 |
 |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|
|
|
|
Associated Aviation Underwriters v. Wood9/29/2004
see also Fulton v. Woodford, 26 Ariz. App. 17, 20, 545 P.2d 979, 982 (1976). But that conflict is not as extensive or all-encompassing as AAU urges. Nor does AAU's broad concept of conflict of interest square with Restatement § 58. In cases such as Morris and Vagnozzi that involve allegedly intentional acts, "the injured person's claim against the [insured] is such that it could be sustained on different grounds," one of which is within coverage and another of which is not. Restatement § 58(2). That is, regardless of whether the insured's liability arose from negligent or intentional acts, the claimant would be entitled to prevail and recover against the insured on either ground.
Here, in contrast, Intervenors' original, alternative claim of intentional misconduct by TAA/City was not pursued and is neither at issue nor asserted by AAU as a coverage defense. Absent that claim, AAU has not established that Intervenors' other claims and consent judgment against TAA/City "could be sustained on different grounds," some of which would be covered and others of which would not. Restatement § 58(2). As Intervenors argue, "there were no alternative grounds to sustain a judgment in Intervenors' favor that would be outside the scope of AAU's coverage." Therefore, we agree with Intervenors that issues subsumed in a Morris agreement and relating strictly to liability and damages rather than coverage "must be given the same binding, collateral estoppel effect as if the judgment in the underlying tort action had been entered after a fully litigated trial -- subject only to a judicial determination that the settlement is reasonable and noncollusive." In other words, as Intervenors also argue, after Morris, an insurer that defends its insured under a reservation of rights "risks giving up the opportunity to contest the merits of the underlying tort claim, except in the more-limited context of disputing the reasonableness of a settlement." See Morris, 154 Ariz. at 119, 741 P.2d at 252 ("The insurer's reservation of the privilege to deny the duty to pay relinquishes to the insured control of the litigation, almost as if the insured had objected to being defended under a reservation.").
D. Other Policy Considerations
Several additional factors compel us to reject AAU's Morris -based argument. First, if an insurer that defends under a reservation of rights may fully litigate in a DRA on coverage all issues relating to liability of its insured (including negligence, causation, and damages), that would largely if not totally defeat the purpose of a Morris agreement. If such an insurer could always contest the insured's liability or the claimant's damages in a coverage case, the claimant would have little incentive to enter into a Morris agreement. In that situation, any benefit to the insured and claimant would be negligible, a point the court in Morris expressly recognized. Id. at 120, 741 P.2d at 253 (permitting insurer "to relitigate all aspects of the liability case, including liability and amount of damages[,]... would destroy the purpose served by allowing insureds to enter into Damron agreements because claimants would never settle with insureds if they never could receive any benefit").
Second, if an insurer could fully litigate all liability and damage issues in a DRA on coverage, with any indemnity obligation arising only if those issues were resolved adversely to the insurer in that action, a second phase hearing on reasonableness of a Morris settlement would be superfluous. That is, there would be no reason for a trial court to address and evaluate the merits of the underlying claims in determining whether a Morris agreement is reasonable if those same issues were previously li
Page 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Arizona Personal Injury Attorneys
Personal Injury Lawyers
|
| |
to fill out a simple form to connect to Personal Injury Lawyers in your area.
|
|