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Settlor, Beware (NJ)
May 16, 2019
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<p style="text-align: justify;">In <em><a href="https://www.wcmlaw.com/wp-content/uploads/2019/05/Estate-of-Atanasoski-v-Arcuri-Agency-Inc..pdf">Estate of Atanasoski v Arcuri Agency Inc.</a><a href="https://www.wcmlaw.com/wp-content/uploads/2019/05/Estate-of-Atanasoski-v-Arcuri-Agency-Inc-Case.pdf"> </a></em>, the New Jersey Appellate Division recently found that a third-party’s broker malpractice claim was completely vitiated based on her settlement with the insured.</p>
<p style="text-align: justify;">The background facts are as follows: Arcuri and Archer procured insurance for their client, Schripps – a bread delivery company – that included a $1 million commercial auto policy, and a $5 million excess policy that specifically excluded commercial auto liability. In July 2017, a Schripps commercial auto was involved in an accident, resulting in the death of a pedestrian. His widow, the Plaintiff, initiated a wrongful death suit, and quickly realized insurance coverage was limited to the $1 million auto policy.</p>
<p style="text-align: justify;">Thus, Plaintiff included claims of broker malpractice against Arcuri and Archer in the lawsuit, alleging it was professional negligence not to advise Schripps of the need for excess insurance on its business autos, particularly given that this was a delivery business, with commercial vehicles in constant use.</p>
<p style="text-align: justify;">Plaintiff ultimately settled with Schripps for $940,000, an amount within the commercial auto policy limits, and paid out under that policy. In the settlement agreement, Schripps expressly did not admit any liability for the fatal accident. The Appellate Division found that this settlement, clearly mooted the claims against the broker, because any potential excess coverage would not have been exposed based upon the set point of damages the parties agreed to therein.</p>
<p style="text-align: justify;">One must assume that Plaintiff was not aware of the risk she undertook by settling out with Schripps, the insured, within the policy limits of the primary policy. Accordingly, this case is a stark reminder that, in legal actions, one must fully evaluate all contingencies and the ripple effects of any settlement with one defendant.</p>
<p style="text-align: justify;">Thank you to Vivian Turetsky for her contribution to this post. Please email <a href="mailto:chayes@wcmlaw.com">Colleen E. Hayes</a> with any questions.</p>