Court Opinion

ID: 5779420
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:47:39.411262+00
Date Added: 2024-06-11T08:41:56.459296
License: Public Domain

Maceen, J. (dissenting).
I disagree with the majority’s assertion that there is no legal justification for Hanover’s preferring its other insureds, Syracuse and Goldberg, over Smoral, which I assume to mean that without Smoral’s consent Hanover in good faith might not settle the case without obtaining his release.
The accident occurred when Smoral fell asleep while driving on the New York State Thruway and his car left the road and overturned. It is not seriously disputed that the action brought by the passenger Whittaker, Smoral’s sister-in-law, was one of clear liability. The limit of the Hanover policy was $50,000 and of Glens Falls’ $100,000. That the case had a value in excess of $50,000 is evidenced by the subsequent payment by Glens Falls of an additional $32,500. Hp to and including the time of the conference resulting in the settlement by Hanover, the lowest settlement demand was $100,000, Whittaker’s attorney apparently having gained the impression that the -limit of the Glens Falls policy was also $50,000i. When presented the opportunity of obtaining releases of Syracuse and Goldberg upon payment of its limit of liability, Hanover had the choice of accepting it or proceeding to trial faced with a potential meritorious good faith action by Syracuse and Goldberg in the event the verdict exceeded $50,000. In these circumstances I see no legal or equitable obstacle to Hanover’s proceeding as it did. Whether it acted in good faith toward Smoral must be determined from all of the circumstances. It was aware Smoral had substantial excess coverage and even if such were not the case, no benefit would enure to him by exposing Syracuse and Goldberg to a judgment in excess of the limit of Hanover’s policy. In such event, as the active tort-feasor Smoral would be entitled to no contribution from Syracuse or Goldberg and, on the contrary, would be obliged to indemnify the latter for any such amounts they were required to pay (Traub v. Dinzler, 309 N. Y. 395).
*27Why Hanover did not bring Glens Falls into the conference resulting in the settlement and failed to notify either it or Smoral that the settlement had been effected until several months later when the case was reached for trial escapes me. Assuming that it had no legal obligation to Glens Falls, simple courtesy required that it do so. As to its insured Smoral, although it might have been a futile gesture, if we must close our eyes to the existence of the Glens Falls policy good faith required Hanover to advise Smoral of the status of the negotiations and afford him an opportunity to negotiate for a release before committing itself to the settlement.
But assuming a breach of Hanover’s obligation to Smoral to the extent indicated, I see no evidence of damage aside from the legal expense incurred after the withdrawal of Hanover’s attorneys. Hanover’s liability for such expense is clear (Fidelity Gen. Ins. Co. v. Ætna Ins. Co., 27 A D 2d 932). Plaintiff’s principal claimed damage is that by reason of the settlement and its inferred admission of liability the amount of a jury’s verdict would be enhanced and that they were therefore obliged to pay more in settlement than would have been required had they been afforded an opportunity to negotiate before the Glens Falls settlement. I agree with the majority that this contention is without merit, assuming as it does that a jury would disregard the court’s instructions as to the significance of the prior payment. I am unable, however, to follow the majority’s conclusion that an issue may be presented “ as to what proportion of the settlement fund should have been, in good faith, allotted to relieving or reducing Smoral’s liability”. Being the active tort-feasor, Smoral’s liability was deduced by the entire amount of the payment.
The judgment appealed from should be modified to the extent of remanding the case for assessment of the legal expense incurred by plaintiffs after the withdrawal of Hanover’s attorneys and otherwise affirmed, without costs to either party.
McGivern, J. P., Markewich and Ktjpferman, JJ., concur with Stetjeb,, J.; Macken, J., dissents in an opinion.
Judgment, Supreme Court, New York County, entered on March 1,1968, reversed, on the law, and vacated, and a new trial directed, with costs and disbursements to abide the event.