Miller v. Byrne8/24/1995
In this action for bad faith breach of insurance contract, legal malpractice, and breach of fiduciary duty, defendants, Southern Aviation Insurance Group, Inc., (Southern) and Thomas Byrne, William White, and Byrne, Kiely & White (Attorneys), appeal the judgment entered in favor of plaintiffs, The Cloud Base, Inc., (Cloud Base) and its owner, Bruce Miller. Cloud Base and Miller cross-appeal certain rulings of the trial court. We affirm in part, reverse in part, and remand for a new trial.
On April 2, 1988, a passenger on a sightseeing glider flight near Boulder, Colorado, was killed when the glider, which was owned and operated by Cloud Base, crashed. The passenger, a Wyoming resident, was survived by his spouse and two minor children.
At the time of the crash, Cloud Base had liability insurance coverage from Ohio General Insurance Company. Southern was a managing general agent for that carrier. The insurance coverage provided $100,000 in policy limits for any damages for which Cloud Base was responsible.
Southern investigated the cause of the crash. A number of potential causes were identified, including weather conditions, a product defect in the aircraft, pilot error, and possible interference with the glider controls by the passenger.
As part of its investigation, Southern's representative met with the passenger's widow to inform her of the policy coverage and to discuss the crash. At about the same time, the representative discussed the matter with Lisa Sweeney, an attorney representing the widow.
In the summer of 1988, Southern's representative hired the Attorneys to examine liability issues and defend Cloud Base should a lawsuit be filed. Cloud Base retained additional personal counsel. Cloud Base and Miller requested that payment of the policy limits in settlement to the passenger's widow be made if such a settlement offer was received. Southern's representative made a structured settlement offer with a present value of approximately $80,000 to the widow. This offer was not accepted.
Thereafter, Southern's representative and the Attorneys corresponded with Meyer & Williams, another group of attorneys who represented the widow. However, on April 5, 1989, Southern's representative received a letter dated March 28, 1989, from Sweeney, which contained an offer to settle the claim for the policy limits of $100,000. The offer expired by its terms on April 9, 1989. Southern's representative immediately sent a copy by facsimile to the Attorneys and discussed its contents with them.
Southern's representative instructed the Attorneys to seek clarification concerning the offer from Sweeney; however, telephone calls to Sweeney by the Attorneys were not returned. Southern was willing to pay $95,000 in settlement, but not the full limits. Without the direction of Southern's representative, by letter dated April 7, 1989, the Attorneys rejected the settlement offer. No offer of $95,000 was made.
Cloud Base and Miller were not notified by Southern or by the Attorneys of this offer or its rejection until early May of 1989. According to Miller's testimony, either he or Cloud Base would have been willing to pay the balance of $5,000 to add to the authority of $95,000 granted by Southern, had they been aware of the offer.
Thereafter, the passenger's widow was appointed personal representative for her husband's Wyoming estate. As authorized by Wyoming law, she then commenced, through attorneys Meyer & Williams, a suit for wrongful death against Cloud Base and Miller. Upon learning of the suit and receiving authority from Southern, the Attorneys sent an offer to pay the $100,000 policy limits to s
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