Fairly Apportioning Covered and Noncovered Claims Settled by the Insured.

   In Westchester Surplus Lines Insurance Co. v. Maverick Tube Corp., Download Westchester Surplus Lines Insurance Co v. Maverick Tube Corp (S.D. Tex. Case No. H.07.540, Mem and Order Filed June 28, 2010)(FREE ACCESS) also published as 2010 WL 2635623 (S.D. Tex. June 28, 2010)(Westlaw subscription required to access Westlaw), the Federal Court in Texas squarely confronted the rule of law that a Policyholder-Insured must "allocate" its settlement of underlying liability claims "between covered and noncovered claims" when seeking its money back under its Commercial (or "Comprehensive") General Liability Policy from its CGL Carrier.  In particular, the Federal Court said that it was following Missouri law which, consistent with the law in many if not all other U.S. jurisdictions, requires that settlements by Insureds which encompass both covered and noncovered claims "'must be fairly apportioned between the two.'"  Maverick, 2010 WL 2635623 at *7.  See generally Dennis J. Wall, "Litigation and Prevention of Insurer Bad Faith" § 13:3, "Compensatory Damages--Amount of Settlement of Third Party's Claim" (Shepard's/McGraw-Hill First Edition; West Publishing Company Second Edition and 2010 Supplement).

   The Maverick Court's treatment of this issue is instructive.  The Court looked behind any argument that the Insured's settlement was subject to apportionment because theoretically it could have included noncovered claims.  The Insured's Settlement Agreement recited 'that it was in satisfaction of 'all' potential claims."  Id. at *8.  The Court rejected this argument.

   Instead, the Court repeatedly pointed out that "[n]othing in the record supports" that argument, that "[i]jstead the record supports" the Insured's argument in that case that no noncovered claims were or could have been settled in that particular case, and in sum that "[t]he record provides no basis to find that [the Insured's] settlement extended to uncovered losses or to impose any duty to segregate covered losses from uncovered losses."  Id.  [Emphasis added.]

   Speculation can run rampant but evidence is required.

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