Parsons v. Continental National American Group

550 P.2d 94 (1976)

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Nature of the Case

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Facts

Michael, 14, brutally assaulted his neighbors. A CNA claims rep began an investigation of the incident. He wrote to private counsel, Watt, retained by Michael's father advising the counsel that he was in the final stages of the investigation and to contact the neighbor's attorney to ascertain what type of settlement they would accept. Michael's father's attorney did contact the neighbor's attorney and requested that a formal settlement demand be tendered, and the medical bills be forwarded to the claims rep. The rep then wrote a detailed letter to his company on his investigation into Michael's background and school experiences. The letter stated that he had talked with the boy's father's attorney and with the boy's parents and he was certain that Michael was not in control of his senses at the time of the incident. The rep had tried to settle with the neighbor's attorney for medical expenses but was unsuccessful. The neighbors then filed a complaint alleging that Michael assaulted them and that Michael's parents were negligent in their failure to restrain Michael. A settlement letter was tendered for $22,5000 which was refused by CNA as completely unrealistic. CNA's retained counsel undertook Michael's defense and that attorney communicated to CNA on the boy's current status in detention and that the act was deliberate on his part. CNA then sent a reservation of rights letter to Michael's family. The CNA attorney got statements from Michael that left no doubt the act was willful and criminal. At trial, the court directed a verdict for Michael's parents. This was affirmed on appeal. Judgment was entered against Michael in the sum of $50,000 which was double what he was insured for. CNA then offered to settle for the $25,000. That offer was not accepted. CNA defended a garnishment action arguing that the intentional act exclusion applied. The same law firm and attorney that had represented Michael represented CNA during the garnishment action. The trial court found for CNA, and this appeal resulted.