Comedian Tracy Morgan at Thunder Valley Casino Resort in Lincoln, California on April 26, 2014.
Wal-Mart’s settlement of the lawsuit over events involving the 2014 vehicle wreck that injured comedian Tracy Morgan didn’t end the legal fight.
Wal-Mart Stores Inc. of Bentonville and its insurance carriers now are suing each other over who is going to pay the settlement.
Wal-Mart first sued its insurance carriers for refusing to reimburse the retail giant for the amount it paid to settle the case with Morgan and others who were injured in the accident caused by a tired Wal-Mart truck driver in June 2014. Comedian James McNair was killed in the crash. Wal-Mart settled with the injured parties for an amount that wasn’t disclosed to the public.
“We funded the settlement agreements in full, but some of the insurance carriers have failed to pay their portion of the settlement amount,” said Randy Hargrove, a Wal-Mart spokesman.
Wal-Mart filed its lawsuit on Sept. 30 in Benton County Circuit Court against several carriers, including Liberty Insurance Underwriters Inc., the Ohio Casualty Insurance Co. and St. Paul Fire & Marine Insurance Co.
Wal-Mart said in the lawsuit that it kept the insurance companies informed about the case and conducted due diligence to determine a settlement amount. The insurance companies, however, tried to prevent the settlement from moving forward.
Wal-Mart said it even hired an economic expert in the entertainment industry to review the careers of Morgan and the other passengers to give an opinion about their future income in order to determine a settlement amount.
“Defendants persisted in making harassing and pretextual demands for more and more information” to evaluate the personal injury lawsuit, Wal-Mart’s lawsuit said. “These requests were made in bad faith as part of an intentional scheme to avoid making coverage payments.”
Hargrove said Wal-Mart has had umbrella liability coverage in place for decades.
“We took full responsibility for the tragic accident,” he said. “So this lawsuit is really about the defendant insurance companies not living up to the requirements of their own policies.”
Wal-Mart is asking a judge to issue a declaratory judgment that would allow the retailer to recover the settlement amount from the insurance companies. It also is suing for breach of contract and bad faith.
The day after Wal-Mart filed its lawsuit, Ohio Casualty and Liberty Insurance together filed suit in a New Jersey state court. The insurance companies said that Wal-Mart didn’t keep them informed about the settlement talks.
Wal-Mart agreed to the settle the case without trying to negotiate a lower amount, the insurance companies’ lawsuit said.
The companies said they haven’t settled with Wal-Mart because “the amount of such settlement is unreasonable.”
The insurance companies want their own declaratory judgment, saying they don’t have to pay Wal-Mart because the insurance companies don’t agree to the settlement amount.
Paul Koepff of Florham Park, New Jersey, who is representing Ohio Casualty and Liberty Insurance, didn’t immediately return a call.
Possible Settlement Coming
Tom Baker, an insurance law professor at the University of Pennsylvania Law School, said that if Wal-Mart had an insurance policy that would allow it to settle a case without getting approval from the insurance company, then the issue would be whether Wal-Mart’s settlement with Morgan and the others was reasonable.
A trial could be held based on the facts that were known at the time to determine if the settlement was reasonable, Baker said.
“Those kinds of suits are very hard for an insurance company to win,” he said.
He said each side would then put on experts as to what the trial risks were and potential damages if the Morgan case made it to a jury.
Baker said he assumes that Wal-Mart has “very good lawyers” and it wouldn’t settle the Morgan crash if it couldn’t do so according to its insurance coverage.
Still, he doesn’t think the case will be decided on motions for summary judgment, which means there wouldn’t need to be a trial.
“These sound like trial issues, which of course means it’s going to be settled, because they’re not going to go to trial,” Baker said.
Sign up for Daily E-news
