Court Opinion

ID: 8781703
Source: CourtListenerOpinion
Date Created: 2022-11-26 13:20:51.205399+00
Date Added: 2024-06-11T17:02:52.035791
License: Public Domain

MOTION FOR REHEARING
GEICO’s original motion to dismiss was based on the contention that plaintiff, the injured party, had no direct cause of action against GEICO, the insurer, to recover the excess over the policy limits on the ground that the insurer negligently failed to settle within the policy limits. The Court rejected GEICO’s contention and held that “the language of Conn.Gen.Stat. § 38-175 clearly subrogates the injured person to all the insured’s rights against the insurer.” 287 F.Supp. at 110.
GEICO’s motion for rehearing is addressed principally to the Court’s decision of July 19, 1968,5 its chief thrust being that the legislative history of § 38-175 does not indicate that the legislature in 1919 was concerned with verdicts in excess of insurance coverage or with negligence of insurers in defending actions; therefor, GEICO argues, the legislature did not intend to give an injured party a direct right of action against the insurer.
Despite the diligence of GEICO’s counsel in assembling statistical data showing the size of verdicts and judgments a half century ago and assuming arguendo that such data were relevant upon the issue of legislative intent, the Court nevertheless, under well settled canons of statutory construction,6 is *36obliged to follow the plain language of the statute as pointed out in its earlier decision of July 19, 1968. 287 F.Supp. at 110.
. There is little authority from other jurisdictions regarding the scope of a judgment creditor’s rights in a case like this one, but this is to be expected since Connecticut appears to be one of the few states which has a statute such as § 38-175. The following cases, however, indicate that when an insurance policy gives the judgment creditor of the insured the same rights against the insurer as the insured would have if he had satisfied the judgment, the judgment creditor is entitled to collect a judgment in excess of the policy coverage from the insurer which in bad faith or negligently has refused to settle. Kleinschmit v. Farmers Mutual Hail Insurance Ass’n, 101 F.2d 987 (8 Cir. 1939); Auto Mutual Indemnity Co. v. Shaw, 134 Fla. 815, 184 So. 852 (1938). And the following cases indicate that if the insured validly assigns to the injured party his tort action against the insurer for failure to settle, the injured party can recover from the insurer to the same extent that the insured could have recovered. Smith v. Transit Casualty Co., 281 F.Supp. 661 (E.D.Tex.1968) (applying Texas law) ; Atlantic City v. American Casualty Insurance Company, 254 F.Supp. 396 (D.N.J.1966) (applying N.J. law); Comunale v. Traders & General Insurance Co., 50 Cal.2d 654, 328 P.2d 198 (1958). The court in Atlantic City also stated that the injured party, as a third-party beneficiary of the insured’s liability policy requiring the insurer to take complete control of the investigation, preparation and defense of claims against the insured, was entitled to bring an action for alleged breach of the policy by the insurer which resulted in an excess judgment.
In this jurisdiction, as this Court pointed out in its earlier opinion, 287 F. Supp. at 110, this Court has squarely held in Turgeon v. Shelby Mutual Plate Glass & Casualty Co., 112 F.Supp. 355 (D. Conn.1953) (Smith, D. J.), that a judgment creditor has a right of direct action against the debtor’s insurer, to recover damages in excess of the policy limits on the ground of the insurer’s negligent failure to settle.
Finally, the Court of Appeals for this Circuit is not unfamiliar with litigation arising out of claims against insureds based upon negligence or bad faith in failing to settle within the policy limits. Brockstein v. Nationwide Mutual Insurance Co., 417 F.2d 703 (2 Cir. 1969), slip opinion 155 (October 20, 1969); Young v. American Casualty Co., 416 F.2d 906 (2 Cir. 1969); Bates v. Metropolitan Mutual Insurance Co., 277 F.Supp. 308 (N.D.N.Y.1967), aff’d, 392 F.2d 591 (2 Cir. 1968) (per curiam); Brown v. United States Fidelity & Guaranty Co., 314 F.2d 675 (2 Cir. 1963); Harris v. Standard Accident Insurance Co., 191 F.Supp. 538 (S.D.N.Y.1961), rev’d on other grounds, 297 F.2d 627 (2 Cir. 1961), cert, denied, 369 U.S. 843 (1962).
MOTION FOR § 1292(b) CERTIFICATION
Aside from the other prerequisites for a certification pursuant to 28 U.S..C. § 1292(b), the Court cannot in good conscience certify, with respect to either its July 19, 1968 order or its July 11, 1969 order, that “an immediate appeal from the order may materially advance the ultimate termination of the litigation”. ACS Industries, Inc. v. Keller Industries, Inc., 296 F.Supp. 1160 (D.Conn. 1969). And see Gottesman v. General Motors Corp., 268 F.2d 194 (2 Cir. 1959); Chas. Pfizer & Co. v. Laboratori Pro-Ter Prodotti Therapeutici, 278 F.Supp. 148, 154- (S.D.N.Y.1967).
*37ORDER
ORDERED as follows:
(1) That defendant’s motion for rehearing is granted and, after rehearing, the Court’s orders of July 19, 1968 and July 11, 1969 are adhered to and confirmed in all respects.
(2) That defendant’s motion for "certification pursuant to 28 U.S.C. § 1292
(b) is denied with respect to both orders.
(3) That the Court’s order of August 7, 1969 staying its order of July 11, 1969 is vacated.
(4) That the Court’s order of July 11, 1969 is hereby made effective forthwith upon the filing of the instant order.

. Although not argued extensively upon the rehearing, that branch of defendant’s motion for rehearing addressed to the Court’s decision of July 11, 1969 has been carefully considered and rejected. Specifically, the Court holds that plaintiff, by virtue of § 38-175, is entitled to waive the privilege respecting confidential communications between the insured or this defendant and their attorney in the earlier action and to require production of other documents and disclosure of facts.

. See Barr v. United States, 324 U.S. 83, 90 (1945) ; Browder v. United States, 312 U.S. 335, 339—40 (1941) ; Burge v. Commissioner, 253 F.2d 765, 769 (4 Cir. 1958) ; Safeway Stores, Inc. v. Arnall, 196 F.2d 510, 513 (Emer.Ct.App.1952), judgment vacated on other grounds, 344 U.S. 803 (1952) ; H. A. Brody Corp. v. United States, 197 F.Supp. 918, 922 (S.D.Ia.1961). See also United States v. Missouri Pac. R.R. Co., 278 U.S. 269, 277-78 (1929) ; United States v. Standard Brewery Inc., 251 U.S. 210, 217 *36(1920) ; United States v. Fraidin, 63 F.Supp. 271, 283 (D.Md.1945) ; SEC v. Timetrust, Inc., 28 F.Supp. 34, 41 (N.D.Cal.1939).