What Happens If There Are Multiple Damage Claims And Limited Resources To Pay Them?

Suppose that the at-fault driver was driving while intoxicated but did not purchase adequate insurance limits/does not own sufficient assets to pay the plaintiff’s and other’s claims? Which claimant gets what amount of the available resources? Can his insurance company simply pay the entire amount to the first claimant who steps forward and have no liability to the others? This is a thorny problem that often arises in multi-vehicle, multi-party crashes. For example, it has been a factor in the case of Ethan Couch, a suit I’ve been working on.

What is the law on this subject? In the leading Supreme Court case of Texas Farmers Ins. Co. vs. Soriano, 881 S.W.2d 312 (Tex. 1994), the facts mirrored the Couch case. Mr. Soriano caused a collision with a car driven by Mr. Medina. Medina’s wife and a teenage passenger in the Soriano’s car were killed and three others were seriously injured. Soriano was charged with DWI and speeding.

Unfortunately Soriano (like most people) only carried the minimum limits, which back then were $10,000 per person/$20,000 per occurrence. Farmers Insurance, his carrier, offered to pay the full $20,000 to Medina, which he rejected. He and several other victims filed lawsuits. Before trial, Farmers settled with one plaintiff for $5,000.00 and offered the $15,000 balance to Medina, which he rejected again. At trial, Medina received a verdict of $172,187 which was affirmed on appeal. Medina then agreed to accept a covenant not to execute and also agreed to drop the criminal charges and in return, Soriano assigned his rights to sue Farmers to Medina.

Medina sued Farmers, claiming negligence, gross negligence, and breach of the duty of good faith and fair dealing for failing to settle his claim. The trial court rendered judgment in favor of Medina for $520,577 and an additional $5 million in punitive damages.

On appeal, the Supreme Court reversed, holding there was no evidence of negligence or any breach of the duty of good faith and fair dealing. The Court found that when an insurer is faced with a settlement demand arising out of multiple claims and inadequate proceeds, an insurer may enter into a reasonable settlement with one of the several claimants even though such settlement exhausts or lessens the proceeds available to satisfy other claims. In other words, “first come, first served.”

This is another reason to hire a personal injury lawyer as soon as possible after an accident. Of course, a person can represent himself against the giant Insurance companies, but they are for profit corporations that make money by minimizing or eliminating payments for injury and vehicle damage. They are hardly the “good neighbor” they would have you believe on television ads. You will not know what information you need to enhance the monetary value of your case. You will not understand the medical system, how doctors work, how billing is applied, and what treatment you should be receiving. And ultimately, you will not know the value of your claim, how to best negotiate it, or how to file suit and collect a verdict if the offer is inadequate.

Many people believe that they cannot afford to hire an attorney. However it has been been proven that you will receive much more money if you hire an injury lawyer. According to the Insurance Resource Council, a non-profit organization financiallysupported by the Insurance Industry, people who have hired an attorney receive about 3.5 times more money — after deducting attorney’s fees.

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