Source: http://dutytodefend.com/elusive-definition-of-collusion/
Timestamp: 2019-04-22 08:48:04+00:00

Document:
3.1 Was a Settlement Reasonable?
3.2 Was a Settlement Fair?
3.3 Did the Policyholder Act In Good Faith?
3.4 Is Procedural Due Process Satisfied?
Despite the illusive nature of the definition of collusion, the concept can be and has been described in words. Most definitions of “collusion” emphasize three elements: (1) an agreement; (2) secrecy; and (3) an unjust result. But as applied in California reported opinions in the field of insurance coverage, no single definition prevails.
• The first element (agreement) usually challenges a settlement contract which often includes an assignment of rights and a covenant not to execute.
• The second element (secrecy) arises in two contexts. The courts uniformly enforce the policyholder’s contractual obligation to notify the insurer of the plaintiff’s lawsuit. California law is clear that thereafter, the policyholder has no contractual obligation to keep a defaulting insurer informed. Nonetheless, many reported opinions express concern when the policyholder negotiates a settlement without keeping the insurer informed.
• The third element (injustice) focuses upon procedural due process to assure that neither the insurer nor the court system is duped.
Did the Policyholder Act In Good Faith?
Is Procedural Due Process Satisfied?
Editorial Note: Nonetheless, to the extent that a policyholder and plaintiff keep the defaulting insurer informed of the particulars of a proposed settlement, the more likely it seems that a court’s concerns about standards of reasonableness, fairness, and good faith will be satisfied.
 Pruyn v. Agricultural Ins. Co. (1995) 36 Cal.App.4th 500, 530 (Pruyn).
 Webster’s New Universal Unabridged Dictionary.
 Safeco Ins. Co. of America v. Parks (2009) 170 Cal.App.4th 992, 1013-1014 (Safeco).
 Zander v. Texaco, Inc. (1968) 259 Cal.App.2d 793, 806.
 Span, supra, 227 Cal. App. 3d at 484.
 Isaacson v. California Ins. Guarantee Assn. (1988) 44 Cal.3d 775, 791.
 Fuller-Austin Insulation Co. v. Highlands Ins. Co. (2006) 135 Cal.App.4th 958, 991.
 Hone, supra, 59 Cal.App.3d at 522, fn. 4.
 Xebec Development Partners, Ltd. v. National Union Fire Ins. Co. (1993) 12 Cal. App.4th 501, 545.
 Diamond Heights, supra, 227 Cal.App.3d at 582: see also, Pacific Estates, Inc. v. Superior Court (1993) 13 Cal.App.4th 1561, 1570.
 Pruyn, supra, 36 Cal.App.4th at 530.

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