AIU INS. CO. v. VALLEY FORGE INS. CO

Inasmuch as Valley Forge Insurance Company, the insurer of Kroemer Avenue Associates (Kroemer), did not take part in the settlement negotiations or agree to the $3 million settlement of the underlying personal injury action, Valley Forge is not required to contribute to that settlement. The individual who arranged for the recitation in the release attributing payment of $1 million to Kroemer did not have the authority to bind Kroemer's primary carrier. The record before us supports Valley Forge's position that Kroemer was entitled to full indemnification and a complete pass-through of liability, in the absence of any showing of any direct negligence on Kroemer's part, since Kroemer was an additional named insured on the primary and excess policies maintained by the actively negligent party, Nicolia Associates, and Kroemer's liability was purely statutory.

However, we affirm the Supreme Court's dismissal of Valley Forge's third-party action, and agree that the actions of third-party defendants did not constitute bad faith.

THIS CONSTITUTES THE DECISION AND ORDER OF THE SUPREME COURT, APPELLATE DIVISION, FIRST DEPARTMENT.