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June 29, 1959


The opinion of the court was delivered by: Poos, District Judge.

This is a suit brought by S.L. Moore, Sr., an insured under a comprehensive personal liability policy, against Columbia Casualty Company, the insurer, seeking to recover an amount paid by the insured in satisfaction of a judgment obtained by one Hilda M. Ruyle against the insured, in excess of the policy limit and for costs, expenses and attorneys' fees.

Suit was originally filed in the City Court of Alton, Madison County, Illinois, and was removed to this Court by reason of diversity of citizenship and the amount involved.

This cause comes on for hearing before the Court upon the complaint and answer, and the defendants' motion for summary judgment under Rule 56, 28 U.S.C.A., supported by the pleadings, depositions, admissions, transcript of testimony in a previous related trial and affidavits. No counter affidavits have been filed by the plaintiff, and therefore the facts, as set forth in the motion for summary judgment and supporting exhibits, are taken as true.

The complaint charges that while the aforeaid insurance policy was in force, one Hilda M. Ruyle claimed to have suffered an injury on the premises of the plaintiff covered by said insurance policy as the result of which she brought an action in the City Court of Alton, against the plaintiff seeking damages of $75,000; that under the terms of said policy, the defendant Company:

  (a) "agreed to assume all liability for all legal
  claims arising under the policy against the
  insured up to the full amount of the policy;
  (b) "contracted for the exclusive right to defend
  all claims arising against the insured under the
  coverage of the policy;
  (c) "assumed exclusive control of the claim
  against the plaintiff and took unto itself the
  power to determine for the plaintiff all
  questions of liability, settlement, of defense
  and management before and during the trial;"

That on May 14, 1955, plaintiff delivered a letter to the defendant Company advising it that it was the "desire" of the plaintiff that settlement be negotiated, and that "it was the opinion of the plaintiff that the said case could be settled for an amount well under the $10,000 limit of the policy"; that if it elected to try said cause, plaintiff would accept no responsibility for any judgment returned against him above the limits of the policy and would hold said defendant company liable for any excess amount; that again by letter of May 25, 1955, plaintiff again urged the defendant to negotiate a settlement of said suit; that notwithstanding said requests, the defendant Company failed to exercise good faith toward the plaintiff in that it arbitrarily and unreasonably refused to negotiate settlement within the policy limits; that because of the failure and refusal of the defendant to make settlement within the policy limits, the said Hilda M. Ruyle on January 19, 1956 obtained a judgment against the plaintiff in the amount of $35,000; that although the defendant Company had previously advised plaintiff that it was of the opinion there would be a good chance of reversal of said judgment on appeal, the defendant Company advised the plaintiff that it was going to pay the limits of its policy on the judgment, was not obligated to take an appeal and would not do so, was not obligated to make a bond on appeal, but merely to pay the premium on such bond and that the appeal bond itself would be that of the plaintiff; that thereafter the plaintiff negotiated a settlement of said judgment for the sum of $20,000, of which sum the defendant Company paid $10,000, and the plaintiff was compelled to contribute an additional $10,000; that by reason thereof, he was damaged in the sum of $10,000 plus an additional $5,000 for costs, expenses, attorneys' fees and other monies which the plaintiff had been compelled to expend because of the actions of the defendant.

In addition, the defendant filed its motion for summary judgment, supported by appropriate affidavits and other exhibits. No counter-affidavits were filed by plaintiff.

The facts, which are deemed admitted by reason of the plaintiff's failure to file any counter-affidavits, are as follows:

On July 9, 1954, the plaintiff was served with a complaint and summons in an action for $75,000 filed by Hilda M. Ruyle in the City Court of Alton, Illinois, against the plaintiff, alleging that on November 24, 1952, while she was doing her laundry in the basement of Moore's home, Moore was assisting her in moving a heavy chair; that he suddenly dropped his end of the chair resulting in a serious back injury to her. Moore forwarded the complaint and summons to the Insurance Company and advised it that this was the first notice he had of any such claimed accident, and that no such event had ever occurred. The Company employed Frank M. Rain of the firm of Pope & Driemeyer, of East St. Louis, Illinois, who is a well recognized and competent Attorney, to defend the action. It also notified Moore that the suit was in excess of its $10,000 policy limit and that he was at liberty to employ personal counsel of his own choice and at his own expense to look after his individual interests. Moore then employed W.H. Thomas, as such Attorney, and he participated in the preparation for trial, trial of the cause and settlement negotiations. The Company also made a thorough investigation surrounding the factual situation.

The discovery deposition of Hilda M. Ruyle was taken in which she testified positively under oath to the time and manner in which her accident occurred. The discovery deposition of Moore was then taken and, with knowledge of Ruyle's testimony, Moore positively denied that the accident had even occurred.

On May 14, 1955 Moore wrote the Company, among other things, saying:

    "I wish to advise the Columbia Casualty Company
  of New York by this letter that it is my desire
  that they negotiate a settlement of this case
  with the said Hilda M. Ruyle, since I am of the
  opinion that it could be settled for an amount
  well under the $10,000.00 limit of the policy.
    "If your company elects to try the case rather
  than make a settlement, please be advised that I
  will accept no responsibility for any judgment
  rendered against me in this case above the limits
  of the policy, and will hold the Columbia

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