Plaintiffs filed a lawsuit for personal injuries against the defendant and defendant entered into an agreement with plaintiffs where defendant stipulated to a judgment and assigned his rights and claims against his automobile insurance company to the plaintiffs. Plaintiffs also executed a covenant not to execute the judgment against defendant personally and then initiated a citation proceeding seeking to discover if defendant’s insurance held any of the defendant’s assets. The insurance company removed the matter to federal court and the district court entered summary judgment for the insurance company after concluding that plaintiffs were not entitled to anything under the insurance policy and had no claim for breach of duty. The Seventh Circuit affirmed, finding that the trial court did not err when it concluded that the insurance company satisfied its duty to defend by providing counsel to the defendant and that the insurance company’s duty to settle was never triggered and, as a result, that the insurance company could raise the legally responsible provision in the insurance policy as a defense to coverage. (HAMILTON and PRYOR, concurring)
Federal 7th Circuit Court
Civil Court
Insurance Coverage