Hendricks v. Novae Corp. Underwriting, Ltd.
- Summarized by Daniel Waxman , KEWA Financial Inc.
- 8 years 6 months ago
- Case Type:
- Business
- Case Status:
- Affirmed
- Citation:
- 16-1712 (7th Circuit, Aug 08,2017) Published
- Tag(s):
-
- Ruling:
- Settlement of cause of action between plaintiff and defendant where defendant agrees to a judgment in the full amount of the claim and assigns its claim against its insurer (who has declined defense) to plaintiff, who agrees not to collect from defendant, violates Texas public policy.
- Procedural context:
- Appeal from the decision of the United States District Court for the Northern District of Illinois (Ellis, J.), granting summary judgment in favor of the defendant.
- Facts:
- Novae issued an insurance policy to Cunningham, et. al. Cunningham entered into an agreement with American Patriot to provide certain services to Cunningham. American Patriot and its shareholder Hendricks, sued Cunningham for fraud and other torts in Texas state court. Cunningham tendered its defense to Novae who denied coverage and refused to defend. While the litigation was on-going, American Patriot filed for bankruptcy. The parties (excluding Novae) eventually settled the Texas litigation. As relevant to the appeal, the settlement provided that Cunningham would agree to a judgment in the full amount of the claim against it and would assign its claim against Nova to Hendricks and the American Patriot trustee who, in return, would agree only to collect on the judgment from Novae. Based on this settlement and assignment, Hendricks and the American Patriot trustee sued Novae in District Court.
- Judge(s):
- Posner, Williams, and Sykes
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