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Gainsco Insurance Co. v. Amoco Production Co.8/19/2002
use of action for third-party bad faith until a judgment has been entered against the insured in excess of policy limits. Jarvis, 948 P.2d at 901-02; Marathon Ashland Pipe Line LLC, 243 F.3d at 1250; Sabins, 82 F.Supp.2d at 1278. Where the judgment amount has been determined not by trial, but by a settlement between the insured and the claimant, without participation by the defending insurer, the insured or the claimant, as assignee, has the burden of proving the reasonableness of the settlement. Morris, 741 P.2d at 253. One factor in the consideration of reasonableness is the adequacy of any pre-settlement notice to the insurer. Spangler, 881 F.Supp. at 545. Unless the insured or the claimant proves that the settlement was reasonable, "neither the fact nor amount of liability to the claimant is binding on the insurer . . .." Morris, 741 P.2d at 253.
[ ] The Amoco-Andrews settlement is not binding on Gainsco. Absent the unreasonable settlement amount, there could have been no judgment in excess of policy limits. Beyond that, the settlement compromised Gainsco's right to recoup an appropriate percentage of the judgment from Kobbe because the third-party complaint against Kobbe was dismissed with prejudice.
Issue No. 10: Does the law of the case doctrine prevent Gainsco from raising the argument in this appeal that the express $300,000.00 limit of Andrews' liability contained in the Contract is a complete defense to any bad faith claim asserted by Amoco?
[ ] On March 17, 1994, Amoco filed its complaint against Andrews seeking indemnity for its settlement with the Abraham Estate. Despite the contractual limitation of $300,000.00, the prayer for relief in that complaint sought from Andrews $716,490.80, which amount equaled the $650,000.00 settlement plus $66,490.80 in attorneys' fees and costs. The answer filed a little more than a month later by the attorney hired by Gainsco to represent Andrews admitted the existence of the Contract, but did not mention or raise as an affirmative defense the Contract limitation. Further, when Andrews stipulated to entry of the judgment against it for $795,901.00, Gainsco did not appeal that judgment on the ground that it exceeded Andrews' contractual obligation. It is Amoco's contention now that, once that judgment became final without appeal, it became the "law of the case."
[ ] Citing Lyden By and Through Lyden v. Winer, 913 P.2d 451 (Wyo. 1996), Amoco contends that Gainsco should be barred from raising this defense because it was not raised in the district court before judgment was entered. Lyden says that the "law of the case" doctrine requires that a court's decisions on issues of law be followed in later stages of the proceedings. Id. at 454. We discussed the law of the case doctrine in more detail in Triton Coal Co. v. Husman, Inc., 846 P.2d 664, 667-68 (Wyo. 1993):
Under the "law of the case" doctrine, a court's decision on an issue of law made at one stage of a case becomes a binding precedent to be followed in successive stages of the same litigation. . . . The "law of the case" is a doctrine designed to avoid repetitious litigation and to promote consistent decision making. As such, it is in the same family as res judicata, collateral estoppel, and stare decisis. . . . Most commonly, the "law of the case" requires a trial court to adhere to its own prior rulings, adhere to the rulings of an appellate court, or adhere to another judge's rulings in the same case or a closely related case. . . . Triton, however, relies upon a fourth and much less utilized aspect of the rule in which a court's ruling on an issue that could have been appealed, but was not, will be given preclusive effect. . . . Although some courts labe
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