In Escabusa, an insured driver was involved in an accident which caused injuries to claimant. Claimant, through various different attorneys over the course of a year, made multiple demands on the insured driver’s insurance company to settle. The auto policy contained a $25,000 limit. The auto insurer agreed to pay the limit numerous times. However, a number of the purported demands included conditions like the insurer to provide information about all applicable insurance policies and the insured entering into a § 537.065 agreement (Missouri’s statute allowing claimant and insured to limit recovery of any judgment to applicable insurance policies only).
The appellate court, in affirming summary judgment, ultimately sided with the insurer, finding that claimant’s demands did not constitute a reasonable settlement opportunity. The court noted several key communication failures. First, the request for information about all applicable policies introduced ambiguity, as the auto insurer could not bind other insurers without their consent. Second, demands lacked the specific terms of the proposed § 537.065 agreement, making it impossible for the auto insurer to properly evaluate and accept the offer to settle. Despite repeated requests from the insured’s counsel, the claimant never provided the proposed § 537.065 agreement and the claimant did not respond when the insured’s counsel provided a draft agreement for execution.
This case underscores the importance of clear and precise communication in settlement negotiations. For claimants, the appellate court found it is crucial to present unambiguous demands, including all necessary terms and conditions. Vague or incomplete demands may not be considered reasonable settlement opportunities, which the appellate court found is an essential element of a bad faith failure to settle claim. Despite bad faith claims typically being fact intensive and thereby rarely subject to summary judgment, the appellate court found in this case the insurer’s actions in attempting to settle were, as a matter of law, not bad faith.
For insurers, Escabusa reinforces the importance of diligent communication and good faith efforts to settle within policy limits. The insurer’s repeated offers to settle for the policy limits and requests for the proposed agreement demonstrated a good faith effort to resolve the claim. Documenting these efforts is crucial in defending against bad faith allegations. While consistent communication does not guarantee immunity from bad faith claims, it significantly strengthens an insurer’s defense by demonstrating a commitment to protecting the insured’s interests. Furthermore, the insured was kept updated about settlement discussions and the attempts to settle.
Cite: Escabusa v. Safe Auto Insurance Company, 2024WL4940663 (Mo.App.W.D. Dec. 3, 2024)
