Hendricks v. Novae Corporate Underwriting, Ltd.

Federal 7th Circuit Court
Civil Court
Insurance
Citation
Case Number: 
No. 16-1712
Decision Date: 
August 18, 2017
Federal District: 
N.D. Ill., E. Div.
Holding: 
Affirmed

Dist. Ct. did not err in granting defendant-insurance company’s motion for summary judgment in action by plaintiffs-assignees of insured, alleging that defendant owed plaintiffs proceeds from insurance policy, where: (1) insured had settled underlying Texas lawsuit, which concerned potential claim under policy with plaintiffs; (2) terms of settlement called for stipulation to entry of judgment in amount of $5.12 million against insured; (3) insured assigned to plaintiffs’ purported right to recover against defendant in coverage dispute; (4) plaintiffs promised not to execute on judgment against insured; and (5) defendant played no role in insured’s settlement of underlying action since defendant had no duty to defend under policy. Ct. found that: (1) instant type of settlement and assignment was neither enforceable nor binding against defendant because said settlement was collusive and distorted adversarial process; and (2) insured’s assignment was invalid as matter of relevant Texas public policy. Ct. further noted that plaintiffs could not use amount of settlement of Texas lawsuit as evidence as to what defendant owed plaintiffs in underlying claim under instant circumstances, where there was no full adversarial trial on matter.