First State v. Utica
Opinion
USCA1 Opinion
March 6, 1996 [Not for Publication] [Not for Publication]
United States Court of Appeals United States Court of Appeals
For the First Circuit For the First Circuit
____________________
No. 95-1100
FIRST STATE INSURANCE COMPANY,
Plaintiff, Appellant,
v.
UTICA MUTUAL INSURANCE COMPANY,
Defendant, Appellee.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Richard G. Stearns, U.S. District Judge] ___________________
____________________
Before
Cyr, Circuit Judge, _____________
Bownes, Senior Circuit Judge, ____________________
and Stahl, Circuit Judge. _____________
____________________
Myles W. McDonough, with whom Robert H. Gaynor and Sloane and ___________________ _________________ ___________
Walsh, were on brief for appellant. _____
Eugene G. Coombs, Jr., with whom Jeffrey A. Novins and Kilburn, ______________________ __________________ ________
Casey Goscinak & Coombs were on brief for appellee. _______________________
_____________________
_____________________
STAHL, Circuit Judge. Excess insurer First State STAHL, Circuit Judge. _____________
Insurance Company ("First State") sued primary insurer Utica
Mutual Insurance Company ("Utica"), claiming that Utica
unreasonably and in bad faith failed to settle a claim within
the primary policy limits, resulting in a significant payout
by First State on the excess policy. The district court,
sitting without a jury, found that Utica indeed acted
unreasonably and in bad faith, but that First State failed to
prove that the underlying claim could have been settled at
any time for less than the amount actually paid.
Consequently, the district judge ruled that First State
failed to prove that it was harmed by Utica's actions, and
entered judgment for defendant Utica. First State appeals.
Finding no reversible error, we affirm.
I. I. __
BACKGROUND BACKGROUND __________
We begin by summarizing the facts as found by the
district court, reported in detail in First State Insurance _____________________
Co. v. Utica Mutual Insurance Co., 870 F. Supp. 1168, 1169-74 ___ __________________________
(D. Mass. 1994) (Stearns, J.). This dispute between insurers
is a by-product of the tragic 1983 drowning of a five-year-
old boy at a bridge construction site. The boy, attempting
to traverse a plank leading to a bridge support pier, slipped
and fell into the river and drowned. His body was not
recovered for several weeks.
-2- 2
The bridge contractor had not fenced in the
construction site, which was adjacent to a playground, nor
had it hired security guards or posted the site with warning
or "no trespassing" signs. Prior to the accident, the
contractor was aware that children and vandals were
trespassing on the site. The contractor found more than once
that someone had placed planks to allow access from the shore
to the support piers in the middle of the river.
In November 1983, the parents, represented by the
law firm of Mardirosian & Barber, brought a wrongful death
action against the contractor in Massachusetts state court.
Utica, the primary liability insurer for the
contractor, had provided a $500,000 policy, of which it had
reinsured $300,000 with Prudential Reinsurance, limiting its
actual loss exposure to $200,000. First State had issued an
excess liability policy to the contractor in the amount of
$15,000,000. Utica, as the primary carrier, was obligated to
provide the contractor with a defense, and in late 1983 it
retained the firm of Roche & Heifetz for that purpose.
The wrongful death case proceeded at a leisurely
pace. During the six years following the filing of the
claim, the parties' lawyers had several inconclusive
settlement discussions. On February 6, 1989, two days before
the start of trial, Utica offered its entire $500,000 policy
limit to settle the case. The offer was rejected. Utica
-3- 3
then tendered its policy to First State, effectively turning
over control of the settlement negotiations to First State.
Trial began on February 8, 1989. On the second day of trial,
First State made a $750,000 settlement offer, but that was
rejected. Subsequent offers of $1,000,000 and $1,100,000
were also rejected. On the fifth day of trial, with the help
of the trial judge, the case was settled for $1,250,000 .
Utica thus paid $500,000 under the primary policy ($300,000
of which was reinsured) and First State paid $750,000 under
the excess policy.
In November 1989, First State brought a diversity
action against Utica in the United States District Court for
the District of Massachusetts, alleging that Utica's refusal
to pursue a reasonable settlement of the wrongful death case
caused First State to lose the $750,000 paid in excess of
Utica's policy limit. After a six-day bench trial, the
Free access — add to your briefcase to read the full text and ask questions with AI
First State v. Utica, (1st Cir. 1996).
First State v. Utica (First State v. Utica) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.
Related
Anderson v. City of Bessemer City
470 U.S. 564 (Supreme Court, 1985)
Wilma Cumpiano A/K/A Wilma Cumpiano Sanchez v. Banco Santander Puerto Rico
902 F.2d 148 (First Circuit, 1990)
William Langton v. Philip Johnston, John Bruder, John Bruder v. Philip Johnston, John Bruder v. Philip Johnston
928 F.2d 1206 (First Circuit, 1991)
First State Insurance v. Utica Mutual Insurance
870 F. Supp. 1168 (D. Massachusetts, 1994)
Hartford Casualty Insurance v. New Hampshire Insurance
628 N.E.2d 14 (Massachusetts Supreme Judicial Court, 1994)