A Georgia insurance company has settled the lawsuit it brought against four former members of a Utah State University fraternity. The company, RSUI, Inc., had paid a wrongful death claim on behalf of the fraternity. In its lawsuit, RSUI sought $50,000 each from Sigma Nu pledge Chad Burton and chapter officers Cody Littlewood, Colton Hansen and Mitchell Alm as compensation for a payment made in a settlement with the parents of Michael Starks, who died on November 21, 2008, from alcohol poisoning after a fraternity event. At the time, RSUI was the insurer for the fraternity and its members, including pledges. Lawyers for RSUI have acknowledged that both the company and the four Defendants would have been jointly liable to the decedent’s parents. But the company says it paid the full amount under the settlement with the parents.
RSUI contended the Defendants planned and participated in a “capture event,” in which new pledges would be kidnapped by members of a sister sorority and later rescued by fellow pledges. It was alleged that Starks drank nearly two-thirds of a bottle of vodka during the event and died hours later. RSUI’s lawyers in a statement said:
The Defendants are required to pay their portion of the amount used to settle the claims against them. The Defendants accepted this benefit and it would be inequitable for them to retain the benefit without payment to Plaintiff of its value.
But lawyers for the fraternity brothers said RSUI breached its good faith agreement by suing its own policyholders. They contended RSUI couldn’t subrogate for the amount paid in the settlement against its own insured. Terms of the agreement reached between RSUI and the four Defendants haven’t been disclosed. But the lawyers who represented Hansen and Burton told the media their clients paid no money to RSUI. A lawyer for another student (Littlewood) said he couldn’t discuss financial details of the settlement. Apparently, this matter isn’t over. A lawyer for one of the students plans to file a counterclaim against RSUI on the student’s behalf, and contends the insurance company had breached its implied duty of good faith and fair dealing.
Source: Insurance Journal
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