in which bad faith may be found in the context of a failure to settle, the underlying litigation having in fact been settled, dismissal of plaintiffs bad faith claim was properly denied in light of allegations permitting the inference that GEICO, by deliberately or recklessly misrepresenting the status of the litigation, effectively deprived plaintiff subrogee of a meaningful opportunity to protect its client’s interests by realistically evaluating and prosecuting the case (see Pavia v State Farm Mut. Auto. Ins. Co., 82 NY2d 445 [1993]). Concur—Mazzarelli, J.P., Saxe, Ellerin, Gonzalez and Catterson, JJ.

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Bluebook (online)

23 A.D.3d 219, 805 N.Y.S.2d 34, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elm-insurance-v-geico-direct-nyappdiv-2005.

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