Fox v. American Alternative Ins. Corp.

Dist. Ct. did not err in dismissing for failure to state valid claim in action alleging that defendant-insurance company breached duty to defend insured in underlying section 1983 action, in which judgment was entered against insured for, among other things, $3.4 million in punitive damages that was not covered by insurance policy in claim that insured subjected victim to false arrest and malicious prosecution in criminal matter. Ct. of Appeals doubted whether Illinois would allow instant lawsuit, which seeks to shift burden of punitive damage award from insured-tortfeasor to insurance company. Moreover, instant insurer, which provided coverage only after primary insurer had exhausted its coverage, did not breach any duty to insured because it did not actually control litigation in underlying lawsuit at time when victim made settlement demand that was within instant insurer’s policy limits. Also, instant insurer was not required to seek out fresh negotiations once insurer had subsequently obtained control of litigation during appeal of underlying case.