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Smiley v. Manchester Ins. & Indem. Co.

OPINION FILED JUNE 16, 1977.

ROY J. SMILEY ET AL., PLAINTIFFS,

v.

MANCHESTER INSURANCE & INDEMNITY COMPANY OF ST. LOUIS, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT. — (WILLIAM D. KNIGHT, JR., THIRD-PARTY DEFENDANT-APPELLEE.)



APPEAL from the Circuit Court of Winnebago County; the Hon. ROBERT C. GILL, Judge, presiding.

MR. JUSTICE GUILD DELIVERED THE OPINION OF THE COURT:

This is an appeal from a third party action against William D. Knight, Jr., an attorney, by the Manchester Insurance & Indemnity Company of St. Louis (hereinafter referred to as Manchester) for malpractice. *fn1 In its third-party complaint Manchester alleged that Knight negligently handled the defense of a personal injury suit and a wrongful death suit against the estate of one Charles Toney, one of Manchester's insureds. Knight filed a counterclaim against Manchester for fees claimed to be due him as a result of services rendered to Manchester. After trial on these issues the jury returned a verdict in favor of Knight in the malpractice suit and another verdict in favor of Manchester on Knight's counterclaim. On appeal Manchester argues that the trial court erred in failing to grant Manchester's motion for a directed verdict on Knight's liability and further erred in denying a motion for a judgment notwithstanding the verdict on the question of Knight's liability. Alternatively, Manchester argues that the trial court erred in failing to grant Manchester's motion for a new trial on damages alone; and also alternatively Manchester argues that the trial court erred in failing to grant Manchester's motion for a new trial on all issues as a result of the admission of erroneous evidence, the denial of several of Manchester's instructions and the giving of Knight's instruction No. 13.

• 1 In Mizowek v. De Franco (1976), 64 Ill.2d 303, 309-10, 356 N.E.2d 32, 35-36, our supreme court recently discussed the standards in determining when a trial court should enter a directed verdict or judgment notwithstanding the verdict and a new trial. The court first stated, in quoting Pedrick v. Peoria & Eastern R.R. Co. (1967), 229 N.E.2d 504, 37 Ill.2d 494:

"`In our judgment verdicts ought to be directed and judgments n.o.v. entered only in those cases in which all of the evidence, when viewed in its aspect most favorable to the opponent, so overwhelmingly favors movant that no contrary verdict based on that evidence could ever stand.'"

The court discussed the difference between granting a directed verdict or a judgment notwithstanding the verdict and a new trial. The court reiterated its statement in Pedrick that:

"There is, in our judgment, excellent reason for so differentiating to be found in the radically different results of allowance of the two motions, and we believe a more nearly conclusive evidentiary situation ought to be required before a verdict is directed than is necessary to justify a new trial."

The Mizowek court then stated:

"On a motion for a new trial a court will weigh the evidence and set aside the verdict and order a new trial if the verdict is contrary to the manifest weight of the evidence."

In applying these two standards to the case at hand, we find that all of the evidence, when viewed in its aspect most favorable to Knight, so overwhelmingly favors Manchester that no contrary verdict based on the evidence could ever stand. We therefore hold that the trial court erred in denying Manchester's motion for a directed verdict on Knight's liability and subsequently denying Manchester's alternative motion for a judgment notwithstanding the verdict.

The record reveals that the original lawsuit arose out of an automobile accident on February 13, 1967, when an automobile driven by Charles Toney crossed the center line of the road and collided with another automobile. Charles Toney was killed in the accident and his two passengers, Lemeau and Isizira Arnold, were both injured. Roy J. Smiley and Byron Emanuel were in the other automobile. Smiley was injured and Emanuel was killed. Attorney Bernard P. Reese, Jr., represented both Smiley and Emanuel's estate in the lawsuits which ensued. At first Reese attempted to negotiate a settlement with the insurance company adjuster, Bill Eastman. Reese initially offered to settle Smiley's claim for $16,000 and Emanuel's estate claim for $30,000. After Reese discovered that the only asset in Toney's estate was an insurance policy with Manchester with limits of $10,000 per person and $20,000 per accident, Reese tried to settle for the policy limits. Reese refused to sign a release but offered to sign a covenant not to sue. Reese explained to Eastman that he hoped that the insurance company would refuse all his demands to settle, allowing him to go to trial, receive a judgment for his clients' entire injuries and make the insurance company pay the entire judgment because of their bad faith negotiations to settle within the policy limits. Eastman made a full report of this to the insurance company. Manchester refused to settle the case on Reese's terms and refused to make a counteroffer of settlement. Reese then filed suit praying for $100,000 judgment for the wrongful death of Emanuel and $50,000 for the personal injuries to Smiley.

Manchester assigned the case to attorney Knight on November 16, 1967. In the file Knight received from Manchester was Eastman's report indicating that Eastman, the adjuster, felt that it was a case of liability, listing Reese's offer to settle and discussing Reese's plan to make the insurance company pay the entire judgment he received for their bad faith negotiations and refusal to settle within the policy limits. Knight prepared a motion to strike the complaint and after it was denied made his own report on the file. He concluded that it was unclear who was liable without further facts.

On November 27, 1967, before Knight undertook discovery, he received notice that the Arnolds, the passengers in the Toney car, had been injured in the accident and that they were represented by attorney Clifford E. Stoner. At that time no suit had been filed by Stoner in behalf of the Arnolds and it was unclear to Knight that he had authority to represent Manchester in negotiations with the Arnolds. On December 6, 1967, William Blackwell, claims supervisor for Manchester, sent Knight a letter stating that Manchester felt that:

"* * * we should probably make some effort to get the claimants together, and make some disposition of all claims, and effect whatever savings of the policy limit possible for a ...


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