INA 10-27-13_INA 10-27-13 10/28/13 9:29 AM Page 14
[ EXPOSURES AND COVERAGES ] continued from page 12
We’ll see how this turns out. I’ll keep you posted.
An Email Strikes Again—Provides Evidence of Settlement Last month I wrote about a broker’s staff member who essentially pled guilty of malpractice in an email. In explaining why she didn’t notice that the application for insurance for the Cleveland Indians “Family Fun Day” indicated that an inflatable slide , which collapsed and killed a spectator, would be used, she emailed: “I’m so used to quoting up your events I think I hardly look at anything but the dates and the details of the event.” After that, the E&O claim against the broker was an open-and-shut case.7 This month, I came across an even stranger email story closer to home. On November 16, 2008, John Forcelli was seriously injured in three-car accident on the Saw Mill River Parkway in Westchester County. He claimed that a car driven by Steven Kuhn ran a red light and struck a car owned by Gelco, which in turn struck his car causing his injuries. On February 10, 2011, the insurers for all three parties moved for summary judgment. That same day, attorneys for Gelco met in a mediation session with the attorneys for the injured driver, John Forcelli. The
mediation attempt was unsuccessful. On April 22, 2011, Brenda Greene, claims adjuster for Gelco’s insurer, reopened negotiations with Forcelli’s attorney and offered $200,000 to settle the claim against Gelco. Negotiations continued and on May 3, 2011, Greene increased the offer to $230,000. The offer was accepted and she sent an email to Forcelli’s attorney as follows: “Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case… “You also agreed to prepare the release…Please forward the release and dismissal for my review. Thanks Brenda Greene.” On May 4, 2011, Forcelli signed a release, notarized by his attorney. On May 10, 2011, the court granted Gelco’s motion for summary judgment, dismissing all claims against Gelco. Gelco’s attorney notified the other parties of the court’s decision on May 11, 2011. That same day, Forcelli’s attorney sent the signed and notarized release to Greene; she received it on May 16, 2011. In New York, agreements to settle are governed by law, CPLR 2104. It provides that an agreement between the parties or their attorneys, other than one made between counsel in open court, is not binding unless it is in writing.8 If the agreement to settle was binding, the summary judgment exonerating Gelco would not set it aside. The question for the court was
4441 Sepulveda Blvd., Culver City, CA 90230-4847 www.zalma.com | zalma@zalma.com 310-390-4455 | fax: 310-391-5614 http://zalma.com/blog Zalma Insurance Consultants provides expert advice to counsel for insurers and counsel for policyholders. Advice from Zalma Insurance Consultants is indispensable to the resolution of insurance disputes. Consultation from Zalma Insurance Consultants can save you, your counsel or client hundreds of hours of investigative and legal work. 14 October 27, 2013 / INSURANCE ADVOCATE
whether the email satisfied the requirement that the release be in writing. In deciding in favor of Forcelli, the court wrote “On these appeals we address the question of whether an email message can satisfy the criteria of CPLR 2104 so as to constitute a binding and enforceable stipulation of settlement. Under the circumstances of this case, we conclude that the subject email settlement agreement was enforceable.” Therefore, the $230,000 release was binding even though the insurer had obtained summary judgment exonerating its insured.8 Second Thought: My first reaction to this case was: Why did the adjuster offer to settle a case where her insured had a good defense and why didn’t she wait until the declaratory judgment issue was resolved? On reflection, I see some possible reasons: 1. The insured’s defense may not be as strong as the brief description in the decision makes it appear. 2. The claimant’s injuries may have been so severe that an adverse decision would be very costly. 3. The third party may have low limits while Gelco has very substantial limits so that a joint and several award might leave Gelco’s insurer holding the bag. 4. Most summary judgment motions are denied. An adverse decision on the summary judgment motion would eliminate the negotiating leverage of a pending summary judgment case. Nevertheless, when the insurance company asks for a premium increase on renewal, citing “adverse experience,” you’ll be able to hear the insured’s screams without the need of a telephone. Learning Point: Emails equal writing. Be careful what you write and tell your staff to be careful, too. Emails can bite. Don’t feed them. [IA] 7 Cleveland Indians Baseball Co. v. N.H. Ins. Co., et al. US Court Of Appeals 6th circuit No. 12-1589 (8-23-13) 8 McKinney’s CPLR Rule 2104. Stipulations www.newyorkinjurycasesblog.com/uploads/file/ CPLR%202104.doc (accessed 9/24/13) 9 Forcelli v Gelco Corp. 2013 NY Slip Op 05437 July 24, 2013 Appellate Division, 2nd Department http://www.courts.state.ny.us /reporter/3dseries/2013/2013_05437.htm accessed 9/24/13
B