Nunn v Mid-Century Insurance Company

Colorado Supreme Court Opinion

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Murray Ogborn and Thomas Neville, Ogborn, Summerlin & Ogborn, LLC

and Bradley A. Levin and Michael J. Rosenberg, Roberts Levin Rosenberg, P.C., Denver, Colorado, for Nunn.

In this case arising out of an automobile accident, Nicole Nunn, an injured victim, and Bryan James, the driver, entered into an agreement which included a pretrial stipulated judgment in the amount of $4,000,000, and an assignment to Nunn of any claims James had against his insurer, Mid-Century. In exchange, Nunn covenanted not to execute on the stipulated judgment.

In a subsequent action by Nunn as James’s assignee, Nunn alleged that Mid-Century had breached its duty of good faith toward James by rejecting her settlement offer of $100,000 and thereby exposing its insured to a judgment in excess of his policy limits. The trial court granted Mid-Century’s motion for summary judgment on the grounds that the covenant not to execute precluded James from having any actual damages to assign to Nunn, and the court of appeals affirmed.

The Colorado Supreme Court reverses the judgment of the court of appeals and adopts the judgment rule, holding that entry of a judgment in excess of liability policy limits, notwithstanding the existence of a covenant not to execute, is sufficient to establish actual damages in a bad faith breach of an insurance contract claim. Because the bad faith claim was dismissed on summary judgment, the court does not reach the merits of Nunn’s claim, but merely holds that the basis for granting summary judgment was improper.

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Reference Info:Decision | | United States


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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