Insurance company refused to defend policyholder...
Insurance company has refused to defend policyholder saying there is no coverage for the claim. We want to enter consent judgment and then pursue garnishment against policy. Policy says insured may make no statement that will assume any obligation or admit any liability, for any “loss” for which we may be liable, without our consent. Given this, is there any way to enter into a consent judgment without losing possibility of coverage?
Answer: There is an old Tenth Circuit case, Traders & Gen. Ins. Co. v. Rudco Oil & Gas Co., 129 F.2d 621, which says if the insurance company unreasonably denies coverage, it is estopped to assert the “assume any liability” clause. There, the insured actually settled and paid the money, but that may not be the only way to do this. Some states (but not Oklahoma – yet) permit the insured to agree to a judgment and make a deal with the injured plaintiff under which the insured agrees to a judgment and gets a covenant not to execute on the judgment in return for an assignment of the insured’s claim against the insurance company. In Arizona, these have come to be called “Damron” assignments, after Damron v. Sledge, 460 P.2d 997 (AZ 1969). This is probably the direction in which we need to move Oklahoma law. We’re not there just yet, though.
Posted on Tue, August 25, 2009
by Sharon Coleman filed under