HOME INS. CO. v. UNITED SERV. AUTO. ASSOC

ORDERED that the plaintiffs' cross appeal from so much of the order dated April 7, 1998, as denied its cross motion is dismissed, without costs or disbursements, as that portion of the order was superseded by the order dated July 21, 1998, made upon reargument; and it is further,

ORDERED that the order dated March 30, 1998, is reversed insofar as appealed from, without costs or disbursements, and that branch of the plaintiff's motion which was for leave to amend the ad damnum clause of the complaint to demand damages in the amount of "the excess verdict that was entered as a judgment [in the underlying action], less any amounts that were paid to reduce said judgment" plus interest from the date of judgment in the underlying wrongful death action is granted; and it is further,

ORDERED that the order dated April 7, 1998, is affirmed insofar as appealed from, without costs or disbursements; and it is further,

ORDERED that the order dated July 21, 1998, is affirmed insofar as reviewed, without costs or disbursements.

During the trial of the underlying wrongful death action, the defendant insurer rejected an offer to settle the case for $100,000, the limit of its policy. The jury subsequently rendered a verdict in the amount of $600,178.46 against its insured. The insured assigned his bad faith claim ( see, Pavia v. State Farm Mut. Auto Ins. Co., 82 N.Y.2d 445) to the deceased's estate, which later assigned it to the plaintiff in settlement of a related action.

The Supreme Court properly denied the parties' respective motions for summary judgment on the bad faith cause of action since the record presents triable issues of fact as to whether the defendant insurer acted with "gross disregard" for the insured's interest ( see, Pavia v. State Farm Mut. Auto Ins. Co., supra). The record belies the defendant's claim that it relied upon the insured's version of the accident and denials of guilt in refusing the settlement offer ( cf., Pipoli v. United States Fidelity and Guaranty Co., 31 N.Y.2d 679, affg 38 A.D.2d 249).

Nor is there any merit to the defendant's claim that the plaintiff's action violated the prohibition against champerty set forth in Judiciary Law § 489. "[T]o fall within the statutory prohibition, the assignment must be made for the very purpose of bringing suit and this implies an exclusion of any other purpose" ( Fairchild Hiller Corp. v. McDonnell Douglas Corp., 28 N.Y.2d 325, 329-330). Here, the plaintiff did not take the assignment for the sole purpose of bringing suit, but to facilitate a settlement of a legal malpractice action against its insured ( see, Fairchild Hiller Corp. v. McDonnell Douglas Corp., supra; Sprung v. Jaffe, 3 N.Y.2d 539). Consequently, the defendant's motion to dismiss the complaint on that ground was properly denied.

However, the Supreme Court should have granted the plaintiff's motion for leave to amend the ad damnum clause of the complaint. As the assignee of the insured's bad faith cause of action, the plaintiff would be entitled to recover the amount of any excess verdict ( see, Soto v. State Farm Ins. Co., 83 N.Y.2d 718; DiBlasi v. Aetna Life Cas. Ins. Co., 147 A.D.2d 93), and is not limited to the amount it paid for the assignment ( see, Tawil v. Finkelstein Bruckman Wohl Most Rothman, 223 A.D.2d 52). Moreover, if successful, the plaintiff is entitled to interest through the date of judgment involving the bad faith cause of action, since the plaintiff would have been so entitled ( see, DiBlasi v. Aetna Life Cas. Co., supra; CPLR 5001).

The parties' remaining contentions are without merit.