Mid-America Bank & Trust Co. v. Commercial Union Insurance Company

587 N.E.2d 81 (1992)

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Nature of the Case

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Facts

A truck hit a 13-year-old boy; he suffered brain damage. The truck was insured by Commercial Union under a policy that had limits of $ 50,000 per person and $ 100,000 per occurrence. P's attorney sent a letter offering to settle for the policy limits. The offer remained open but was never accepted. D hired third-party defendant as its lawyer. On the advice of D, and because of the possibility of damages exceeding the policy limits, the owner of the truck hired his own attorney. Three years later on May 3, 1980, P again offered to settle for $50,000. The third-party defendant offered $ 30,000, 'take it or leave it,' but did not tell the truck owner that he was going to offer this amount. P withdrew all offers. Six days later, third-party defendant offered to pay $ 50,000, stating that he always had had authority to settle for that amount. P refused to accept the offer and the case was tried. A jury awarded P $ 911,536.50, an amount in excess of the coverage. The owner of the truck assigned to P all claims he had against D in exchange for P's covenant not to execute the $911,536.50 judgment against him. P sued D for negligence and for the tort of bad faith in settling the original claim. D filed a third-party complaint against its lawyer, third-party defendant, whose estate has since been substituted, seeking indemnity and contribution. A jury awarded P $686,536.00, being the unpaid balance of the previous judgment. It found D to be 75% at fault and third-party defendant 25% at fault. The circuit court entered judgment and also awarded attorney fees and costs and ordered interest assessed against Ds at 9%, to be computed from December 3, 1983, for a total judgment of $1,099,791.95. Ds appealed.