Fire Insurance Exchange v. Bell

643 N.E.2d 310 (1994)

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Nature of the Case

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Facts

Sixteen-month-old Jason Bell was severely burned in a fire at his grandfather's home (Moore). Gasoline had leaked onto the floor of Moore's utility room and was ignited by a water heater. The fire department cited Moore for the careless storage of gasoline. Farmer's was the insurance company, whose claims manager was Dennis Shank (Shank) and whose attorney was Scaletta. P's mother retained Collins to represent Jason regarding his claims for injuries sustained in the fire. Collins communicated with Scaletta and Shank on many occasions in an effort to obtain information regarding the insurance policy limits. Farmers informed Scaletta that Moore's policy limits were $300,000. Scaletta told Collins that he did not know the policy limits, even though Farmers had already provided Scaletta with this information. Collins claimed that Scaletta and Shank told him on separate occasions that Moore had a $100,000 policy limit. Scaletta confirmed his misrepresentation to Collins in a letter. Shank and Scaletta each represented to Collins that Farmers would pay the $100,000 policy limit. Collins advised P to settle. The agreement was approved by the probate court, and after settling with Farmers, Bell filed a products liability action against the manufacturer of Moore's water heater. Collins learned that Moore's homeowner's policy limits were actually $300,000. Collins informed P that he had been deceived and advised her to seek independent counsel to assert claims against Farmers and Ice Miller (Ds). P filed a complaint alleging fraudulent misrepresentation. Ds moved for summary judgment contending that P's attorney had, as a matter of law, no right to rely on the alleged misrepresentations because he was a trained professional involved in adversarial settlement negotiation and had access to the relevant facts. The court held that the right to rely upon the alleged misrepresentations by D is a question of fact for the jury to decide. The appellate division affirmed, and the attorneys appealed.