In Stryker Corp. v. National U. Fire Ins. Co., Nos. 15-1657/1664, 2016 WL 6818853 (6th Cir. November 18, 2016), the Sixth Circuit reversed an award of $8.6 Million.
In this liability insurance coverage case alleged under Michigan law, the Sixth Circuit held that the clear purpose of the consent-to-settle clause is to afford the liability carrier with the opportunity to negotiate settlement of claims going forward, not backward. In other words, the clause operates prospectively to deter conduct which would be an obstacle to the carrier's carrying out its indemnity obligations under the liability insurance contract.
The Sixth Circuit reversed in large measure because it held that the policyholder violated a consent-to-settle clause set forth in an excess carrier's policy, as it happened, by settling claims against the policyholder, and ten years later asking for its liability carrier's validation of the settlements that the policyholder made long ago.
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