In an earlier article published here, it was said that when and as the courts start to cite to the Restatement we will take a very close look at it, but as of then, the time had not yet come when the judges have analyzed it. The time has now come.
The Restatement has acquired something of a history of citation in at least one court in South Dakota. In Sacred Heart Health Services v. MMIC Insurance, Inc.[1] the Court was confronted with the following issue, as it put it:
The issue in this case is whether [the liability carrier at bar] breached its duty to defend such that it forfeited the right to assert control over the defense and settlement of the [underlying] lawsuits.[2]
The Court in this case recited its previous consultation in a case in which "there was no South Dakota precedent on an insurer's liability for providing an inadequate defense[.]"[3] The Court in its earlier case looked to Section 12 of the Restatement of the Law of Liability Insurance "for guidance given that the South Dakota Supreme Court had found the Restatement to be persuasive in many instances."[4]
In Sacred Heart, the Court again "found no South Dakota caselaw on point" and looked again to the Restatement, this time to Section 19 of the Restatement of the Law of Liability Insurance, including its Comment b.[5] The guidance which the Sacred Heart Court received from the Restatement was this:
Section 19 of the Restatement of the Law of Liability Insurance provides that '[a]n insurer that breaches a duty to defend a legal action forfeits the right to assert any control over the defense of settlement of the action.'”[6]
The Court then held that "[v]iewing the facts in the light most favorable to Plaintiffs, the non-moving parties," the insurance company's motion for summary judgment "on the breach of duty to defend claim is denied."[7]
Citations to the Restatement of the Law of Liability Insurance are more fully set out in the 2 Volumes of DENNIS J. WALL, LITIGATION AND PREVENTION OF INSURER BAD FAITH (West Publishing Co. 3d Edition, 2024 Supplements in process).
Please read the disclaimer. This blog article ©2024 Dennis J. Wall. All rights reserved.
[1] Sacred Heart Health Serv's v. MMIC Ins., Inc., No. 4:20-CV-4149-LLP, 2023 WL 3742544 (D.S.D. May 31, 2023).
[2] Sacred Heart, 2023 WL 3742544, at *36.
[3] Sacred Heart, 2023 WL 3742544, at *35.
[4] Sacred Heart, 2023 WL 3742544, at *35.
[5] Sacred Heart, 2023 WL 3742544, at *36.
[6] Sacred Heart, 2023 WL 3742544, at *36.
[7] Sacred Heart, 2023 WL 3742544, at *36.
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