Priscilla Pristine’s attorney settles her case against the defendant Dan Denver and his liability insurer, Geico, for $25,000 under the new law. Upon payment, Geico’s duty to defend is eliminated. Priscilla has $100,000 in UM/UIM benefits afforded to her from her carrier, Allstate. All policies renewed in 2016 before the collision. Allstate makes no offer, requiring suit. Priscilla suffered a permanent traumatic brain injury with $85,000 in past specials. Priscilla’s lawyer correctly files suit naming Dan Denver (released party) as defendant and including Allstate and its registered agent in the caption, as plaintiff’s UIM insurer, not as a defendant, with the notation “Also serve”. (Both Dan Denver, the defendant, and Allstate’s registered agent must be served.) Allstate, if it chooses, will defend the UIM claim. The defendant has a duty to reasonably cooperate with Allstate in its defense. If not, Allstate’s subrogation rights are revived against the defendant. The jury returns an $800,000 verdict against the defendant, Dan Denver. The judgement is docketed against “released defendant” and Allstate is obligated to pay its UIM limits to the plaintiff of $75,000. The plaintiff has already received Geico’s liability settlement of $25,000. Under the new 2016 settlement procedure law, the plaintiff has no claim against the defendant for any excess verdict, nor does Allstate have any subrogation claim against the defendant since he reasonably cooperated with Allstate in its defense of the UIM claim.
If the plaintiff’s attorney’s pre-suit investigation revealed that the defendant, Dan Denver had substantial assets, serious consideration should have been given to not settling the case with the liability carrier and proceeding to trial.
Suit Before Settlement With the Liability CarrierSame facts as the previous example except suit was filed against the defendant, Dan Denver, before settlement with Dan and his liability carrier, Geico. Both Geico and Allstate counsel defend the case. After plaintiff’s deposition, Geico settles with the plaintiff, under the new 2016 settlement procedure law. Upon payment, Geico has no further duty to defend. Geico’s lawyer is granted leave to withdraw by the court, leaving Allstate’s counsel to defend the case. Verdict for plaintiff is $800,000 – same analysis as in the previous example.
But, what if Geico offers its available liability limits and plaintiff accepts with payment being made one day before trial under the new law? Answer: Technically, under the new law, Geico’s duty to defend ends “upon payment” of its available policy limits. Since Allstate counsel is also defending, it is likely the trial judge will grant Geico’s counsel leave to withdraw on the morning of trial as long as there is no prejudice to the defendant, Dan Denver.
NB: During trial, it is improper for UIM counsel to suggest he/she is representing Allstate, the plaintiff’s UIM carrier. UIM counsel can only tell the jury that he/she is present in court to assist in the defense of Dan Denver. See Travelers v. Lobello and Allstate v. Wade, discussed, supra.
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