Opinion ID: 4530325
Heading Depth: 2
Heading Rank: 1

Heading: Failure to Settle

Text: We have recognized that under Kansas law, “[w]hen an insurer negligently or in bad faith declines a settlement offer within the policy limits, takes the case to trial, and a verdict is rendered against the insured in excess of policy limits, the insurer is liable to the insured for the excess judgment.” Wade v. EMCASCO Ins. Co., 483 F.3d 657, 660 (10th Cir. 2007) (citing Bollinger v. Nuss, 449 P.2d 502, 508 (Kan. 1969)); see also Aves ex. rel. Aves, 906 P.2d at 648 (“If the insurer negligently or in bad faith refuses to settle a case within the policy limits, the insurer has breached . . . the insurance contract.”). But that is not what happened here. Progressive never rejected a policy-limits settlement offer. On the contrary, it early and repeatedly offered to pay the $250,000 policy limit but was rebuffed by Gant. Gant argues, however, that the broader obligations of an insurer to defend its insureds in good faith and without negligence include “the duty to make reasonable efforts to settle the case,” which, in this case, included the duty to discover and disclose the Bitco policy. Aplt. Br. at 27. He contends that if the Bitco policy had been disclosed, the case could have settled within policy limits. We are not persuaded. Even assuming without deciding that a “duty to make reasonable efforts to settle” exists, we are confident that the Kansas Supreme Court would not hold that Progressive breached a duty to the Birks to investigate and disclose information about their insurance coverage with other companies. At the outset Progressive made written and verbal requests to the Birks, and contacted the insurance agent who sold the Progressive policy to the family, to inquire 10 about any additional coverage. And the attorney hired by Progressive, Kevin McMaster, later reviewed the Birks’ policies with the family’s personal counsel and represented to Progressive that all agreed that there was no other applicable coverage. Gant concedes that no Kansas court has recognized the duty he urges us to impose on Progressive. But he cites American Star Insurance Co. v. Allstate Insurance Co., 508 P.2d 244, 250 (Or. Ct. App. 1973), and Casualty Indemnity Exchange Insurance Co. v. Liberty National Fire Insurance Co., 902 F. Supp. 1235, 1240 (D. Mont. 1995), which both declared that a liability-insurance company has a duty to the insured to inquire about the existence of other liability insurance that may protect the insured. In neither case was the court considering a claim by the insured against the insurer in excess of the liabilitycoverage limit. Rather, in both cases a liability insurer that had settled the claim against the insured then sought partial contribution from (1) another insurer who had received untimely notice of the claim or of a tender of the defense and, additionally in American Star, (2) the insured who had failed to give timely notice. The settling insurer was denied contribution because it had failed to exercise due diligence in determining whether there was another insurer. Both opinions note that it would be helpful to the insured to know if there was additional coverage. But they do not adequately explain why an insurer has a duty to tell an insured about its other insurers. We agree with the Sixth Circuit that “neither decision . . . is particularly persuasive,” Nat’l Sec. Corp. v. Hartford Cas. Ins. Co., 493 F.3d 752, 760–61 (6th Cir. 2007), at least insofar as either relies on the purported duty urged here. As our fellow circuit court stated, the insured “presumably knows from whom it has obtained insurance.” Id. at 760. 11 We can think of no doctrinal support, or other good reason, for ruling that an insurer cannot rely on its insured’s assurance that there is no other coverage with another insurer, when, as here, there is no reason to think that the insurer has special or superior access to information regarding other coverage. Just as the Sixth Circuit concluded that the Kentucky Supreme Court would not “impose a duty on an insurance company to investigate whether its insured has other insurance coverage,” id. at 761, we predict that the Kansas Supreme Court would not hold that Progressive breached a duty to the Birks in failing to discover and disclose the Bitco policy. The district court properly rejected this claim.1