## Facts

- A 13-year-old, David Struempf, was struck by a truck and suffered severe, permanent brain injuries.
- The truck owner was insured by Commercial Union under a liability policy with limits of $50,000 per person and $100,000 per occurrence.
- Struempf’s representative sued the insured truck owner; Commercial Union controlled the defense and settlement decisions.
- Given the gravity of the injuries, Commercial Union recognized a substantial risk of an excess verdict, including an internal assessment noting a meaningful chance of a verdict up to $1,000,000 and a recommendation to reserve the policy limits for settlement.
- Struempf’s counsel initially offered to settle for the $50,000 per-person policy limits; Commercial Union did not accept or meaningfully respond for nearly three years.
- When the policy-limits offer was renewed in May 1980, Commercial Union’s retained defense counsel, James K. Almeter, made a $30,000 “take it or leave it” counteroffer without informing the insured of that settlement posture.
- The plaintiff withdrew all settlement offers, and six days later defense counsel tendered the $50,000 policy limits, asserting he had authority to do so all along; the plaintiff refused.
- The case went to trial and resulted in a verdict exceeding $900,000 against the insured.
- The insured assigned to the injured party the insured’s claims against Commercial Union in exchange for a covenant not to execute on the excess judgment.
- Mid-America Bank & Trust Co., as administrator for Struempf, sued Commercial Union for negligent and bad-faith failure to settle within policy limits; Commercial Union filed a third-party claim against Almeter (later his estate).

## Issues

1. Whether the evidence supported a finding that Commercial Union acted negligently or in bad faith by failing to accept a reasonable policy-limits settlement offer and by countering with a substantially lower “take it or leave it” offer, exposing its insured to an excess judgment.
2. Whether the trial court erred in denying Commercial Union’s motion for a directed verdict (or judgment notwithstanding the verdict) based on alleged insufficiency of the evidence.
3. Whether defense counsel’s conduct negated or reduced Commercial Union’s liability, including whether the trial court committed reversible error in handling instructions or responsibility allocation involving counsel.

## Decision

- The appellate court affirmed the judgment entered on the jury’s verdict against Commercial Union.
- The court held that the evidence permitted a jury finding that Commercial Union failed to give at least equal consideration to the insured’s interests when evaluating settlement.
- The court held that Commercial Union’s delay and its low “take it or leave it” counteroffer, in the face of a clear risk of an excess verdict, could constitute negligence and/or bad faith.
- The court held the trial court properly denied Commercial Union’s directed-verdict/JNOV request.
- The court rejected arguments that defense counsel’s conduct absolved Commercial Union of liability; counsel’s actions could support a third-party claim but did not eliminate the insurer’s duty to the insured.

## Legal Principles

- An insurer that undertakes the defense and controls settlement decisions must give at least equal consideration to the insured’s interests as to its own when the claim presents a realistic possibility of an excess judgment.
- Where liability and damages exposure make a within-limits settlement demand objectively reasonable, an insurer may be liable for an excess judgment if it unreasonably refuses, delays, or takes a settlement position that foreseeably destroys the opportunity to settle within limits.
- An insurer cannot avoid its duty to the insured by attributing settlement mishandling solely to counsel retained to defend the insured; counsel’s conduct may support separate indemnity or contribution claims but does not negate the insurer’s primary settlement duty.

## Conclusion

The court upheld an excess-verdict judgment against the insurer, concluding that repeated policy-limits settlement opportunities, known severe-injury exposure, years of inaction, and a low “take it or leave it” counteroffer supported the jury’s finding that the insurer failed to protect the insured by giving the insured’s interests equal consideration in settlement decisions.


Mid-Am. Bank & Tr. Co. v. Com. Union Ins. Co., 587 N.E.2d 81 (Ill. App. Ct. 5th Dist. 1992)