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Gainsco Insurance Co. v. Amoco Production Co.8/19/2002
d the circumstances under which the claimant should bear the burden of proving the reasonableness of a stipulated judgment:
In these circumstances, while the judgment is binding and valid as between the stipulating parties, it is not conclusive on the insurer. The burden of proof is on the claimant, the plaintiff judgment creditor, to show that the settlement is reasonable and prudent. . . .
It may be instructive to point out how this case differs from Butler Brothers v. American Fidelity Co., 120 Minn. 157, 139 N.W. 355 (1913). In Butler we held that a stipulated judgment, while not conclusive on the insurer, was presumptively so, and that the burden was on the insurer to show the settlement was unreasonable. In Butler, however, the insured entered into a settlement with the plaintiff in the course of a "real trial" while defending itself after being abandoned by its insurer. Thus the Butler settlement had quite different bona fides than the settlement made here. Here we think it appropriate, and so hold, that the burden of proving reasonableness is on the plaintiff claimant. Miller, 316 N.W.2d at 735-36.
In other words, when the insured and the claimant settle a case that is being defended by the insurer, even under a reservation of rights, the insured and the claimant should bear the burden of proving that the settlement was reasonable. See Morris, 741 P.2d at 253. But see also Kivela, 408 N.E.2d at 812-13, where a stipulated judgment was held conclusive against an insurer who refused to defend the insured.
[ ] We conclude that, as between Amoco and Gainsco, Amoco had the burden of proving that its settlement with Andrews was reasonable. Further, we hold that a settlement in such circumstances is reasonable if a reasonably prudent person in the position of the insured, under all of the relevant circumstances, would have settled on those terms. With that standard in mind, we cannot find that the settlement was reasonable. While the question of the reasonableness of a settlement is a question of fact, there are no genuine issues of material fact in regard to this issue. Despite a contractual limit of $300,000.00, Andrews agreed to a judgment for $795,901.00. Despite a potentially valid claim against Kobbe for implied indemnity, Andrews agreed to dismiss that claim with prejudice. Amoco has attempted to justify the dollar amount by emphasizing the validity of the underlying stipulated judgment in favor of the Abraham Estate. However, Amoco's evaluation of the "worth" of the wrongful death claim has little to do with Andrews' failure to evaluate the "worth" of the indemnity claim. Similarly, Amoco has produced no evidence to justify Andrews' agreement to dismiss its claim against Kobbe, an action that undeniably prejudiced Gainsco.
Issue No. 9: Did the district court err as a matter of law when it held that the total stipulated judgment amount was enforceable by Amoco against Gainsco?
[ ] Toward the end of its decision letter, the district court stated its agreement with several "propositions advanced by AMOCO," including the following:
e. GAINSCO's repeated offers of $20,000 to settle a likely liability exposure of well over $700,000 to its insured, when there was applicable coverage, constituted insurance bad faith.
g. GAINSCO is guilty of bad faith, and thus is liable to AMOCO for its $300,000 policy limit and further for all amounts in excess thereof necessary to satisfy the judgment of $795,901 and post-judgment interest.
[ ] These conclusions were preceded by the district court's analysis that formed the basis for the conclusions:
Having determined that GAINSCO has contractual
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 Wyoming Personal Injury Attorneys
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