Section 3.27 Reasonableness Requirement

• Library: Settling Cases 2014

Traditionally, as is noted in §3.26 above, Missouri courts have required that settlements entered into under § 537.065, RSMo 2000, be in good faith in order to be enforceable. This was interpreted to mean an absence of collusion or fraud.

What happens if the settlement is in good faith, but for an excessive amount? That was the issue in Gulf Insurance Co. v. Noble Broadcast, 936 S.W.2d 810 (Mo. banc 1997). In Noble, Fuller was hurt by the negligence of Noble Broadcast. Noble had two policies of liability insurance with two different insurance companies—one an automobile policy that was issued by Pacific Indemnity, and one a commercial general liability policy that was issued by Gulf Insurance. Each insurer claimed the other was responsible for Noble’s defense.

Pacific Indemnity ended up providing the defense. Fuller, Noble, and Pacific entered into a § 537.065 agreement by which Pacific agreed to pay Fuller $187,500. The agreement also provided that Noble would consent to a judgment for $1 million, the amount of Gulf’s policy. The federal district court entered judgment for that amount.

Gulf filed a declaratory...