Local Law Blogs

Insurer Obligated to Pay Portion of Settlement without Determination of Insured Liability

By Todd A. Rossi

In Perkins v. Entergy Corp., 2010 WL 2332357 (June 10, 2010), the Louisiana Third Circuit Court of Appeal held that a non-settling insurer was obligated to pay an allocated amount of the settlement in which it did not participate.  The suit arose out of a flash fire at an industrial facility that caused significant bodily injury.  Several insurers settled, and sought an allocation and contribution from another insurer that contended its policy did not afford coverage for the underlying accident.  That insurer urged that it was prepared to defend the insured, and should not be compelled to pay for the strategic decision made by the other insurers, pointing out that the insured's liability had yet to be adjudicated, and that the settlement was unreasonable.  The appellate court initially recognized that when more than one potentially liable insurer pays a loss 'whether in satisfaction of a judgment or in settlement of a claim,' it can seek contribution from the other insurers.  The court also rejected the argument that the settlement did not provide proof of the original damages, finding that if the settlement was fair and not excessive, and would form the basis for a demand for contribution.  A reasonable prudent person would have settled the case, which was supported by the underlying facts without a separate judicial determination of the 'actual' damages.

Full post as published by Louisiana Law Blog on October 29, 2010 (boomark / email).