Binding the Insurer to Relevant Facts Through a Consent Settlement

Recently the Missouri Supreme Court in Allen v. Bryers, 512 S.W.3d 17 (Mo. 2016), as modified (Apr. 4, 2017), reh’g denied (Apr. 4, 2017), cert. denied sub nom. Atain Specialty Ins. Co. v. Allen, 138 S. Ct. 212, 199 L. Ed. 2d 118 (2017) held that an insurance company’s wrongful refusal to defend its insured bound the insurer to the findings made in the underlying tort action. The court found that when the insurer improperly refused a defense to its insured, the insured was entitled to enter into a consent judgment which bound the insurer to findings of fact that were made in the underlying tort action. In this case, the insured failed to pursue a declaratory judgment action, failed to appeal the denial of a motion to intervene in the tort action, and subsequently made an untimely motion to intervene. However, the court did find that the insurance company was not liable for damages in excess of the policy limits where there had been no finding that the insurer engaged in bad faith when it denied coverage.