Construction Insurance Claims: Consent Judgments and Coblentz Settlement Agreements

Navigating the Contours of Permissible Insured/Third Party Claimant Settlements vs. Unreasonable Collusion That Extinguishes the Duty to Indemnify

Recording of a 90-minute CLE webinar with Q&A


Conducted on Wednesday, June 17, 2015

Recorded event now available

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Program Materials

This CLE webinar will examine the use of collaborative settlements between insured contractors and third-party plaintiffs as a strategy to pressure the contractor’s insurer into indemnification after denying coverage. The panel will discuss the factors courts consider in deciding whether a settlement is reasonable and permissible or unreasonable collusion such that the insurer’s duty to indemnify may be extinguished. The program will discuss strategies for insurers to challenge collaborative settlement agreements.

Description

When an insurer denies coverage for a third-party construction claim or issues a reservation of rights and files a declaratory judgment action, it faces the risk that the contractor will settle with the plaintiff in exchange for a covenant not to seek recovery from the insured contractor, but instead seek recovery from the insurer.

The concept of a claimant settling with a contractor in order to obtain rights under the contractor’s liability policy is an effective tool in construction litigation, especially in construction defect scenarios where the defendants look to their CGL carriers for defense and indemnification and plaintiffs look to insurance to cover their significant damages.

There are several factors that the third-party plaintiff must demonstrate to be entitled to collect its excess verdict against the insurer. Impermissible collusion between the insured contractor and the third-party plaintiff can result in the extinguishment of the insurer’s duty to indemnify.

Listen as our authoritative panel of practitioners analyzes collaborative settlements and consent judgments between insured contractors and third-party plaintiffs intended to induce the insurer to indemnify after initially denying coverage. The panel will review factors the courts consider in deciding whether the settlement is reasonable and permissible or unreasonable collusion that will extinguish the insurer’s duty to indemnify.

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Outline

  1. Third-party claimant’s burden to establish entitlement to collect excess verdict against an insurer in a construction defect claim
  2. Recent case law and factors courts consider in determining whether a collaborative settlement or consent judgment between an insured contractor and a third-party claimant is reasonable and permissible
  3. Strategies for insurers to challenge collaborative settlement agreements between insured contractors and third-party claimants

Benefits

The panel will review these and other key issues:

  • What elements does a third-party claimant in a construction defect case have to establish to collect an excess verdict against an insurer?
  • Which factors do courts consider in determining whether a collaborative settlement between an insured contractor and a third-party claimant is reasonable and permissible?
  • What are the best strategies for insurers to challenge collaborative settlement agreements and excess consent judgments?

Faculty

Adelstein-David
David M. Adelstein

Partner
Kirwin Norris

Mr. Adelstein represents general contractors, subcontractors, design professionals, developers, associations,...  |  Read More

Debbie S. Crockett, Esq.
Debbie S. Crockett, Esq.

Cheffy Passidomo

Ms. Crockett’s practice concentrates in the areas of commercial and construction litigation. She is...  |  Read More

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