Opinion
16462 Index No. 650113/18 Case No. 2021-04187
10-18-2022
ZURICH AMERICAN INSURANCE COMPANY, Plaintiff-Appellant, v. The INSURANCE COMPANY OF THE STATE OF PENNSYLVANIA, Defendant-Respondent.
Coughlin Midlige & Garland LLP, New York (Adam M. Smith of counsel), for appellant. Barclay Damon LLP, Buffalo (Kevin D. Szczepanski of counsel), for respondent.
Coughlin Midlige & Garland LLP, New York (Adam M. Smith of counsel), for appellant.
Barclay Damon LLP, Buffalo (Kevin D. Szczepanski of counsel), for respondent.
Manzanet–Daniels, J.P., Mazzarelli, Kennedy, Mendez, JJ.
Order, Supreme Court, New York County (Shawn Timothy Kelly, J.), entered May 19, 2021, which denied plaintiff's motion for summary judgment and granted defendant's motion for summary judgment dismissing the complaint, unanimously affirmed, without costs. Applying the Pavia framework, the motion court properly determined that defendant primary insurer did not grossly disregard plaintiff excess insurer's interests in defending against and attempting to settle the underlying action ( Pavia v State Farm Mut. Auto. Ins. Co., 82 N.Y.2d 445, 453, 605 N.Y.S.2d 208, 626 N.E.2d 24 [1993] ). An excess insurer will not prevail on a bad faith claim based upon a failure to settle unless it proves that the primary insurer showed a "gross disregard" for the excess insurer's interests by displaying a "deliberate or reckless failure to place on equal footing the interests of its insured [and the excess insurer] with its own interests when considering a settlement offer" ( Pavia, 82 N.Y.2d at 453, 605 N.Y.S.2d 208, 626 N.E.2d 24 ).
The record here does not support plaintiff's claim of bad faith (see id. at 454–455, 605 N.Y.S.2d 208, 626 N.E.2d 24 ). Given the significant questions relating to causation and damages, the record shows that the excess verdict was objectively improbable, a conclusion that is bolstered by the fact that no one – including plaintiff – expected the verdict to exceed the primary policy limit. Regardless, defendant worked consistently to settle the case in a reasonable manner, making a total of six settlement offers, including four during the trial. Defendant was under no obligation to accept the $900,000 offer despite the fact that it fell within the policy limits, as an insurer cannot be compelled to settle a questionable claim simply because an opportunity to do so presents itself ( Pavia, 82 N.Y.2d at 454, 605 N.Y.S.2d 208, 626 N.E.2d 24 ).