## Facts

- Jerry L. Wade, II caused or was alleged to have caused a traffic-signal collision with a minivan carrying Ninh Nguyen, who suffered catastrophic injuries and later developed paraplegia.
- Liability was initially disputed because each driver claimed to have entered the intersection on a green light; later information strengthened the claim that Wade ran a red light.
- Wade had automobile liability coverage from Emcasco Insurance Company with a $100,000 per-accident limit for all claimants.
- Shortly after the accident, Nguyen’s counsel made a time-limited demand to settle for the policy limit while investigation of liability, damages, and causation was ongoing.
- A key dispute concerned whether Nguyen’s paraplegia was caused by the crash or by subsequent negligent medical care during hospitalization.
- During the demand period, Nguyen’s counsel provided some records but did not provide the critical hospital records relevant to causation; attempts by Emcasco’s counsel to obtain them directly were unsuccessful due to an ineffective medical authorization.
- The time-limited policy-limits offer expired and was withdrawn before Emcasco received the hospital records or a usable release.
- After Emcasco later received the hospital records, it promptly offered to settle for the full policy limits; Nguyen rejected the offer and pursued an excess recovery through a bad-faith theory.
- Nguyen obtained an agreed excess judgment against Wade (about $3.15 million) paired with an agreement not to execute against Wade’s personal assets, and Wade assigned his rights against Emcasco to Nguyen.
- Nguyen (as assignee) sued Emcasco for negligent/bad-faith failure to settle under Kansas law, and Wade asserted a separate breach-of-contract claim; the district court granted summary judgment to Emcasco.

## Issues

1. Whether Emcasco acted negligently or in bad faith under Kansas law by not accepting Nguyen’s time-limited within-limits settlement demand before its deadline.
2. Whether Emcasco’s conduct caused the excess judgment against Wade, as required to impose liability beyond policy limits.
3. Whether Emcasco breached contractual duties to Wade based on its handling of settlement and defense, and whether Wade could separately pursue a contract claim after assigning rights to Nguyen.

## Decision

- The Tenth Circuit affirmed summary judgment for Emcasco.
- Emcasco did not act negligently or in bad faith by declining to pay policy limits before obtaining critical medical records necessary to evaluate damages and causation.
- Emcasco’s prompt tender of policy limits after receiving the hospital records supported the conclusion that its investigation and timing were reasonable.
- Nguyen’s rejection of the later full-limits offer for strategic reasons defeated causation between any earlier delay and the excess judgment.
- Wade’s breach-of-contract claim failed because there was no contractual breach shown and his assignment of rights undermined independent contractual recovery.

## Legal Principles

- Under Kansas law, an insurer owes its insured a duty to act in good faith and without negligence in evaluating and settling third-party claims within policy limits; liability for an excess judgment requires negligent/bad-faith handling that causes the excess judgment.
- A reasonable investigative delay—especially where liability and causation are uncertain and critical medical records are unavailable despite reasonable efforts—is not, by itself, bad faith or negligence.
- Causation is required: if the claimant rejects a later policy-limits offer for reasons unrelated to protecting the insured from excess exposure, that rejection may sever any causal link between earlier settlement timing and the excess judgment.
- Alleged mishandling of settlement opportunities is generally analyzed through the Kansas good-faith/ordinary-care settlement duty; absent proof of breach of an express policy term, a parallel breach-of-contract theory will not survive.

## Conclusion

The court held that Emcasco’s failure to accept an early, time-limited policy-limits demand was not actionable where key causation records were withheld or unavailable during the demand period and Emcasco promptly tendered limits once it received the necessary information; because the excess judgment flowed from the claimant’s rejection of the later limits offer, Emcasco was not liable for bad faith, negligence, or breach of contract.


Wade v. Emcasco Ins. Co., 483 F.3d 657 (10th Cir. 2007)