Guarantee Insurance v. City of Long Beach

106 A.D.2d 428, 482 N.Y.S.2d 522, 1984 N.Y. App. Div. LEXIS 21470

• Court: Appellate Division of the Supreme Court of the State of New York
• Decided: December 10, 1984
• Status: Published

Opinion

—In an action by an insurance company to recover from its insured the $7,000 settlement paid to a third-party claimant, defendant appeals from (1) an order of the Supreme Court, Nassau County (Levitt, J.), dated December 15, 1983, which, inter alia, granted plaintiff’s motion for summary judgment and (2) a judgment of the same court entered thereon on December 29, 1983.

Appeal from the order dismissed (see Matter of Aho, 39 NY2d 241, 248).

Judgment affirmed.

Plaintiff is awarded one bill of costs.

Pursuant to the subject insurance policy the defendant insured was obligated to pay the first $10,000 of any settlement or judgment in favor of a third party. Plaintiff insurance company settled a third-party claim for $7,000 and thereafter commenced this action to recover that sum.

An insurance company must exercise good faith and fair dealing when it engages in settlement negotiations (Gordon v Nationwide Mut. Ins. Co., 30 NY2d 427, cert den 410 US 931). Before an insured may recover damages for an insurer’s bad faith refusal to settle within policy limits or, by analogy, failure to enter into a settlement for as small a sum as possible where, as here, there is a deductible, there must be “an extraordinary showing of a disingenuous or dishonest failure to carry out a contract” (Gordon v Nationwide Mut. Ins. Co., supra, p 437). No such showing has been made here. Thompson, J. P., O’Connor, Niehoff and Boyers, JJ., concur.