United National Ins. Co. v Faure Brothers Corp.
2016 IL App (1st) 132419-UB (Ill. App., 2016)Words & Phrases
Burden Of ProofTrial Judge
Sophia HallAppellate Judge
HarrisHolding
Insured had burden to prove covered claim was settled in reasonable anticipation of liability.Fact Summary
In order to recover a settlement, the insured ' need not establish actual liability to the party with whom it has settled "so long as a potential liability on the facts known to the [insured is] shown to exist, culminating in an amount reasonable in view of the size of possible recovery and degree of probability of claimants success against the insured." ' " U.S. Gypsum Co., 268 Ill. App. 3d at 626-26 quoting Luria Brothers & Co. v. Alliance Assurance Co., 780 F. 2d 1082, 1091 (7th Cir. 1986).
The determination of whether Faure's anticipation of liability was reasonable would turn on the "quality and quantity of proof" which Faure would expect to be offered against it in the underlying case. See U.S. Gypsum Co., 268 Ill. App. 3d at 626. The burden of proving reasonableness falls on the insured both out of fairness, since the insured was the one who agreed to the settlement, and out of practicality, since the insured will have better access to the facts bearing upon the reasonableness of the settlement. Guillen ex rel. Guillen v. Potomac Insurance Co. of Illinois, 203 Ill. 2d 141, 163 (2003). However, the insurers retain the right to rebut any preliminary showing of reasonableness with its own affirmative evidence bearing on the reasonableness of the settlement agreement. Guillen, 203 Ill. 2d at 163.
Based on this, we conclude that even though Faure was the defendant in this action, it was proper to have it proceed first, but the evidentiary burden Faure was required to prove was wrong. Accordingly, we reverse and remand for a new trial on whether Faure can prove the settlement it entered into was reasonable.