Another Failure of a Settlement Allowing Plaintiff to Sue Defendant’s Insurer

Read the full article at https://www.linkedin.com/pulse/must-occurrence-liability-coverage-apply-barry-zalma-esq-cfe and at https://zalma.com/blog plus more than 3400 posts.

Sometimes what appears to be the most routine home sale transaction can result in grave legal problems and seriously complicated litigation. In James T. Krause and Patricia Ann Vanlear v. James M. Kerns and Christine C. Kerns, and American Automobile Kansas (October 16, 2020) James M. and Christine C. Kerns owned a residence covered by a homeowner’s insurance policy issued by American Automobile Insurance Company (AAIC). The Kernses entered into a contract to sell their home to James T. Krause and Patricia Ann Vanlear (collectively Krause). However, according to Krause the disclosure either misrepresented a number of issues or outright omitted problems with the home.

ZALMA OPINION

There is only one reason to enter into a settlement agreement that takes an assignment of the rights of a defendant against its insurer and a covenant not to execute the judgment against the defendant is if the defendant is judgment proof. This case got the plaintiffs a judgment that it was unable to collect.