Pipoli v. United States Fidelity & Guaranty Co.

Steuer, J.

Suit is on an assigned claim, and the rights of the parties are to be determined as if the assignor were the plaintiff. The assignor, one Tedesohi, was the insured under a liability policy for $10,000 issued by defendant. The insured was involved in an accident in which a young woman was seriously injured. It appeared that the insured left Ms car on the highway and another car crashed into it. It was the insured’s contention, maintained throughout,' that he ran out of gas; that when his car stopped he took every possible precaution to make its presence known to other drivers; and that at least two such drivers passed him before the crash. And his version was to some extent corroborated by the other defendant, to the latter’s disadvantage. The injured young lady sued both drivers, and in the course of trial the other driver settled for $32,000. Negotiations were had with defendant and the final result was that defendant, having made an offer of $5,000, refused to increase it, and the demand, wMch at that time was $6,500, would not be lowered. The case proceeded to verdict, which was in the sum of $31,000 in excess of the amount already received. The defendant having paid the policy limit, Tedeschi, the insured, owed the plaintiff $21,000.

He asserted a claim against defendant for this sum, which claim he assigned to the plaintiff in the underlying action. An insurer’s duty to its insured is to defend the action against him in good faith. Without going into all of the factors which lead to a conclusion on whether good faith in fact characterized the company’s actions (see Brown v. United States Fid. & Guar. Co., 314 F. 2d 675; Keeton, Liability Insurance and Responsibility for Settlement, 67 Harv. L. Rev. 1136), there is in this case one overriding consideration. An insured who steadfastly proclaims his own freedom from fault cannot complain if Ms insurer believes Mm and acts accordingly (Colbert v. Home Ind. Co., 35 A D 2d 326).

It is argued that this principle has no application because the insurer did make an offer. This contention loses sight of the practicalities of negligence litigation. There are several factors which lead to an offer of settlement which in an ideal system of absolutes, depending strictly on the merits of the action, would lead to none. To mention just a few: the cost of defending, including time and energy; the possibility of a very large, even though unmerited, recovery; and the creation of an unfavorable image of adamant resistance, justified or unjustified, in the eyes of the litigating fraternity. The last frequently takes the form of making some contribution to a larger offer made by a codefendant, in order to dispose of the entire litigation. In view of these, the fact of some offer being made is no sign that the company did not rely on the insured’s insistence on his version of the occurrence. Surely it is under no duty to him to disbelieve him.

The judgment entered August 5, 1971 (Frank, J.) should be affirmed with costsl