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Safeway Insurance Co.2/24/2005
This case requires us once again to consider issues arising out of a Morris agreement. The question presented is whether attorneys who negotiate a Morris agreement on behalf of a plaintiff in a personal injury action can be subjected to liability to the defendant's insurer for intentional interference with contractual relations. We conclude that such a claim does not lie in this case.
I.
This case arises out of an automobile accident in which Holly Castano suffered catastrophic injuries. Castano's mother, Patricia Himes, was appointed as her conservator and retained Peter A. Guerrero of the firm of Roush, McCracken & Guerrero (collectively "Guerrero"), to handle Castano's personal injury claims. Steven Botma drove the car that caused the accident. Safeway Insurance Company ("Safeway") insured the vehicle that Botma was driving. The insurance policy provided coverage limits of $15,000 per person and $30,000 per accident.
Guerrero made a settlement offer that included a demand of the $15,000 policy limits. Guerrero later withdrew the offer, and then sued Botma and General Motors, the manufacturer of the car in which Castano was injured. Safeway appointed counsel for Botma, who filed a counterclaim alleging that Safeway had accepted the settlement offer before it was withdrawn. That issue was tried to a jury, which found that no settlement had been reached. The court of appeals affirmed in a memorandum decision.
Shortly before the scheduled trial of the personal injury lawsuit, Himes and Botma entered into a Morris agreement under which Botma admitted liability in the amount of $12 million and assigned to Himes any claims that he had against his original counsel and Safeway. Safeway intervened in superior court to contest the amount of the settlement. The superior court found the $12 million settlement reasonable.
After the Morris settlement, Safeway filed two lawsuits. The first, filed in federal court, sought a declaratory judgment that Botma had breached the cooperation clause of the insurance contract by entering into the Morris agreement. Himes and Botma counterclaimed, alleging that Safeway had acted in bad faith by failing to accept the policy limits settlement offer. The district court granted summary judgment to Safeway, finding that the insurer had not acted in bad faith and that Botma therefore breached the cooperation clause of his insurance contract by signing the Morris agreement. Safeway Ins. Co. v. Botma, No. CIV-00-553-PHX-RCB (D. Ariz. Mar. 7, 2003) (order granting partial summary judgment). An appeal of that judgment is pending in the Ninth Circuit.
In the second suit, filed in superior court, Safeway sued Guerrero for intentional interference with contractual relations. The complaint alleged that Guerrero "devised a scheme" to induce Botma to admit liability and assign his bad faith claim against Safeway, in order to allow Guerrero to "receive a much larger fee." Safeway alleged that Guerrero induced Botma's breach of the cooperation clause by threatening Botma with a multi-million dollar judgment, manufacturing a bad faith claim against Safeway through aborted settlement negotiations, and misrepresenting to Botma what had occurred during those negotiations.
Guerrero filed a motion for summary judgment. The superior court granted the motion, holding that "on the undisputed facts, plaintiff's complaint fails as a matter of law." The court of appeals reversed, finding a genuine issue of material fact as to whether Guerrero engaged in improper conduct that could give rise to the intentional interference claim. Safeway Ins. Co. v. Guerrero, 207 Ariz. 82, 95 55-56, 83 P.3d 560, 573 (
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