Surgery Center at 900 North Michigan Avenue, LLC v. American Physicians Assurance Corp., Inc.

Dist. Ct. did not err in granting defendant-insurance company’s motion for judgment as matter of law in plaintiff-insured’s action alleging that defendant was guilty of bad faith in failing to settle underlying medical malpractice action, where said failure caused plaintiff to become liable for $4.17 million excess judgment because defendant failed to settle malpractice action within $1 million policy limit. Duty to settle arises when third-party demands settlement within policy limits, and there is reasonable probability of recovery in excess of policy limits and reasonable probability of finding of liability against insured. Here, plaintiff failed to present evidence of reasonable probability of finding of liability against it, where: (1) claims representative for defendant, plaintiff’s clinical staff, and attorneys representing plaintiff in malpractice action all thought that plaintiff would not be found liable in malpractice action; and (2) plaintiff’s president severely undermined plaintiff’s defense at trial on malpractice claim. Fact that defendant ultimately increased reserve amount to full $1 million policy limit prior to trial on malpractice claim did not establish, by itself, reasonable probability of plaintiff’s liability in malpractice action, and record otherwise showed that plaintiff’s president repeatedly urged defendant not to settle malpractice action.