Quote of the Day - This is a get-out-of-liability-free card.
Anthony Choy installed a lift kit on his car, and then promptly lost control of the car and severely injured himself in an accident. How he got to sue anyone else is a mystery, but he did.
He bought the lift kit from Shamrock Tire, and Shamrock was insured by Redland Insurance Company, part of the Clarendon Insurance Group (rating recently downgraded). Not surprisingly, Choy sued Shamrock. Not surprisingly, Shamrock filed bankruptcy.
Here’s where it gets dicey. Choy tendered a policy limits demand to Redland for $500,000. Redland rejected the demand. Deals were made in Shamrock’s bankruptcy, and ultimately, Choy ended up with a bankruptcy claim for about $26K. The trustee approved the claim, the bankruptcy court approved the claim, but when the trustee sued Redland Insurance to collect the claim, the case was dismissed. The appellate court upheld the dismissal. Boom. Case over.
The trustee’s case was dismissed ultimately because no one ever bothered to prosecute to judgment the underlying case for liability. It’s very simple in insurance lingo. No judgment, no payment. No one ever proved that Shamrock was liable for Choy’s injuries. (See also the second paragraph, above). Now, the attorneys, trustee and practically everyone else is embroiled in litigation to sort all of this out.
That is, everyone but Redland. They’re just continuing to collect premiums and not pay out claims.