Ging v. American Liberty Ins. Co.

Ging v. American Liberty Ins. Co.

Opinion

 [*757]  ARNOW, District Judge.

The issue before the Court on Defendant's motion for summary judgment may be stated as follows: Can an insured recover from his insurer the amount of a judgment awarded against him in excess of the limits of his automobile liability insurance policy on the basis of the insurer's bad faith refusal to settle where the amount of the excess judgment is measured by a jury award for punitive damages?

This Court is of the opinion that he may not, and that Defendant's motion should be granted as a matter of law.

The undisputed facts upon which this case arose may be briefly stated as follows. On the night of June 2, 1962, a collision occurred between automobiles being operated by Billy James Martin and Father Bernard Morgan. There was ample testimonial evidence, of which the insurer of Martin, American Liberty Insurance Company, was aware, that the collision was caused by what a jury might determine was the gross negligence of Martin [**2]  in the operation of his automobile. As American Liberty's investigator reported, there was a clear case of liability against their insured.

Two suits were brought against Martin as a consequence of the accident. The first, brought by a passenger in the Martin car for injuries sustained as a result of Martin's alleged gross negligence, was settled on the morning of the trial and is not here material. A second, subsequent suit was brought by Frank Ging, as Administrator of the Estate of Father Bernard Morgan, praying for relief in the nature of compensatory and punitive damages.

Settlement offers were made by both parties. Ging, through his counsel, originally demanded $50,000 to settle the case. However, apparently because of the financial prostration of the Defendant Martin, the offer was resubmitted as a demand for the monetary limits of the policy. American Liberty declined to accept such an offer. It pointed out that under its policy, it was not liable for punitive damages, and that, in its opinion, $3,500 would be a reasonable settlement figure for compensatory damages.

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