Settling with an insurance company out of court is commonplace in the legal world. However, entering into a “High/Low” agreement prior to trial can come back to hurt a plaintiff and should be carefully worded and considered before executed. The cost of this kind of failure is exemplified in Soileau v. Smith True Value and Rental.
In November 2007, plaintiff Mary Solieau sustained serious injuries when a John Deere front-end loader detached from a John Deere tractor and shattered her leg while she was supervising the cleaning out of canals for the Town of Mamou. The tractor was rented from Smith’s Hardward, insured by Defendant Hartford Insurance Company.
Before proceeding to trial, Solieau entered into a “high/low” agreement with Hartford, capping Hartford’s liability at its policy limit of $2,500,000 and further releasing the Smiths of any personal obligation. At trial, Solieau moved to dismiss the Smiths, which led to Hartford filing for a directed verdict based on the language of its policy, which obligated Hartford to pay only those sums that its insured becomes legally obligated to pay. The trial court denied the motion.
After trial, the jury found in favor of the plaintiff, placing 15% of fault upon the Smiths. The trial court entered judgment against Hartford for $1,074,462.82. Hartford and Soileau then appealed the decision, addressing the issue of whether Louisiana Revised Statute 22: 1269 (La.R.S. 22:1269) barred Soileau from pursuing Hartford alone once its insured parties were dismissed from litigation.
In overturning the decision of the trial court, the appellate court determined that the direct action statute, La.R.S. 22:1269, did in fact bar Ms. Soileau from recovery from Hartford. The relevant statutory language ensures an injured person a “right of direct against the insurer within the terms and limits of the policy.” The court relies on the language of the “high/low” agreement, which released the Smiths of personal liability, but nowhere mentioned Hartford agreeing to waive its rights under the direct action statute.
The court went on to shoot down the plaintiff’s contention that the direct action statute only governed the initial filling of an action, not the maintenance of an action against an insurer once the insured is dismissed. The court sided with Hartford, positing that “the legislative intent behind the direct action statute would be defeated if a plaintiff could circumvent the statute’s requirements simply by filing the action against the insured and the insurer then dismissing the insured.”
In the end, the “high/low” agreement entered into by the plaintiff turned out to be fatal to the cause of action since the dismissal of the insured barred the defendant insurance company from liability towards the injured party. Knowing how to navigate a settlement opportunity is incredibly difficult and comes from years of experience. The Berniard Law Firm has significant experience in settlements, especially with insurance companies, which provides a wealth of information and quality advice from our attorneys. Contact us today for more information on your rights before you make a settlement that could hurt your ability to be compensated for your injury.