![]() ![]() The policy of insurance issued by Fireman’s Fund had bodily injury limits of $15,000 per person/$30,000 per accident. CA 1992), the California Court of Appeals for the Fourth District held that “where an insurer provided a defense to its insured in the underlying litigation, and insured, without the participation or consent of insurer, stipulated to judgment without evidentiary support and with no potential for personal loss, such judgment is insufficient to impose liability on the insurer in a later action against the insurer…” In Wright, the plaintiff was injured and his passenger killed in an automobile accident with Fireman Fund’s insured. With this decision in mind, we turn to cases from other jurisdictions that have confronted this issue and concluded that a stipulated judgment cannot be relied upon to impose liability on an insurer for its alleged negligence in failing to settle, nor can it be relied upon to support a finding of bad faith. 1972) (applying Connecticut law and holding that where the insured was killed in the accident and his estate had no assets whatsoever, “there was no possible conflict of interest between the insurer and the insured, there is no basis of imposing a duty on the former as a matter of common law.”). The court, therefore, denied the insured’s motion to strike the declaratory judgment action. ![]() As a consequence of this distinction, “an insurer’s election to defend under a reservation of rights leaves the insurer and the insured with a very different set of options than if the insurer refused to defend the insured from the outset.” Id. The case not speak to the situation where the insurer elects to defend the insured under a reservation of rights.” Id. The Glownia court held, however, that the Connecticut Supreme Court’s decisions in Black and Missionaries of Mary, Inc., speak “only to the situation where the insurer makes an unqualified refusal to defend. ![]() at * 4 (citing Missionaries of Mary, Inc., 155 Conn. 144 (1996), and argued that both cases support the proposition that an insurer waives its right to contest a stipulated judgment where it chooses not to perform its contractual duty to defend its insured. ![]() The insured relied upon Missionaries of Mary, Inc. In the subsequent declaratory judgment action commenced by Great American, the insured argued that “Connecticut law recognizes that when an insurer breaches an insurance contract by refusing to defend the insured, the insured is released from any covenant against settlement or interference contained in the contract and may pursue a reasonable settlement of the claim.” Id. During the course of the underlying action, the plaintiff entered into an agreement with Great American’s insured whereby its insured agreed to stipulate to liability as well as to a monetary judgment. In Glownia, Great American provided a defense to its insured under a reservation of rights in response to claims that she intentionally engaged in sexual activity with and/or sexually molested a minor. of New London, March 20, 1997) (O’Keefe, J.), open the door for an insurer to argue that it is not bound by a stipulated judgment entered into between its insured and an injured plaintiff where the insurer provided a defense to its insured in the underlying action? We believe it does and, if given the opportunity, Connecticut courts should refuse to bind defending insurers to such stipulated judgments. Does the Superior Court’s decision in Great American Ins. ![]()
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