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No Bad Faith Found where Carrier Promptly Offered Policy Limits and Subsequent Demands Were Not Sufficiently Definite

ABSTRACT: The Missouri Court of Appeals affirmed summary judgment for the insurer, ruling no bad faith where the carrier promptly offered policy limits. The claimant's subsequent demands for a 537.065 agreement were not sufficiently definite to constitute a “reasonable opportunity to settle.”

On December 3, 2024, the Missouri Court of Appeals, Western District affirmed the trial court’s order granting summary judgment in favor of insurance carrier and against insured who was suing for bad faith failure to settle.

Within a few weeks of receiving notice of the claim, the carrier had offered policy limits to counsel for the injured party. Rather than accepting the offer, the claimant’s attorneys made numerous requests for information and suggested that the settlement would need to include a 537.065 agreement.

Several months later, counsel for the claimant indicated they would settle the case for policy limits, but only if the insured entered into a 537.065 agreement. In the same correspondence, counsel for the claimant requested that the carrier provide a copy of the release it was proposing. The carrier responded with a release that included the carrier as a released party.

In the bad faith lawsuit, counsel for the insured argued this constituted a rejection of the claimant’s offer to settle within policy limits, and that it was evidence of the carrier’s failure to protect the interests of its insured.

The court of appeals disagreed. Instead, it found that the claimant’s demand for a settlement that included a 573.065 agreement was not sufficiently definite because claimant’s counsel never provided a proposed version of the agreement. As a result, and in view of the fact that the carrier had offered its policy limits on numerous occasions, the court found that the carrier did not act in bad faith. Instead, according to the court, claimant’s attorneys “simply refused [the carrier’s] attempts to pay its policy limits to release [the insured].”

The takeaway from this decision is that Missouri courts will not find an insurer liable for bad faith where there is a documented history of the carrier’s attempts to settle the case for the policy limits, and where plaintiff’s counsel conditions the settlement on terms that are not sufficiently clear to constitute a reasonable opportunity to settle.

Bryan Roy Escabusa v. Safe Auto Insurance Company, 2024 Mo. App. LEXIS 876, WL4940663 (Motion for rehearing/transfer pending.)